When a customer refunds your paid app, Apple refunds its 30% cut [edited]
twitter.com
twitter.com
I was mistaken in my original (now deleted) tweet and have been corrected by a few people
Apple does not keep the 30% commission on a refund the refund happens as you’d expect. I don’t know where I got the idea that it worked the way I thought it did
https://twitter.com/twolivesleft/status/1288625617873694721?...
I've been wanting to get into research on the study of the spread of tweets like this. Anyone have pointers for reading material?
I continue to use Apple products every day as my daily drivers, and can’t see that changing. Im writing this from my iPad Pro. I’m probably buying 2 new iPhones this year despite them all being too big. I haven’t bought a new MBP in a while as my 2015s meet my current needs better than the new products do.
I found the original tweet totally credible.
I feel more like an “Apple sucker” than an “Apple hater”.
I found it credible. I upvoted the post. I then learnt the truth, and posted that I found the original tweet credible.
There's no rage. There's just me, a long time Apple customer, finding a falsehood believable.
There's more nuance to the world than just 'Apple haters' and 'rage'. You don't have to be an 'Apple hater' to fall for this. You don't have to have been 'raging' to have fallen for this. You can just be (like me) stupid, and happily admit that.
¯\_(ツ)_/¯
TDLR: Materials that cause anger/ rage make people want to reshare it at higher rate (I want to do something) vs positive materials that make you feel good.
My thought was to ask HN editors to run some kind of a correction post, because these angry people had learned of this “fact” here but never saw the follow-up comments. Since @twolivesleft already has a correction post up on Twitter, I just posted that on HN instead.
It remains to be seen if this post does well on HN. I'm afraid it won't, because personal embarrassment isn't quite as fun to spread as anger against billion-dollar companies.
If the app store took a 3% chunk and never refunded it regardless of the ongoing status of the transaction, that would put them right in line with other payment processors. It would also still net them billions of dollars, I think!
We also learned about how credit card thieves test credit cards. We saw hundreds of donation attempts. Stripe had us refund those that went threw, which costed us money in fees. Fortunately we were able to put some quick measures in place to stop them temporarily & then better measures for long term success.
We lowered our online donation limit. Above a certain amount it really is more ideal for a check or some other type of transaction. Though we've had a few people offer to just pay the 3% transaction fee on top of the multiple thousand dollar donation. For those we do a bit more manual process.
For a cost, Stripe also lets you put some additional rules on what type of payments you'll allow & how much info the person has to verify for the payment to be accepted.
Honestly a basic version of this should be free. I shouldn't have to pay extra to say I only accept cards with a CVC number & expiration filled out.
Other business obviously have MUCH higher refund rates (sneaky autobill businesses etc). For these loosing 5% on the refunds matters if they have a lot of refunds, so they'll be very tempted by no costs if you autobill and get caught. They'll just autorenew everyone, autosign up and then be VERY good about refunds to avoid chargebacks. Even if just 30% of customers don't catch a few months you end up with real money.
Of course, CUSTOMERS may hate these players, but stripe I guess is focused on what works for the businesses generating lots of refunds.
The reasonable thing to do is to ramp up the fees based on the number of refunds. You want to push away the crappy billers, but not hammer developers that have the occasional bad release.
However, a read of their current policy shows it's no longer the case - so I'll likely get dinged on my next refund.
Something like 5 cents + 1.5% would be a great deal on payment processing, generally. (Apple is a juggernaut and may have been able to negotiate something else, of course.)
That does mean that for a $0.99 app, keeping the fees would still be more than that 3%, at ~$0.07... but not wildly divergent from the 30% amount.
Where the 30% gets really abusive is for things like Codea, the app being talked about in the Twitter thread. It costs $14.99. So it had presumptive fees of ~$0.28, while Apple's keeping $4.50. That's outrageous.
(Also, I see mixed reports on whether credit card refunds refund the processing fees. It might be contract-dependent.)
[1]: https://www.fool.com/the-ascent/research/average-credit-card...
I'd guess 10-15% is what is actually reasonable. Microsoft has settled for 15% in their store (because nobody was using it so charging 30% is ridiculous).
So much the same as the other stores then.
But the store feature I want to see from Apple is that if you provide the customer referral to your app yourself, Microsoft only takes 5%.
Not GP, but I didn’t read it that way. I read it as Microsoft loss leadering their store to get growth.
You can't attract people to the store with low fees and then raise them later or they'd just leave as soon as you do. Unless you would require them to use Microsoft's store and no other, but then you could just do that from the outset, except that it'd leave you with the same sort of antitrust scrutiny that Apple should be under for doing the same thing.
It's uniquely online processors that do not refund fees.
Your bank account -> visa/mastercard/discover -> PayPal's merchant bank account -> the person you're paying bank account
PayPal only replaces the ccs when you pay with their wallet. Otherwise they're just orchestrating the money flow (because integrating with the CC companies is a gigantic PITA)
Stripe on the other hand is a credit card processor, and as a merchant you get a Merchant account, the same like Authorize.net who used to be the largest online processor before Stripe.
Back in the day (and I have been out of that market for over a decade) Authorize.net absolutely refunded processing fees on refunds
Auth.net is a gateway/portal that facilitates CC transactions, and while you may be refunded on processing fees for the use of the gateway, someone, somewhere is likely eating the interchange and most likely occurring at the merchant level.
TSYS, Vantiv, PaymentTech are processors. your merchant account is usually with (i think) the acquiring bank that's part of the Visa/MasterCard/Amex/Discover network.
Uniquely those that provide some higher level thing, like PayPal or Stripe. If you have a merchant account, you can get an actual refund for online purchases.
They had refunded fees but iirc it meant they were paying a small fee per refunded transaction (which in a sense subsidizes apps that incur frequent refunds) which they wanted to stop doing.
A quick search showed they started refunding fees in 2012 and stopped in 2017. Here's a discussion from the past couple years: https://news.ycombinator.com/item?id=22371330
In fact, you will pay more on the scheme fees to process a refund, as you need to send another message into the scheme's network - often charged per message or per byte etc.
Interchange is not payment scheme revenue - it is just passed through to the issuing bank.
That is primarily an issue for cross-border credit or debit card transactions.
Scheme fees are much lower for domestic transactions as far as I'm aware, though.
Generally, Visa and Mastercard simply charge more per transaction for different cards in the US. For example, rewards cards cost merchants more, which is why many gas stations won't accept them.
It sorta makes sense, since the online processors are usually middlemen that only make money on the fees they themselves charge. I could see their perspective being "we provided the service; that service is not un-provided because the customer returned the item and you sent them a refund... in fact, you used us even more because we had to mediate the refund transaction!"
I think if the fees were just a few percent, I wouldn't have too much trouble accepting that logic, but from Apple, where it's 30%... not so much.
The card issuers don't care quite as much about keeping the fees in a refund scenario, I guess... though I believe you don't get everything back during a refund, regardless.
This is for AML, not because of fee refunds.
This is new, and in fact PayPal and Stripe enacted this policy only this (or last year if I recall correctly).
Some payment processors like Affirm or Amazon Pay have not changed their policy on this yet.
For example, the default price on Stripe (and many others) is 2.9% plus $0.30. For a business with an average order value of $30, that $0.30 adds a full percent, bringing your fees to nearly 4%.
If you do high enough volume, yes, you can negotiate lower prices.
"Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details."
https://support.waveapps.com/hc/en-us/articles/115004056523-...
That doesn't say anything about what the merchant gets charged. Stripe and PayPal also send the full amount to the card holder, so that blurb would apply to them too. The question is whether the merchant ends up with zero or minus the original processing fees after the refund.
