Greetings! Coming right up, the most interesting stuff about Apple in the past week. — Please forward this email to anyone you think might find it interesting.
This is a long issue. Skip to the “The root of it all” section, and then go to the very end if you don’t have time.
I’ve read thousands and thousands of words and listened to many podcasts about it. This is a recollection of it all. I hope saner heads prevail.
I’ll try to summarise what transpired this week after the European Commission started two investigations to check if Apple broke the blocks competition rules. The formal investigations are two:
These formal investigations are serious, and many of the concerns are shared across the Atlantic by members of the U.S. Congress. Apple isn’t on the verge of a path that leads to being broken-up by regulators, like probably Google and Amazon are, but still it’s in the target of bureaucrats and politicians in many fields.
The case for “reform” was only made stronger after a new email paid service called Hey.com, made by traditional software studio Basecamp, got rejected from the App Store, and less so by the revelation that Apple had rejected a new Facebook app for the fifth time after months of tug-of-war and design changes.
I’ve spent the week reading other people’s opinions and perspectives. From pro-consumers to developers, from ex-Apple employees to average Janes. I will quote most of their most interesting thoughts and offer my commentary, to try an offer a full-picture.
I’m assuming you’ve read the letter from Apple to Basecamp after the rejection of Hey.
“This feels like an inevitable moment of change for the App Store. The question is, will Apple get ahead of the situation and negotiate that change themselves, or will they resist and minimize any change, pay the fine and keep their model as is?”
Jim Dalrymple, veteran Apple writer.
U.S. Congressman David Cicilline joined the Vergecast episode this week, to talk about the letter. He is the chair of the Antitrust Committee in the House of Representatives.
Rep. Cicilline, and others from both American parties, have been pushing for more restricting regulation for several companies in the tech sector.
“That’s always the answer of monopolists: “if you don’t like it, leave.”"
“The whole reason that we have competition as a virtue — in that we have policies to promote competition — is because it promotes innovation. It makes space for the next great idea, the next great company. And it also drives down prices, gives consumers more choices.”
“I think the economic size and the economic power that these large technology platforms have they believe translates into certain political power.”
The last paragraph
The part of the letter that struck many people as unnecessary and inflammatory.
Thank you for being an iOS app developer. We understand that Basecamp has developed a number of apps and many subsequent versions for the App Store for many years, and that the App Store has distributed millions of these apps to iOS users. These apps do not offer in-app purchase — and, consequently, have not contributed any revenue to the App Store over the last eight years. We are happy to continue to support you in your app business and offer you the solutions to provide your services for free — so long as you follow and respect the same App Store Review Guidelines and terms that all developers must follow.
Signed “App Review Board”. More than likely penned under Phil Schiller supervision, if not by Schiller himself.
“Whoever at Apple wrote this (…) should never be allowed to communicate with developers again.”
Marco Arment, long time Apple developer and host of ATP, one of the most influential media inside and around Apple.
“Wow, this is extremely flimsy. Who is Apple protecting with this stance?”
John Siracusa, another host of ATP, and seen from inside the company as a person that ‘gets’ Apple.
“Apple didn’t just send it to the developer, they shared it with the press. A middle finger to everybody just before WWDC”
Steve Throughton-Smith, long time Apple developer.
“Spent 13 years working at Apple. Poured my life into it. Disgusted by what I am seeing here.”
Jordan Dea-Mattson, former Apple engineer.
“I think Phil is just lucky that it isn’t an in person event this year. He might actually have been met with a chorus of boo’s this year”
Steven Barker, another Apple developer.
“This is just tripling down right now and honestly, it’s painful to see this sort of thing.”
Christina Warren, Microsoft employee and former journalist.
“The basecamp founders spent a decade marketing themselves by deliberately insulting their peers, employees & half the tech industry. That’s their brand - a cool app run by trolls.”
Benedict Evans, VC.
“This whole “has generated no revenue for the App Store” line holds no water. If Apple removed all third party apps from their iOS store today, what would iPhone sales look like for the next 2 years? The abundance of apps makes Apple’s phones sell. Without them they’d be dead."
Russel Ivanovic, CPO of Pocket Casts, the podcast app Apple removed last week after China told them to.
I have to agree that the last paragraph is arrogant, disrespectful of developers that made the iPhone so desirable of a tool… and also plays into Hey getting a free marketing campaign.
The broken rules
Apple argued that Hey didn’t follow Rule 3.1.1, that regulates In-App Purchases in the App Store. It currently says:
“Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, etc”.
“Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.”
John Gruber, an excellent writer and probably the person outside of Apple with the most keen and perceptive view of what transpires in the company, doesn’t see any problem:
“The Hey app isn’t dancing around the App Store’s rule 3.1.1 in some cute way — they’re complying with it completely. Am I missing something?”
In fact, Apple didn’t see any problem as they approved the app, only for them to, after an update, flagged the already approved feature.
Matthew Panzarino, from TechCrunch, could reach a quick interview with Phil Schiller, the SVP at Apple responsible for the App Store.
“You download the app and it doesn’t work, that’s not what we want on the store.” says Schiller
It doesn’t work because Apple doesn’t let them add external links. There are plenty of apps like this. Like Netflix, or your bank’s app, or newspapers for instance. They don’t work if previously you didn’t engage outside the App Store with them.
Apple refers then, to a articles 3.1.3 (a) & (b), where they offer exceptions to “Reader apps” and “subscription platforms”.
“Apps may allow a user to access previously purchased content or content subscriptions (specifically: magazines, newspapers, books, audio, music, video, access to professional databases, VoIP, cloud storage, and approved services such as classroom management apps), provided that you agree not to directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods are not designed to discourage use of in-app purchase.”
But 3.1.3 (b) doesn’t allow you to link to a webpage where users can pay:
“You must not directly or indirectly target iOS users to use a purchasing method other than in-app purchase”
The root of it all
According to Apple, an app like “Hey” must include IAPs so users aren’t confused when they install it. Only a subset of apps that Apple chose can include a secondary link to “access previously purchased content”.
Basecamp, and others quoted, argue that “Hey” fits into the category, because it could fit under “cloud storage”, and they don’t think Apple can arbitrarily decide what kind of business they are running.
The enforcement of the rules
Marco Arment proposed that that exact rule could be replaced with the previous one.
“A realistic solution that would give Apple and devs most of what they want, and remove most antitrust pressure, would be the older, less-strict version of the rule: Allow non-IAP payments to exist, but not be reachable in-app, and let apps say “Go to our website to sign up”
You can check the historical revisions of the App Store rules here. Apple has changed rule 3.1.1 four times.
Rep. Cicilline, again in the Vergecast episode:
“The [App Store] rules are not clear at all. (…) But besides that, a company doesn’t have the ability to make rules that violate competition policy or antitrust”
“There are thousands of small businesses all across America that are facing the same kind of bullying, the same kind of gatekeeping from these large technology platforms.”
“The fact that Apple has trouble following its own rules (it accidentally approved Hey at first) may suggest there’s an issue here.”
Harry McCracken, technology journalist at Fast Company.
One of the better arguments against the rejection, is that many similar apps don’t offer IAP and have been on the App Store for years. Fastmail, another email app, said:
“Apple asked us recently to add IAP. We agreed to add it, and it was already on our longer term roadmap. We have always believed in meeting our users where they want to be, and more and more people are going mobile-only. It’s expected in our next major release.”
Another such case is Gmail suite. You can’t use it without paying for the service outside.
“App Store rules and policies were created for the world as it was a decade ago. The world is not as it was a decade ago. Apple should create new guidelines for the world as it is now.”
M.G. Siegler, a veteran journalist turned VC.
Benedict Evans reaches a similar conclusion:
“Apple locked down App Store payments in early 2011. At that point around 10% of the mobile phones in the USA were iPhones. Today, 60-70% are iPhones (and 80%+ of US teenagers have an iPhone). That changes the conversation about what terms are OK.”
The spirit of the App Store
The App Store is a great equalizer. Every One Man Band and every Multinational videogame maker are in the same level, and treated under the same set of rules. That’s the theory. The reality is that Apple apps and big apps from Tencent and Amazon aren’t treated the same.
Steven Sinofsky, a veteran Microsoft executive turned VC investor, shared his thoughts in a very nuanced article about how we got here.
Talking about the United States vs. Microsoft case in the 90s, Sinofsky clarified: “Much of the DOJ v Microsoft antitrust case was perceived to be about browsers or even”bundling" but in fact it was really about the terms and conditions that came with selling a Windows PC. The regulation that followed was much more about that."
Today’s case is very different, but he explains how Windows OEM Preinstallation Kit, a set of rules to distribute Windows, was hit by regulators, and eventually turned into a mess. Sinofsky also argued that “clearly no one wants to go back to a free for all”, a world where you’re two clicks away from installing anything from the Internet. One of the biggest points:
“Today we’re hearing all the examples of good actors who say they want to do good things. We’re not hearing from bad actors who would have destroyed the smartphone experience—maybe even prevented the app revolution from happening.”
