Comment by tpmoney
5 days ago
To steel man the policy, one thing it helps avoid is the free rider problem. Apples store terms are than free apps don’t pay a commission to Apple. But someone has to pay for the costs of developing the SDKs and the platform. We no longer live in an age where Apple or Microsoft gets away with charging for multi thousand dollar per year per seat developer license for their platforms, but that doesn’t mean those platforms don’t cost money to develop and maintain. So the idea is, if you make money on the platform, so does Apple. But free apps + in app downloads is a giant loophole in that plan. Sure we all think of Netflix or Kindle apps when we think of this, but without a policy that charges for IAP and discourages or outright forbids steering off the platform, we would see a new category of “freemium” apps where the app is “free” on the App Store, but is effectively just an empty downloader shell that you then have to buy the “real” app through. Unscrupulous devs steer you to their own outside store or put some ridiculous inside the App Store price (think 300x+ markup) with a link to the outside store with the cheaper price and all those customers are transacting, and Apple gets no money for funding their platform.
And yes I know we can all scoff and say “oh poor multi-billion dollar Apple can’t get paid but getting paid is exactly how Apple is a multibillion dollar company. So if they don’t get it from IAP and app sales fees then they’re going to extract it either from hardware prices, or for charging those per seat per year dev licenses again.
Personally I think Apple is big enough now and the App Store is popular enough now they can revisit this but somehow they are going to want to solve the free rider problem, and whatever they pick, people won’t be happy (see also core technology fee)
> But someone has to pay for the costs of developing the SDKs and the platform.
The business model Apple has used since the Macintosh is that the hardware subsidizes the software. I paid for the platform when I bought the device. The only reason why there's even a "free rider problem" is that Apple believes itself entitled to a 30% cut of half of mobile, forever.
Furthermore, we've known since the failure of OS/2 (at least) that expensive development tools almost guarantee zero software uptake. The platforms that win are the ones where the developer tools are affordable or free. In other words, it is not the third party developer's job to pay for the platforms they rely upon. It is the platform's job to pay (in a roundabout way) for the third-party software.
In fact, that's why Apple even has a reader app exception. They know Netflix doesn't have 30% to give and they know nobody's going to buy an iPhone that won't play Netflix.
The reality of Apple's business model is that they absolutely could give away the platform, make money off the phones and the OS, and remain profitable. But investors don't invest into profitable companies. They invest into growing companies. Tim Cook has to treat developers' bank accounts as his own because that's the only thing that makes Apple stock valuable.
> Apple believes itself entitled to a 30% cut of half of mobile, forever.
1. This isn't the number. Worst case, the after first year number is half that, and even less for most.
2. App store platforms on ostensibly "open" PC such as Steam cost game developers more. Why?
Nothing "ostensible" about PC being an open platform.
Any PC will run any number of game stores. Steam is large despite not being the one owned by the platform maker and installed by default (Microsoft Store and the XBox app).
Steam does not prevent publishers from selling in other stores too, nor does it enforce pricing outside its store. (E.g. there are games that are cheaper on other stores, citing Steams larger cut as the reason)
It also allows publishers to force users to install the publishers store to play games sold on Steam. (See e.g. Ubisofts launcher, being required to install games and selling you additional subscriptions without a cut to Steam)
To a limited degree Steam even lets publishers use Steam infrastructure for sales outside Steam, for free. (Publishers can sell Steam keys for free on other platforms, but the number is limited and here pricing has to roughly match Steam pricing)
Even on Steam Deck, the only PC hardware where Steam is actually the preinstalled default store, running games from other stores is supported and the main inconvenience to it is that most stores don't have a supported version for it and you need to use third-party workarounds.
Being an open platform doesn't ensure a market doesn't have other weirdness going on (in this case, there being a strong consumer preference towards Steam, certainly in part due to Steams existing large position, but not only), but its a different thing and most of the usual competition law approaches don't apply. Steam is popular because Steam is popular, not because Steam is using its strong position in another business to push its app store business.