That seems ... not great, especially these days. What happens when mobs of internet morons decide review bombing isn't sufficient and realize Apple will help them cause direct financial harm instead?
> Yeah Apple keeps their 30% no matter what. So if someone refunds an app they get the whole amount back, Apple keeps 30%, and the developer has to cover that extra amount
edit: so who is in trouble here? The person calling for people to do it with their twitter following or the twitter followers? I'm not saying that buying the app and returning it is not fraud if you entered into the transaction in bad faith and with intent to cause damage to the dev, I'm saying calling people to do that is not fraud.
I think the form is definitely fraud but I wouldn't be surprised if Visa went after you for something as well, they need to actually process all those charges and charge backs and it does cost them some amount of money to do so.
likewise collecting damages, etc
I think it would depend on the local jurisdiction's definition of the tort. A purchase/refund scheme would not induce Apple or the vendor to breach their app store contract, but it would deprive the vendor of its expected economic benefit.
In the past 2 weeks you've said quite a lot of mean things to people on HN. Please stop doing that.
It would be one thing if they said "We're keeping the credit card processing fees so that we don't lose money," but to keep the whole 30% cut is just petty.
> All Transactions are final. Content prices may change at any time. If technical problems prevent or unreasonably delay delivery of Content, your exclusive and sole remedy is either replacement of the Content or refund of the price paid, as determined by Apple. From time to time, Apple may refuse a refund request if we find evidence of fraud, refund abuse, or other manipulative behavior that entitles Apple to a corresponding counterclaim.
Which makes it sound like they aren't granting refunds at all for anything except failure to deliver the product.
And yet when I look at their actual refund request form it has options for "I did not mean to buy this, child bought without permission, I did not mean to subscribe, I did not mean to renew subscription, my purchase did not work as expected, in-app not received." So clearly not all purchases are final.
I don't think it's a good look for Apple to be issuing refunds at their sole discretion and then turning around and making someone else pay for it. You're just supposed to trust them that the magic fraud prevention box is doing its best?
https://europa.eu/youreurope/citizens/consumers/shopping/gua...
> Right of cancellation: If you choose to cancel your order, you may do so within 14 days of when you received your receipt, without giving any reason
It seems pretty random when it's applied though. Some got it after just one refund, meanwhile I've had multiple refunds, and I got that popup once for a $1 purchase but then never again and I was able to request a refund again.
> In the EU you have the right to return purchases made online or through other types of distance selling, such as by phone, mail order or from a door-to-door salesperson, within 14 days for a full refund. You can do so for any reason – even if you simply changed your mind.
There is a potential exemption for digital content "if you have already started downloading or streaming it and you agreed that you would lose your right of withdrawal by starting the performance," but Apple does not appear to have its customers agree to that.
Specifically called out in their UK conditions:
> Right of cancellation: If you choose to cancel your order, you may do so within 14 days of when you received your receipt, without giving any reason.
https://www.apple.com/legal/internet-services/itunes/uk/term...
Presumably in other European terms as well, I checked the UK because it's in English.
Actually, with an EU iTunes account, you have an additional popup dialog you have to agree to with every in-app purchase where you have to agree that it does not qualify for the exemption.
They have an "I would like to cancel this purchase" option in the EU for a reason, which gives you an unconditional refund within 14 days as long as you didn't get that popup when purchasing.
I think the jurisdiction you’re talking about is the EU, and it’s not quite that clear cut.
As a general rule online merchants do need to provide refunds, unless it’s a digital good, and they provided an explicit warning during the checkout flow that the sale isn’t refundable.
If you ask for refunds from Apple for apps they’ll introduce that warning into the checkout flow for future app purchases, which will disappear again after enough purchases.
So Apple do have some basic, compliant, controls that means you can’t just keep buying apps and getting refunds.
https://support.apple.com/en-us/HT208856 -a problem with the payment method
https://discussions.apple.com/thread/250384392 -credit card fraud
I asked for you to cite sources on Apple banning people for repeatedly claiming a refund. Not for using a stolen credit or gift card.
Cite me that it's not fraud if that's not good enough for you, I'm not really interested in proving fraud is not just allowed to run rampant in a payment system in the very thread about how doing this exact thing would be abusive and need to be stopped somehow.
In the EU i have a right to a refund, there is no part of that right that forbids me from repeating that purchase. Since we have established that Apple don't suffer financially from obeying these rules to the letter, i see no incentive for them to treat this kind of thing like fraud.
They might, but you have not established this, and i don't think its a fair assumption to make.
Also - that plotline from SV where he just buys pizza from thd pizza startup that is operating at a loss seems like the same idea as this but just slightly different. Business is funny
What is worse, is that Apple doesn't remove the app from the user's device. When you get a refund of a paid app it is on the honor system for them to delete it. It is removed from their account, so they can no longer download/update, but the installed binary is not affected.
This. Is. Ridiculous.
We all know this is an intentional design decision by Apple and that they would absolutely not have designed the workflow this way if they had to dogfood their own platform.
But Apple does sell one app through the iTunes App Store (Dark Sky, which they recently acquired). They sell several through the Mac App Store.
So, they do dogfood, but obviously they are not depending on revenue to survive here.
Side note: there are a bunch of apps listed under their developer that I had not seen before: Music Memos, Indoor Survey, Texas Hold'em, and Reality Composer.
Their pro apps are almost given away for free.
You could argue that $200 for Logic is not free, but similar DAW products costs 4-5 times more.
Not only that, but competitors need to charge you for major updates every couple of years, like any developer. Since Apple released Logic Pro X in 2013 it has kept pushing updates without asking for money.
I've seen this circumvented by creating a package deal of the old and new versions, which then gets discounted via the "you already own part of this set" mechanism, but it's a messy experience and not something that many developers have done.
So it's not at all feeding they own dogfood. Do do so Apple would need to run separate finances and make sure they don't get benefited in the review process.
Here's another example from Wil Shipley where someone purchased 30 education copies and then refunded all of them. Total for the day nets out to -18 purchases and sales of $-360:
https://twitter.com/wilshipley/status/768540129203855360
If you made say a high profile game that a particularly whiny subset of gamers took notice of, I imagine it could be much worse, but I don't know that this has happened yet. I'd bet money that it will though, and you have to wonder what Apple will do about it.
I see this as a good thing, since it probably means that only the user is capable of removing apps, requiring intent, and that Apple can never remove an app from my device.
(Except if your phone never connects to the internet or a cell-phone at all ;=) )
Also apple could just require the user to remove the app before requesting refund or at least putting it in a partially removed state from which apple then can remove if.
I.e. there is 0 benefit for any serious acting person. Only people who try to rip of app publishing companies profit from it.
Want a refund? Awesome. Delete the software from your phone. Then, go to the appstore, find the app again, and click 'request refund'. If apple wants to improve the user experience, they can offer 'request refund' when someone uninstalls a recently bought app.
Or if that's too much of a disruption for users, just requiring the current device to delete it would cover most cases and be better then the current situation.
Users can set each device to automatically download and install newly-purchased apps.
Imagine the case where there is a device you have misplaced (or given to a relative, or had stolen, or ___). You must find every device with auto-download and purge the app from each one before requesting a refund.
So you create a situation where it is possible that the user quite literally can't comply with the terms of the refund.
Perhaps a compromise would be to
1. Delete from the current device; and 2. To verify the status of each app during OTA updates (which, by definition, have connectivity to Apple's servers). Any refunded apps would be greyed-out or something.
Uninstalling an automatically installed, never-opened app is not a breach of the personality of your device.
Why would you want Apple to have access to everyones online/offline usage habits for apps, and scans every time you restore a backup?
Why? Apple controls the OS, and can blacklist any App they want. They dont need to know whats installed on your device to prevent it from running.
