Apple buying Google ads for high-value subscription apps
forbes.com
forbes.com
> “The user experience is much worse,” a marketing executive from one company told me. “When you buy with the developer, they have a relationship with you ... when you buy from Apple: sorry, you’re Apple’s customer, not ours, and if you have a problem with a subscription … we can’t really help them.”
Now interview a real user of subscriptions instead of a brand marketing executive and ask them if the user experience is worse.
PS. Even when not confronted with such a piece, remember that Forbes is no longer the business journalism folks may have grown up with. For the past decade, it’s a blogging platform for independent contributors:
> Each contributor flies solo with his own blog. He is responsible for conceiving and creating the content, ensuring its accuracy and building an engaged, loyal readership. Forbes provides the technology and compensates some of the contributors, but otherwise, like all entrepreneurs, contributors are left to sink or swim on their own.
https://www.poynter.org/reporting-editing/2012/what-the-forb...
I’d be amazed if the game publisher would have cared at all. No amount of future loyalty to the one game would have offset the cost of the refund. Same is not true for Apple or Nintendo.
I want to cancel in one tap for any subscription. I do not want to go through shitty, abusive retention flows.
It’s currently 6 taps to cancel a single subscription in Apple and 2 taps extra for each service you want to cancel right after. I love knowing that I don’t have to figure out what magical incantation I have to do to cancel any/every service I sign up for.
I do not want any kind of retention, I do not want to be messaged in any way, just stop renewal. I do not want to call in, live chat, give a reason, etc.
I think that would be great, except many companies care more about holding on to users than the user itself.
But i think it's a great idea, it could even be listed as a feature/badge when signing up.
[X] Easy one-click cancellation.
Also, those numbers aren't as great if you count typing a url in your tap count.
Two questions:
1. Are you fine (edit) as a consumer (/edit) paying 30% more for this, especially when you are just trading data collection from the App maker to Apple?
2. Wouldn't you rather that everyone had this protection, and not depend on the mercy of corporates for this?
I absolutely am not fine allowing Apple to charge 30% extra, especially when other payment processors only charge around 2 to 5%. And Apple forcing themselves as a middle man is more of a concern here as they have more potential to exploit me commercially, using my data, than some non-BigTech app maker. The 2nd question is more pertinent to all of us as consumers - thanks to Indian laws and regulation, I can easily unsubscribe to any service, and that protects me from exploitation both from Apple and any unscrupulous service. That is what we should all be working towards (more consumer rights). Any support for Apple on this is totally misguided - if they genuinely cared about your rights here, they wouldn't be gauging 30% of you in in-apps payment, without even telling you that money goes to Apple.
There is a difference between trusting a single company to run all your transactions through them and giving your card out to the 20+ places you subscribe to.
I trust Apple (and Google) on data security several orders of magnitude more than any generic publisher. While I may not like the privacy part, at least they tend to hold it better than any other generic app.
Several years ago there was a company similar to this called UltimateGameCard - they were a neutral third party not associated with any publisher that strictly handled paid-in-store prepaid value PINs that collected no personal information and were partnered with dozens to hundreds of game publishers, and supported hundreds of different major games (and several software publishers).
They were available in almost every store, and using them required no privacy violations. Explicitly, their largest customer base were minors (like me at the time), and not collecting PII or even name made it great and a first choice for them.
The low incidence of fraud and inability to chargeback the company (cash only in hand; and you could still dispute the game publisher via the prepaid company to get value added back) resulted in extremely low fees, to the point where games would give you bonus value if you chose this instead of a credit card or other. They had contracts with basically every major publisher - Club Penguin, Runescape, Everquest, etc, and your funds were good almost every game you'd play.
They generally respected both sides of the market: you, a 12 year old, could ask customer service if you were genuinely ripped off or accidentally claimed too much value at a specific publisher but didn't use it yet, and they would treat you like an adult. The game publisher could refund the value if you didn't spend it yet, and not be hit with any form of chargeback or dispute fee or any increase in fees at all. And since it was paid in cash, if you were lying about it or just upset you failed your loot box gamble, you got nothing back. It was also more or less publisher contract based so random IAP trash couldn't just sign up and take money - all the big names were on this.
I would love a system like this again.
Regarding #2, we didn't depend on the mercy of corporates in the PC world. I saw firsthand how annoying it is to debug my parent's computer repeatedly when random apps get installed or terms of service overstep. For less tech aware consumers this is almost certainly a win in terms of privacy and general experience.
Spoken like someone who has never tried to cancel anything where they had a direct relationship with the publisher
As an individual, I would rather buy a newspaper subscription from Apple instead of paying for a 13 week subscription from the paper directly, billed monthly.
As an enterprise, I don’t want to be stuck dealing with a mercurial and pain the ass middleman like Apple for anything significant to my business. I have the market power to get terms from a company like Adobe or whatever, but with Apple, we get a very polite “Fuck you, we’re Apple, you are not Apple. Be thankful we are selling our beautiful things to you.”
The reasons why I can’t stand Apple for B2B are why they are delightful to Spooky23, the individual consumer.
1. Until June it was impossible for a developer to issue a refund to an angry customer - Apple simply did not allow developers to do that, despite the app store being around for 13 years. This has led to untold frustration among developers - angry customers email us, leave horrible reviews, leave screeds on social media about how we “won’t” refund them, when in actually Apple reserved that right only for Apple support agents. Literally - if you forgot to cancel your Calm or Headspace subscription, neither Calm nor Headspace could give you a refund. You had to call Apple. That’s insane and leads to horrible customer experiences. (I can send you actual emails we got blasting us for this, and us pleading with them to contact Apple because we literally can’t do anything to help them).
