Does the end loom for Apple’s App Store “extortion”?
Apple accused of behaving like “gangsters” as regulators move in
Apple comes under fire from both industry and regulators amid allegations that its App Store is abusing its position of power.
Apple is under fire from industry and regulators amid allegations that the company’s App Store is abusing its position of power to hurt rivals and exploit developers.
Apple has faced criticism before over the fees levied for in-app subscriptions, which many developers must pay in order to trade through the App Store. Now, with regulators in the EU mounting investigations into the company’s practices, an email startup has been emboldened to speak out about what it has branded Apple’s “outrageous” tactics.
Email startup Hey ( hey.com) was told it must agree to take part in Apple’s in-app subscription service – which means Apple would take a 30% cut of sales – or it would not be allowed to issue updates to its apps. During subsequent discussions, Hey was told its app would be removed entirely if it didn’t conform.
“Apple has doubled down on its rejection of Hey’s ability to provide bug fixes and new features, unless we submit to their outrageous demand of 15-30% of our revenue,” said David Heinemeier Hansson, CTO of Basecamp, Hey’s parent company. “Even worse - we’re told that unless we comply, they’ll remove the app.”
Hey – a $99-per-year webmail service – has fallen foul of Apple’s App Store Review guidelines, which state that “if you want to unlock features or functionality within your app, (by way of example: subscriptions), you must use in-app purchase. Apps may not use their own mechanisms”.
Apple believes it’s allowed to set the rules for its own store, but regulators are increasingly unsure whether the company’s policies are fair or act as barriers to competition.
The criticism comes as the EU – which recently fined Google €4.3 billion over allegations it used Android to further its position as a search tool – has launched official antitrust investigations “to assess whether Apple’s rules for app developers on the distribution of apps via the App Store violate EU competition rules”.
From the top down, Apple sets the rules of its ecosystem and decides who gets to do what
The EU probe follows complaints from other developers, including Spotify. A preliminary investigation into the case raised “concerns that Apple’s restrictions may distort competition for music streaming services on Apple’s devices”. Apple has its own Spotify rival, Apple Music. According to critics, the Hey saga – and similar criticisms from the makers of Fortnite, Spotify and Tinder – reflects the huge power Apple wields over the apps landscape. “If Android is Google’s surveillance state, then iOS is Apple’s personal fiefdom – from the top down, Apple sets the rules of its ecosystem and decides who gets to do what and on what basis,” said Jennifer Cobbe, coordinator for the Trust and Technology Initiative at the University of Cambridge.
Hey, like many other app developers, could have little choice
but to pay or lose access to the company’s 1.5 billion iOS users. “This situation is, of course, ripe for abuse – like forcing developers to use Apple’s own in-app purchases program from which they take a 30% cut,” said Cobbe. “Either they pay up or they don’t get access to Apple’s userbase. It’s basically a form of extortion that allows Apple to profit even more from other people’s hard work. And this is on top of other fees that Apple takes for letting developers use the App Store.”
Apple hits back
The furore erupted just a day after Apple appeared to pre-empt negative feedback from the EU investigation by highlighting how the App Store supported $519 billion in billing and sales for developers around the world, according to an Apple-commissioned report. “The App Store is a place where innovators and dreamers can bring their ideas to life, and users can find safe and trusted tools to make their lives better,” said Tim Cook, Apple’s CEO, in a statement that trumpeted the App Store’s success.
But Apple’s view is different to that of developers such as Hey, who claim Apple makes developers jump through hoops and may punish anyone who doesn’t comply.
“Worse still are the draconian restrictions and merciless retribution that Apple brings to bear on application makers who dare to decline using Apple payment services,” Basecamp’s Heinemeier Hansson wrote. “A mere link to an external webpage that explains how to sign up for a service that doesn’t use Apple’s payment system can get your application rejected,” he added, before later accusing Apple of behaving like “gangsters”.
Apple’s position, according to Heinemeier Hansson, has created an environment of fear among developers, who worry that speaking out might mean they are also targeted.
“Every application maker using Apple’s App Store lives in fear that their next update is denied or even that their application is removed,” he said. “My accounts are blowing up with stories from other developers.
“Apple’s abusive behaviour with the App Store has been an open secret in the developer community for years. But very few people are interested in talking to regulators or the press, because you don’t want to get on Apple’s bad side, or you might get crushed.”
Apple did not respond to a request for comment on the situation with either the EU or Hey.