Archive for February 4, 2022

Friday, February 4, 2022 [Tweets] [Favorites]

App Store External Purchase Fee: 27%

Apple (Hacker News):

A recent order from the Netherlands Authority for Consumers and Markets (ACM) will allow developers of dating apps on the Netherlands App Store to use alternate payment processing options. These changes will compromise the user experience, and create new threats to user privacy and data security. We have appealed the ACM’s decision. In the meantime, we are required to make the mandated changes and are providing further details today which satisfy our legal obligations in the Netherlands while helping to protect users from these increased risks.

Benjamin Mayo (also: MacRumors):

Apple typically charges 30% commission on purchases made using its In-App Purchase system. The commission levied on alternative payment systems has been set at … 27%, net of tax.

Netherlands dating apps can choose to offer alternative payment systems by linking out to a website, or using a native in-app flow.

[…]

Each month, developers will have to send a report to Apple that lists their sales. Apple will then send out invoices for its commission, that must be paid within 45 days.

Stephen Hackett:

Check out the text the company is going to require developers to show on a modal sheet prior to allowing users to go outside the App Store to make a payment:

Title: This app does not support the App Store’s private and secure payment system

Body: All purchases in the App Name app will be managed by the developer “Developer Name.” Your stored App Store payment method and related features, such as subscription management and refund requests, will not be available. Only purchases through the App Store are secured by Apple.

Federico Viticci:

This is perfect* – it’s implying-without-technically-saying-it that other payment services aren’t “private and secure”.

Apple mastering the art of legalese is where we’re at in 2022. Proper regulation can’t come soon enough.

*ridiculous and downright user-hostile

Nick Heer:

Just look at the striking twist in language here. The title and final sentence the body text literally say that the app’s payment mechanism is different from Apple’s, and that Apple’s is “private and secure”. But it implies the payment standard used by the developer is less private and has inferior security to Apple’s own — even though Apple requires all developers to use a private and secure payment processor. Apple is selling asbestos-free cereal, while requiring all other cereals to be asbestos-free but not allowing them to label themselves as such.

Marco Arment:

  • Separate app, only available in Netherlands
  • Cannot also support IAP
  • Must display scary sheets before payment
  • Website links are all to a single URL specified in Info.plist with no parameters
  • Must submit monthly report to Apple listing EVERY external transaction

Tim Schmitz:

Apple is afraid to compete fairly against other payment methods because they know the current IAP system wouldn’t win a fair fight.

See also:

Previously:

Update (2022-02-08): Dave Verwer:

I know some of you will see this as unnecessarily kind to Apple, and I’ll make sure not to read this week’s unsubscribe reasons 😰 but I really don’t think anyone benefits. Apple certainly doesn’t look good. I was quite shocked at the arrogant tone of yesterday’s announcement. However, they are behaving in a predictable way for a company being told what to do by courts.

I’ve said this before too, but I would support a bigger rethink of how the App Store works. A shake-up that focuses on downloads and usage more than taking a percentage cut of financial transactions. One that makes sure that the largest companies in the world, who get massive value from the platform, pay something instead of nothing. I don’t know what that model looks like, but I can only really see changes of that magnitude putting an end to this current situation.

Kosta Eleftheriou:

Steve Jobs on the greed and outlandish profits that ruined Apple[…]

Jon Brodkin:

Apple notes that it “has audit rights pursuant to the entitlement’s terms and conditions,” which “will allow Apple to review the accuracy of a developer’s record of digital transactions as a result of the entitlement, ensuring the appropriate commission has been paid to Apple.”

Benjamin Mayo:

I’m not sure you could find a webpage more emblematic of the idiom of following the letter of the law, rather than the spirit of the law. They are also simultaneously appealing the decision and that tone comes across in the text too, as if each sentence is dripping with resentment.

[…]

This court ruling is on enabling competition for in-app payment systems, rather than the general monopoly of mobile app stores. However, the two are obviously inextricably linked. No one is going to use a third-party payment system when the saving compared to Apple’s built-in offering is a measly 3%. These current terms will not incite competition in payment systems as no developer will ever implement one.

[…]

Apple’s stated policy is not long-term sustainable. I don’t know whether it will be changed as a result of these proceedings, or a different lawsuit down the road. It will change.

Bruno Virlet:

They try to get away by finding the limit where they respect the ruling, while still ensuring it’s so complicated and painful that no developer chooses to use out-of-store payments.

Florian Mueller:

The 30% cut is not the only problem, and not even the most important one.

Joe Rossignol:

The Netherlands’ Authority for Consumers and Markets (ACM) has fined Apple five million euros for a third consecutive week for allegedly failing to satisfy the requirements it set regarding alternative payment systems for dating apps, according to Reuters.

The ACM today said it has still not received enough information from Apple to assess whether Apple has properly complied with the order, the report states. The competition regulator will continue to fine Apple five million euros per week, up to a maximum of 50 million euros, until it finds the company has come into compliance.

