U.S. Antitrust Regulators Investigating Apple's App Store Fees and Policies

As part of an ongoing antitrust inquiry into Apple's App Store policies, U.S. antitrust regulators are looking into the 30 percent cut that Apple takes from in-app subscriptions, reports Bloomberg.

appstore
Government lawyers have been meeting with developers over the course of the last several months, and in meetings as recent as last week, developers have been asked questions about Apple's subscription rules.

Apple requires developers to use its ‌App Store‌ payment system for subscriptions, an issue that was in the spotlight recently when email app "Hey" was rejected for requiring users to purchase a subscription on its website because the app's developers did not want to pay Apple's subscription fees. The problem was ultimately resolved, but it led to multiple developer reports about unfair treatment from Apple.

Developers have been questioned by government officials about the ‌App Store‌ review process, and at least one developer was asked if Apple lowering its 30 percent cut would solve concerns, but the developer in question told the DoJ that the problem is not the commission, but the fact that Apple doesn't allow for alternate payment systems.

Representative David Cicilline, Chairman of the U.S, House Subcommittee on Antitrust that's looking into Apple's ‌App Store‌ policies, earlier this month called Apple's fees "highway robbery" and said that Apple's rules are unfair to developers and hurt consumers.

The U.S. investigation into Apple's ‌App Store‌ practices is in the early stages, according to Bloomberg, with the U.S. Justice Department focusing most of its resources on a separate investigation into Google's dominance in digital advertising. The case against Apple has been described as "serious," however, but the inquiry is ongoing and no decisions have been made.

At the conclusion of the investigation, the antitrust committee will generate a report with recommendations on legislative action.

Apple is also facing a European antitrust complaint over its 30 percent cut on ebooks in the ‌App Store‌, brought about by Rakuten's Kobo subsidiary. Kobo said that Apple's rate is anti-competitive because of Apple's own Books service, which does not have to pay the same fee.

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Top Rated Comments

ethanwa79 Avatar
53 months ago
I’m an app developer... I’ve been so for more than a decade. I had an app on the App Store in the first month of its launch in July 2008.

Here is why the 30% cut is a problem:

1. People argue that it’s the “storefront and distribution” and not just the payment processor that developers are paying for. But the reality is that free apps cost developers NOTHING (besides $100/year dev fee) to host on the App Store. And many of them make tons of money from ads within the app. But they own 0% to Apple. So why should paid apps have to subsidize free apps?

2. Payment processors typically take 1-3% of a transaction. Apple has a bit more convenience with in-app payments via Touch ID and Face ID, so let’s say 5%. Maybe even 10% if we are being generous. But 30%? Makes no sense except for a cash grab. It’s arbitrary. And when subscriptions are over a year, it’s 15%, which is still arbitrary.

3. The 30% wouldn’t be an issue if Apple allowed distribution outside of the App Store OR allowed developers to at the very least to advertise a different payment method within the app itself, even if it takes people out of the app for a purchase. Then devs would offer a “discount” to users for using a cheaper processor to save from the 30% rake. Which would in turn force Apple to be competitive in the cut, which is WHY they don’t want to allow outside payments.

4. But despite all of this, Apple does make exceptions to these rules to large companies with hidden contract terms no one knows about. “Reader” apps, for some reason, don’t have to follow these rules, such as Netflix. Why? Who knows. Apple just make up some rule to make them happy so they could be on their store. But the Hey email app wasn’t a “Reader” app so screw them right? Technologically there is no reason one should get hit with 30% and Netflix with 0%.

Apple has complete control and are using it to take arbitrary cuts of money for no real reason. There are millions and millions of iOS devices, WAY more than what Microsoft had with Windows when they got in trouble, and Apple owns large chunks of market share especially in North America and Europe.

I hope they are forced to change something.
Score: 43 Votes (Like | Disagree)
rjp1 Avatar
53 months ago
Remember when Apple didn't like the rates Qualcomm was charging them? Some people will defend them no matter what.
Score: 19 Votes (Like | Disagree)
topdrawer Avatar
53 months ago

How about just allowing customers to download apps from safari...just like on a Mac. That would allow competition in the payment field too
i think if people want to take the "security" risk, they should be allowed.

30 percent on distribution sales is one thing, but 30 percent on subscriptions is pretty steep considering they don't take responsibility in giving costumer support specific to those apps.
Score: 15 Votes (Like | Disagree)
LeeW Avatar
53 months ago
The vast majority of users see the app store and the way it works as a good thing, not sure that even given the choice, most would choose anything other than the app store to make payment. It's convenient and that is the way users want it.

Not saying it's being done right by Apple in relation to developers, but it does not change the fact that it works for users.

Again, people only see 30%, it is that in the 1st year then 15% in all others.
Score: 15 Votes (Like | Disagree)
albert421 Avatar
53 months ago
For anyone who has a problem with Apple's policy, I have only one thing to say. Why don't you build an "iPhone" and an "App Store" and charge people less on it.
Score: 15 Votes (Like | Disagree)
sw1tcher Avatar
53 months ago

Apple operates a store. They take up to a 30% cut of everything sold in their store. Simple. Every retail business operates this way. Why is it any business of the government to regulate this?
Every retail business does not operate that way.

If I buy a piece of software (game, anti-virus, Microsoft Office, etc.) for my PC at Target, Best Buy, Amazon, Newegg, etc., the retailer only gets a 1 time cut of the intial sale. The retailer I buy it from does not get a cut of the subscription month after month or year after year like Apple does.

Then there's the issue of me being able to sell/distribute my product where ever I want with other retailers. Developers can't do that with Apple. It's the Apple app store or it's nothing.
Score: 14 Votes (Like | Disagree)