In the past few weeks, Apple has made several changes to the rules of the app store, allowing more developers to pay lower commission rates, or completely avoiding Apple’s mandatory 15% to 30% bonus.
Although these concessions seem to be a major change in Apple’s app store policy, when we look back on the history of the app store, we will find that this is obviously a continuation of the 2009 strategy.
These changes may have little impact on Apple’s revenue, and it continues to do its best to defend its core interest that Apple has the right to decide which software can run on the iPhone.
Tencent technology news on September 6, Apple has made several changes to its app store rules in recent weeks to allow more developers to obtain a lower commission rate, or completely avoid Apple’s mandatory collection of 15% to 30% revenue sharing. However, although these concessions seem to be a major change in Apple’s app store policy, when reviewing the history of the app store, we find that it is obviously a continuation of the strategy implemented since 2009.
Apple has always made minor changes to the “guidelines” of its app store. This 13000 word document stipulates what iPhone applications can and cannot do, and defends its core interests, that is, Apple has the right to decide which software can run on the iPhone and set its own financial terms for these developers. Apple has not changed its policy of taking 30% of in app game purchases, which is the highest revenue category in the app store. The analysis shows that the total sales of Apple App store will reach $64 billion or more in 2020.
Samik Chatterjee, an analyst at JPMorgan, said in a recent research report that he believed that the financial impact of the improvement of e-mail function on Apple would be “moderate”, and the impact of the adjustment to reduce the revenue share of some applications to 15% on Apple would be “minimal”.
Regulators and developers who criticize Apple’s app store have made various complaints in the past decade: its 30% commission is too high, its manual application review process is too arbitrary, the app store will deliberately lower the price of software and induce consumers to believe that updates are free. Therefore, in response to litigation or media attention, apple allows software manufacturers to appeal or challenge their rules, but only change a single rule at a time.
Events in the coming months may force apple to adjust its policy again. Game developer Epic Games’ antitrust lawsuit against apple is expected to be ruled in the coming weeks. After spotify, a genuine streaming music service platform, filed a complaint, the EU found that Apple had violated the antitrust law and is currently reviewing penalties and remedies. South Korea recently passed a new law that may force apple to allow customers to use alternative billing systems.
But looking at the history of the app store, apple is likely to continue to promote private negotiations and public lobbying for smaller non structural reforms to the app store to address more and more complaints, but it will never easily change its control over iPhone software.
It was controversial as soon as it was launched
Apple’s app store has been controversial since its launch in 2008. Just a year after its launch, the Federal Communications Commission (FCC) investigated the company’s refusal to approve google voice applications.
Now, there is increasing pressure from regulators and developers around the world, which has led apple to make more improvements to the rules of the app store. The company recently made some concessions due to the settlement of class action lawsuits with U.S. developers and the agreement with Japan’s Fair Trade Commission, although apple is implementing these changes around the world.
However, these adjustments basically allow companies such as spotify and tinder’s parent company match group to bypass Apple’s sometimes 30% of total sales, thus resolving a long-standing complaint at least five years ago. Apple also reduced the percentage of news applications participating in the apple news project to 15%. Apple news is Apple’s own news application.
‘these are meaningful changes that address the main concerns of software manufacturers, ‘an apple spokesman said. But many opponents, even those who have petitioned apple to implement these changes, say that these changes are not deep enough, and apple is rapidly dividing the critic camp by changing only one rule at a time to appease some critics.
Daniel EK, CEO of spotify, said in response to Apple’s change of in app link rules on social media this week: “our goal is to restore competition once and for all, rather than taking arbitrary and selfish steps at a time.”
Tim Sweeney, CEO of Epic Games, said in response to the concession made by Apple’s news application last month: “Apple’s strategy is to divide and rule, that is, to provide special concessions for different developer segments.” Epic Games is suing apple in the hope that apple can install its own app store on the iPhone, but this is a major change Apple wants to fight.
Apple’s history of changing app store rules
2009: Apple was investigated by the FCC for not approving Google Voice citation
A year after the app store went online, the FCC began to investigate its refusal to approve google voice applications. Apple responded to the FCC, providing many details about its application review process for the first time, and argued that it had the right to reject the entire category of applications.
In the letter, Apple also introduced in detail its “executive review board” for the first time, which is led by Apple executive Phil Schiller and is responsible for making final decisions on “new and complex issues”. The google voice application was finally approved at the end of 2010.
