Apple's New Fees Will Kill Free Apps
Summary
TLDRThe video examines Apple's monopoly over iPhone apps, which requires developers to pay fees and give Apple a 30% cut of sales. It covers the US court ruling against Apple in the Epic lawsuit, allowing alternate payment links, and the EU's Digital Markets Act forcing Apple to allow third-party app stores. However, Apple is maliciously complying by making alternate payment links cumbersome and charging exorbitant fees for third-party app installs that could bankrupt developers. The video argues Apple is maintaining its monopoly against the spirit of the rulings.
Takeaways
- 😡 Apple has a monopoly on iOS app distribution and in-app purchases through the App Store.
- 💸 Apple charges a 30% commission on digital goods purchased through iOS apps.
- ❌ Apple imposes strict rules on what kinds of apps can be distributed through the App Store.
- 📱 The only way to install apps on an iPhone is through the App Store.
- 👎 Apple blocked game streaming services like Xbox and Nvidia from the App Store.
- 💥 Epic Games challenged Apple's monopoly and commission structure through lawsuits.
- 🇺🇸 A US court ruled Apple can no longer block external payment links in apps.
- 🇪🇺 The EU Digital Markets Act aims to open up iOS app distribution and payments.
- 😠 Apple is using 'malicious compliance' to undermine the impact of these rulings.
- 💸 Apple's new EU terms include fees that could bankrupt free apps that go viral.
Q & A
What is Apple's monopoly related to?
-Apple's monopoly is related to the apps and services available on iPhones, specifically the requirement that all apps must be distributed through their App Store where they take a 30% cut of sales.
How did Apple respond to the US court ruling on allowing external payment links?
-Apple responded by only allowing one external link, opened in Safari, with a warning popup, and charging a 27% fee on purchases, making it worse than just using in-app purchase.
What new terms did Apple introduce for the EU market?
-For the EU market, Apple introduced a reduced 17% commission but with fees of €0.50 per install after the first 1 million, and requirements for large credit lines, which make it unfeasible for most developers.
How could the new EU terms be exploited maliciously?
-The per install fee structure means a malicious actor could easily bankrupt a developer by installing their app millions of times from different devices.
Why can't services like Xbox Cloud Gaming release on iOS?
-Apple bans game streaming services because they consider interactive games to be apps, so game streaming violates their rule against app streaming services.
What happened when Epic Games added direct payments to Fortnite?
-When Epic added direct payments to Fortnite, it was banned from the iOS App Store, and Epic employees were even locked out of their Apple devices.
How much does Apple make from App Store fees?
-Apple makes billions in revenue from its 30% cut of App Store sales and mandatory in-app purchase commissions.
Why can't you create a Netflix account in the Netflix iOS app?
-Due to Apple's rules, you can't sign up for a Netflix account in the iOS app, to avoid paying Apple's commission. Users have to sign up on the web instead.
What are some examples of Apple's App Store restrictions?
-Apple restricts apps from offering gaming streaming, alternate app stores, alternate browser engines, and more. They also restrict communications and payments.
How did the EU Digital Markets Act attempt to address these issues?
-The EU Digital Markets Act designated Apple as a 'gatekeeper' and attempted to prohibit restrictions on third-party apps and payment processing to promote competition.
Outlines
😲 Apple's App Store Monopoly
This paragraph provides background on Apple's monopoly over iPhone apps through the App Store. It explains how Apple requires apps to pass review, charges a fee, and takes a 30% cut of purchases. This allows Apple to control what apps iPhone users can install. Examples are provided of restrictions Apple imposes, such as not allowing other app stores, streaming game services, alternate browsers, etc.
😡 Pushback in the US and EU
This paragraph covers legal challenges to Apple's monopoly in the US and EU. A court ruling in the US Epic case said Apple can't block external purchase methods. However, Apple found a loophole by focusing on the word "or". The EU Digital Markets Act prohibits gatekeepers like Apple from restricting app store access. But Apple made alternate terms so bad no one would use them.