It wouldn't be foolproof in case of backups but it would be a lot better than an honor system.
And doesn't apple have some form of remote logout/factory reset feature for lost devices?
EDIT: (Sure requiring remote factory reset for lost devices would not work if it's a iPad which has not internet connection and never gets one again in it's live time, but that would be an acceptable corner case I thing).
If you no longer have access to a device you used to own, you should use findmy to remote wipe it.
If you really didn't want that, then you should at the very least go through the trouble of filing, with apple, that the device is lost or stolen, so that any attempt to return that device to an apple store or reseller to fix it gets it flagged.
It seems bizarre in the extreme that you'd want to somehow protect your privacy by not reporting your stolen stuff as stolen with apple, but that you opt in to a system where installing apps requires going through a single vendor.
It seems odd, though, that Apple wouldn't have an API that allows locking app functionally behind licenses; on Android [1],
> With Google Play Licensing, your application can query Google Play at run time to obtain the licensing status for the current user, then allow or disallow further use as appropriate. > ... > Note: The Google Play Licensing service is primarily intended for paid applications that wish to verify that the current user did in fact pay for the application on Google Play. However, any application (including free apps) may use the licensing service to initiate the download of an APK expansion file.
In other words, the licensing service checks for both IAPs as well as if you've paid for the app itself.
This is what their subscription system does, though. I'm not familiar with their for-pay app setup, but for subscriptions you can monitor the receipt and see what it's status is. Perhaps you can't do it from there, but I know when even an free app is installed, you still get receipt information written to the device.
They do have something like that: https://developer.apple.com/documentation/storekit/in-app_pu...
I probably wouldn't go as far as 'dystopic' either.
They could also make the removal part of the refound process in which case the user would delete the app through the refound process.
The idea that this is because it protects users isn't holding up any closer inspection.
I don't see how this would explain a disincentive to charge higher prices.
Take other payment processing platforms like Stripe as an example. Stripe charges $0.30 + 2.9% to process a purchase.
To help build your (and my) mental model: Price of item -> Stripe revenue (rounded)
$1 -> $0.33
$5 -> $0.45
$100 -> $3.20
Apple's 30% cut makes sense if they were expecting most apps to be roughly $0.99 (anecdotally, I remember this being true during the early days of the App Store) and the (presumed) few apps that cost more than $1 would be the "whale" developers that would subsidize Apple software development. But nowadays apps are a lot more powerful, feature-full, and development-intensive so higher prices are required for any hope of profit.
So the math you have is right, it's just that the path to profit is a lot harder when the ONLY way to sell your product is to have >=30% cut out immediately upon sale. Some stores set a minimum (e.g. $5) sale amount for using a credit card and those payment processing platforms have fees orders of magnitude less than Apple's App store
(Sales not refunded * 0.7-refunds * 0.3) * price
If
Sales not refunded/refunds<0.3/0.7 ~ 43%
Then profit can be negative (you lose money because more people refund than not).
>57% refund rate literally makes you lose money from listing. But even if just quarter of people refund that eats almost half of profit.
EDIT: ofc in the Twitter thread, there's few disputing that if this is actually true, or if maybe Apple does different things in different markets, etc. so everything with a grain of salt I suppose
For in-app purchases, up until a few years ago, users would always have access to them (even after a refund) then it followed the same rules as paid apps - access always maintain but one couldn’t restore.
Subscriptions however are unique as a server would constantly check the receipt from Apple, which would show a refund flag, so you could block access. Now they even send you a push notification to your server to indicate a refund.
With iOS 14, in-app purchases will get a “notification” when a user receives a refund on device (with IAP encompassing subscriptions).
So it’s getting better. Not perfect. But better.
Apple gets $30, and you never see it.
I believe that the $70 is taxed; not the $100.
I know that if a customer get a refund, the full Benjamin comes back to them (I have received refunds).
So does that mean that Apple asks the developer to pay "back" $100, when they only paid the developer $70?
I have never had to issue a refund, so I don't know.
Kind of, except Apple doesn't ask, instead Apple automatically reconciles the balance debiting the $100 from the payout balance Apple maintains.
That's the part that puzzles me. If there's a refund, and they penalize me by charging $30 more than I was actually paid, I see that as being problematic. Also, I suspect that it would be illegal in some venues, unless clearly spelled out in the contract. I'll have to spend some quality time, reviewing my contract, to find that...
> 6.3 In the event that Apple receives any notice or claim from any End-User that: (i) the End-User wishes to cancel its license to any of the Licensed Applications within ninety (90) days of the date of download of that Licensed Application by that End-User or the end of the auto-renewing subscription period offered pursuant to section 3.8, if such period is less than ninety (90) days; or (ii) a Licensed Application fails to conform to Your specifications or Your product warranty or the requirements of any applicable law, Apple may refund to the End-User the full amount of the price paid by the End-User for that Licensed Application.
...and here's the (literal) money shot:
> In the event that Apple refunds any such price to an End-User, You shall reimburse, or grant Apple a credit for, an amount equal to the price for that Licensed Application. In the event that Apple receives any notice or claim from a payment provider that an End-User has obtained a refund for a Licensed Application, You shall reimburse, or grant Apple a credit for, an amount equal to the price for that Licensed Application. In such cases, Apple will have the right to retain its commission on the sale of that Licensed Application, notwithstanding the refund of the price to the End-User.
So that answers the question as to whether or not it does happen; but not whether or not it should happen. I guess developers could ask their congresscritters to grill Tim about it...
Sorry, when is this fine?
A dev flogs an app at 10 and pays 3 to Apple. Then on a refund they lose 3 and the end user has no incentive to even delete the app. Nope, I won't entertain that nonsense.
The only way that I can see for that model to play out is for the dev to factor in a lossrate x 1.3 uplift for their app. That means owners of shiny iStuff are paying Apple an additional unannounced "tax" based on their app churn. Use and discard more apps, then you pay more for the privilege. A dev would have to become a loss adjuster as well: "Hmm assume a 10% return rate" - so the upcharge on my app will have to be:
* My app should cost 10, assuming a fair market. * I lose 3 on a refund, which happens on 1/10 sales (I was paid 10 on sale, I paid 3 to Apple, I refunded 10 and hence lost 3)
So my price adjustment would be 10 + (0.1 x 3) = 10.30. Yes, it looks like a simple uplift will deal with this. Sales: x, churn rate: c, Apple tax: a. => s' = s + (c.a)
That is anti-competitive behaviour on a gigantic scale. Apple are making the apps that are developed for their platform automatically more expensive by a process that looks suspiciously like stealing.
I call that parasitic.
If there is a sunk cost component that number skyrockets.
Try adding a $5 customer acquisition and $1 developer time.
Thats a $1 profit, you need to sell 3 apps to cover the cost of apples fees. You also need to sell another 6 to cover the sunk costs you don't get back.
So 1 refund costs you 9 sales.
To cover the 1/10, you'll need to charge 10.90, or more likely 11 to cover the moving 30%.
But this is just to break even with your original $1 profit margin.
At work our refund rate is like 30% for Japan. Investigating this, it turns out there is a cultural behaviour where converting at a higher rate early and refunding if it's not a good fit is the normal way of doing things.
And in a past life, general 4% refund/return rate is pretty common across most ecom markets.
Not saying apps are in this boat but if you ignore refunds in business you're in for a bad time.
Ignoring all other factors, flogging the app on Apple automatically introduces a parasitic "tax". That is the hallmark of a monopoly.
Whether you sell 1000 copies at $100 or 100,000 copies at $1, assuming the percent of refunds is constant, then the effect is identical. Right?