2011: Apple requires in app payment for digital goods, creating a “reader rule”
In app purchase is a rule launched by Apple’s app store in early 2009, with a commission rate of 30%. However, in February 2011, apple significantly tightened its control over the app store and announced plans to force the company to use Apple’s in app purchase system when providing digital subscriptions.
At first, apple made exceptions to products such as the Kindle or the New York Times. In these products, users may purchase e-books or digital subscriptions outside the application. However, the company still needs to abide by Apple’s pumping rules when making in app purchases, and the price is the same as that of out of APP subscriptions.
This does not work for many publishers who want to maintain direct contact with customers. By June, Apple had withdrawn some of its more stringent guidelines, allowing the company to pass on 30% of the profits to customers, or if they wanted, they could not provide apple in app purchases at all.
According to an email released by Epic Games during the trial, soon after, Apple marketing director Schiller began to question the 30% commission charged by apple and suggested reducing the revenue sharing level, such as 20%. Since then, Apple has restricted users from turning to publishers’ websites within applications, but it has changed its practice in recent weeks.
2016: Apple reduced the second year’s subscription to 15%
In 2015, spotify publicly challenged Apple’s restrictions on subscriptions. First, it sent an email to customers telling them that it was cheaper to subscribe directly than through the app store. This violates Apple’s guidelines, but it is one of the rules officially clarified by Apple last month as part of its concession. Soon after, spotify completely cancelled Apple’s in app purchase and began to complain to government regulators to challenge Apple’s rules.
In 2016, Apple announced that it would revise its revenue sharing agreement, especially for subscription applications. Apple still charges a 30% commission in the first year of subscription, but subscribers lasting more than 12 months will pay a lower 15% share. Apple also opened subscription bills to all app store apps and launched search ads, so developers can pay for better locations on the app store search page.
A few months ago, Schiller publicly took over the app store and replaced Eddie cue, head of service business, although Schiller was involved in the formulation of app store policy from the beginning. Although Schiller is no longer Apple’s senior vice president, he is still Apple’s “research scholar” and continues to lead app store policy-making.
2019: apple takes back the power of parents to control the app and introduces an appeal procedure
By the opening of Apple’s annual developer conference in 2020, the app store has received considerable antitrust attention, especially its ability to reject applications, especially those competing with Apple’s functions, such as parental control applications that allow users to set screen time limits for their children.
After receiving negative media attention, apple changed some policies on parental control of apps in 2019, allowed some apps to enter the store, and created software tools that can be used to build apps. But the conflict highlights that Apple’s app audit process is arbitrary, sometimes delaying app updates because of small details, or worse, being rejected because apps do not meet in app purchase rules.
Throughout 2020, developers’ protests against app censorship continued to increase. At Apple’s annual developer conference, apple said it would implement an appeal system to let developers challenge Apple’s rules, although many application developers said that apple did not resolve their complaints through the approval process.
2020: Apple reduces small company commission rate to 15%
In November 2020, Apple launched the small business program, which is a high-profile olive branch to legislators and application developers.
It reduced the commission rate from 30% to 15% for small companies with an annual revenue of less than $1 million through the app store. But because the app is a winner take all business, it doesn’t do much damage to Apple’s finances. An estimate at the time showed that the top 1% of APP publishers generated 93% of app store revenue. But it does reduce the cost of most personal application developers.
According to the documents of the 2021 settlement agreement, the launch of the “small business plan” is also due to a class action lawsuit.
2021: Apple will reduce the commission rate of news applications participating in apple news projects to 15%, allowing developers to guide users to alternative payment systems
In 2021, antitrust concerns about app stores increased. Earlier this year, Apple CEO Tim Cook testified in a court trial to defend Apple’s app store’s Countermeasures against Epic Games. At the same time, several States and Congress have proposed a number of bills that may force apple to allow alternative app stores to go online.
In August this year, apple reduced the subscription revenue commission rate of all publishers from 30% to 15%, so as to solve the problem that some developers resist the change of the app store in 2011. However, Apple has a prerequisite that these news applications must participate in Apple’s news aggregator. Apple also settled a class action lawsuit with smaller U.S. developers, paid $100 million, and clarified guidelines for the application to send e-mail to its customers.
In September, apple reached a settlement with the Federal Trade Commission of Japan, saying that the “reader” application can link customers to register subscriptions on its website. All three changes have solved some people’s concerns, and these concerns have emerged as early as when Apple formulated the “reader rule” in 2011（ Tencent Technology (reviser / Jinlu)