2. You may love the Apple subscription experience, but we shouldn’t be letting Apple decide what experiences we do and don’t have online (within reason). For instance: Apple doesn’t allow subscriptions priced at less than $0.99. Why not? What if I had a product that i wanted to sell for $0.50 a month? Why should Apple get to decide that that’s not high enough? There are many examples of things like this.
3. I think we should grapple with the ideas and arguments of the author, when in this case or others, and not focus on the pedigree of the publication they write for
I’d pay $0.50 more.
I just had the unpleasant experience of canceling a non-Apple controlled service. It sucked. Pages and pages of “are you sure you want to cancel” dark patterns.
You guys did this to yourselves with absolutely shitty customer experience. Could not care less if Apple makes things harder for you. Do not care if I pay more.
Shouldn’t Apple’s IAP actually be able to compete on its merits (like the better experience that we both prefer!) rather than arbitrary platform lock-in?
If, faced with actual competition, users and/or developers do not chose Apple IAP, wouldn’t this signal to Apple that they need to do better and improve their service?
What would an acceptable solution to letting both styles compete? (would it be controlled by the phone's settings and the end user can change how they manage their subscriptions? Is it at the app level?)
Google, Nintendo, Sony, Microsoft all wish their app stores could be as lucrative as Apple’s, and most of these are trying to do exactly what Apple is doing.
What other product exists that is able to take such a large revenue cut from 3rd party product enhancers? Is this possible outside of software? Don’t see why Apple would give that up unless they were forced to.
The market segment that would have to resist would be the app developers themselves, but no individual app is attractive enough to do that. Even Microsoft attempted to keep Office products off iOS for quite some time. The cat is out of the bag at this point. Ironically, it seems as long as Google/Android still commands a significant market share, it's unlikely to be viewed by the courts as a monopoly. That just means Google will try harder to become like Apple, but they're going to have an even harder time back-tracking the path they've gone down.
The thing about Apple is not only have they prevented in-app payment processing, they have also prevented side-loading. This combination makes the App store so powerful. Probably some of the reason why they don't support PWAs well etc...
From the Epic decision it sounds like the courts may be inclined to allow 3rd party in-app payment processing as long as Apple still gets a cut. It's debatable which would be "worse" for end-users -- allowing them to side-load or allowing 3rd party in-app payment processing. It's probably less debatable about which one Apple prefers.
From the developer side of things, if 3rd party in-app payments are allowed and Apple still gets a cut what was gained? If Apple is forced to allow side-loading, you better believe they're going to make enabling that feature seem as scary and obscure as possible to the end-user.
Remove the centralization of apple driving the policy, then again to get rid of the centralization of developers choosing
Yes, users know how to shop around. That's how they buy cars, groceries, gas, computers, cellphones, etc.
The problem is that on iOS apps are forbidden from telling their users that this is an option.
It's not much of a fair market if one of the items have been removed from the shelves and you have to specifically ask for it and the price.
Is it fair if Spotify and Netflix are charged a 30% tax on Apple's platforms when Apple's services arent?
To be fair, this isn't a very apt analogy.
A better one would be to liken Apple to a smart fridge...
- Is it ok for Apple to say "only products bought through our smart fridge's grocery app can be stored in this fridge" ? --> probably not
- Is it ok for Apple to take a cut when the consumer purchases through the smart fridge's app directly? --> IMO clearly yes
- Should Apple be required to warn you that it'd be cheaper to buy the same brand of milk from a grocery store 10min walk away? --> IMO clearly no
Right now Apple prohibits developers from being transparent about what the users choices are. I think it is wrong that developers are not allowed to explain the rules to its own users.
Apple should compete on the product itself, not technicalities and obfuscation. There should be pressures on Apple to lower prices for what it charges.
Ah yes. "The market".
People forget that before Appstore mobile apps were distributed through stores controlled by mobile operators. With "store tax" at 70% or higher.
Then Apple came along and decided to take only 30%. It turns out that this (and superior phones) is exactly what users prefer.
But wait, now it's somehow not the proper "market", there's some other "proper market" that must make it right.
App store is classic rent-seeking; it's also an economic force. So, we've pulled our app, but I'm long $AAPL
Now if you file a chargeback against Apple or Google, your account with that company will almost certainly be permanently disabled, based on what I've heard from users who have done it. This is a significant setback for consumer protections, and makes it less advisable to concentrate your digital identity into either of these companies' services. However, as inconvenient as it may be to get banned from having an account with Apple/Google, it shouldn't blacklist you from using your card at any gas stations or online stores, assuming that you aren't using Apple/Google payment processing.
That being said you’d have to be purchasing from shady merchants quite a lot and using lots of chargebacks (and presumably losing them) to be blanketed.
Needless to say I don’t shop at that store anymore.
If you haven’t seen it, it’s because you’ve never read the App Store agreement. They have a table in the PDF that lists out every single price you can charge. $0.99, $1.99, $2.99, … , $999.99. Per country too. Want to charge $1.49? Sorry, it’s not on the table of prices. It’s just absurd.