🤯 Apple's Malicious Compliance
This paragraph examines how Apple is maliciously complying with the court rulings and laws. In the US, Apple only allows one external link for payment in a hidden view with warnings, and charges a higher fee. For the EU, Apple made opt-in terms with per-install fees that would bankrupt developers. Apple intends to block apps even if third party stores are allowed. Their goal is maintaining their monopoly.
😞 The Potential Damage
This paragraph considers the potential damage from Apple's actions. Few will use the bad faith EU terms, but if they go viral they'll go bankrupt from per-install fees. Malicious actors could bankrupt apps by repeatedly installing them. Apple's monopoly prevents innovation and consumer choice. But they intend to maintain it through malicious compliance.
Mindmap
Keywords
💡App Store Monopoly
💡Compliance
💡Payment processing fees
💡Install fees
💡Third-party app stores
💡Consumer choice
💡Chilling effects
💡Legal challenges
💡Gatekeepers
💡Threats
Highlights
Apple's monopoly is not about which phone you buy, it's about what you buy on your phone
The only way to install apps on an iPhone is through the App Store
Apple requires a 30% cut of all digital purchases made in iPhone apps
Genuine innovation in the market is being blocked by Apple's interpretations of their own monopolistic rules
If a digital good or service is purchased in an iPhone app it has to go through Apple Pay or you will be banned
Apple will now charge a 27% fee on purchases made through external payment links due to a court ruling intended to allow more payment options
The EU Digital Markets Act will prohibit gatekeepers like Apple from restricting third party software access and payment options
Apple is using malicious compliance tactics to work around regulations by making external payment options extremely unappealing
Apple's EU compliance terms include a fee per app install that could bankrupt developers of free apps that go viral
Even with required third party app store support, Apple can still block apps and enforce their own review policies
Apple wants everyone to keep using their old monopolistic terms because the new compliant options are so bad
The new terms create massive financial and security liability risks that discourage adoption
The changes might actually hurt consumers if companies stop supporting Europe to avoid the extremely high costs
Apple is using technical compliance as a facade while trying to maintain their monopolistic status quo
In the end consumer choice is important - users should be able to choose what apps they install
Transcripts
at this point it kind of feels like
Apple's trolling us if you want to
release a free app today it cost you
$100 a year to do such policy Apple
published today would force some devs to
pay millions Instead This would
fundamentally change the App Store
destroying tens of thousands of free
apps in the process I'm a software Dev
and an apple Fanboy but that doesn't
mean this video is only for devs and
Fanboys everyone should understand
what's happening here I'm going to do my
best to explain it to youall this VD
will be broken into three separate parts
Apple's Monopoly the US EU push back and
most importantly the potential damage
from Apple's malicious compliance so
without further Ado let's start with
chapter one Apple's Monopoly hopefully I
don't have to convince you that a lot of
people have iPhones in the US 58% of
smartphones are iPhones and over 87% of
teenagers have an iPhone to be very
clear having a certain percentage of the
market doesn't inherently make you a
monopoly it's also worth noting that
Apple's global market share is only
around 30% of the smartphone market
their Monopoly isn't about which phone
you buy it's about what you buy on your
phone when the iPhone launched there was
no app store there was just Safari which
Apple pushed is the future of
applications they learned their mistake
quickly and a year later the App Store
was created crazy enough it only had 500
apps at the time we're going to be
talking a lot about the App Store so
let's break down some important things
about it first you should know the only
way to install apps on an iPhone is
through the App Store there are some
works it's a Dev but it's generally fair
to say apps come from the App Store
Apple also charges that $100 a year
license fee to all devs that make iPhone
apps I mentioned earlier they require
all apps past their strict review
process they require a 30% cut of All
Digital purchases made in those apps and
you also can't tell users about other
payment methods outside of your app so
if you're let's say Spotify there's no
option to tell users hey go sign up on
the website and then sign in here
they're strict about that I want to
focus on those first three points though
because if Apple doesn't like you or
your software then no iPhone user will
ever be able to install it the rules
they enforce through these reviews are
brutal no credit cards only Apple pay no
streaming games only only movies and
music no SMS messages only
