Today is a special day for the App Store, it’s been twelve years since it opened its digital doors to the first iPhone users. 500 apps were waiting for them then, today there are more than 2,200,000. The Apple App Store is an ecosystem that generates more than half a billion dollars a year.
A statistic that has not been overlooked by certain developers willing to take control away from Apple . And to do so, they have not hesitated to take the matter to the courts in the US and the European Union.
Looking through the fog of the App Store
Spotify and more recently the email app Hey have decided to raise their voices against the App Store and its model. One that they consider monopolistic by Apple , given the high control that the company exercises over its own platform. Spotify went beyond public confrontation to bring it before the European Commission, which has launched an investigation into the App Store.
What is striking about this case is that Spotify has decided it has nothing to lose by taking Apple to court. There is no doubt that in a good business relationship between two companies there are more opportunities between them than if they get along badly. With its complaint, Spotify believes that any positive relationship with Apple is of less value than the uncertain possibility of benefiting from a favourable ruling.
For some large developers, it is vital for their business to take control of the user in the App Store
Leaving this aside, when we clear the fog surrounding the issue of the App Store and its alleged monopolistic practices , we find the crux of the matter: who controls the user. Because whoever controls him will be the one who can extract more value and will be able to decide on his future. The more you stick to the user and the less intermediaries there are, the better for companies like Spotify or Hey. For them, Apple is an intermediary to be suppressed.
A supermarket or bazaar: the App Store model
It is no secret that Spotify and many other developers of a certain size would like to have more control over their relationship with the user . One that would allow them to decide which payment method to incorporate into their apps. Communicate directly with all users who download their apps. To have the entire experience in their hands.
At present, that is not possible. Or at least not to a great extent. The App Store is based on a supermarket type distribution model , where Apple:
- You know each of your customers, because they have accounts and credit cards in their user profiles.
- Users know that when they buy an app they are not at risk (or at least minimally so) of fraud, data theft or any other damage.
- When a user wants to download an app, he walks down a certain aisle, grabs one from a shelf and if he likes it he puts it in the shopping cart.
- When you get to the checkout, pay for the app or service or just get it for free. And you go home to enjoy the app.
- If you are not satisfied, you should go back to the “supermarket” App Store and ask for a refund (here Apple has changed the rules to make them easier).
Just like in a supermarket, the one in control of the whole experience is the owner. In this case, Apple. The devs do not intervene at all in the purchase process, except for to highlight their apps through ads in the App Store. In the same way that a brand of chips can pay a supermarket chain to put a cardboard stand with its bags of chips on the front of a shelf (a common but very expensive practice).
The App Store follows a model of app distribution similar to that of a supermarket, where a single company manages the store and acts as an intermediary between the developer and the users
In the case of the supermarket, like the App Store, the customer is not the brand or the developer. It is the owner of the store who distributes the products who “owns” it. Apps like Hey or Spotify what they are looking for is to turn the App Store supermarket into a bazaar . An open street with shopkeepers on both sides not subject to common rules or processes. Where the shopkeeper is the app-brand that decides:
- How you make payment.
- What data you must give him to make the transaction.
- How that data is kept.
In this case, the developer-user relationship is direct. There is no middleman to get in the way if I want to advertise promotions or handle refunds. But there is also no security in the transaction and risks of data theft or fraud arise. Just like in a bazaar, you can get fake money back (or be charged twice as much as the previous customer if you are not smart).
In ApplePhil Schiller on Hey: “there’s no change in the rules that we’re considering”
For a developer with a powerful enough brand , the user’s distrust of a “bazaar” type App Store disappears. Because Netflix or Spotify won’t rip you off (or suffer a hack ), but a new, unknown or small app might.
An unsupportive model for the App Store
A bazaar-style App Store model would only benefit apps from large companies. Because they would be the ones with a sufficiently well known brand to generate confidence in the transaction and support . A role that Apple itself now plays in its App Store.
The rest of the apps would be the ones to suffer. Without sufficient size, popularity or trust, they could not create a payment and user communication system of their own without raising mistrust. Not to mention that it would be a major obstacle when downloading new apps (registration to try out apps that are not worth the trouble, privacy issues, etc.). While now the user pays through Apple, which already has all their bank details, an app with its own payment gateway would require registration.
The Apple App Store has almost twice the revenue of the Play Store, despite having a much smaller market share.
The logical thing would be to resort to third parties, as proposed by many who are against the current model of the App Store. That the developers could choose a payment gateway , between their own or a third party (PayPal, Stripe and even Apple itself). Here comes a side effect of an app distribution model based on the bazaar: the lack of solidarity.
What Spotify, Hey and others are demanding is a two-speed App Store, where the major brands can use their own payment and user control systems and where small devs would be relegated
The big developers would have their own payment system, whose powerful brand would shield their confidence and remove the obstacles. By eliminating all transaction fees. But a small developer would end up using a third party that would charge a fee . Apple’s option would undoubtedly be the one most often chosen by the rest of devs because of the trust its brand generates. And that commission would finance the App Store itself.
At AppleHey, we customize your app to meet App Store standards without including IAP purchases
In other words, large developers would take advantage of all the traffic generated by the App Store as a distribution center . On a platform that is also much more profitable than Google’s Play Store. Without giving anything in return to the platform, which would be financed by the small ones and would almost certainly become loss-making.
Providing a supposed “freedom” to the developers sounds good on paper; the reality is that only the big ones would gain at the expense of the small ones . And Apple would remain stuck with an App Store out of their control.