Yes, in a Supermarket, they will advertise your product on your behave. But customer dont run to Kraft Heinz, Johnson & Johnson, Procter & Gamble or Coca Cola for refund. They go straight to the store they bought it with. Or a better analogy would be tools ( multi usage ) rather than consumables. Consumer buying a tool will still return their tools to Home Depot rather than making complain about the tools maker not doing refund. But with Software that is not the case. Nearly all software are treated as "services" by consumer whether they are charged with subscription or not. And customer will act the same if they bought a services from Walmart. Let say Disney+ or Netflix. They will go to Disney and Netflix to complain or refund, not Walmart.
I think this distinction is quite profound ( to me at least ). Because we often use the product analogy with Software and Subscription. We even have a term SaaS ( Software as Services ) when in fact nearly all software are in some way treated as services by consumers. And of course Software developer have long thought of it as services due to its constantly updating nature.
So this mismatch, between how App Store operate, how Apps are priced and how consumer behaves with software seems to be fundamentally wrong.
Similarly, people buying from the app store BnL don’t go back to the app store to find the developer web site and go there to look up a support phone number to ask a human if they can please cancel by physically mailing a certified letter somewhere (how you cancel most first party subscriptions). They go to the subscriptions settings and cancel.
I’d argue that is indeed exactly like Heinz vs. Walmart or whatever.
So odds are subscribe through apple has better experience.
You, as a dev, may offer better, for sure. But the user cannot count on that.
What if a person would sign up to a dating site under two separate names - would the App Store out them somehow?
RevenueCat had a decent explanation for this considering this is their main product:
https://www.revenuecat.com/blog/managing-cross-platform-subs...
Disclaimer: not at all associated with revenuecat, just in the process of evaluating their product myself.
Businesses have cost cut and devalued support so much that it's not worth having a relationship with them. They only want a sales relationship and you're on your own when it comes to support.
What does having a relationship with them get me as a customer?
I'd say the same thing. Much prefer dealing with individual app developers. I go out of my way to purchase through them over Apple. It's far more secure for me as a consumer to go through individual app developers than through Apple.
Their experience is better when they signed up, mostly due to Apple's integrated API and enforcing standards.
Their experience is much worse when they have dispute. Because no user think of themselves as Apple's customers. They are using your App or Services. Telling them to go to Apple doesn't solve their problem.
If the experience is truly better, and if Apple owns every single transaction and relationship. Why is it the developers gets the blame every time when there is a problem while Apple sitting their enjoying their 15% to 30% commission?
Apple is muddling rent-seeking, developer tooling, support, discovery, distribution and services all into that 15-30%. And they happily dance around that one of these stance every time they are questioned.
Google benefits too much from this sort of arrangement to have any incentive to stop it, even though these are unauthorized advertisements that are specifically against Google's AdWords TOS (side note, I wonder if there is a legal avenue to follow when a vendor doesn't follow their own TOS? An interesting thought...).
This is also a recurring issue with all of Google's advertising revenue -- malicious behavior such as fraudulent clicks, unauthorized ads, etc., are a decent portion of the revenue stream, and Google is financially incentivized to keep these sorts of abuse going until the ruse is up and the accuracy of their system is called into question publicly in a way that scares away advertisers, but with NDAs and corporate secrecy, it is far too easy to keep things unbalanced, and keep abuse like this in the dark.
Business models like this demonstrate just how dire the need for regulation is in some areas of the tech world, particularly among FANG.
b) Google is incentivised to tackle abuse within their system. It's ridiculous and baseless to say otherwise. Lack of integrity in an ad marketplace very easily can translate to lost dollars. But unfortunately with spoofing being trivial it's simply hard to detect and manage abuse.
c) There is no regulation that will prevent this. App developers have signed a legally binding contract.
[1] https://developer.apple.com/support/downloads/terms/apple-de...
c) regulations and laws trump contracts, not the other way around.
> You can’t sell yourself into slavery or sign away your freedom of religion or speech.
it sounds almost whimsical: you have all the freedoms except the freedom to give up your freedoms
a) Apple will be a big customer for Google but nothing compared to companies like P&G who manage hundreds of products or those who have more competitive search terms. And in this particular case it's neither.
b) Apple has a dedicated App Store Marketing team who likely signed up or maybe they used their main account. Either way it's pretty simple and you don't need to ask Google's permission.
> Justice V Kameswar Rao also observed that allowing individuals who are not owners of a trademark to choose a keyword which is a trademarked term or use parts of the trademark interspersed with generic words in the Ad-title or Ad-text may constitute an infringement of a trademark or it's passing off. The Court also opined that the use of trademarks as keywords amounts to "use" in the course of trade in terms of the Trademarks Act.
( https://www.livelaw.in/news-updates/google-not-absolve-liabi... : )
Something similar is happening here - it seems clear that Apple is also bidding for the trademarked keyword "HBOMax" to show their ad to mislead the user to their app store. As per the indian courts, this can make Google liable if they don't act on complain from the trademark owner.
We obviously know why Apple is doing it and why the apps in question don't like it.
But a couple things occurred to me:
You could view this like Amazon giving away your book or android app in a promotion. As I understand it, they still pay the author as if it were a sale, so the author seemingly has nothong to complain about. Even that still seems wrong to me but that's the argument Amazon uses. That is essentially, no, litterally, Amazon advertizing your product for their own purposes.
Another argument Apple and Apple devotees and general "invisible hand" worshippers may try to use is: Any sales generated by the ads would not have existed without the ad, and so it's not taking anything from the app developer.
