Apple CEO Tim Cook Comments on 'Hey' App Controversy and Apple's App Store Policies

Apple CEO Tim Cook was, as expected, questioned about Apple's App Store policies during today's antitrust hearing with the U.S. House Judiciary Antitrust Subcommittee. Cook primarily stuck to the talking points provided in his opening statement [PDF], but he did have some extra color to add.

app store 2019
Cook was specifically questioned about email app "Hey" from Basecamp, which was at the center of a huge controversy earlier this year after Apple approved the app and then threatened to remove it from the ‌App Store‌ because Hey was skirting Apple's in-app purchase rules.

At issue was the fact that the "Hey" app was non-functional for customers unless they subscribed to the $99 per year Hey email service outside of the ‌App Store‌. Hey did not want to give Apple a 30 percent cut of profits, while Apple claimed that it did not want an app that "doesn't work" on the ‌App Store‌. Hey at the time opened to a blank screen asking users to log in.

When asked about the inconsistency over the approval of the app and the subsequent controversy, Cook didn't have much to say other than pointing out that the issue was resolved and that the ‌App Store‌ provides a lot of value for developers.

Hey is in the App Store today and we're happy that they're there. I believe they have a version of their product for free so they're not paying anything on that. I would also say that the 15 or 30 percent is for lots of different services, compilers, programming languages, APIs, etc. [...]

It's an economic miracle that the App Store allows a person in their basement to start a company and serve 170 countries in the world. I believe it's the highest job creator in the last decade.

Cook went on to explain that Apple does sometimes make mistakes given the volume of apps that are examined each week. "I'm sure we made errors," said Cook. "We get 100,000 apps submitted a week and there are 1.7 million apps in the ‌App Store‌."

Cook was asked if Apple's 15 to 30 percent cut that it takes from apps squeezes out the next generation of App makers and whether it's unjust, and Cook said no.

No, I don't think so. There are a lot of apps on the store and a lot of people are making a very good living.

There were questions on whether Apple was "extracting" commissions from apps that have had to change their business models in response to the pandemic like Airbnb and ClassPass, (as outlined here) and whether this was pandemic profiteering.

Cook said Apple would "never do that." He went on to explain that if something has moved to a digital service that does not follow the ‌App Store‌ rules, that it does need to go through the ‌App Store‌. "In the cases I'm aware of, we're working with the developers," he said.

As for educational apps, Cook said that Apple will not make efforts to monetize apps that students adopt as they transition to learning digitally.

We're proud of what we've done in education. We're serving that market in a significant way. We will work with people who move from a physical to virtual world because of the pandemic.

When asked about limiting copy cat apps and whether those rules apply to Apple, Cook said that he was not familiar with what was being asked, but Apple is subjected to the same rules as other app developers. The Congressman questioning him, Joe Neguse, said that Apple's ‌App Store‌ rules allow Apple to use any data collected by developers to create clone apps while also preventing these kind of apps from developers.

Cook said that he was not familiar with that, and that he'd follow up with the Congressman's office. He did, however, say that Apple would "never steal somebody's IP."

Cook's full testimony can be watched on YouTube as the U.S. House Judiciary Antitrust Subcommittee livestreamed the proceedings.

Top Rated Comments

atomic.flip Avatar
15 months ago

As a developer, I disagree.

I bet Apple makes zero profit at best directly from the 30%. Having teams of developers creating the next version of iOS, the next version of Xcode, etc. costs a lot.

Have you seen how poor the developer tools are for Android development? Google also charges 30% and I bet they do make significant profit from it.

Maybe Apple should just formally ring-fence the app-store income and categorically use it only for app-store upkeep and enhancement with any surplus (if there ever is any) used in part for the good causes that Apple supports. This way if they are forced to reduce the percentage, the people that force it will be seen to be reducing the funds that go to good causes. Just thinking it might be better for Apple to be ahead of the curve on this one.
What on earth?!?! Honestly, I can believe you are a developer but I struggle to imagine you’re an independent business owner or a business developer / manager.

