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ppeetteerr

They are doing a ton that is useful:

- Taking care of payment processing

- Storing the user's credit card information

- Providing a ton of pricing options

- Providing analytics and crash monitoring tools

- Providing deployment tools

- Providing development tools (push notifications, regular updates to their platforms, market segmentation, beta releases, etc)

- Providing distribution

- Creating a market place for the demand

I'm not saying that 30% is the right amount but to say that the stores are doing nothing useful is a bold disregard for the service they are providing.

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At the scale Apple operate None of what you stated above is worth anywhere near 10%, let alone 30%. And for the last few points, they are covered by the Hardware cost which in Apple case cover the software as well. ( Where Windows and Android are covered by other means )

And I don't think you are actually disagreeing with your parents at all. Because all the services they provided and as you have listed are now considered as standard. That is like accepting credit cards and cashiers in Retail stores. They are not providing enough useful valued ON TOP of the standard expected.

How can you argue that it's not worth "anywhere near 10%, let alone 30%" if there are so many firms willing to pay it? The idea of the fees is not to cover the costs of doing business, it's to turn a (ideally significant) profit.

It sounds like your expectation is that a company would not charge as much as the market will accept for a unique product. How much it costs to simply handle e.g. payment processing has relatively little to do with it.

The inverse question is equally interesting: In a monopoly, how do you determine when to put a stop to it?

It's a tough question.

I don't agree with you that Apple or Google are monopolies. I also don't see that what they're doing is anti-competitive.

I expect that will be a pretty controversial opinion, but I'm just being honest.

Oh, I probably sounded identical to a certain common pattern. Don't read too much into it. :)

I don't think they're anti-competitive. But they are monopolies.

http://gsl.mit.edu/media/programs/south-africa-summer-2015/m...

https://i.imgur.com/ooJmwsg.png

Ideally profits should be incentives for a good service. Instead the profits are a result of the lack of competition because it‘s impossible in iOS‘ case and virtually impossible in Android’s case to compete.

Is that a lack of competition in the actual legal sense of the word? I don't actually know the answer, but my perception is that it's probably not.

Apple does not restrict the ability of another browser to be installed (like Chrome) nor another music service (like Spotify) nor another video service (Amazon). It does charge a high fee for purchases through the App Store platform, but I think reasonable people can disagree about whether or not that's actually anticompetitive.

I think it's incorrect to compare Apple'a high fees to other things that are not app stores, like payment processors. It might be the case that we need more than two mobile operating systems in the market this way Apple and Google have a competitive incentive to reduce their fees. But I think it's fair to mandate a high fee to do things on your operating system if end users and developers will accept it. So far most developers accept it.

> Apple does not restrict the ability of another browser to be installed (like Chrome)

They do not allow you to develop/use any other webkit than the one provided though.

> nor another music service (like Spotify)

Back when I had an iphone, you could not change the default app switches to competing products like spotify and google maps.

> nor another video service (Amazon)

Amazon cannot sell their videos in their app (nor books in kindle) without paying Apple a 30% cut and there is no way users can download an amazon app that allows them to do so because you cannot install software onto IOS devices outside of their app store.

I agree about IOS but it is not hard to download an app for android outside the play store. Amazon has a competing store and fortnite skipped the play store and sells their game straight from the web.

But Fortnite and Amazon are huge. It's almost possible for individual devs or smaller companies to sell apps outside the store. Not technically but logistically. Hence the preceeding "virtually".

Not sure you can say they are willing to pay it, considering the alternative is not being able to provide the application to iOS/Android users.

They are clearly willing to pay it if they pay it. If users buy these devices knowing in advance that it will be infeasible to install software outside of the app store, I don't think it's fair for developers to act entitled to another software distribution channel.

In particular it doesn't seem anticompetitive to me because Apple/Google charge a fee to every business in return for their service, but don't try to stop competitors from being on the service outright.

>It sounds like your expectation is that a company would not charge as much as the market will accept for a unique product.

Actually I don't have a problem with charging 30%. I just don't think it is worth it. Like Rental, you don't have a choice, unless you don't want to access These customers. I just wish Apple could offer something more, because what they are doing now is rent seeking.

Ideal competitive markets allow for little profit. Significant profits are a sign that a market lacks competition. One can certainly not expect a company to voluntarily lower prices based on a value judgement. It requires competition or, in unusual cases, regulation.

> worth anywhere near 10%, let alone 30%

Let's throw more arbitrary numbers around...

But it is not. The total revenue projected this year for App Store is roughly $50B. I would bet $1000 the average credit card processing fees world wide for is lowered than 2%. With China, EU, AUS, and Japan all has much lower cap on it. The whole yearly revenue for the one of the largest CDN Akamai is only $2.5B. Not only s Apple's data requirement less than Akamai, they now also operate their CDN. There is absolutely no way the Apps Store storage and delivery cost more than 500M to operate, even if Apple were using Akamai.

Given the economy scale advantage, Apple are likely to break even at 4%. So even at say a 5% running cost, Apple is making 25% Net Profits. Giving them 10% of App Store revenue is already a 50% margin business.

Like I said again and again, the physical world roughly the same or more than that. But it has a bigger operational expenses and rent. We cant argue with property prices or Rent, it is the fundamental of how our modern society creates a thing call money. But in a non physical world, Apple and Google needs to demonstrate how this 30% is worth while, rather than pure money grabbing. Google has a much better excuses because its App Store profits will be needed to continue and fund the development of Android Operating System.

How do you determine this, instead of the market?

Firms are willing to pay it to Apple and Google, and not competitors.

> None of what you stated above is worth anywhere near 10%, let alone 30%

"Creating a marketplace" can have well over 30% value.

Credit cards take up to 5% and they only cover the transaction.

The EU capped it at 0.3% for credit and 0.2% for debit cards.

And in US it is no where near 5%, even AE, and the volume Apple is processing they likely have a lower rate than the normal 2-3%.

How much is $0.30 + 3% on every transaction for a $0.99 cost the seller?

It isn't as easy as you are making it out here, it's a chicken egg problem, really. OS vendors need to provide tools to developers or else there will be no apps. No apps means less users which means no customers to sell hardware/ads to.

Microsoft failed to establish a healthy developer community and had to close the whole smartphone department because nobody wanted their phones. Windows Phone was a very good operating system and had very high quality hardware but because the apps were missing, people bought Android and iOS.

But without the app stores and tools, developers won't get their apps to their customers.

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