I don't really buy either theory, but it does take some thinking to describe a mechanism by which they cause harm and should be considered invalid.
They hold enough water to convince a lot of people who want to be convinced, and the arguments against just sound kind of weak and whiny.
This argument is not very convincing in my opinion, as it looks like Apple is purchasing ads for brand keywords. If the ad wasn't there, the customer would go to the brands website, which would be ranked #1 without the ad.
Also neglected for consideration: the developer doesn’t pay for these ads - and the scarcity isn’t high enough to meaningfully affect bid pricing over regular competition.
Sure, they still make profit from the Apple signup, but less than they would have done if people were signing up from their website.
Needless to say if the App Store price is increased 1:1 to match so the developer definitely doesn't lose, it's a terrible deal for the consumer instead (if you're Googling, it's not even like Apple can claim the App Store is adding value with simplicity of discovery...)
Or the the developer would run their own ad.
But those are very different propositions to a middle man running a ‘genuine’ ad which simply takes a cut.
They say that their app store not allowing side loading is for user safety.
In actuality, it forces the brand/company/startup into a place where they're completely shackled. They pay 30% taxes, have no customer relationship, and have to step through every hoop to satisfy apple.
The handicap their browser so you can't get new runtimes or deploy software via alternate means. Good luck launching your media startup on iPhone without an app.
Now this. They're clearly trying to gobble up any interest in other apps and force them into the payment shackles.
This is a fucking monopoly! Please stop this, department of justice! Apple has undue power in computing! Every company has to go through them to reach 50% of consumers, and apple is extorting us!
Apple says you're welcome to go to consumers another way, and then they do this. Look at their actions.
-- the person currently in charge of the DOJ, when running for office, speaking to donors.
It's about Apple driving up the user acquisition costs for these companies so much so that it become entirely uneconomical for them to buy ads that direct users to their own websites, and instead the campaigns that target users to download the app - which results in 30%-to-Apple IAP subscriptions - become much more attractive again. So Apple is trying to make the cost of running these ads so prohibitive to the companies that they stop trying to drive web subscriptions and instead go back to driving app subscriptions only, where Apple gets 30% of everything.
As you can see it's even more sinister than it first appears - it's not a short term land grab, it's a long term strategy to prevent developers from legitimately acquiring users outside of Apple’s walled garden.
(Looking at the economics make this even more clear. Let's say Tinder has a $100 subscriber LTV (lifetime value). If the user purchases the subscription in the app, Apple takes $30 of that, so if Tinder wants to run a marketing campaign on Google, Facebook, etc that drives an app install, they can't pay more than $70, otherwise their spend has a negative margin.
On the other hand, if tinder can use these ads to get people to subscribe on the Tinder website, they have a ~$97 LTV ($100 minus 3% payment processing fee via stripe/adyen/etc). So now they can run a campaign on Google where they can spend up to $97 to acquire a user, much more than the $70 before. And because Google and Facebook inventory availability scales non-linearly with your maximum bid, a 38% increase in acquisition cost allowable could mean a 100% increase in available inventory, and potentially higher quality inventory at that.
But if Apple - with their unlimited cash pile and not caring about negative margins - comes in and soaks up all this inventory by bidding the same $97 for every user, all of a sudden the cost for Tinder to acquire these users goes way up and becomes negative margin. At that point, the rationale thing for tinder to do is stop running these campaigns. This means they stop getting web subscriptions, stop diversifying their business away from Apple, and Apple maintains its iron grip on Tinder.
Remember, in this case Apple is paying $97 to acquire a user who will generate $30 for them (30% of the $100 LTV), so they're massively in the hole on this spend. But they don't care because their goal isn't to profitably acquire users; their goal is to make the costs for Tinder to create a more diversified business so high that Tinder stops trying to. That's some f-ed up sh*t.
Tinder in this example is still getting the customer. Google is still getting paid.
So the moment Apple stops buying the ads, they’re both ready to participate again. So how is it a long term play?
I think we can assume Apple is getting enough out of it to run this scheme permanently.
Unlike Tinder, they can get extra revenue from the user staying in the ecosystem (active credit card registered for IAP), getting used to Apple’s service, and keep buying Apple devices. Their LTV of the user is not just the 30% cut.
And even your last point is not wrong: at some point Apple may stop doing this. But that could be year's away, and in the meantime, they're throwing their big stack around to make it too costly for developers - who Apple supposedly partners with - to build businesses that are less dependent on Apple’s whims. Plus, Apple uses the fact that most subscribers to app store products subscribe on the app store itself to bolster their case with regulators that no reform is needed bc consumers are overwhelmingly happy to use Apple’s IAP systems. But if Apple is putting it's finger on the scales in order to actively drive users away from web subscriptions, then they heavily misleading these regulators about the true “choices” consumers are making.
* Apple has a higher LTV estimate than Tinder for this traffic.
* Tinder has less available capital, so they are not able to outbid Apple even though they think that they would still earn lots of money at that price.
* Perhaps someone who is looking to subscribe to Tinder is likely to succeed even without advertising, but without Apple's ads it won't be via Apple's IAP. The amount it's worth to Tinder for a subscriber to come to them directly instead of via Apple and the amount it's worth to Apple for a subscriber to come in via IAP are about the same.