I once forgot to cancel a subscription, cancelled one day after renewal, and they would NOT refund me. It was a time based pricing model, so it’s not like I could’ve used any in-app credits.
[1] One listed features that were actually (expensive) in-app purchases, one didn't work, a new app had been released but they were still selling the old non-updated one as well (and I bought the wrong one), and one was just really clunky and borderline unusable; the in-app purchase was purchased by mistake (my thumb was resting on the home button and I hit something that triggered a purchase in the app by mistake, so it went straight through TouchID)
https://support.google.com/googleplay/android-developer/answ...
"Google will return the transaction fee to you. You'll see the returned transaction fee on your next earnings report."
Apple takes back from the developer exactly what they gave the developer. This has been verified by a number of people, and this submission is just farcically wrong.
How is this nonsense front page on HN? Is this community this clueless?
Apple takes back exactly what they gave the developer. There are zero sources demonstrating otherwise (and the source of this links a basic sales chart -- guess what, that doesn't prove his point whatsoever). There are literally a half dozen developers replying to him countering his claim, yet it's remarkable seeing the gullibility of this crowd regarding a simply absurd claim.
The guy's trump card is that they had "negative days". No shit. One day they had more refunds than sales. That doesn't mean Apple is taking an extra 30%.
EDIT: Even the Reddit story on this absurd tweet now has a top comment refuting it, and a wide acknowledgment that they need to be more discerning. HN -- all the top comments are falling in line. My two comments are at -1. LOL. My bio that this place is Dunning-Kruger demonstrated writ large holds true. What an embarrassment.
If you charge $10, you get paid $7, and if the customer refunds, Apple removes $10 from your account – you'll be $3 worse off than if the customer never purchased anything.
>If you charge $10, you get paid $7, and if the customer refunds, Apple removes $10 from your account
BUT APPLE DOESN'T DO THIS
There are literally dozens of developers with monetized apps saying that Apple does not and has not done this in this thread and replies to the tweet. There is one guy misrepresenting some facts. The overwhelming truth according to the pitchfork mob of HN is the lie. Amazing.
The gullibility of this crowd is simply incredible. Do you not think this would be bigger news than "hey look, some guy says something billions of dollars into app store sales".
cc @ dang -- rattray is intentionally spreading hilariously dumb misinformation to make HN look like a bunch of stupid assholes.
Hilariously this is auto-dead. Of course it is. Yet another of so many times HN has been so catastrophically off the mark. This place is a den of absolute idiots, time and time again. And when it is realized it goes to auto-dead time. Absolutely fucking embarrassing for anyone who is proud of their association with this shithole of stupidity.
Unclear whether it happened in this case.
But I do appreciate the anecdotal stories from folks that actually processed refunds.
Apple is entitled to yank the extra 30%, but it seems that they don't do it. That's not uncommon. Lawyers will often add stuff to contracts that they don't intend to enforce, to give them leverage and cover, in unique situations.
I have never had to process a refund, so I don't know.
How can this be even remotely true if Apple takes a 30% commission for every sale in the App Store?
[1] https://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG...
1) Free apps with advertisements. Paid apps are by far the minority.
2) I guess this statement is related to subscription models like spotify. If you acquire the user outside of the apple ecosystem and they subscribe on your own website and then download your free app from the app store, you get to keep 100% on the revenue that the user generates as well.
As for the subscription model, I've thought about that but developers that aren't huge companies have a hard time NOT integrating in-app purchases for cloud services (see "Hey", which had to use social media to get their update approved [1]), so it couldn't be the "vast majority of apps".
[1] https://www.theverge.com/2020/6/18/21296180/apple-hey-email-...
That's why it's true.
It's precisely the long tail of side hustles with ads that make up most apps.
They keep 100% of the 70% of the store price. Truthful statement, just one that is designed to mislead you.
Tim Cook is saying developers keep 100% of their cut of the sale.
And it sounds like you interpret Cook's statement to mean developers keep 100% of the entire sale.
> They are the very definitions of predatory competition squashing monopolies.
But they aren’t, this is a rather competitive space.
We already had battles on this front, Microsoft had to offer competing browsers for some time at least in the EU. Manufacturing the platform ceases to afford dictatorship when the device reaches a large enough share of the population imo.
Ideally measured two ways: in downloads and in dollars.
A competitive market would be one in which the platform providers were forced to divest from the app markets, and support competing app markets which meet requirements, and which actively compete on features and price.
If cars only supported gasoline from manufacturer gas stations, and 95% of the market was controlled by cars from GM and Ford, and once you bought a GM car you could only buy gasoline from a GM gas station, would you call the gasoline market competitive?
To extend the metaphor, let's say it was technically possible to use third-party gas stations, but the manufacturers had hidden this ability, and it required a small amount of mechanical knowledge to enable, and maybe voided your warranty, would you then consider the market competitive?
How much do they take? 30% and 30%.
Is there an option where they take less than 30% or where someone can compete on that cut? No.
Is there a different store you can use with the same privileges as these two stores? No.
Can you take your payments outside of the store and manage payment fees yourself so as to not give them 30%? No.
At best I guess we could say Google has a carrot approach where Apple prefers the stick.
When I buy a phone I can choose from multiple models, then once I choose a model I can choose a store where I want to buy it. These 2 examples are competitive. Then I can choose what app I want to buy, but I can't choose anymore where I buy it (at least on IOS). There's no competition between stores. There's just competition between phone manufacturers that ends the moment you choose the phone, from then onwards is a monopoly (or near monopoly in case of Android)
This is a stupid question. Whether or not there is competition on iOS doesn’t matter as long as there exists viable competition on any viable platform.
Apple and Google may be competitors, strictly speaking, but the reality is they've pretty well carved up the market between premium buyers mostly concerned with fit+finish, prestige, and compatibility with other Apple devices, and the operating system and network infrastructure for, well, everything else.
It's absolutely a duopoly, and so minimally competitive: either Google or Apple would happily claim leadership status, but neither party really wants the other to go away lest actual competition or government intervention cause them to lose control of their patch of ground.
Somehow there are heaps of expensive android phones that sell just fine. The flagship Samsung phones cost more than any iPhone.
> It's absolutely a duopoly, and so minimally competitive
Well no, there are tons of smartphone manufacturers with viable products.
There are 2 viable software platforms.
Interesting and rather unfortunate that you should use that example, since the landmark Magnuson-Moss Warranty Act famously invalidated automakers attempts to revoke their products' warranty if aftermarket parts were installed. It's a clear example of a consumer-hostile practice that was deemed to be unfair and regulated, even though no monopoly was involved.
They actually can't. Not legally, anyway.
I am not a lawyer, but Nintendo famously lost a lawsuit, when attempting to block third-party software distribution : https://openjurist.org/16/f3d/1032/nintendo-of-america-inc-v... Sega (back when Sega was a major console competitor) also lost a similar lawsuit, when attempting to block third-party software distribution : https://openjurist.org/977/f2d/1510/sega-enterprises-ltd-v-a...
If we still had anti-trust enforcement, this should set precedent against what Apple is doing here today. We already decided this issue in the 80s and 90s, making a specialized locked-down computer (i.e., a "game console") does not entitle you to own the entire software market for that device. And so long as you don't steal copyrighted materials to do so (see Nintendo v Atari), you are allowed to reverse engineer and sell your own software for these devices, without any royalties or licensing owed.
If you want iPhones to be treated like "gaming consoles" instead of computers, then it is already legal to jailbreak an iPhone, distribute your own apps (or entire app store) and sell to iPhone users, without ever paying Apple a single penny.
It's even legal by precedent to modify other people's software when selling your own third-party software (see Game Genie / GameShark lawsuit, it's legal to sell a program that modifies someone elses copywritten software, so long as you don't include or redistribute the original copywritten code).
