Apple fighting to maintain its app store monopoly

Apple is being sued by Epic Games for levying a 30% charge on its app sold in its App Store. Epic wants to be able to sell directly to its customers, while Apple insists only it should provide software for its iPhones and iPads. The issue is one with strong arguments on both sides.

Apple explains that selling exclusively with a 30% cut (15% in some cases- see below) is justified for the cost of running its store and curating the apps to ensure that they’re properly tested and safe to use. Using a non-Apple store, they argue, would subject users to apps that would create issues of privacy, quality, and even fraudulent activity. They also point out how easy it is for app developers to use their store to reach a huge audience, comparing the 30% to typical margins from retail stores.

Critics argue that 15% or 30% is too high a percentage for a developer to pay, and criticizes Apple’s other policy that prevents app makers from selling their apps or additions to the original app anywhere else. Apps are not allowed to provide any information about making purchases elsewhere; they can’t even add a link to their website.  Many of the apps are offered for free with add-ons available, and developers would like to send their users to their website to buy these add-ons, but Apple prevents that.

Developers also point out that Apple’s rules also are confusing and differ based on the kind of merchandise being sold from the app. For example, you can make a purchase from the Amazon app for goods without the 30% fee, but cannot buy a Kindle ebook from the Amazon app, because Apple wants you to buy ebooks from their own bookstore.

There’s something to be said for Apple providing a very good experience on their phones. Many of its policies may benefit some users some of the time, but Apple is overly restricting iPhone users from choices they are perfectly capable of making and are available on their Mac computers, as well as Android phones. Choices such as allowing us to buy apps from other stores that can be just as diligent at curating their software or directly from app makers that have established ongoing relationships with its customers.

And some would argue that in spite of the fees it levies, Apple has not always done a good job at keeping bad apps out of their store. The store contains some apps that levy huge subscription charges and deceive the users, and only after being pointed out by reporters, has Apple removed them:

According to The Verge, app developer, Kosta Eleftheriou, who created the successful Apple Watch keyboard app FlickType, has been publicly criticizing Apple for lax enforcement of its App Store rules that have allowed scam apps, as well as apps that clone popular software from other developers, to run rampant. These apps enjoy top billing in the iPhone marketplace, all thanks to glowing reviews and sterling five-star ratings that are largely fabricated, he says.

Apple responded with, “We take feedback regarding fraudulent activity seriously, and investigate and take action on each report. The App Store is designed to be a safe and trusted place for users to get apps, and a great opportunity for developers to be successful.We do not tolerate fraudulent activity on the App Store, and have stringent rules against apps and developers who attempt to cheat the system. In 2020 alone, we terminated over half a million developer accounts for fraud, and removed over 60 million user reviews that were considered spam. As part of our ongoing efforts to maintain the integrity of our platform, our Discovery Fraud team actively works to remove these kinds of violations, and is constantly improving their process along the way.”

What this fight really comes down to is that the App store generated $64 Billion in sales in 2020, even while Apple this past year reduced the 30% fee to 15% for those app developers making less than a million dollars per year and for subsequent subscriptions.

While Apple has done a great job at creating a hardware and software system that provides a very good experience, so has many of Android phone manufacturers, such as Samsung and Google, where you can buy software from a number of different stores.

Whether they are being benevolent or not and protecting their customers, Apple is practicing monopolistic behavior in restricting what owners can do with the phones that they buy. While they may win this lawsuit, expect to see some changes coming.


by Phil Baker