The best case is 15% for subscription apps after the first year of service, or if you're a "small business" developer under a certain sales threshold. The latter goes away after you reach a certain size, after which you pay 30%; the former requires you to adopt a subscription business model.
I still think calling it a "30% cut" is accurate, even though there are discounts now. 30% is the base rate. You mentioned Steam, which also has discounts too, except they're the opposite ones of Apple. The cut starts at 30% and goes down the more sales you make. This "costs game developers more" only in the sense that it would be incredibly difficult to qualify for both Apple and Steam discounts at the same time. But the base rate is the same.
> solve the free rider problem
This framing just doesn't register. You want developers to develop apps for your product, app availability is what makes users choose to buy the hardware/use the OS. They're not "free riding", they're what makes your product worth buying.
The "free riders" aren't developers in general, they're the developers not paying for their portion of the upkeep. Like I said, someone has to pay for the dev work that goes into making the platform, building the SDKs and maintaining the whole thing. No one works for free. So Apple can get that paid for either by charging more for hardware, charging for access to the dev kits, or taking a cut of sales for products produced with those dev kits. Apple chose the later.
So now they have a problem, not all software is monetized. You want to have the ability for people to choose to distribute software for free. Open source projects, educational, charity, and also "accessory apps" (think your bank app). But you don't want to charge developers money that they're not making. Imagine the shit storm Apple would stir up if they just started charging free apps a monthly fee to be listed in the app store at all. You also want to have young and new developers without a lot of capital to have access (that's why so many companies used to offer student discounts). But the problem becomes how do you allow that, and also allow in app downloads and purchases without every developer just having a "free" downloader app that then downloads the real application code that you pay for separately?
Let's say you sell a dev tool. And you decide you want to support open source projects, so you offer free licenses to any open source project. Would it satisfy your licensing if some company that had an "open source" curl wrapper that downloaded and executed binary blobs for which there was no source code? I doubt it. You'd rightfully say that an app that does nothing except download and launch closed source binary blobs is not in and of itself an open source project for the purposes of your license. It's the same basic idea for Apple. An app that only serves to download or unlock the "real" app after you pay the developer in a separate external transaction is not a "free" app of the sort Apple intends to allow. So they don't allow external transactions at all except for a narrow set of circumstances, and in those cases they don't allow steering. This maximizes the number of developers who are funding the costs of the platform, reducing the overall cost for all the developers who are paying and subsidizing a limited set of developers who are distributing free applications.
Or to try one other way of thinking about it, everyone hates the "freemium" business model. How much crappier would it be knowing that all the "freemium" games were paying absolutely nothing, but everyone who chooses not to engage in the freemium model still had to pay 15-30% to apple on their revenue?
That logic doesn't work for me.
The person who paid for the sdk is the person who bought the iphone.
Typically the definition of free riding requires that if everyone behaved like the free riders, then the system would cease to exist.
If apple made $0 off the app store, would they still make iphones? I would assume yes since they are profitable devices. Hence this isn't free riding.
> The person who paid for the sdk is the person who bought the iphone.
Are they? Then why did companies previously charge per seat annual licenses for their SDKs? Were the people who bought the computers and products back then not also paying for the SDK?
Clearly the answer is "who is paying" depends on the model you set up. You can take your income stream from the initial hardware sales, or you can take it from subscription fees, or you can take it in revenue sharing models. Apple chose the latter, and so every developer that finds some way to use the platform and not share their revenue is a "free rider" relative to the other developers who are now subsidizing them.
>If apple made $0 off the app store, would they still make iphones? I would assume yes since they are profitable devices. Hence this isn't free riding.
It's not "would they still make phones" they might. It's "would they still make phones that 3rd parties can develop applications for at the same price they currently charge and without per seat annual $1k+ up front license fees to prospective developers."
> You can take your income stream from the initial hardware sales, or you can take it from subscription fees, or you can take it in revenue sharing models. Apple chose the latter
I missed the part where they give iPhones away for free, and only make money from revenue sharing
> It's not "would they still make phones" they might. It's "would they still make phones that 3rd parties can develop applications for at the same price they currently charge and without per seat annual $1k+ up front license fees to prospective developers."
