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Hmm, I generally take the pro-Apple stance on this. I don’t want side loading or third party stores. It’s Apples product and they get to decide what features it has, IMHO. I don’t want government committees dictating the security model and software architecture of my phone, thanks.

However Marco’s argument is spot on. Apple is saying in Senate hearings that App developers are picking up crumbs from the App Store’s floor and should be grateful for what they get, while reassuring devs that they are what makes iPhone so great. Too many of Apples moves against devs on the store recently have bordered on the abusive. Yes they’re greatly trimmed charges for small dev shops, but the rules on that are awkward and are clearly about optics not substance.

To your questions.

1. Then Apple would have failed to offer a compelling product. There are other phones and app stores out there. If Apple can’t compete with Samsung on the quality of their phones, then they’re not the Apple I know and love anymore. It’s up to them to add value, not leech it off others. They do deserve fair recompense for their services, but that’s all.

2. We know very well what their hardware margins are. From their own filings, their phone hardware margins are over 35%.

This is definitely a case where our Senate is out of it's depths. Software licensing and the world of software distribution is still a remarkably new field in the political world, so it makes sense that our government is totally lost here. There is no precedent for what Apple is doing. This is the licensing nightmare scenario all of the BSD developers warned about when Sony sold the Playstation Linux Kit: we no longer own the hardware we buy, we simply lease it from someone who provisions us authority to it as they see fit. It's a harrowing paradigm.

I also "don’t want government committees dictating the security model", but IMHO it's a big leap from that to advocating against consumer choice within a general purpose product.

Why is it a big leap? Consumers also choose to buy Apple and the assumption is we're too stupid to know we can buy something else and do more with it. It's just as big an insult. If I can't get your app on iOS then I just won't use your app. I don't care if it's on Android because I didn't buy an iPhone to use your specific app.

If you want to legislate for consumer choice do so but can we stop pretending this is some battle for choice when it's literally about two behemoth corporations arguing over how they split our money.

We agree that, properly empowered, consumers will make the best choice for themselves.

We disagree about what constitutes "properly empowered".

Yes that's a fair break down of the situation. We're mostly not aligned on how to properly empower individuals.

I don’t think it’s a big leap at all. On summers have a choice if they buy a product. They don’t get to dictate what products a company is allowed to make. Safety and consumer protection, fine, but I don’t see this as about consumer protection. It’s about some people wishing Apple would change their phones to suit their preferences, but there’s no obligation on Apple to do so.

People have always wished Apple would sell computers with this or that feature, this or that peripheral or option. That’s not how it works though. If they don’t sell a device that suits your needs, you have the same recourse the rest of us have.

But do you really think they would stop with specifications for side loading and App Store APIs, security profiles and associated OS services? How about specs for police and security services back doors, tracking and surveillance. They won’t be able to help themselves. And if the US can pass laws demanding these things, that creates a precedent for Russia, China, Saudi Arabia etc to follow suit.

So you get Apple dictating both the security model and the commercial model, to developer detriment.

It's clearly monopolistic - exploitative, monolithic, controlling.

The app store is the biggest source of friction standing between app developers and their customers.

Now - this wouldn't be a problem if Apple did the job they claim they do, improved search so it worked well, provided easy visibility for relevant apps, and threw out the scams and the trash.

That isn't what's happening. And that is a problem.

The security angle is a non-issue. Returning the app ecosystem to some semblance of functionality and fairness would is an orthogonal issue.

Apple can keep its walled garden. But it needs to start treating it like a valuable garden, not like a pile of burning trash that happens to generate huge amounts of free money.

>That isn’t happening.

When Apple says they rejected 1 million app submissions in 2020 and cancelled 470,000 developer accounts for fraud in the same period, do you think they’re lying?

https://www.cnbc.com/2021/05/11/apple-rejected-nearly-1-mill...

>How do we know the price of the hardware today isn't offset by services revenue?

Unless you want to some doggy NRE number into accounting. Apple's hardware are extremely profitable doesn't matter how you spin or slice it.

But, yes. Today's price are subsidise by their services revenue. The keyword here is price. Apple still gets to keep their same margin. Basically Apple shifted the cost of macOS, cloud and other software expenses from Hardware / Product cost to Services revenue. This was stated in their 2018 investor notes.

Again, Macro's point isn't just about 30%. There is an Anti-Competitive, Anti Trust play here. Of course those two words have difference definition to quite literally everyone, and especially different from a US and EU stand point.

I don't think they shifted anything, they just added the new revenue on top and became more profitable.

Apple used to account their software development cost as part of their product COGS. Which is what Steve's way of saying you buy iPhone for iOS. Both are the same and one. I believe this was listed in their late 00s investor notes. We dont know how much they account for those development though. It was never listed, but in the case of 2018, $10 / devices were put to Services Revenue. Which is roughly $3B annual revenue to Services Revenue.

Marco literally states that it’s not wrong pointing out that it’s their business prerogative and further they aren’t known for being very generous anyways.

So you’re arguing a straw man.