In fact, they don’t even really compete with each other. Play is only on Android and App Store is only on iOS.
You could say Android and iOS compete with each other, but once someone has bought a phone, they do not have a choice of where to buy apps.
Btw, curating is basic responsibility of every storefront. It's something even your Brick and Mortar Store does.
Regulation granted! There are now many stores on Apple devices. But the platform still requires code signing from Apple for code to run and must still abide by all existing Apple policy including entering into a contract with Apple that 30% of all revenue from your app on iOS is paid to them.
Regulation granted! You can now download and install apps directly from the internet or locally with no pesky store to act as an intermediary. However, you still require Apple code signing for the app to run and for that your app must go through the regular App Store approval process.
What monopoly? Apple controls maybe 8% of the desktop/notebook market and ~13% of the smartphone market. They don't even come close to qualifying as a monopoly.
Even if we rewrite the dictionary and legal texts, Apple would be part of a duopoly, not a monopoly. If you try to redefine monopoly to mean that Apple has a monopoly over their own platform, then you better start lawyering up because essentially every company in America has a monopoly.
I think people want Apple to be classified as a monopoly because they see their behavior as unfair. But they aren't a monopoly and your recourse as a free American citizen is to just not buy Apple products. The fact that you are able to buy from a competitor with zero personal harm is absolute indication that Apple is not a monopoly.
If Apple has pricing power because people don't move to competitors, they are a monopoly in the eyes of the law no matter how many players are in the same commonly-described market segment and what their sizes are.
> If you try to redefine monopoly to mean that Apple has a monopoly over their own platform
If that platform is sufficiently sticky that pricing changes don't induce people to switch to competitors, that's exactly what the law already does, no redefinition needed.
> then you better start lawyering up because essentially every company in America has a monopoly.
No, most don't, though they tend to seek them (what do you think a ”moat” is?)
I'm not taking sides, or claiming I'm an expert on economics, but isn't the question with monopolies always "what is the market, and what are the competitors"? If you accuse someone of being a monopoly, they will always define their market as widely as possible, but if you are an antitrust lawyer trying to win a case against them you will define it as narrowly as possible. There's always a sufficiently wide or narrow definition for either side to win. And every business has some pricing power and some friction for their customers. Everyone talks about investing in companies that have a "moat" which seems to be understood as something more than many companies have, but less than a monopoly.
Pricing power is a key way in which that question is answered: if an actor doesn't have it, the people to whom business goes when they raise prices are the rest of the market they are in. If they do have it, there are no actual competitors.
The fact that Apple can charge a premium despite being a minority player, and despite their marketshare shrinking, is evidence of their excellent marketing, not a monopoly.
To be a monopoly you must either have a dominant position in the market or your behavior must be such that you are attempting to gain a dominant position in the market. Or you can just make shit up because you don't like Apple.
You are wrong in two respects.
First, I am not taking a position o whether Apple meets the test for monopoly.
Second, the test is pricing power (the ability to raise prices without defection to competitors) not “high prices”. This is more important than how many players might be in any popular description of the market, because it is test of whether those other players are in fact competing with the player in question, or whether they are in objectively separate markets even if the usual popular description is of a single market.
> Wanting something to be true doesn't make it true
Correct, wanting “are there more players in what is typically described in the press as the market in which the actor is participating” to be the main legal test for monopoly instead of pricing power does not make it so.
But personally, yes. I think controlling your own device is more important, so there should be a way to sideload apps.
Regulations makes competition important for benefit maximization. Apple would have long bought and closed by Microsoft if not for Regulation. AMD would have had suffered end.
Traditionally the company that develops a product gets to decide what features that product has. There are various laws that require a product be safe to use, is not misrepresented and does what it is advertised to do, but beyond that there are very few actual features of products that they are required by law to have. Maybe some standards they need to meet.
Sometimes companies will invite other companies to join them in adding features to a product. A TV company might add licensed audio technology from Dolby, a car company might add licensed software for infotainment or navigation software, and they may charge their customers for the added software features.
This is how games consoles work, you buy the console from the manufacturer, who licenses other companies to write games for their product as add-on modules. In the past CDs and cartridges were used, but now this often happen via downloads. These games are developed using the console manufacturers tools, run against their code libraries on the device and are clearly an extension of their product. This has been an established approach for many decades. When my kids were toddlers I bought an educational toy where you could buy little cartridges for it that added educational features.
That's all the App Store is. It's a feature added by Apple to their product for adding optional features to the device. As in many cases in the past, across many types of device, this is a feature added by the manufacturer and your relationship as a customer remains with them.
There is no law requiring that a device containing a computer, be it a car, TV, games console, phone or whatever have any specific features to enable loading additional software. That's just not a requirement that exists, and if a device does have a mechanism to add or update its software, there are no laws about how that must or must not be implemented, that I'm aware of anyway.
If you disagree that this is the way it should be that's fine, that's absolutely your right, but can you explain how such laws should be drafted. What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
Besides that, it could be argued that running software is the feature. What software does is not a feature of the iPhone. Like a recipe is not a feature of a stove.
We are buying the device, it's a tool, and we should control how it's used.
I agree it's a tool and you should control how it's used, but you're demanding that Apple implement specific features for you that they don't want to implement. How do you intend to coerce them into doing that? Who gets to specify precisely how those features are implemented?
I agree that what you do with your phone after you bought it should be up to you. If you can find a way to jailbreak it, I think you should be allowed to do that. In fact I've jai-broken iPhones and iPod Touches before. However I don't think I have a right to tell apple how they make their products, or to force them to implement features for me that I get to specify.
Youre not actually answering my questions. Exactly what features should Apple, Samsung, Pinephone, etc be required to implement? How should we decide what products these new requirements should apply to? Who gets to specify those features and certify compliance?
Common carrier regulations on railroads provide a model for regulating critical tech infrastructure that happens to be privately held. I'm as big a fan as it gets of the capitalist market-based way of organizing society, but even I acknowledge that at large scales, companies need to play by a different set of rules, one that makes them accountable to the public. The alternative is essentially the subversion of democracy. You can take a purist approach to corporate autonomy all the way to its natural feudal end, but I'm not going with you.
So, let's make them!
Saying that there is "no law" is the weakest argument ever.
We the people make the laws, we can decide whatever we want, and we can certainly vote into law the regulations we think are necessary.
Please understand I don't in any way mean to pick on you. The comment has 8 paragraphs that are mostly a description of how property rights work. Analogies to how they worked in other markets, examination of the law, etc. This detail is all very clear and I appreciate it because it helps me understand your point of view.
It is less clear to me, why the current situation of property rights is good. Of course many bad things (and for that matter many good things) have been done in the name of how property rights worked at one time. But in democratic societies we decide how things work, so in that sense we are the author of things like property rights, we decide how we want them to be based on our values.
> If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
I don't know if they have "broken the law" but there are certainly similarities to historical situations.
You discuss game consoles and licensing games. I might suggest from Sega v. Accolade that a hardware marker's ability to license games exclusively was quite controversial at that time, was ultimately reversed by courts.
In DOJ vs MS, Microsoft was convicted as an illegal monopoly for (among other things) illegally bundling software with Windows, and using technical means to keep Netscape off the platform.
I am sure that Apple has great arguments for why they are different than these cases, and a lot has changed since then. At the same time, some things are similar. It's really about our values. Is the law about encouraging companies to innovate new ways to lock out all their competitors? Or is it about helping competitors? Or helping the large companies? Society has not yet decided, so the question has no answer.
> What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
Personally? My designer regulation is one where we have a tiered regime which gets worse the bigger you are.