John Gruber:

The strangest aspect of Apple’s new guidelines is that they’re intended specifically and solely to address the ACM requirements, and we already know they do not. […] Neither the ACM ruling nor Apple’s updated guidelines seem ambiguous here, but clearly Apple’s guidelines don’t comply with “Providers must be able to choose both options.”

[…]

Both Apple and Google obviously want purchases to be made using their built-in purchasing. Google’s thinking seems to be that if third-party payment options can only be offered alongside their built-in Play Store processing, most users will just use the Play Store option. Apple’s thinking seems to be to make offering third-party payment processing so unappealing to developers (including the requirement that they use an entirely different SKU just for the Netherlands version of their app) that they won’t even bother.

[…]

The reduced commission rate of 27% isn’t completely arbitrary — clearly it’s based on a rough estimate of 3% for payment processing fees. But 3% isn’t enough to cover most developers’ actual payment processing. […] Consider Stripe, which is incredibly popular (and deservedly so). Stripe charges 2.9% plus $0.30 per transaction.

[…]

That’s the warning sheet for apps providing their own in-app payment processing; there’s a similar required warning sheet for apps that link users to the web to make payments. The language here is clearly slanted — perhaps laughably so.

[…]

It strikes me as inherently problematic for Apple to demand anything from transactions that take place outside the app.

[…]

Another restriction on web-based payments: an app can only have one URL that users are sent to, and that URL cannot contain any parameters[…]

Matt Birchler:

Shout out to John for mentioning the flat fee also usually associated with payments, which will mean it’s not break-even for merchants, it’s a net negative in most cases. Literally no one else seems to be mentioning this, which is wild because it meaningfully changes the math.

[…]

I will never stop finding it funny that the argument is, “yes, the App Store fees are monstrously high compared to every single other way people sell apps today, but have you seen game consoles?”

Francisco Tolmasky:

I do wish more of the conversation (and the ACM’s ruling) was around the user vs. Apple. Another way to look at this is that Apple believes you should pay them a markup for using a dating app.

I’ve mentioned before that for small app shops, the 15-30% commission could be the difference between being able to afford hiring full time support or another developer. Those are new features, bug fixes, and support you’re missing out on in your favorite apps.

And just look at the purposefully miserable experience they’re designing for out-of-store purchases. Sure, the goal is for to not be used… but what if it is? Is this what Apple wants, a bad experience for users? That’s where we’ve finally gotten to now? Deliberately bad design?

Update (2022-02-11): Matt Birchler:

That’s a lot of manual work for both sides, and I don’t see how it could ever scale to more than a few of Apple’s smaller markets.

[…]

I would suggest that Apple should, and will, build third party payments into the in-app purchase system. After all, why not? If Apple is getting their 12/27% and is saving money on processing payments, then what difference does it make to them how hard they make it for merchants to use another payment provider?

[…]

Based on my replies every time I talk about Apple Pay, I know for a fact that many people think that Apple is processing this payment, but that could not be further from the truth, every Apple Pay transaction you’ve made outside of Apple.com is happening through a third party payment provider already and it’s not disclosed anywhere in the UI.

John Gruber:

EU has lower credit card processing fees than the U.S. Stripe, for example, charges 1.4% plus €0.25 per transaction. That’s still about 4% for a €10 transaction, though.

Jason Snell:

For a company that says it is focused on delighting its customers, it has always chosen to maximize App Store revenue. Why else can you not buy Kindle books in the Kindle app, for example? Apple cares more about its cut and about pushing iPhone users to Apple Books than it does about the iPhone being the worst device on which to be a Kindle user.

If I sound despondent it’s because I am. Apple will fight tooth and nail to keep the money it feels it is owed. Yet third-party developers helped make the iPhone what it is, and Apple profits mightily off the iPhone. Regulators continue to test Apple, but the results will just add complexity without actually benefiting developers or consumers substantially.

Update (2022-02-16): David Heinemeier Hansson:

Every time Apple mobilizes its law machine to squash a developer in court, foil democratic accountability in the legislatures, or give regulators the middle finger, Apple wounds the relationship with developers. They can win every battle in court, lobby around every hearing in the house, and pay all the trifling regulatory fines, and still ultimately end up losing something far more long-term important than a monopoly tax rake.

[…]

Apple was in our corner. Apple was our escape. Oh how the world has turned. I guess you either die a hero (salute Commodore) or you live long enough to become the villain (hello Apple).

So here we are twenty years later. Apple has planted all the same seeds of discord with developers as Microsoft did in the 90s. But somehow even more ruthlessly and greedy than the boss that came before it. What a story arc.

See also: Accidental Tech Podcast, Upgrade.

Facebook Blames Apple, Usage Declines

Kif Leswing (Hacker News, MacRumors):

Facebook said on Wednesday that Apple’s App Tracking Transparency feature would decrease the company’s 2022 sales by about $10 billion.

[…]

Meta shares sank 23% in extended trading on Wednesday after the company warned about numerous challenges and came up short on user numbers. Facebook said first quarter revenue will be $27 billion to $29 billion, while analysts were expecting that number to exceed $30 billion.

