Twelve years ago in 2008 Appstore was introduced by Apple as a peculiar online market place which eventually became one of the world’s largest centers of commerce and business. However, Apple demanded a 30% cut of the sales made on the apps by the organizers. This means that users download the app for free and pay for the In-App purchases they make for additional features and content, out of which 70% sale is earned by the developers of that app while Apple gets 30% commission of that sale.
A former senior App Store executive Phillip Shoemaker said “I think we’re realizing that 30 percent is wat too much”. Credit card companies roughly charge 3% to process payments he said “it should be closer to that”
According to Reuters, Facebook claims that Apple rejected its attempt of informing the users that it charges a 30% fee on all iOS app purchases. Facebook announced a new feature that allows businesses and influencers to host online events like fitness classes, expert talks, or cooking tutorials, for which users must pay to access; this eventually would help make up for the loss caused by the pandemic. For this Facebook urged Apple to give up the 30% commission that it would get from in-app purchases. This would have allowed the entire income to be passed onto the business owners if only Apple would have agreed which it so generously did not.
Reuters advocate that Apple rejected this update on the grounds of it being “irrelevant” information. It is implied by Facebook that Apple did this by citing a rule of the Apple developer program that blocks developers from showing irrelevant information to the users. A planned message that read “Facebook doesn’t take a fee from this purchase” for the android version, was also not displayed during the purchase either. Facebook in a statement said
“Now more than ever, we should have the option to help people understand where the money they intend for small businesses goes. Unfortunately, Apple rejected our transparency notice around their 30% tax but we are still working to make that information available inside the app experience.”
How Facebook will do that without enduring Apple’s wrath is the real question.
BuzzFeed News reports that Mark Zuckerberg said “Apple has a stranglehold as a gatekeeper on what gets on phones”, during a meeting he told his employees that iPhone maker “blocks innovation, blocks competition” and “allows Apple to charge monopoly rents”
Facebook is not the only one challenging Apple’s right on the large cut of the iOS- app purchases but other app makers like Epic (a game company) and Spotify (music app) are also confronting Apple over its law of taking up 30% commission of the sales.
The rage intensified when Epic Games sued Apple and Google both accusing them of breaking the antitrust law by forcing app makers to pay their 30% fees. Epic courageously motivated users to pay directly to the developers rather than through Apple or Google to avoid their fees however this lawsuit followed the removal of Fortnite from Apple and Google’s Appstore and play store respectively.
Correspondingly Spotify had to raise its monthly subscription from $10 to $ 13 to account for Apple’s fee. However, to compete with Spotify, Apple introduced a music service priced at $10. So to avoid Apple’s commission Spotify opted out of Apple’s payment system enabling users to pay directly to Spotify through an app for which they would only have to subscribe to its website.
An email service proton mail advertised to charge 30% less on subscriptions purchased from its website but when the information was publicized to iPhone users, Apple restricted its app. The chief executive of ProtonMail, Andy Yen said “There are very few companies out there that have a 30 percent profit margin, and the only way we can support this fee is bypassing that cost on to customers.”
Evidently, Apple is facing multiple probes over its alleged anticompetitive behavior. Apple justifies its actions by arguing that Appstore is no different than a mall where companies seeking to offer their services must pay rent to the mall i.e. Apple, which suggests that Apple is simply exploiting its ownership by charging high prices from the competitors that can make them vulnerable and harm their business, especially amidst this pandemic.
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