So, for a small startup that serves basically nobody, we have the current regime, or maybe even we remove some things. There's still regulation on things like HIPAA and SEC rules, fraud, etc. I would also be in favor of much stronger privacy regulation, and limiting arbitration clauses, mostly because a lot of adtech is fly-by-night.
Once you reach some threshold, we regulate at a basic level. This is probably defined as some combination of revenue, daily active users, units sold, subscribers, employee/contractor headcount, but let's just call it a $10m company. Here you fill out a form once a year with an address the regulators can write letters to you, send in your EULA and privacy policy, and there's a list of basic rules like "don't sell user data", "make your software accessible", that are mostly on the honor system unless someone complains in which case the regulator writes you letters.
As we go up in orders of magnitude it becomes a bigger deal. By the time we get to FAANG, you have a regulatory team looking at individual products full-time, the same way we have inspectors in food or finance or anything else. For Apple specifically, maybe "users can jailbreak their device, subject to certain warranty consequences", "all first-party apps will only use public APIs", "developers of first-party apps will find out about new APIs the same time as everyone else", etc.
What is there to regulate? If you don't like their terms you can sell on a different store or distribute yourself, there's nothing stopping you like there is on a typical iPhone or Android device. And frankly their terms are pretty damned fair. For the longest time they took such a hands-off approach to their marketplace that people got angry about that instead!
What other stores have a family plan at all?
I think even the Nintendo Switch is more fair about it, but I haven't checked it directly
This has burned me really badly. I had an account with hundreds of Steam games, and then my dad got hooked on some of the VR games I'd bought and set up on a Vive machine in the living room upstairs. I had to make a new account to be able to play new games. Then my nephew got hooked on one of the games on the new account, so I ended up giving it to him and making a third account for myself. That one only has a couple of games on it, since I've mostly just transitioned to playing stuff on GoG and the Nintendo Switch
In most cases the regular plan is the family plan because most people live in a family and the extra features don’t harm people with individual accounts at all.
Me as a kid on Christmas morning 2004 unwrapping the Half Life 2 disc only to realize it’s a 6.5GB download over my 14.4k dial-up connection. My parents bought the physical disc for a reason, because we had a shitty Internet connection.
They definitely did not get everything else right.
AppStore and, to lesser extent, Google Play are monopolies, that severely restrict rights of their users, no matter what people say that 'Apple is not a monopoly because you can buy another phone'
That would solve the problem. Someone will spin up a better App store. Someone already has in fact. If you jailbreak your iPhone you get access to a second app store (https://cydia-app.com) which has apps that Apple won't put in their regular store.
Putting them in the list but leaving out all console manufacturers and operating system devs? Strange.
He wasn’t saying third party apps should be HTML5 just to stall for time. He really believed it. And it was a good idea and still is.
Processors, memory, bandwidth, and browsers have all advanced by leaps and bounds and yet the dream remains unrealized and Apple is the most to blame. They got addicted to the ill gotten gains of their walled garden and can’t bring themselves to kick the addiction. Rent seeking is a powerful force.
It’s pathetic for a company so good at being honest with themselves and moving forward when they know what the best future is.
The App Store shouldn’t exist at this point. It has outlived its usefulness. It’s in their users’ best interests to move beyond it. And yet maybe it’s too traumatic and daring a move for anyone other than Steve Jobs to attempt.
Tim Cook could drop the headphone jack because it didn’t damage the bottom line but dropping the App Store would actually cost something in the short term even if it is the right thing to do for everyone in the long term.
Because Google exists, and is diametrically opposed to this vision. The past decade have shown constant examples of these two visions of the future clashing. Google wants more people on the internet. Apple wants more people on their devices.
Great website, by the way!
Out of curiosity, can you say whether Tesla has approached you for acquisition?
In my data right now I see a few examples of an $80 purchase match to $56 in proceeds (70%) matched to $56 of a refund.
I can't say I think the 30% fee is appropriate anymore, but this particular case being made about refunds does not appear to be accurate for me at least.
The group think on here always reaches a fever pitch when it comes to Apple - HN is particularly susceptible to it
Recanted there. People need to think more critically.
Plan:
1. Create fake news that X people see.
2. Wait until X is large.
3. Delete fake news, use "plea ignorance" apology to save face, that Y (Y << X) people see.
Congrats you now have a large number of people who now have an even worse opinion on the subject of the news. Repeat steps to cause even more damage.
Pretend to be the victim, whip up a whole lot of free PR sympathy and then make the minor change to the app and resubmit whilst no one is paying attention.
https://developer.apple.com/forums/thread/105454 "Apple has the RIGHT TO withhold" https://news.ycombinator.com/item?id=23989256
It seems you can only get a refund by reporting a problem, which means if your app works as described you shouldn't be able to request a refund.
Takes like 10 seconds.
I have heard this rumour before and it does sound like Apple deserve the right to do this, so perhaps it varies on a case by case or region by region basis? But seems to be hard to find concrete information either way strangely!
Tech in general has quite a few things about itself it needs to fix. Is it ethical for Apple to write the OS, run the store, sell its own wares AND compete with people it charges, eg 30%, to compete? Same question for other stores, eg Google? Both companies have analytics to determine which of the crop is successful and therefore needs to be harvested. Is this a level playing field? Do we expect such? Should we?
These aren't trivial or straightforward issues. It will be interesting to see over the next 20 years how this plays out. It would be better with a shorter time frame but... nothing involving legalities is usually fast.
https://twitter.com/twolivesleft/status/1288491970248077314
- Since 2011 Codea has had 1,768 refunds
- Estimate it cost us ~$8,000 USD to pay Apple’s 30%
- A single day in 2017 saw 193 returns and I have no idea why or how that’s possible
later:
> Yes, we’ve had a few days of negative revenue in the last few years due to people refunding Codea. Apple keeps their 30% no matter what
How long will they get away with this before antitrust regulation kicks in? They are so focused on extracting rent that they keep on poking this sleeping bear, and it eventually will be a huge problem for them. If they don’t reverse course, expect to see large reductions in their profits and stock price when this happens.
It is somewhat ironic that so many people who helped so many other sectors disintermediate again (by building websites), are now busy actually intermediating their own.
Why developers even use the app stores baffles me
97% of user's time is spent using the 10 top mobile apps
Average user downloads ~0 apps / month
PC sales are up last year and more this year with COVID
Who makes money?
There are 3.5 billion smartphone users. [0] Smartphone usage statistics suggest that an average person spends 2 hours and 51 minutes per day on their mobile device. [1] This works out to a cumulative total of 3.6 trillion hours of use per year. 3% of that time is 109 billion hours a year in non-top-10 apps.
You might not become a millionaire with your app being part of the 3%, but there's still real money there.
[0] https://www.statista.com/statistics/330695/number-of-smartph...
This in turn shifts more and more apps in the direction of invading our privacy with invasive ads libraries, leading to also worse privacy as a consequence. It's already pretty hard to convince users to pay for an app, the 30% cut almost guaranties it will be a bad business model.
If someone knows how to work with their system better regarding returns, let me know.
They skim the seller for the sale (because they do the marketing for you). They skim on payment processing (it costs them less than they charge) They skim for exposure (ads are almost a must have to ever appear in search results). They then skim on delivery via FBA (they charge more than it costs them). And they skim on warehousing via FBA (the pricing was already unbelievable back then).
Fast forward 10 years, they have started to skim sellers off their business analysis and risk taking effort (They have the data, and will compete with 3rd party sellers on products that sell decently enough, and even place their product before yours).
I've recently taken the time to edited and publish a book that is in the public domain, on their KDP platform, a few days later I see that Amazon is selling that same book and even redirect customer clicks from my page description and book cover to their line item to buy.
