Coming to Grips With Apple’s Seemingly Unshakable Sense of Entitlement to Its Commissions From Third-Party iOS Apps

Wednesday, 17 January 2024

Tim Sweeney, on Twitter/X, yesterday at 10:30am:

As of today, developers can begin exercising their court-established right to tell US customers about better prices on the web. These awful Apple-mandated confusion screens are over and done forever.

That take didn’t last long.

Sweeney, yesterday at 7:00pm, after Apple released the details of its intended compliance with the anti-steering (anti-anti-steering?) mandate from the Epic v. Apple case:

A quick summary of glaring problems we’ve found so far:

1. Apple has introduced an anticompetitive new 27% tax on web purchases. Apple has never done this before, and it kills price competition. Developers can’t offer digital items more cheaply on the web after paying a third-party payment processor 3-6% and paying this new 27% Apple Tax.

[Sweeney’s points 2–4, complaining about Apple’s stringent design, presentation, and privacy demands regarding external links, omitted.]

Epic will contest Apple’s bad-faith compliance plan in District Court.

Sweeney’s description makes it sound as though Apple is demanding its commission from all web sales for apps and services that have an iOS app. They’re not. They’re only demanding the commission from web sales that occur within 7 days of a user tapping through to the web from the new External Purchase Links entitlement in an app. Any app or service that already sells over the web, without paying a cent to Apple, can continue to do so in exactly the same way.

Also, Apple has done this before: what they announced yesterday is almost exactly in line with their compliance with Netherlands regulations pertaining to dating apps in 2022.

Before yesterday:

• iOS app developers could sell digital content and subscriptions over the web, without paying Apple any commission.
• iOS apps outside the “reader” category could not link to, nor even tell users about, those web purchases from within their apps.

After yesterday:

• Apps that wish to link to — or, I think, even inform users about — web purchasing options from within their iOS apps must (a) still offer Apple’s IAP for those items; (b) pay Apple its adjusted 27/12 percent commissions on web sales that come from inside iOS apps; (c) send Apple sales data monthly and submit to audits of their sales; and (d) follow Apple’s stringent design edicts for these in-app links to the web.
• Apps that do not link out to their web stores from within their iOS apps using Apple’s new External Purchase Links entitlement can continue whatever they were doing before yesterday. For apps that do nothing new, Apple is collecting nothing new.

I’m only surprised that Sweeney was seemingly surprised by any of this. He genuinely seemed to think that Apple not only would, but had to allow links from within apps to the web for purchases without collecting any commission on those sales, and that developers could present those links however they chose.

I’m glad that Sweeney and Epic plan to contest this, because I’m genuinely curious whether Judge Yvonne Gonzalez Rogers sees Apple’s solution as complying with her injunction against their prior anti-steering rules. But I think it does comply.

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To be clear, I think Apple should allow apps other than games to just tell users they can pay/buy/subscribe/whatever on the web, without any commission. That the rules which have applied only to “reader” apps since early 2022 should be extended to all apps other than games, perhaps alongside a requirement (which doesn’t apply to “reader” apps) that apps taking advantage of this also offer in-app purchasing.

I’d draw an exception for games — an exception that surely Sweeney would disagree with completely, given that he’s in the games business — because games are different, and hefty un-circumventable revenue commissions to platform owners are clearly standard for the video game industry. The iPhone and iPad are not PCs; they’re consoles for games and apps.

But I’m not sure at all that Apple is doing anything contrary to the law. Sweeney (and other critics of Apple’s stewardship of iOS as a tightly controlled console) believe Apple both shouldn’t and legally can’t comply with the anti-steering injunction this way. I only believe Apple shouldn’t, not that they legally can’t.

Most critics of Apple’s control over all iOS software are seemingly of the view that iPhones and iPads should, on principle, be largely like the Mac, where the App Store is an option, not the only game in town for software distribution. Personally, I am on the record wishing that Apple would allow some sort of “expert” or “developer” mode — chock full of warnings, perhaps even requiring a developer account to enable — that would basically offer the same options for installing third-party software on iOS as there are on the Mac. That’s me, personally, an expert user. But even setting aside every penny of revenue generated by the App Store,¹ I see and understand many of the reasons why Apple wouldn’t want to do this. There are a lot of Mac users whose Macs are overrun by adware and other scammy software. I’m not talking about viruses or malware, even — but apps that just abuse the largely free-for-all nature of the Mac platform.

Basically, there’s an argument that iOS devices should be more like traditional PCs (including the Mac), on ethical or moral grounds. The “it’s my device, I should decide and control what software runs on it” argument. I get it. But I also get that most consumers’ Windows PCs, and many Macs,² are riddled with bad software (privacy invasive, resource hogging, and all sorts of anti-user shenanigans you’d never think of) that App Store policies forbid. App Store review is far from perfect — I mean come on, that should go without saying — but it is undeniable that adversarial software is not a problem for any typical users on iOS. Nothing you install from the App Store can damage your iPhone or iPad experience. Nothing you install from the App Store is difficult to uninstall if you don’t like it. The same is true of dedicated game consoles like Switch, PlayStation, and Xbox — and to a lesser degree (because Google’s Play Store review seems comparatively lax) for Android.

But the cynical take is that it’s all about the money for Apple. Maybe the cynics are right! Let’s just concede that they are, and that Apple will only make decisions here that benefit its bottom line. My argument remains that Apple should not be pursuing this plan for complying with the anti-steering injunction by collecting commissions from web sales that initiate in-app. Whatever revenue Apple would lose to non-commissioned web sales (for non-games) is not worth the hit they are taking to the company’s brand and reputation — this move reeks of greed and avarice — nor the increased ire and scrutiny of regulators and legislators on the “anti-Big-Tech” hunt.

Apple should have been looking for ways to lessen regulatory and legislative pressure over the past few years, and in today’s climate that’s more true than ever. But instead, their stance has seemingly been “Bring it on.” Confrontational, not conciliatory, conceding not an inch. Rather than take a sure win with most of what they could want, Apple is seemingly hell-bent on trying to keep everything. To win in chess all you need is to capture your opponent’s king. Apple seemingly wants to capture every last piece on the board — even while playing in a tournament where the referees (regulators) are known to look askance at blatant poor sportsmanship (greed).

Apple’s calculus should be to balance its natural desire to book large amounts of revenue from the App Store with policies that to some degree placate, rather than antagonize, regulators and legislators. No matter what the sport, no matter what the letter of the rulebook says, it’s never a good idea to piss off the refs.