internet-based messaging apps no browser
engines only Safari this has had real
impact on both companies and users Xbox
and Nvidia were blocked from Shipping
their game streaming apps Chrome and
Firefox are just skins on top of safari
Apple's goal was to build a software
Marketplace you could trust when the App
Store launched most software was still
installed by buying discs at stores or
downloading sketchy exe's from random
websites the App Store started a giant
leap in the software quality we expect
today but that do make these rules okay
look at the Xbox streaming app for
example obviously you can stream media
on your phone like Netflix Spotify
whatever you want for the most part
almost it's interactive according to
Apple game streaming is a workaround
since they consider games to be apps
therefore game streaming is app
streaming therefore Xbox is banned based
on their no thirdparty app store
rules what this is insanity genuine
innovation in the market is being
blocked by Apple's own weird
interpretations of their own weird
monopolistic rules if you use your
iPhone to order order an Uber or door
Dash Apple doesn't take a cut that's a
service if you use your iPhone to trade
stocks or open a new bank account Apple
doesn't take a cut from that either
however if you use your iPhone to buy a
game for $5 Apple takes a 30% cut Indie
big Studio doesn't matter and this is
insane theoretically you could just have
a user enter their credit card number
and process payments through a company
like stripe they only take 2.9% and 30
cents on top regardless massive 10x
difference in cost sadly in reality
Apple will ban you from the app store if
you try and do that if a digital good or
service is purchased in an iPhone app it
has to go through Apple pay or you will
be banned they are very very strict
about that if you ship an app with no
payment methods and tell a user to go
sign up on your website so that they can
pay there instead you'll be banned for
that as well Netflix and Spotify both
have challenged apple on this and both
sadly lost you literally can't create a
Netflix account in the Netflix app on
your
iPhone this hasn't stopped other
companies from trying though epic games
the creators of fortnite added an option
to use a credit card instead of Apple
pay they got banned so hard that epic
employees got locked out of their
MacBooks for a while thankfully epic's
pretty based and they spent the last
three years challenging Apple in court
and that's where we enter chapter 2 the
US and EU fight back I published a video
about the Epic case two days ago so I
won't go too deep here Link in the
description if you want to catch up on
that the US courts ruled that Apple
could no longer block devs from
promoting external payment methods their
specific words are important so I'll
share them here Apple are hereby
permanently restrained and enjoined from
prohibiting developers from including
their apps and their metadata buttons
external links or other calls to action
that direct customers to purchasing
mechanisms in addition to inapp
purchases this seems pretty definitive
right now you can just put a button that
links to your checkout
page sadly Apple's interpretation of
this ruling is it's strange they've
chosen to focus on one word from this
statement using it to work around pretty
much all the rules can you guess which
word in this statement is letting them
work around things keep thinking on that
for a bit we'll be revisiting it in
chapter 3 no spoilers for now because
first we have to talk about the European
Union the 's been cracking down on Apple
lately the USBC stuff was big enough to
honestly deserve a video of its own
we're not here to talk about ports we're
here to talk about the digital markets
act this act opens by defining the term
gatekeeper it defines that as a large
digital platform providing so-called
core platform services such as online
search engines app stores Andor
messenger services I've spent way too
much time trying to turn this 65 pages
of EU legal ease into something
understandable I gave up so I'm just
going to break down the core important
points here there's a bunch of rules
addressing the monopolistic stuff I
brought up earlier game streaming would
be allowed external links to payment
options are now protected legally and
they even had a whole section dedicated
to browser engines really cool stuff
that said there's one key point we need
to focus on now if you want to read this
whole thing then pause the video because
I can't be bothered at this point the
tldr is that Gatekeepers restricted
access to third part party software in
stores which has been determined to hurt
users so now it's prohibited in just
over a month these rules will be
enforced for all countries within the EU
and Apple is very much not happy about
this and here's where we enter chapter 3
malicious compliance let's go back to
that ruling from the US courts in the
Epic versus Apple case to figure out
which word was the one I was talking
about the one that Apple use to work
around everything I'll remove some of