Amazon has no limit.
Can you expand on this? I'm not sure what you mean exactly. Is Amazon redirecting direct links to your free book to a non-free version?
Does "customer refunds your paid app" mean the customer requests and gets a (full) refund from Apple for a prior app purchase?
(I would say "returns" not "refunds" ... Apple is the one refunding, not the customer. The customer receives the refund. But I guess this is some kind of regional/informal usage I'm not familiar with.)
If so, that's BS. Apple could reasonably keep transaction costs of something like 5%, but the full 30 is crazy.
You buy an app for $10, Apple gets $3, the developer gets $7.
You refund the app (through the Apple App Store), you get your 10$ back, but that whole 10$ comes from the developer, unlike the 7/3 split when you first purchased it.
So in the end, the developer has lost money due to the refund.
If I get a 30% commission for a sale when the customer is referred by me and at some point in the future the customer asks for a refund I don't give my commission back. Our transaction was done when the original sale was made.
The developer has no capacity to deny a customer, yet has the responsibility for the bad customers shopping someone else's store.
The ethics of this scheme are debatable but it should be assumed that some refunds are legitimate and Apple loses tangible customer $LTV from some refunds.
Compare it more to sales tax, which is a much closer comparison because it is required as part of the transaction in a monopoly ecosystem (much like a sales tax is in a country).
If a vendor adds tax to a price, and then charges the customer, and the customer gets a refund, the customer get the sales tax back, but the vendor then doesn't have to remit that tax to the government (and if they've already remitted it, they can apply for a credit).
Because that’s basically Apple’s whole thing. If you want you can just ignore their existence. You can run a very successful business on the web, Android, Windows. But getting your app on iOS and in front of their customer base is really valuable. Better than any billboard or FB ad. They know that customer acquisition is hugely expensive and that being able to sell on their platform will make you more money than not and so they charge like it.
The difference between having Spotify on iOS that can’t mention that premium exists (because that would be using iOS as a marketing vector which Apple charges for) and therefore has to do their own customer acquisition, and being able to convert customers in-app makes a big difference.
We were talking about selling in the iOS ecosystem, and the mechanics of that process.
No one said there weren't other options, and "take your ball and go home" is obviously always an option but that's not what was being discussed.
(Note that it turns out that Apple does not keep their 30% when it refunds an app, so the original point wasn't valid).
I just looked at our app store connect Sales and Trends page and for a $10 item: Apple proceeds $7 to developer and takes back $7 again from the developer on a refund.
Lesson learned for me to verify claims before supporting them!
https://twitter.com/twolivesleft/status/1288625617873694721
Apple does not keep the commission when an app is refunded.
1. Someone pays me $100.
2. Apple takes 30%, so I only get $70.
3. Customer asks for refund and gets back $100.
4. Apple takes back the $70 from me.
If Apple was skimming 30% off from the start, how does that affect me during a refund?
> You shall reimburse, or grant Apple a credit for, an amount equal to the price for that subscription. Apple will have the right to retain its commission on the sale of that subscription, notwithstanding the refund of the price to the End-User.
If you disagree, please cite a source.
Here's apple deducting a refund from me in 2010, and the amount is exactly what they paid me. https://imgur.com/a/KwKlMXh
First screen shot is a week with one refund (-$1.40) and ten sales ($14.00 proceeds).
You make 3 sales of $100. One gets refunded. You get paid $200 - $90 = $110 instead of $140, because in practice Apple pays you in batches and doesn't pay immediately for each purchase.
That should mean 3x$70 for you, $210.
But then one of those is refunded. Apple takes $100 from your account and gives it back to the customer. You end up with $110.
Should be like:
You make three sales of $100 each. One is returned. You get $70 + $70 + $70 - $100 = $110. Apple gets $30 + $30 + $30 - $0 = $90.
That is, you get $70 for each purchase but lose $100 for each refund. Apple gets $30 for each purchase and loses $0 for each refund.
Apple has real costs for each transaction and the refund is not really its problem so it makes sense that it keep those transaction costs. But those aren't anywhere near 30% (well, actually on a $1-$2 purchase it might be, but too far beyond that).
Instead, Apple keeps records of what it owes each developer, and at some later date (likely monthly), it makes one big payment to the developer.
Thus at purchase time, Apple enters +$70 in the records it keeps of what it owes a developer. And at refund time, it enters -$100. So the net effect of a purchase and then refund is +$70 + -$100 = -$30.
> You shall reimburse, or grant Apple a credit for, an amount equal to the price for that subscription. Apple will have the right to retain its commission on the sale of that subscription, notwithstanding the refund of the price to the End-User.
If you disagree, please cite a source.
Refund should be: Developer has $7 deducted from current owed "royalties" Apple refunds $10 to the customer.
Is Apple actually taking $10 from the developer and giving it to the customer? That would be theft. The developer is not obligated to cover refunds beyond the profit/royalty they originally made on it.
That is exactly what is happening.
Frankly from my point of view this is criminal. We kept payments for our product outside the app for years, and now Apple closes that ability too, by forcing any app that accepts payments of any kind to also accept Apple Pay. We've had to basically hide the ability to find it in the app so that people will go to the website first.
Apple seriously needs to be regulated.
We see what "serving developers" has done to the web in general - a genuine mess. Perhaps the fee is a bit much and the refund should come with a return, but as an apple product owner, I like the general experience of my iPhone and its app stores, and I don't want them to cater to devs over me.
I think Apple should split the fee up. Make a portion what they charge for processing payments and the rest their commission.
one is the cost of doing business, the other is predatory
Do you know how much manufacturers earn on products sold in grocery stores? Far less than 50% of the retail price. When distributors are involved, it’s even less. The company that makes a bar of soap might get paid $1, the distributor gets $1 and the retailer sells it for $3 and has the right to return unsold product. And shipping costs aren’t included in these amounts. The manufacturer gets $1 but also has to pay shipping to the distributor.
People complaining about 30% have no idea how real world businesses operate. They are in some kind of fantasyland. Don’t forget, the App Store also handles your worldwide sales tax payments, fraud protection, chargebacks, hosting, distribution, your storefront, your payment processing and gives you worldwide availability for your app in the specific local currencies.
If those services aren’t of value to you, then don’t sell apps for iOS. Certainly Windows Phone has some users, or perhaps create your own device and ecosystem that offers terms you find more amenable. This is Hacker News, not crybaby news: you don’t like the status quo, then get some friends, start making a better system, raise some money, then compete. If you think 30% is predatory, then make a system that only charges $what_you_think_is_fair.
As far as Stripe, they take more than 3%. And for connect accounts, the percentage is closer to 3.5% not to mention you get charged $15 or $20 for a chargeback. What’s Apple charge developers for chargebacks? Zero. How often do developers have to challenge chargebacks with Apple? Zero. If you are selling using Stripe, it can become a significant expense, depending on your industry, especially gaming.
It’s my feeling that people complaining about 30% have no idea of the expense of “doing it themselves.”
Getting INTO stores is hard. The store can dump product back onto you - so they have no risk. The price on shelf has NOTHING to do with what you get, if you are small you are already going through some intermediaries. Ie, person making product, packing, shipping to distributor (some make you pay cost to get it to them), then distribution costs then retailer markups then return handling yadda yadda. THEN retailers will ask you to run promos and give them discounts or they will drop you.
3%? EVERYONE would pay that. In retail I'd say person making product gets maybe 20%? 80% is taken by others?
Nobody is saying Apple shouldn't get paid here, but keeping 30% is insane.
30% is quite high? It's highway robbery!