The answer still seems like a very obvious yes. Certainly in the modern context where most of the value of the phone comes from apps and app devs can go to android if ios becomes to onerous.
Which is probably exactly why apple chose this model instead of per seat.
> But someone has to pay for the costs of developing the SDKs and the platform.
Like their customers who happily pay a premium of $hundreds on every device sold? Talking about a free-rider "problem" in connection with literally the richest corporation in the world is diabolical. They develop the SDKs and the platform because that's the foundation of their business, nobody would buy an iPhone that doesn't have any 3rd party apps.
What's the cost of developing the SDK and the platform amortized over the number of devices that Apple sells? Is it $0.50, $5, $50, or $500?
> oh poor multi-billion dollar Apple can’t get paid
Apple is 1000x richer than that, they're a multi-trillion dollar company.
Ultimately all the money Apple is making from the store comes from the pockets of people. If apps won't have to pay a cut to Apple, people would be left with more money in their pockets.
If all apps were free and no sales would be forced to go through those apps, Apple still sells the phones and makes money from them. Would it be left with less money? Not my problem. Would it increase the cost of phones (maybe only in the EU) to compensate the missing revenues? Fair. Let's see how it affects sales.
> Would it increase the cost of phones (maybe only in the EU) to compensate the missing revenues?
Probably not "fair" since the EU seems opposed to their "core technology fee", which is (supposedly) a fee to the developers to compensate for the missing revenues. And if the EU allowed raising prices in EU counties to offset that lost revenue, but didn't allow the core tech fee, that would effectively be the EU outlawing making your money on software rather than on hardware. It seems more likely the EU would just demand continued subsidized access to the same services, like they already did with facebook.
> EU would just demand continued subsidized access
No. Apple is free to charge the same "core technology fee" to developers who choose to release apps on the Apple Appstore. The only issue the EU has is how Apple uses the fee to give themselves an advantage.
The EU creates laws to prevent predatory behaviour from corporations. It isn't the EU's job to come up with an alternative business model that still makes Apple the same amount of money.
> But someone has to pay for the costs of developing the SDKs and the platform.
According to APPL's own marketing, that's what the yearly 100$ fee is for.
>the free rider problem
Yes charging rent does stop the free rider problem. The cost of maintenance is infinite if Apple says it is cause nobody else is allowed to maintain Apple services.
When people and universities are allowed to maintain Unix services it turns out the cost isn't infinite, and is easily manageable under a public budget and charity. Apple chooses to burn money to create a smokescreen here and you are falling for it.
> Personally I think Apple is big enough now and the App Store is popular enough now
This isn't a steelman. These aren't real problems as you well know and they know. There's no motivation (no argument needed) other than rent seeking.
> And yes I know we can all scoff and say “oh poor multi-billion dollar Apple can’t get paid but getting paid is exactly how Apple is a multibillion dollar company.
The entire discussion there could be summed up as people have become convinced that Apple the multi-billion dollar company should shift revenue to Facebook or Netflix (or whoever), the other multi-billion dollar company. Fantastic marketing by them to convince people this is a moral thing to do and must be done. It has nothing to do with small developers or better experiences for customers, just an increase in X for Netflix.
> But someone has to pay for the costs of developing the SDKs and the platform.
This is included in the price of the hardware that their customers and all the developers who develop for the platform have bought, many times over.
Don't believe me? Look up Apple's financial statements and compare iPhone sales to the measly amount they spend on R&D (which includes the development of SDKs for all their platforms).
It used to be that Apple charged for MacOS. And then they said: nope, our hardware pays for that. And made it free.
> But someone has to pay for the costs of developing the SDKs and the platform
I really do not want to use the iOS SDK which is utter garbage quality. The reason people use the Apple tooling is because they have no choice, in reality xcode is 10 years behind any modern web or native tooling.