the words that don't matter to see if
that helps you figure it out any
guesses I'll spoil it for you it's the
word or apple interpreted the use of or
here to mean that they only have to
support one of those listed options when
I read this I thought it was pretty
clear the Court's intent was that third
parties could pick from the options not
that Apple could choose the one they
want to support and boy did they find
some cringe ways to support it there are
enough details here that I actually
already made a video covering it so if
you want to hear all of the crazy things
going on there go check out my last
video about Apple and epic but a quick
TDR is that Apple only allows external
links no buttons no other checkout Flows
In fact you can only have one link and
it has to be in a separate view from the
existing inap purchase flows so you
can't just put a link at the bottom of
your checkout the link also has to open
in safari with no direct attachments to
that link so you have to sign in again
on the website once you open it in
Safari clicking those links will pop up
a giant bold text warning when you do it
but most importantly Apple now has a new
27% tax on all purchases made through
this web method so you're not even
escaping their 30% I guess not 27 but
now you're paying another 3% to whatever
payment provider you're
using
God honestly I was impressed when I
heard this they took a definitive ruling
about external payment options and
somehow managed to make it significantly
worse than dealing with their existing
not great options you think that's
malicious just wait till you hear about
their plans for compliance with the Dig
digital markets
act chapter 3.1 EU
compliance I could paraphrase Apple's
changes but for once they actually did a
pretty good job describing things
themselves they even made a fancy
website and calculator to help describe
all these things I'll be sure to leave
this link in the description if you want
to dig through it yourself because
honestly some of this is unbelievable
and if I just saw it in a video I would
have assumed it was fake in fact when I
saw this particular tweet this morning I
assumed it was fake too and I had to go
confirm the numbers myself due to the
the level of insanity here Apple's not
stated whether or not they intend to
make these new terms the only option for
EU developers in the future for now you
have to opt into them which hopefully
will be enough for them to comply
because they kill these old terms a lot
of apps will die with them today's terms
are everything I described earlier the
30% cut the requirement that you only
distribute your app through the App
Store the requirement that all purchases
are done through in app purchases the
usual Apple stuff however they've
introduced this new Option the new
capabilities and terms for apps in the
EU developers have additional
distribution and payment processing
options available Apple will also apply
a reduced commission I believe it's 177%
instead of the usual 30 however there's
an optional payment processing fee and a
fee for first annual installs above 1
million in the last 12 months if you're
in the gaming world at all this might
sound familiar it's very similar to the
crap that Unity tried to pull last year
and crazy enough it's actually worse
here once we dig into the details so uh
let's do that one quick detail before we
go to the calculator is that your first
1 million annual installs are free so
that 50 Euro I don't know what the
equivalent of a cent is in Euros but
like this 0.5 fee only applies once
you've broken a million but that fee
applies for every install so every two
installs costs you a Euro that's insane
let's see just how insane these numbers
get do you sell digital Goods in your
IOS app or game Let's assume the answer
is no here that this is a free app no
how many installs do we expect to get
well say our app just went viral and we
got I don't know 5 million
installs I know crazy thought but it's
not that insane I've had a Chrome
extension that I released when I was in
college that got like 15 20 million
installs this is a totally reasonable
number when something goes
viral we'll use today's terms and
capabilities for now and look at that
it's a$0 fee for those Europeans that
are in my audience I'll show you that 0
converts pretty nicely to Z as well but
again we're not here to talk about the
existing capabilities in terms CU these
are although not super Fair they're
somewhat reasonable I want to talk about
these new capabilities in terms so let's
take a
look oh that's $181,000
fee that's
$181,000 monthly
fee now I'm not great at math so I'm
going to pull up my calculator quick
that's a $2 million a year bill because
your free app went
viral that is actual insanity this
basically means if you're agreeing to
these new terms and you make a free app
that goes somewhat viral you are now
bankrupt you are now out of business you
now have to pull the app from the app
store because you have no money that's
crazy that's absurd this is just the