This is exactly how it works:
* Customer pays $10
* Apple owes developer $7 (to be paid in 4-6 weeks)
* Customer asks for refund, Apple sends them $10 back
* Developer owes Apple $3
I've seen the discrepancy in our own accounting, and as mentioned elsewhere, it's in the App Store terms. But Apple's dashboard doesn't show a clear difference between chargeback and refund, and maybe that's where the story originated.
HN won't let me amend my comment above, but I stand by the claim that this happens on chargebacks. Otherwise the App Store Connect numbers don't add up.
I think the truth has some nuance, but that doesn't work on the internet, it's got to be either an outrageous story or "total fake news".
Apple takes more than 30% cut for in-app purchases made in other countries. For example, an in-app-purchase (IAP) you sell in USD for $15.99 is translated to 1249 Indian Rupees and you get a proceed of 741 Rupees which is only 59%. So Apple keeps the rest 41%. Today's (when I wrote this) exchange rate shows approx. 76 rupees for 1 USD so the amount they charge the user is pretty accurate but Apple put so much wiggle room in their favor. This is true for other currencies as well.
Now I should have done my research but it doesn’t support tunneling or I couldn’t figure out. Some research told me that no iOS ssh client will. So I requested a refund and got it.
In this case I think the blame was on Apple. Not the author of the app.
If my kid wants a dvd about beetles (the bugs), and I click on a Beatles (the band) documentary instead, that’s neither the seller or producers fault.
No dvd player manufacturer created a dvd store where they sell dvds called "The Beatles" but every Beatles dvd is missing Ringo because their dvd store censors Ringo, but dvds are still named The Beatles.
They are two different things.
Of note is that the developer "protection" clause in the 2009 version doesn't seem to be in the current version ("Otherwise, no refunds are available."): https://www.apple.com/legal/internet-services/itunes/us/term...
My memory is fuzzy, but I recall there was pressure from the EU? regarding lack of refunds, so I'm guessing this was Apple's adaptation.
Regardless, it still clearly seems like the right thing to do is to refund the developer the 30%.
So each refund costs the dev more than they took in for the sale whilst Apple always pockets the 30%.
How can a refund cost the dev $1.00 if they only took $0.70 for the sale?
I feel like getting rid of the app store, or even just allowing side loading, would open users up to a lot of nefarious software.
If we assume that consumers like the App store and that its not going away, how do we satisfy developers but allow consumers the comfort of the walled garden?
The bigger question is whether their cut should be 30% in the first place.
30% was chosen by the first store of this type and it's just never been questioned by platforms. I just read that Valve recently changed their agreement to be a sliding scale based on sales (30% to start, falling to 20% if you hit certain numbers).
But as far as I know, Microsoft, Sony, Apple, and Google all do a 30/70 split on digital sales.
Consistency which is only possible in an environment of collusion.
You don’t have any other options for most of their respective platform and there isn’t enough incentive to compete on the pricing.
Also even when there is competition there are rules that prevent you from lowering pricing in one store vs the other (there are some exceptions) so if you end up say selling a game on the PC and you set the retail price as $60 and you launch it on 3 different digital content distribution platforms while you might make more money on one platform than the other there is no difference for the end consumer so there isn’t an actual competitive incentive to reduce your cut as a digital distributor unless you think you can get an exclusivity deal.
If the first store did 20%, it's likely all the stores would have followed suit on that price point.
30% is likely the most they can take that people will tolerate.
I see the case where your child spend money via an in-app purchase in Roblox. Where The kid buys USD 1k in robux and the Roblox app never complain... Where we are using two factor authentication and all kind of measures to protect credit card purchases. So, I think you can blame Roblox or Apple for not adding these measures. This is like a dark pattern hidden in the "frictionless" payments via apps.
Would be great if others could chime in with their experience if they have records to check!
My apologies for posting this if it proves to be incorrect, hard one to fact check weirdly.
Apple appears to be deducting just the 70% from earnings, not the full 100%. https://imgur.com/gallery/KwKlMXh
This is a critical consideration in these 30% store fees. They come off the top, before funding any developer costs. As a result, Apple and Google make more profit from most developers' games than the developers themselves. That is terribly unfair and exploitative.
https://twitter.com/TimSweeneyEpic/status/128831577560707891...
See Steam vs. Windows Store vs. Epic Games store.
(nitpick) The use of the verb "refund" seems confusingly wrong in this sentence. Neither the customer nor the paid app is paying back any money. I know it's Twitter, but it'd make a lot more sense to say "When Apple refunds a customer of your paid app..."
Remember You often have a choice to not support this platform and move towards web by default even if it is not easy (Apple enforce to use their web engine to make sure you are in a slave position on iOS)
Fortunately their cut isn’t the massive 30% that Apple takes.
I buy your app. You get $7 and Apple gets $3.
I refund your app and get $10 back. Is Apple taking $10 from the developer to give to me?
This smells positively rotten.
Apple appears to be deducting just the 70% from earnings, not the full 100%. https://imgur.com/gallery/KwKlMXh
This is a serious misunderstanding by someone in a pretty incredible way. Literally a single person claiming this and _multiple_ people refuting it from their own experience.
Yet it's top of HN. Amazing. A lesson to never, ever trust anything here because the masses clicked an arrow.
Here the post still sits on the front page.
Don't ever change your adorable ignorance, HN. It's such a laugh.
And this will be auto-dead. I was spot on and completely right and got pummeled down by the imbeciles of this cesspool. Hilarious.
FWIW, it's been corrected in less than 18 hours.
Conclusion: You can continue to blindly trust everything here (provided you check a day later)
;-)
I am using the term in a colloiquial, non-legalistic sense.
My fear is that politicians are invested in tech stocks, like the rest of us and pretty much anyone with a mutual fund, so they are unlikely to act in a pro-consumer manner.
Because they can afford it, and it's the right thing to do both ethically and morally.
Apple were part of the transaction, so if there's a refund they should return the money they earned. They can't just ignore the customer's wishes to get the money back, and they can't just pass the loss on to the developer. Neither would be fair.
The interface and what you can do/demonstrate in the store is severely limited.
On top of the non-negotiable $99/y developer account fee.
Apple would justify that 30% being non-refundable by saying "you would have never had that client to refund if you did not give us that 30%". They did their job, they got you the client, you were the one who did the bad job and made the client pursue a refund.
You pay a toll to cross a bridge, but it turns out to be the wrong bridge. You don't get your toll back, you still crossed the bridge.
A person who focuses only on marginal cost will say "It only took you an hour to make that" while discounting the decades of training it took to be able to.
A person who focuses only on marginal cost will say "I could have made this at home" while discounting the reasons why they didn't.
Prices relate to provided value, not just cost.
it has to do with who is being made to carry the cost, and the griefing that can occur that way. Not worth the trouble IMHO.
And the cost of refund is the same to Apple for a product that cost $1 just as it is for products that cost $100.
Apple has all the reasons to entice the customer into buying the product and encouraging them to do so by offering a full refund, and they take none of the risks because the make the same money either way.
I am surprised of how many people don't see the conflict of interest here.
In your analogy, it would be like giving the toll back and charging a portion of it to the bridge builder.
The customer's experience is now in the developer's hands. If the experience is botched, somebody has to cover the full refund. Since the bad experience happened outside of the transaction, it's not Apple's responsibility, it's the developer's; they need to shoulder the full refund. It wasn't Apple that fucked up.
If the user didn't understand the app before buying, that's still on the developer. If the app has issues because of some dependency on wonky Apple implementations, that's up to the developer to communicate to potential clients. The developer is responsible for the experience after the purchase is made, therefore they are responsible for the full refund if the client wants one.
The problem is Apple doesn't need paided third party apps as much as they use to. The app store gave them runway to develop important apps internally. Big name/vendor free apps are welcome.