(Disclosure: I work on ads at Google, but not search ads. Speaking only for myself)
As to your bulletes points:
- Tinder is owned by Match Group who - before Tinder - spent 20 years building a paid acqusition machine. In order to do paid acquisition you have to deeply understand the LTV of your users. That methodology, refined iver years at Match was ported to Tinder (just read Matchs earnings calls). While Apple has access to all ybe transaction data of apps on iOS, so do then defelopers, who are highly resourced and highly motivated to understand their LTV/CAC. So no, I dont believe for a second that Applr has an advantage here. And even if they did, applr only collects 30% of the revenues - how could they ever guy profitable when bidding for the same slots as the developers who Are getting 70%?
- Capital - nope. Match produced close to a billion dollars a year in cash flow. HBO billions. Capital isn't an issue for either of them.
- I disproves this hypothesis with the LTV illustration above. To be clear: Theres no scenario where apple can be profitable on this spend when they can only ever get 30% of what the consumer spends.
a) They can click through to a Tinder site, where they subscribe directly.
b) They can click through to the App Store, where they end up subscribing via Apple's in-app purchases. Apple gets a 30% cut.
Assuming your $100 LTV from before, in (a) Tinder makes $97 and Apple makes $0 while in (b) Tinder makes $70 and Apple makes $27. Tinder clearly prefers (a) while Apple prefers (b), but by how much?
Tinder: they make $97 - $70 = $27 more in (a)
Apple: they make $27 - 0 = $27 more in (b)
This means both companies are willing to bid approximately the same amount, since their profit on winning, relative to what would've happened otherwise, is $27.
Any marginal conversion that Tinder creates (either against a competitor or non-consumption) is worth over $50 net to them using Apple payments. ($50 would assume a generous $20 marginal cost to serve.)
That doesn’t mean that the data that Tinder’s ROAS team is looking at will guide them to spend more than $27 in this case, only that it might.
Likewise Apple could spend $27 on every customer they converted who was already going to be paying Tinder on the web to buying via the App Store plus $27 for every user they added to Tinder who paid on the App Store who would have not bought or would have gone to a competitor (minus any credit Apple would have earned there) plus an amount of cashflow and enterprise value created by people seeing ads for Apple’s store and concluding that Apple has more/better apps than their competitors.
If we confine only to first-order effects and assume advertising is exclusively about changing payment preferences of users who would convert anyway, I’d expect both companies to be willing to bid close to $27.
I mean, maybe if tinder's margin was less than apples, but that's pretty unlikely.
If they’re both bidding on the same keywords, which they are, then the price of the keywords is the same to each of them. It’s an auction, so whoever bids the most will win the auction. The developer can spend up to $97 to bid on that keyword and still be profitable or at worst break even, while apple can only spend up to $30 to stay profitable or break even. So if Apple is winning auctions, it means they’re spending more than the developer, despite having less than half the purchasing power of the developer. So they’re spending negatively almost no matter what.
1) more demand in auctions means higher prices. so if apple is taking the second slot they’re almost certainly increasing the cost of the 1st slot for hbo. which is apples whole point: to increase the cost (literal and figurative) of hbo’s efforts to get people to sign up via web rather than via app.
2) in the world of search marketing - including both on google and the app store - there is a strong belief by brands that they MUST be the #1 paid result for their branded search terms, no matter what. so what you’re seeing here is hbo saying “we always have to be #1 on our branded search no matter the cost”. This is exactly why people complain constantly about google showing competitors ads when the original company’s brand is specifically searched for by the user - effectively the competitor is freeloading on the incumbents brand searches to drive traffic (by paying to show ads on those searches). Google doesn’t care because they make more money this way (more competition for the branded keyword drives up CPCs).
all of this is to say that apple being in the #2 slot doesn’t say anything about the intent of their actions here, which is to make it uneconomical for companies to move users off apples rails onto their own systems.
Maybe Apple clears 15% of the user's purchase price after credit processing, tied-in platform development costs, customer service/hosting fees, and the 70% payout to HBO, and HBO clears 15% after licensing, hosting, app development costs and the 30% fee from Apple.
In this case, HBO would be motivated to have a website sign-up to raise their 15% to closer to 40%, and Apple would be motivated because otherwise they are negative for the lifetime of the subscription.
The problem is that what you describe is the short term positive impact to Tinder. But that’s far outweighed by the long term negative of having your whole business dependent on the whims of Apple. For example, anytime Tinder wants to make an app update, Apple has to approve it. Well, if Tinder goes after Apple with regulators by filing complaints and pointing to antitrust violations, Apple now has the power to mess with Tinders business. Or if Tinder wanted to offer its users a 20% discount as an inducement to subscribe directly with Tinder rather than through Apple, Apple can and does prevent them from doing that right now by refusing to allow Tinder (or any developer) to reference in the app the fact that lower prices can be achieved by subscribing via web. The examples are countless, but essentially the more reliant Tinder is on Apple, the worse for Tinder and the better for Apple.
Thanks ;-). I wasn’t sure there wasn’t something I was missing.
> the more reliant Tinder is on Apple, the worse for Tinder and the better for Apple.
So you’re saying that the long-term impact for going through Apple IAPs isn’t just the 30% margin, but also increased reliance on Apple, and less knowledge about their customer base? That makes sense, I get why Tinder wouldn’t want that. Thank you :-)
For instance any other seller of your book is affected, so you potentially lose distribution channels.
Customers also get attracted to Amazon, but your book is only seen as a bait, and when it goes back at the regular price it will be less desirable (some will have negative feelings of having missed the sale, some will keep seeing your book as something only worth giving away).