The cost of maintenance of the AppStore is infinitesimal compared to the revenue it generates. And just where do you think that revenue comes from? App sales, subscriptions and in-app purchases. 30% is nearly one third of the gross revenue generated by any one app. And that is frankly too high. It’s always been too high and the carriers (AT&T, Verizon etc.) would do the same with their own AppStores back in the day.

There are a few things at issue and one of them is that there is no real alternative to the AppStore for Apple iOS devices. It’s a walled garden. And since Apple provides no ability for a smaller entity to negotiate rates then it’s quite a monopoly. Or rather the correct legal term would be a matter of “detrimental reliance”.

Sadly, in the tech sector (as it relates to software) when it’s not open source it’s managed the same way across the board.

I don’t have the energy to comment further on this today but that revenue share needs to be down in the teens and no greater. Or at minimum Apple needs to stop charging app developers an annual fee just to get advanced access to the SDKs and to publish on the store front.
Score: 13 Votes (Like | Disagree)
SteveJUAE Avatar
15 months ago
They would have to keep Tim in the chair for around 3 years that's the usual response time for Apple admitting something is wrong
Score: 12 Votes (Like | Disagree)
cygy2k Avatar
15 months ago
The people complaining about the 30% have clearly never tried selling goods or services anywhere as that is the going kickback for almost every professional marketplace in any industry. From eBooks to App Stores to old school consignment shops - they provide the service, you provide the goods, they keep a portion. It’s not anticompetitive, it’s the very definition of capitalism.
Score: 10 Votes (Like | Disagree)
macjunk(ie) Avatar
15 months ago

As a developer, I disagree.

I bet Apple makes zero profit at best directly from the 30%. Having teams of developers creating the next version of iOS, the next version of Xcode, etc. costs a lot.

Have you seen how poor the developer tools are for Android development? Google also charges 30% and I bet they do make significant profit from it.

Maybe Apple should just formally ring-fence the app-store income and categorically use it only for app-store upkeep and enhancement with any surplus (if there ever is any) used in part for the good causes that Apple supports. This way if they are forced to reduce the percentage, the people that force it will be seen to be reducing the funds that go to good causes. Just thinking it might be better for Apple to be ahead of the curve on this one.
SMH.
So you think Apple is doing the devs a favor by developing the next version of iOS, XCode etc? Of course it costs a lot...but they should not be looking to reimburse those costs through App store fees...rather sell hardware (which they are doing very well)

Xcode, iOS are all tools that Apple uses to attract devs to the platform so that they develop for the platform, enabling Apple to sell even more devices. And don't forget Apple charges 99 per year already but they still deem it fit to charge 30% of whatever your app makes. If Apple did not develop iOS or XCode, there would be no apps developed by devs and people would flock to Android cause Android phones are suddenly more useful.

So yeah...Apple is only helping themselves with iOS, XCode etc. No need to pretend they are doing a favor.

So Apple gives you Xcode, iOS and a bunch of frameworks. What devs do with it is completely their ingenuity and their effort. Apple can and should charge for Xcode, iOS, payment processing etc but what they are doing is leeching of devs' ingenuity like a parasite. Suppose somebody conceives an app that cures cancer using totally out of the world innovation, does Apple then have a right to reap the fruits of somebody else's labor?

If they are so confident in their logic, let them try doing the same to their Mac OS...whatever, whoever builds apps for the Mac platform, owe Apple cash cause they are using the OS frameworks....

Just infuriating to me on how entitled Apple feels to somebody else's hardwork. Parasites!
Score: 8 Votes (Like | Disagree)
macmyworld Avatar
15 months ago
Sounds like an interview with Al Capone. Protection for pay.

Love the App Store, but 30% is too much. Especially when some apps get around it.
Score: 6 Votes (Like | Disagree)
ader42 Avatar
15 months ago

Apple also charges a $99 per year while Google a one time $25 so you better get your money's worth.
Just owning an iPhone over an Android gives me more than £99 value each year lol
Score: 4 Votes (Like | Disagree)

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