And if the service revenue was supporting hardware revenue Apple’s services wouldn’t largely be limited to Apple devices.

Besides, Apple is a public company and we can see how those revenues break out. Further, we can guess that even the relatively minuscule service income would largely disappear, if, for example, I could download apps at a 15% discount using a non Apple App Store to an iPhone and not have to jailbreak the iPhone.

I was just arguing the quote "Apple uses their position of power to double-dip"

Double dip has connotations that they are taking twice when they should only be taking once. I am simply saying that diverse revenue streams to capture value from a product is not wrong. Therefore, calling out "double dipping" behavior is unfair.

If the optics of it don't look good, there's a very good chance that it isn't good.

If you read my argument I'm saying the optics don't look good because the margins on phones are high AND they are taking platform fees on top of that. As the margins on phones decrease in the future, the optics won't look as bad.

That's not an excuse for them to be driving such insane margins then. Plus, who's to say that the iPhone doesn't receive another overhaul in the next few years, driving the margins back down? Apple will continue to play this game of cat-and-mouse for as long as you let them, and that's ultimately how they accumulate wealth. It's a campaign almost entirely ran on deception.

It's a campaign ran on Apple making products that a lot of people like enough to buy them at the price Apple is selling them.

Yes, and at some point it's possible consumers simply won't pay for some new technology down the road. Say for example, a very expensive health/bio sensor. However, Apple might feel that 1) it's good for the world to be able to monitor/improve health, 2) will give safe access to this sensor to 3rd party developers, so it's good Apple can draw on this revenue source from platform fees to make it happen, by killing margins to ship this sensor. I am not saying this is happening today at all. I just think it's good for the platform to have diverse revenue sources. It's good for Apple, but it might also be good for developers too

This is an idyllic situation which has sadly never panned out. Apple has had plenty of times to integrate their hardware and software with open standards, but time and time again they reject it in favor of overcomplicated and inherently insecure solutions. Imagine how simple messaging would be if iMessage was an open protocol, or Airdrop was a standardized and unlicensed. The solution isn't to crush your competitors, it's to coexist with them. Google, Microsoft, Amazon and Facebook have all accepted their postmodern places in the industry, and Apple will continue to stick out like a sore thumb until they return to their core competencies and quit repeating the mistakes Microsoft made in the late 90s.

Customers aren't the only factor here, though. Developers are coming out en-masse to denounce Apple's business practices right now, and the government has been starting to intervene lately too. It's obvious that there is contention in Apple's ecosystem, so they'd be much better suited to addressing it outright instead of dragging it into the world's longest media fiasco. This is (and has been) one of Tim Cook's massive pitfalls, and he repeatedly falls into these asinine grudge matches that only further destroy what little digital cogency there is in this world.

So basically in your opinion businesses making a lot of money makes for bad optics.

I would have to agree with that. Excessive greed is bad optics.

Apple is literally the world's largest company. I would argue that increasing their market share of anything, anywhere is harmful to the future of humanity, full stop.

No the optics around charging developers large platform fees when they also highly profitable on the phone itself. This whole thread is about double dipping. I am specifically talking about "double dipping" and the optics of that.

Optics is just another word for propaganda in this case. The optics just come down to who is able to "control the narrative".

IMHO, Apple can keep their 30% fee on their store if they open the platform to 3rd party stores.

If Apple has to raise prices on their hardware to stay is business, that seems much fairer that using addicted mobile gamers to subsidize hardware for everyone else.

I’ve never paid for an app, and don’t want to pay more for an AppStore that I don’t use. Only app I use other than Apple stock apps is a bank app which I can use safari and Instagram. Which should work on web browsers but I don’t care about it enough to pay money for it

I don't get it, how would you be paying more for an AppStore?

If Apple reduces platform fees the price of the phone could go up to compensate for that.

Also, my experience aligns with this too. I dont game on my phone and basically use default apps. I use the United app to book flights but could easily use the mobile website. Same with Twitter

The profit margin on the iPhone is 35%. The App Store currently runs at a large profit (estimated to be 70%) primarily from in app purchases in the gaming category.

Your purchasing habits are not indicative of the mainstream; further, the iPhone isn't priced based on cost to the cost to design or manufacture.

I'm not sure how anything you've said here relates to anything Iv'e said

But then you wouldn't be paying for an AppStore, you would be paying the real cost of the hardware.

This is also entirely hypothetical because Apple has really good margins on their phone sales.

I too don't see any issue with this. They built the phone and created a platform to build upon. They exact a 30% tax. So be it. I will not use, install, or tell my friends or family to use, install, or get software from any third party app on their phones as it would break one of the biggest selling points of the iPhone: it's appliance nature and how difficult it is to brick or screw up.

I also don't want the podcasts I subscribe to to have my email. Podcasters claim to want to own the customer and the flow. They only want this for upselling or cross-selling. No. I will pay you through apple-pay without revealing my email, and you can talk about promotions and things in the podcast but otherwise let's leave it at that.

You are not alone. Consumer satisfaction of the iPhone as a product is through the roof. Android has been steadily losing customers who jump over to iPhone.