He is, of course, right. I still think 99.9999% of users are better off with a “benign dictator” at the gate. Software makers should also be free to reach pro-consumers and businesses outside the stores.
Like we do on desktop machines. Make it opt-in, reduce your guarantees, and leave the small subset of consumers to do with their hardware what they want. I think the “smartphone app revolution” is mature enough in 2020.
Other developers aren’t as complacent as Sinofsky, specially those who have been doing work for Apple’s platforms for decades.
“It’s pathetic to say, but I respect your bravery in immediately calling them out for this. We’ve dealt back-channel style with capricious rejections for years and years and it’s so exhausting, and though we almost always prevail, the only thing that gets Apple changing is bad PR.”
Cabel Sasser, founder of Panic Software, a firm that’s synonym with quality macOS and iOS software.
“The goal that Apple is shooting for. A world where they have all the control, and also get all the money. And also have apps that have all the features that customers expect it’s never going to happen. (…) Best case scenario is this tense Cold War where our apps are inexplicably stupider that they need to be, developers are cranky, and Apple’s platform has apps that are worse.”
“iOS wouldn’t be what it is without devs producing apps. Apple couldn’t have done it alone. Cash isn’t the only value Apple extracts from the App Store.”
Layton Duncan, long time Apple Developer.
“[Developers] add value to your highly profitable hardware FAR beyond the 30%”
“Apple still needs to rewrite its payment policies. If it doesn’t the EU will, and no-one wants that.”
Ben Thompson talked with an undisclosed number of developers, both big and small, privately.
“I have now heard from multiple developers, both big and small, that over the last few months Apple has been refusing to update their app unless their SaaS service adds in-app purchase.”
“Multiple emails, several of which will only communicate via Signal. I’m of course happy to do that, but also think it is striking just how scary it is to even talk about the App Store.”
Thompson has long argued that the Apple’s App Store is “by far the biggest antitrust problem in tech”.
Respected analyst Ben Bajarin did an (arguably unscientific poll) amongst his Twitter followers: “If Apple allowed you alternate payment methods and took no fee, but your app would never be featured or promoted in the App Store would you take that trade-off?” 43.7% voted yes, 33.5% voted no, and 23.8% said “maybe”.
“After many issues early on, Rogue Amoeba has avoided Apple’s App Stores. To save our sanity & revenue, we focused on direct distro via the Mac. Sadly, problems have persisted & worsened.”
Rogue Amoeba, a traditional software shop for Apple platforms.
“As a direct result of Apple’s actions, as well as policies both written and unwritten, we have no plans for future App Store apps”
Neil Cybart, another highly esteemed analyst, argues that this is just a vocal minority:
“The entire tech press apparatus has been after the App Store for years. It’s not like there is a lack of outlets to air grievances.”
Some of his points:
“The loudest voices against the App Store want to change everything. This isn’t just about revenue share percentages or unclear App Store guidelines. It’s about who has more control.”
But Apple has all the control. Not more, all of it. The company sets the rules, enforces them and manages it with varios degrees of competence and independence.
Cybart also argues that most developers build free ad-based apps, and thus, the App Store is a cash-generator, not a burden of fees:
“The vast majority of app developers don’t share any App Store derived revenue with Apple”
“I don’t think people who have legitimate issues with the App Store end up advancing their cause if the narrative shifts to “let’s burn the App Store down.”
I get that point, but after a decade of the App Store, Apple has bulged after developers pressured to make it fairer rules several times. This is only one more. I don’t think Cybart is right that a majority doesn’t care because, the App Store is not a relationship where two businesses meet as equals. See points from developers in the previous section.
My opinion is that a middle ground is very close. Apple has changed the rules several times in the past, and they only need to broaden the categories that qualify for external purchases and subscriptions.
Now, I don’t know if Apple can earn back the admiration of the developer community as a whole. If they do, it will be through a generous compromise and thinking about the customers. If they don’t reach a deal, Brussels and D.C. will make one for them, and it won’t be pretty.
Doubling down when faced with antitrust cases from both sides of the Atlantic, plus Beijing doing what it does best, doesn’t make for a good strategy.
I don’t think Apple needs to apologise. Just sit at the table before it’s too late. There are many other issues that developers would like to see addressed too, just sit and talk with them.
Thank you for reading Apple Weekly. Please consider forwarding this email to your contacts. — Alex