Hence, the standard rules of supply and demand apply. If you control 100% of the supply, you are a monopoly, so the question will become one of defining the supply. Is it iOS users? Is it mobile device owners? Is it media consumers? Where the definition falls on that continuum will define the outcome of the investigation.
I'd be very surprised if the regulatory agencies defined the supply as iOS users, so I think Apple will get away with this. Not that it matters much. I believe Apple has crossed the critical tipping point where sustainability exists only in niches, and will ultimately push away so many content distributors that the actual creators (those with the room to sell at a 30% markdown) won't be able to fill in the gaps fast enough. There will be volumes of content available on other platforms, and the attractiveness of iOS devices (and platform) will diminish. This will have the effect of accelerating competing platforms' growth lead. At that point, Apple will either react to the market, or relegate themselves to a small portion of the market that they will happily turn a huge profit on.
If Apple were to relinquish their price-match requirement (unlikely) or allow apps that had no external store references (more likely), they would not cause such an upheaval in pricing.
M: I just don't know. 10% seems high.
A: But it's a great service, and developers will pay for the convenience.
B: M's right, 5% would be a better rate; we're not planning to force people to use it and if it's too high they'll just go somewhere else. 5% might even be too high.
M: I'll think about it.
A: But you've been thinking about it for weeks! We can't release until we agree on a number. And I still...
[all are interrupted by video of Apple announcing their 30% policy with mandatory participation]
[pause as they pick their jaws up off the floor]
M: Ten. Go.
Google isn't mandating anything; if a company finds 10% to be reasonable for the services provided, they can make use of it. Otherwise they can do it themselves, or use another provider.
Of course, as far as regulators are concerned, the big difference is Google isn't railroading publishers into using it on Android or enforcing price matching.
Like the credit card processing, the hardware manufacturing facilities in China, the software libraries, the industrial designers...
Apple has made it absurdly convenient to consume rich content. They have built fucking science fiction. 30% to get delivered to someone anywhere, any time is a bargain. You're paying to be part of the gut wrenchingly difficult channel Apple has created from scratch, which no one else had the foresight to predict or the balls to put money behind.
Apple bet the damn farm on this crazy iDevice shit and they get to charge whatever they like for it now that it works. Anyone who doesn't like it can go build their own fully integrated platform.
Why doesn't Firefox get to charge 30%? A big chunk of people probably get to Netflix via it.
Assuming a lot of things in how this plays out, I don't find it terribly unlikely that some subscription services will have to raise their rates to maintain a profit. Maybe not a big problem for iOS users, since they get the benefit of using the app store for purchases.
What about non-iOS users? I subscribe to Netflix, but I don't use any apple products to access that subscription. According to Apple's rules, Netflix can't have the subscription available at different prices, and so my price goes up because of Apple's policy.
There may be some ways around this, like Netflix offering two plans - one that includes iOS use, one that doesn't - without hiking the latter. But they might not.
I haven't yet worked out what the "fairness" of this all is. As a consumer, I certainly don't feel that I am entitled to never having price hikes, and I realize at the same time that some of the money from products I pay for is used to support products that I don't pay for. But this feels wrong to me - maybe it's just the directness of it. Apple says "pay more" and even people who don't buy Apple products have to pay more.
So you have an overhead that doesn't exist on other platforms artificially introducing pricing inefficiencies elsewhere. Just the tip of the iceberg, really.
I'd amazed by how much people support one of the richest companies in the world get richer off the backs of others. After all, it isn't like they are hurting for money.
Apple is getting rich by making extremely good stuff. I support them getting richer because I want them to continue making really good stuff I enjoy using. Because I can't trust any other company in the world to do that hard work.
Let me show you something:
2001:
http://www.wired.com/gadgets/miscellaneous/news/2001/10/4754...
2007:
http://www.palminfocenter.com/news/9414/palm-treo-755p-revie...
One month later:
http://ipod.about.com/od/iphoneproductreviews/fr/iphone_revi...
Fucking science fiction. Consumer wireless devices were dull, stodgy things until Apple came in and said "fuck you, this sucks" and did it better. Innovation was putting an ugly resistive color screen into the clunky enclosures from six years earlier. Spicy.
2003:
http://www.tabletpc2.com/Acer.htm (Owned one of these)
2010:
http://www.anandtech.com/show/2904
Three months later:
http://www.apple.com/ipad/specs/
Hey, that looks familiar, where have I seen that before? Oh, right, in science fiction.
But then again, I buy a MacBook Pro instead of a junky plastic laptop. I'll pay a premium for quality, so will another chunk of the market and everyone else can fight over the Wal-Mart segment.
I personally think Netflix/Amazon/Spotify are doing science fiction too (every movie and song ever made, at your fingertips in a second!) and I would like them to survive too.
Yes, Apple does bear the cost of maintaining the app store, but my sympathy for them on that point is rather limited considering that they're the ones who insist everything must go through the app store.
I can see both sides of the argument, but I still think Apple is being unreasonable. Really, I think this is the same as network neutrality -- just because Apple provides a platform doesn't mean they're entitled to a cut of every sale on it any more than it means Time Warner is entitled to a cut of Apple's sales every time I rent a movie through the iTunes store. Apple already got my money off the hardware (not to mention the other apps I've bought) and Time Warner's already getting my monthly subscription fees.
Now, if you want to argue that 30% is reasonable if Apple is doing the content hosting and other stuff, sure. 30% just to process a convenient payment? No fucking way.
It's the cost of doing business on the App Store. You always have the option to serve your customers on their iOS devices over the web. If you want the convenience of the App Store and a native app, then 30% is the going rate.
I love my Apple products. I'm in awe at what the company has accomplished over the last decade. That doesn't mean they can do no wrong and their decisions can't be questioned.
I'm not talking about the cost of doing business here. I'm talking about the cost of being a customer here and the potential cost I might be forced to take, even if I decide not to be a customer any longer. If Netflix raises its prices across the board so they can stay in the garden, then it doesn't matter whether I accept Apple's rules or not: the prices are raised across the board.
I agree that there seem to be some questionable terms (especially involving the most favored nation clause) but the 30% fee itself is simply not highway robbery.
There are two roads to your customer on an iPhone. One is nicely paved with trees planted and maintained for maximum appearance, and if you take this road you're charged 30%. The other road is a path in the forest where maybe you need to chop down some trees as you go, but there is no 30% fee. There are no robbers in any of these options, one just happens to include a toll booth and you can decide if the nice view and comfortable ride is worth paying the toll.
Personally, I just hope people realize the kingdom of Android has a much nicer path. Sure, some parts aren't as nice as iOS, and the locals tend to do less business, but there are no bandits, and no gate keeping you out if the king suddenly decides he doesn't like what you're selling.
My complaint is taking a flat 30% of all subscriptions and digital purchases where their only value-add is as a credit card processor. As I said originally, I think Google's 10% is also steep for this same feature, but, as others pointed out, you aren't required to use theirs, so if you find a better deal, good for you. Also, Google's 10% won't cause my iPhone subscriptions to go up by 10%, but Apple's 30% may cause my Android subscriptions to go up 30%.
This is still hypothetical, and it is a hard problem to solve. On the one hand, you have Netflix that has a huge infrastructure and large supplier costs who is already set up to do very well at $15/month. On the other hand, you have Po Dunk Developer who wants to add $0.99 subscriptions to his app. 30% on the former is too much; 30% on the latter is reasonable. How do you reconcile?
Most businesses would provide a way for Netflix to enter a formal agreement that pays some amount up front, then lowers the percentage. I have to wonder if Apple will go that path (or something similar) as well. I hope so.