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Comment by Otek | Hacker News Reader

Developers would stop offering Apple payment and only allowed to buy subscriptions and full products by their websites. It wouldn’t be cheaper for consumers, maybe on the beginning it would, as a PR move. But as a consumer I would lose this amazing Apple support, that allows me to return in few clicks game I didn’t like, subscription that didn’t offer what it promised and other services I was dissatisfied with. I would lose one interface to manage all my apps subscriptions, and had to give my credit card number left and right for every, even small app, I would want to try. No thanks

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If the frictionless payment system was so much more appealing to users that it generated enough extra income to offset Apple's fess then devs would offer it. This is how marketplaces are supposed to work.

Exactly, it would force apple to lower the cut they take to make it worth it.

It's frictionless in part because it's exclusive and universal. I don't even have to think about what the payment method is, or whether I should trust it, or whether I should choose another one. I'm not necessarily arguing for this, just pointing out that friction can be as much about uniformity as it as about choice.

And let's be clear, this isn't an argument over competing methods of payment, it's an argument about whether Apple should be entitled to a percentage of revenue for iOS app sales, regardless how they are sold, regardless where they are sold.

We should be mindful to keep this question separate from whether there should be more than one place to acquire apps, or whether it matters if the financial transaction occurs prior to downloading or after the app is installed.

If you don't like the payment options the app offers then you're free to choose another app that does. Isn't that the same justification Apple's defenders always give?

To be clear, are you arguing that what matters is a choice in payment methods even if Apple takes a percentage either way, or is your argument that Apple shouldn't be entitled to a percentage of revenue from apps built with their tools and libraries?

If it's the latter, then Epic disagrees with you.

Epic's own business model says they're entitled to a cut of your revenue if you use their tools and libraries. They don't care what payment method you use. They don't care if you sell copies or sell in-game hats. If you make revenue, they're entitled to a slice of it.

(Yes, Epic does waive their fee for low revenue games. That's very nice of them, though in reality it's obviously a clever strategic move to lure game developers over to their ecosystem, in the hope that more breakout indie successes happen to be built with Unreal Engine. But that doesn't change the underlying principle: they would be entitled to it if they had asked for it.)

I don't think Apple should be allowed to both require that all apps on the phone go through their store and that they get a cut of all the business that goes through that store. Either allow other stores or allow other payment methods in the one store they do allow. Unfortunately Apple has recently made it clear they will use their control over their store to disadvantage competitors.

Yes, but separate to the question of marketplace and payments diversity, do you think Apple is entitled to a revenue share in return for the use of their tools and libraries, just as Epic are entitled to for their tools and libraries?

Maybe but I think that’s a separate issue that’s going to have to be hashed out in court and in legislation. Nobody would buy Apple hardware if those tools didn’t exist so in some sense they’ve already been extremely well compensated for the work they put into them.

Fair enough. I just notice people arguing that the reason why Apple should face competition in app stores is because charging 30% for retailing an app is too high, as though the 30% was supposed to be a retail margin and nothing else.

Though I disagree with arguments about whether Apple are "extremely well compensated" already. Arguments of principle should not take into account any company's particular monetisation strategy. For example, it's often stated that game consoles are sold at razor thin margins, or even a slight loss, and this justifies why they can charge high license fees for games. I think that's a perfectly valid strategy, but the fact that the game consoles aren't a profit centre (whereas iPhones definitely are for Apple) shouldn't affect whether it's decided that a 30% manufacturer's margin on digital software sales is appropriate or not.

I don't think game consoles are a useful analogy for the mobile market. Different business models and different stakes for society.

I actually agree with that, to an extent.

But I would also argue that when the software in question is a game, a game console can indeed be a relevant analogy. Games are games—whether you are buying them to play on a smartphone or a GameBoy or an Xbox. The "business models" and "stakes for society" are the same regardless.

If I were in charge of Apple, I would lower their store percentage to a very low 10% for non-game apps. 30% might have been a reasonable amount in the early days, but Apple's market success means they don't need it. (I would also completely abandon their pointless stance over reader content and allow Spotify, Netflix etc to bill customers directly in-app.)

But for games, I would have Apple match the prevailing percentage set by Sony, Microsoft and Nintendo—which I believe is 30% across the board.

This is exactly why Epic is trying to claim that Fortnite is more than a game right?

I haven't read that particular detail but it wouldn't surprise me. Though it's not a particularly clever line of argument since fundamentally it is a game, even if it does have a sprinkling of non-game aspects to it. I'd argue that when a game has aspects which are "more than just a game", the error is in our description of what a game is.

I suppose you could bolt a rudimentary spreadsheet feature onto Call Of Duty but that doesn't stop it from being any less of a video game. This isn't interesting and it certainly isn't clever.

A more interesting question would be if Microsoft Excel iOS had a little Sudoku mini-game buried in a submenu.

Of course developers would allow people to purchase through the app.

They would do this by transparently showing the markup to the user, and allowing the user to choose if they want to pay 30% more or not.

That seems like a pretty reasonable solution to all of this. Give users the choice to buy on the app, and have them pay the full fee if that is actually what the user wants.

One-sided consumer protections are great if you're a consumer who actually is being wronged. They're not so great for merchants when consumers who haven't been wronged abuse them, though, and that has a chilling effect that hurts everyone. Merchants will either push their prices up to compensate for the abuse, so legitimate customers end up paying the price for abusive ones, or simply not offer their products or services for sale in that channel at all if it brings more trouble and risk than it's worth.

Is there evidence of this chilling effect in action on the App Store? What’s the restock overhead for returning a digital game?

Yes, you're talking to it. My businesses operate web apps but do not offer native iOS apps despite the occasional request. The hostile developer environment, high fees and expectation of ridiculously low prices simply aren't worth it in our view.

That sucks but what does it have to do with "consumers who haven't been wronged abuse them"? Especially in the context of "Apple support, that allows me to return in few clicks game I didn’t like, subscription that didn’t offer what it promised and other services I was dissatisfied with".

I guess my point is that App Store metrics (total revenue, subscription revenue, average revenue per user, etc) continues to grow and maintain their lead over Google Play so the chilling effect can't be too bad.

For example, if Apple's terms require that merchants take the hit any time a consumer gets buyer's remorse and demands a refund, it's hardly surprising that some merchants aren't willing to accept that liability.

I suggest that in terms of metrics, Apple's App Store vs Google's Play Store isn't really the right comparison to see the chilling effect I'm talking about, because both mobile ecosystems have broadly similar dynamics. A more telling comparison might be something like iOS app developers vs. web developers offering SAAS. How many businesses that run successful SAAS websites charging subscription fees for access also offer an equivalent mobile app where customers can subscribe, accepting Apple's 30% cut and other restrictions?

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