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Apple’s Stand-Off With Developers Over the App Store Puts It on the Wrong Side of Innovation

Apple’s Stand-Off With Developers Over the App Store Puts It on the Wrong Side of Innovation

Apple finds itself in the middle of two separate, yet related stories that highlight its long-standing (and controversial) approach to managing t

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Apple finds itself in the middle of two separate, yet related stories that highlight its long-standing (and controversial) approach to managing the iOS App Store. Both stories also highlight the impact that approach has on how we use our devices, and how it, in the long run, stifles innovation, running against the core promise of Apple’s brand.

The first was that the European Union announced it was opening an investigation into Apple’s businesses. Two investigations, actually, though we’ll only focus on one here–the one that centers on the App Store, and whether Apple is engaged in anti-competitive behavior by charging a commission on in-app purchases for third-party apps when Apple offers its own option. Think: Spotify vs Apple Music.

Last year, Spotify filed a complaint with the EU claiming Apple was engaging in anti-competitive behavior by taking a cut of subscriptions within the app. As a result, Spotify says it has to charge customers more. Apple Music, however, doesn’t have that same cost since it’s made by Apple. 

The second story to emerge was this incredible Twitter thread from Basecamp co-founder, David Heinemeier Hansson that highlights the effect Apple’s strict control has on smaller developers who depend on access to more than a billion iOS users.

Before we dive into that thread, let’s be clear on why it matters.

Apple controls the entire App Store, including deciding which apps are available there. Apple would argue its insistence on such rigid control of the app review process is so it can guarantee the best experience for users, preventing malicious or objectionable apps. At the same time, it also imposes requirements on developers around how they monetize their apps or services.

Where that gets complicated is with apps that serve as a way to access a service you already use and have subscribed to. Think Netflix. People used Netflix before there was an iOS version. The app just makes it possible to use the service on your device. You can’t, however, sign up for Netflix within the iOS app (though that hasn’t always been the case).

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In the case of a game or a productivity app, you might pay a fee when you download it, or if you choose to “upgrade” or subscribe to gain access to additional features. That’s pretty cut and dry. So is the fact that Apple takes 30 percent of whatever you pay. (In the case of a subscription, that drops to 15 percent after the first year.)

If the developer offers a way to sign up in the app, Apple will take its cut. Many services, like Netflix, get around that by forcing you to sign up outside the app. You can understand why Apple isn’t a particular fan of this approach since it misses out on a cut. 

Which brings us back to that Twitter thread. In it, Basecamp’s co-founder slams Apple for its review process that requires the company’s new email service, Hey, to allow customers to sign up in the app. Of course, that would mean Apple would take 30 percent.

Mr. Heinemeier Hansson points out that Hey isn’t any different from Basecamp itself, which has always required customers to sign up and subscribe directly. (Basecamp’s CEO, Jason Fried, also responded with an open letter.)

Apple’s position (though it hasn’t been clearly articulated in its App Store Review Guidelines and is apparently subject to its own discretionary whims) is that the difference lies in the fact that Basecamp is a business service, while Hey is a consumer product. 

Hey, a $99 per year email service, is not likely to be something the average “consumer” is going to flock to.

The distinction is pretty arbitrary considering the very blurry line that exists between the technologies we use personally and the ones we use for work. Is the iPhone itself a consumer or business device? The answer is both. There’s also the fact that Apple seems to be making up the rules as it goes. 

Apple’s services business is its fastest-growing, and the largest contributor to that is the App Store. Apple has a vested interest in maintaining control over how developers collect payments from customers since it gets a cut. It also has a strong motivation to keep tight reins on the overall user experience since that has always been one of its core selling points.

The problem is that despite the fact that Apple is pretty good at creating great products, it doesn’t have a monopoly on great stuff. Thousands of app developers are creating incredibly innovative apps, and I’m not sure Apple should be the final arbiter of the relationship between those developers and iPhone users. 

In practice, it has a monopoly over what ends up on your iPhone. That puts it on the wrong side of both innovation and the customer experience–two things it has long said it stood for. As of now, Apple isn’t backing down, which says a lot about whether it’s actually true.

There’s an irony that Apple’s brand was long built as the young, scrappy, underdog, battling against the giant tech machine. It was the one that broke all the rules while creating iconic and innovative products. Now that it’s one making the rules, it’s more clear than ever, Apple has become the machine. 

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

This article is from Inc.com

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