Via John Gruber:

Worth noting that on Facebook’s analyst call, when pressed on this $10 billion figure, Wehner offered nothing to back it up. Really strong vibes of “The problem isn’t us, or our products — it’s mean old anti-competitive Apple.” It doesn’t seem like anyone bought that line.

Alex Sherman:

Facebook parent Meta lost more than $232 billion in value Thursday. That’s the biggest one-day drop in value in the history of the U.S. stock market.

There’s a kind of symbiosis here where Facebook wants to blame Apple, and Apple wants to take credit for protecting users from it. But the amount of protection is far less than commonly understood, and Facebook’s main problem is not App Tracking Transparency, but rather fading interest from its own users.

Alex Heath:

Since its inception, Facebook’s user growth has essentially been up and to the right.

[…]

Not only was user growth across Facebook, Instagram, and WhatsApp essentially flat last quarter, but the main Facebook app lost 1 million daily users in North America, where it makes the most money through advertising.

John Gruber:

All social networks are fleeting. They’re like hit TV shows — they come and go. Facebook itself (i.e. the blue app) and Instagram aren’t going to disappear, but their times as the new hotness are gone and will never return.

Nick Heer:

This alarmist story is accompanied by a chart illustrating the year-over-year declines in the prices of shares in Meta, Pinterest, Snap, and Twitter. It gives enormous credence to Mark Zuckerberg’s claims that App Tracking Transparency, which rolled out last spring in iOS 14.5, is to blame for a forecasted decline in advertising revenue.

But Facebook has made the same claim before, even as earnings grew. Also, it is not like a negative impact by App Tracking Transparency is some sort of universal truth, as implied by the Times.

Previously:

Update (2022-02-08): Ben Thompson:

The latter’s App Tracking Transparency (ATT) initiative severed the connection amongst e-commerce sellers, app developers, and Facebook by which Facebook achieved that ROI, and while the company is better positioned than anyone else to build a replacement, it is important to note that the impairment entailed in probabilistically measuring ad effectiveness instead of deterministically is a permanent one.

[…]

Still, Facebook’s forecast, disappointing as they were to investors, was for $27-29 billion in revenue this quarter; this is still a major player in an advertising market dominated by the three companies mentioned in this article, with one looming dark horse.

[…]

One of the biggest questions about the advertising landscape going forward is if Apple is going to move down to the “Apps + Discovery” quadrant that remains Facebook’s purview. If the company did they would have an unbeatable advantage: remember, Apple has made clear through its App Store policies and testimony in the Epic case that it views apps on the App Store as first party for Apple (this is how the company justifies its anti-steering provisions, likening links to websites to putting up signs in its own store for another, even though the signs in question are in the app and not the App Store). It follows, then, that Apple would see no inconsistency in denying Facebook the ability to have knowledge about installation and conversions derived from a Facebook ad, even as Apple has perfect knowledge of those installations and conversions from its own ads.

Update (2022-02-16): Peter Kafka:

Facebook is still making an enormous amount of money from advertising — analyst Michael Nathanson estimates the company will generate $129 billion in ad revenue in 2022.

[…]

Another way of putting it, via Alex Austin, the CEO of Branch, a company that helps advertisers figure out how their campaigns are working: After Apple introduced its anti-tracking changes in the spring of 2021, advertisers who used Branch’s services to measure paid ads on iOS dropped by 20 percent. Instead, Branch customers spent more time using the company’s services that track “organic” marketing campaigns using tools like email, and on services for advertisers who used Google’s Android phones — where those anti-tracking measures don’t exist. “It’s clear that the market is still figuring out how to handle [Apple’s new rules] on iOS, and shifting focus to Android and organic channels on iOS,” he told Recode.

Facebook says it’s working on a fix to make things better for advertisers in the near term via an “aggregated event measurement” workaround. Which in plain English means that while it won’t be able to tell advertisers which individual users clicked on a link or downloaded an app after seeing an ad, it can tell them what a larger group of users did.

Via Dave Mark:

Obviously, the goal was better privacy, not a move against Facebook specifically.

I mean, I don’t think that’s obvious. We’ve long known that Tim Cook doesn’t like Zuckerberg, and Facebook is obviously a major Apple rival and potentially a direct competitor in the AR space. It would be great for Apple if Facebook were less powerful. What reason do we have to take the privacy rhetoric at face value?

Mike Isaac and Jack Nicas:

The executives have also jabbed at each other. In 2017, a Washington political firm funded by Facebook and other Apple rivals published anonymous articles criticizing Mr. Cook and created a false campaign to draft him as a presidential candidate, presumably to upend his relationship with former President Donald J. Trump.

Update (2022-03-09): Ben Thompson:

It’s worth underlining this point: the App Store would not be nearly the juggernaut it is today, nor would Apple’s “Services Narrative” be so compelling, were it not for the work that Facebook put in to build out the best customer acquisition engine in the industry (much to the company’s financial benefit, to be clear)[…]

Facebook was by far the best and most efficient way to acquire new users, while Apple was able to sit back and harvest 30% of the revenue earned from those new users. Yes, some number of users came in via the App Store, but the primary discovery mechanism in the App Store is search, which relies on a user knowing what they want; Facebook showed users apps they never knew existed.