If your book has a short shelf life and you didn’t expect much of it, or if it’s a stepping stone into a series and you could have given it away anyway, Amazon footing the bill is a boon. Otherwise it probably shortens the life of your book.
Here, Apple is helping certain "preferred" iOS app developers win against other iOS app developers. Apple stands to profit, the preferred developers stand to profit, but not other developers (and possibly users who will never discover their apps).
There, Google was helping Google Ads users, i.e., "preferred" DoubleClick AdX auction participants, to win against other participants in AdX auctions. Google profits (and brags about it in its internal presentations), Google Ad users may profit, but not the users of Google Ad alternatives.
Big Tech wants to facilitate "winner-take-all" scenarios. Healthy competition and parity amongst competitors (for user attention) reduces the profitability of the "tech" company business model. Big Tech would rather that user attention only be focused on what is most popular, creating more desirability to advertise to that single audience. A "Top 20" mobile app list, or top of page 1 of SERPs.
Concentration of web traffic, 80/20, network effects, and so on. Winner-take-all. The most ideal conditions for selling apps or ad services. The issue is not that they are doing this, it is in how are they doing it. They run and control the so-called "platforms" for advertising and sales and use that privileged position to manipulate outcomes that favour themselves. (And stifle competitors.)
This was specifically re: Amazon using a trademark in AdWords to redirect sales to Amazon, where they then of course also sell competitor products.
This might be moot of course if you granted Apple rights to your trademark in whatever agreements, but then these agreements are also frequently found inapplicable so ymmv.
If customer pays on the app developers website, Apple is not getting cut. If customer downloads the app and makes payment there, Apple gets their money.
I get why Google doesnt, care, since Ads is their core business. But does Apple which already makes oceans of cash need to go this low for that little bit of extra $$$
This is like eBay promoting sales of items on their marketplace using advertising.
Which they've done for years.
the Apple ad purely cannibalizes what would otherwise be a first party brand click or organic click,
and targeted clickers are as (or less) likely to eventually convert if they click the Apple ad.
If either doesn’t hold, Apple may be able to create an incremental conversion that’s net positive for both developer and Apple.
I was actually surprised to learn some of the app native brands mentioned (Tinder, Bumble) even had a way to sign-up for a subscription outside of the app. Seems like they would actually benefit from apple placing adds.
You could create a bootstrap page after first install, bit that makes it feel like unfair cause the app was 'free' on the app store.
So once again Apple got it all figured out how to make stuff difficult for creators and make money while doing it
There was nothing in the court ruling preventing Apple from amending their developer contracts to put such a condition on steering for non-reader apps.
Apple's cost is probably significantly less here as it is a small app and most of the bandwidth is in the streaming, which Apple doesn't help with.
And that is the problem with our modern companies. The only morals is making money. What a pitiful excuse.
[Edit: I should clarify that i meant that a company needs no other reason to exist, not that a ethical company is impossible]
For example, a company could be made to serve the interests of employees rather than just shareholders. This can be done by, for example, requiring a certain percentage of the board of directors to be employee representatives.
On the flip side, I see numerous posts and comments on HN that blame companies for not behaving more ethical. This is complete nonsense to me; you can't expect companies to autoregulate when they are designed to follow only 2 things: laws and market. Since as we know now we have little control over what the market wants, the real control is through regulation.
But the US has done a very poor job at selecting their politician leadership for a long time now.... that's where people who wants to do something needs to look at..
According to you, seeing as almost every country in history was run exclusively for the benefit of the ruling class, none of them had a reason to exist?
> But the US has done a very poor job at selecting their politician leadership for a long time now.
Agreed. But i think it's a problem in the system itself. The us have a binary choice between hilary/biden and trump with no middle ground.
Hmm... with "reason to exist" I meant the reason why they were "created" in the first place. This is an interesting article that expands on how corporation "rights" have changed since foundation (take the historical data points more than the underlying political bias): https://www.americanbar.org/groups/crsj/publications/human_r...
> Agreed. But i think it's a problem in the system itself. The us have a binary choice between hilary/biden and trump with no middle ground.
Indeed! I believe the problem in the system is even deeper. Regardless of your values or your preferred policies, I really feel hilary/biden/trump is a very poor display for the United States. The selection process that brought them there is not working. Smart people avoid going into politics in the first place because of this selection process. People don't want to spend their days arguing with a guy with bogus claim that is only trying to bring them down.
Unfortunately we don't and likely won't ever know who exactly did what. The best we can do is point at the company as a whole and say that some people over there decided to do bad things, nobody else in that group stopped them, and then some of those people went and did the bad thing. I don't see why that's not a reasonable critique when we cannot be more specific.
I think that it is also important to do so. The more we perpetuate the idea that companies can't be blamed for bad-but-not-illegal behavior the more we help enable people to make those sorts of decisions as part of a company. They can't be blamed personally - it was the best decision for the company and that's what companies do, you know?
We also help reduce negative feelings towards the companies when they do behave unethically. You can't actually blame them - they're a company after all, right? But this actually helps enable companies to get away with it. Negative public perceptions can impact the ability of a company to make money. I don't see why we should be trying to reduce this kind of influence.
What I was referring to is the expectation that this criticism can make the difference; I don't think it can, for mostly one single reason: if you happen to make progress and magically turn 99% of the people running companies ethical, you have created a huge incentive for being evil. Someone acting unethical will reap the benefit without competitor.