side of developers releasing their apps
in Europe so if they accidentally agree
to these new terms they go viral they're
screwed hopefully the addition of these
new app stores is going to help with
this right no absolutely not because
this fee doesn't only apply to Apple's
App Store this applies to all of the
alternative app stores that they're now
being forced to support epic has already
publicly confirmed that they intend to
make a new app store for the iPhone just
to allow for European customers to have
fortnite access again so yes if you're
in the EU and have an iPhone and you use
their new app store you can get it
however every two times users install
this app it costs them a Euro so if they
can't make more than a Euro every two
players they are done for this is going
to be a huge huge catastrophic Financial
loss for them to take we're just talking
about the install fee there's so many
other costs that still exist there's the
inap transaction percentages there's the
cost of paying the developers to make
all of this there's this really weird
rule where you to take out a million
doll Plus credit line with Apple so that
if things go wrong they have a way to
bill you so they can do whatever they
want to do when they sue you if you
don't follow the rules Apple's found a
wild balance here where both the
liability and the implementation cost
gets put on the third parties which
again massively disincentivizes them
from using this you may have started to
notice a theme here when Apple's forced
to comply they provide a new option that
is compliant but it sucks so badly that
you basically can't use it epic's going
to eat a ton of costs sitting here and
doing it just to demonstrate what it
looks like so obviously epic's taking a
huge cost on here in order to make a
third party app store but at least they
can finally release the apps they want
to right right
right here's where one of the most fun
Apple decisions comes in despite support
for third party app stores apple does
not seem interested in thirdparty app
reviews they will still require all
iPhone apps go through Apple's review
even if they're being distributed on
different stores so crazy enough Apple
might still choose to block fortnite
even if they allow the Epic game store
because they're legally required to have
the store they'll just block the apps
instead what like it's so sad because
this legislation really should have
changed a lot of things for the better
and instead either nothing will change
or things get exponentially worse
because if these rules become the
default for customers in Europe most
companies are just going to stop
supporting Europe because if you can't
make back your euro per install you're
screwed
you're just screwed and we're not even
talking about the malicious actor angle
here when I first tweeted about this
first off I thought that the fee here
was monthly not yearly so I was off by
12x but more importantly pirate software
applied if youall don't know him he's a
very talented opack guys he's on a ton
of security stuff help work a blizzard
in a bunch of other places check him out
if you haven't great dude he replied
obviously calling out the unity thing
but this is where things get interesting
this malicious example let's say I'm a
rival business and created a clone of
your game I want to shut you down I set
up a few servers that randomize Hardware
information and download your game
millions of times now you're out of
business I no longer am a
clone and since every device is uniquely
identified they should be able to
prevent this some amount but if someone
sets up a farm of old iPhones to just
install apps when they want to destroy
them this works great and that's
terrifying the fact that any malicious
actor can kind of just destroy your free
app because they feel like it and you
happen to have selected this new deal in
the
EU this doesn't work and if anyone
accepts this new policy there's a high
chance they get screwed but since it
technically complies with the eu's rules
they're going to get away with it
doesn't matter how much worse these new
terms are and how much more risk there
is to developers who accept them because
Apple actually intend for anyone of
meaning to use these terms they want
everyone to go use the old ones because
they don't want to change they want to
maintain the exact state of their
Monopoly as is I don't want to present
my opinions unchallenged so I'm going to
link in the description of video by John
prer that I really like about how the EU
changes in rules might actually hurt
Apple going forward and in the end hurt
users as a result in the end I think
consumer choice is important users
should be able to choose what devices
they use and also what apps they install
as such I can't honestly support the way
Apple has chosen to lock down the iPhone
and I do genuinely hope we see a future
where these third party app stores
aren't implemented in such a malicious
way and users can install the apps they
need for the things that they're
doing that's all I have to say peace
nerds
5.0 / 5 (0 votes)