I tend to see these dynamics as balances and movement from balances when something changes. I think changing laws changes the balance point and after a shake, the system will settle somewhere else. Trying to persuade managers to be ethical it's just a fight against the balance that you will eventually lose.
The more meaningful aspects are the fact it creates a negative reputation, and that reputation impacts all interactions with the company. A bad reputation adds an additional cost to interacting with you (be it customers, workers, or business partners), and that needs to be constantly paid for somehow.
Additionally, there's some level of 'acceptableness' for the individuals of a company to do unethical things, which also plays a role. You addressed this in your 99% hypothetical, which I would agree with if it was done in a vacuum. However it's not. In practice if 1% of businesses were behaving in some way the rest refused on ethical grounds, lawmakers would be be falling over themselves to address it. Obviously such an example is unlikely to appear, but I hope you get my point. Moving the needle on acceptable behavior also moves the needle on what acceptable regulations of behavior.
I also largely agree on many of these factors being a dynamic balance. It's just that public criticism is already a factor in the current balance. Some level of criticism is required to maintain it, lest we move towards a balance that sees even more bad behavior.
This is incorrect. There are many reasons a company can exist other than to make money. The company I work for, for example, does not have making money as its primary goal.
There's nothing wrong with a company making money. The problem is people who believe that companies should only make money, or make all the money they can at whatever cost.
There are actually people on HN who think companies have some legal obligation (usually under the cliché of "shareholder maximization") to do anything to make money. This is false.
Companies are created by and for humans. They should work for humans.
If companies didn't have to maximize x% of the profit made on the investor's money per quarter/year, they will be able to focus on product/service, customer and employees more. It may result in less profit but it will be better for the society as a whole.
We can see this happening when some company is acquired solely for sucking money out of it. Sometimes it leads to worsening of the service/product made by original company, y% of employees get fired because new owners don't care about the product or the employees. Money saved by using cheaper but worse raw material and firing employees shows up as profit.
Because money is sole motivator, we end up over optimizing a company's operations around it. This could be seen everywhere when Covid started. Hospitals didn't have have back up PPEs. Auto makers didn't have parts/chips in inventory for emergencies. They're optimized to order the amount they need in immediate future, without any serious thought to contingency.
When an Amazon worker is asked to self x products across the warehouse in y minutes, like a machine without a thought to the well being of the worker, its because Amazon has to show profit to the investors.
We don't have product making companies anymore, we have stock making companies. They don't sell goods, services, they sell stocks.
BS. One of the only things Ayn Rand got right was her view of money: it is one of the greatest forces for good humans have ever invented. Money allows us to settle our disputes without violence; money is what enables peaceful trade; money is how we moved beyond palace economies.
Sure, money can corrupt some things, but on the whole money has likely saved many lives and in all likelihood the free societies we have today could never have existed without a monetary system.
The difference (some would argue, improvement) is that shekels have a worth of their own, so can be stored against harder times, which may not have been possible with the goods they bought. Of course, that shekel value being variable over time, can equally lead to riches or ruin, and requires a more sophisticated treatment by perhaps insufficiently sophisticated participants; snakes and ladders.
In any event, societies existed well before this “money” thing came along, even free ones. High technology societies do need a money system, I think; for automated transactions to take place, there needs to be a standardized good-exchange valuation, but not all high-tech societies are free, and not all free societies are high-tech. Freedom seems orthogonal to money.
I think we are all in agreement there. But it has such sophistication and is so amazingly efficient that it has an intrinsic value as a mere concept. This is because it enables activities that would otherwise be impossible. A good analogy would be a computer program. This i think is where we differ. But i think it's obvious that money is more than "nothing"- after all it sustains the entire banking industry.
>The difference (some would argue, improvement) is that shekels have a worth of their own, so can be stored against harder times
Again this isn't (and was never) the true reason for money. It was only a security against the money and helped people to visualise the concept better (i know i'm oversimplifying but i think that's the basic idea)
Money is the core of a distributed optimisation system. How does society decide whether to fix a pothole, eat some oranges, advertise a game? The hugely complex chain of suppliers is balanced via money - every actor in the chain is optimising locally using profit as the objective function. Legal agreements are the mechanism to ensure the money flows for the correct goods/services, and society sets constraints (laws/regulations) to enforce goals that are not monetary.
The economics 101 narrative for how money was created is an extremely limited view.
What? Money is the cause of like70% of all violence
What leads you to believe that the pie is smaller than it was without money? I have never seen any kind of statistics like "hunter gatherers had more wars". How you you even formulate the null hypothesis for this?
I was talking about the human greed that is exploited by money.
Also, if you're going to fight a war with another country, money doesn't mean much does it? Unless you have a global currency that both sides can agree on. Ultimately wars were fought for resources (Non ideological ones). Money is just paper/coins which you can print anytime you want if you control the resources.
What have we done with love, mercy…
What do you believe the original motivation was, if it wasn't money?
[Edit] https://www.youtube.com/watch?v=f61KMw5zVhg&ab_channel=batxg...
Richard Feynman, explaining if "it" was worth the Nobel Prize.
"...I already got the prize. Prize is the pleasure of finding the thing out, kick in the discovery, the observation other people use it. Those are the real things..."
The problem with this sentiment is it's always presented as some new found discovery, and not as an inherent outcome of a capitalist economy. It was in 1973, 48 years ago now, that Ford did the infamous calculation on not to recall the Ford Pinto because the cost of recall was less than their calculated law suit risk - a move that would have killed their customers; and then further still Milton Friedman defended this decision.
We haven't had "product making companies" as the norm for at least 50 years now. What era are you talking about?
My comment was hyperbolic, it should have been more moderate.
That is not actually true. Corporations are a tradeoff for society: a corporation fulfills some societal need in exchange for investors receiving limited liability and a chance to profit. We have every right to question whether or not this arrangement is beneficial or harmful to society, and every so often a corporation will be broken up when society's needs are not being met.
Don't think that profit, limited liability, or anything about the current arrangement is a given or a natural right or anything like that. It is a system we use to accomplish certain shared goals, nothing more.
The way this is supposed to work is that you make flour and I want flour so I give you money and you give me flour. Then you make more money by automating the production of flour so you can sell it to me for a lower price even though you now have higher margins. And try to take market share from competitors who are doing the same thing. The profit motive increases efficiency. This is growing the pie.
The nefarious way to make money is to swipe somebody else's piece. This is rent seeking. It causes prices to increase with no increase in value. It is to be destroyed.
Helping people, raising a family, being virtuous…
“Making money” is just so void of content.
Companies either exist for human beings or are just despicable.
But this is just my opinion obviously.
In Elizabethan times, company charters (and the subsequent right to create and hoard profit) was granted by the queen as a reward for the company doing the work required by the state. Money was a secondary reason for a company's existence, their primary reason was to further the interests of the monarchy and by extension the country.
So if companies are happy to maximize profit with the only barrier being law, and the lawmakers are too clueless/slow to make effective laws quickly, what are we supposed to do?
It only becomes a problem when there’s no regulation, which is exactly what’s happening here. Apple has too much market power, and the government is doing nothing to regulate them. The only way Apple will stop doing evil and harmful things like this is if A) government steps in or B) Apple decides to stop trying to grow. B will never happen (it’s basically impossible for a publicly traded company)
The same is true for the other tech giants.
Either we need one big action (break them up), or a lot of small actions (force them to change specific business practices)
Dark patterns and raking in money is what these managers do and take pride in. The system we've created made that so.
Apple is relying on the subscribers' not knowing of this money grab...
They get their 30% subscription fee. And they get to control the customer relationship. App publishers have a really shitty deal here.
Mobile computing would be so much better for competition if this had become a Microsoft / Google duopoly rather than have Steve Jobs with his perverse app store model. We'd have web downloadable apps and a better mobile web.
We now have a cartel for 50+% of American consumers. The cartel is so greedy that it's now placing ads to confuse and ensnare consumers even more.
It's like if Amazon put out ads for Lenovo but bundling a protection plan and taking a referer cut.
Developers of apps should be allowed to opt out of this, or really should be an opt in feature.
Except they aren't forced to sell through Apple, Netflix doesn't allow in app-purchases for this very reason.
Apple did this all on their own, without telling app publishers. They're deliberately trying to get their 30% tax and shut out app creators.
This is nefarious. Apple is cutting the legs out from the very apps that bring value to its users.
This could be the basis of an antitrust case against Apple.
It's a cold blooded move by Apple, but I don't think its "nefarious". I'm very much against their rent seeking with the app store though.
But doesn’t this help defend a 30% app fee, when apple is also paying marketing costs to help the app get more customers through it’s service?
Not even taking in account the rise of advertising for the app creators self, the loses you have from not being able to redirect to your own website, giving specific incentives that Apple doesn't allow etc etc etc.
So no, it's not just bashing, and that's the reason Apple does it secretly
You might have an argument if Apple was bidding on more general keywords like “online dating” to send traffic to the App Store’s Tinder page.
Apple are trying to intercept purchases and/or raise ad costs for the mentioned companies.
I agree. When you have as much economic power as Apple does every move has some side effect. In this case they are actually doing something nefarious and the side effect is simply shifting app company profits to Apple.
The impacted apps are “high value” - they make both sides a lot of money.
> Impacted businesses include major brands such as dating apps like Tinder, Plenty of Fish, and Bumble, media giant HBO, education and learning publisher Masterclass, and language learning service Babbel.
Didn't some other tech company do this recently? Something like eBay or Etsy, where the company was promoting the items for sale, and then taking a cut of that sale? I seem to remember it because the sellers were mad that it was opt-out, rather than opt-in.
Netflix decided they couldn't afford the 30% commission, so they don't offer subscriptions in-app. It's really as simple as that.
https://www.theverge.com/2020/6/25/21302931/hey-email-servic...
Would you mind people putting up ads for buying an iPhone in their store?
The fact Apple can afford to do this simply reminds us of the fact they can demand a 70-30 split (85-15 after 1 year) and deem themselves the exclusive payment provider. That's the controversial part, which is what this issue reduces to.
Whatever the "fair" revenue split is, once you accept it exists, it's a net positive for the developer that Apple is reinvesting to grow the pie.
If anyone's hurt by this, it's their smaller competitors who won't get the same love from Apple's ad arbitrage team.
Yeah, that fits “nefarious” in my book.
Abandon Apple, develop PWA version of your web flow.
All the money in the world isn't enough for Apple.
I wonder if Google can be said to be colluding with Apple on this.
There is nothing illegal or dirty about this and frankly I fail to see how it is that different to bidding on competitor's search terms.