Apple’s App Store is a marvel. Introduced in 2008, a year after the debut of the iPhone, it’s become a marketplace that generates billions of high-margin dollars for Apple every year.
But the App Store is also a problem for Apple. The company’s tight control over it — which is the only way iPhone customers can get apps onto their devices — has attracted sharp scrutiny, generating antitrust complaints and investigations, and now, a high-profile antitrust lawsuit from Epic Games, the company behind Fortnite.
It seems impossible to imagine Apple fully relaxing its grip on the App Store, where it charges app developers as much as 30 percent of each sale they make within the store. This is in part because the company believes its control protects Apple users from malware and scams, and in part because Apple’s Wall Street story now depends on the high-margin profits the store generates. So it’s dug in against an increasing number of opponents.
John Gruber thinks he has a face-saving solution: better signs. Or more accurately: signs.
Gruber, a blogger and podcaster with a passionate audience among Apple fans (and executives), thinks Apple will eventually have to relent on at least one of the App Store policies former CEO Steve Jobs instituted years ago: Apps can’t tell their users they can buy something — say, sign up for the paid version of an app or buy virtual currency for Fortnite — outside of the app.
In practice, this means developers that don’t want to sell through the App Store — such as Netflix and Spotify, which sell subscriptions to their streaming services on their own sites so they don’t have to give Apple a cut of their monthly revenue — can’t tell app users they can do so when they open the app. Instead, they have to just hope users figure out how to do it on their own.
Here, for example, is what Spotify tells iPhone users who want to start paying the company for a monthly subscription: You can’t do it this way, but we can’t tell you how you can do it. “We know, it’s not ideal.”
Developers hated the rule — created explicitly to keep customers buying things on Apple-controlled apps — back when it first showed up in 2011. But they haven’t been able to get Apple to budge.
Now, Gruber told me during this week’s Recode Media podcast, it seems as though relenting on this rule is the most likely concession Apple can make — it doesn’t change Apple’s overall control of its app ecosystem, and Apple can afford to take a relatively small hit to its revenue that it might feel as a result.
On the other hand, Gruber argues, Apple has to do something. Courts and regulators might force it to, and continuing to dig in now is not a good look.
“At some point, you have to balance the dollars from holding on to every single penny they can through the App Store, with the damage it’s doing to Apple’s brand,” he said.
And that brand matters to customers — and to the developers that depend on Apple but are increasingly unhappy about the way Apple runs the store. “I also think that there’s a reckoning within Apple that they really should look at the resentment that’s grown slowly but surely, like any slow-festering problem, where so many developers resent Apple” over the 30 percent fee, he said.
Like many other observers, Gruber doesn’t think Epic Games is likely to prevail in its fight against Apple. And ditching the no-signs rule now wouldn’t stop the case that’s already underway.
But it could certainly help Apple in other fights. The conventional wisdom is now that Spotify has a better antitrust argument — in large part because Apple sells its own music service that competes with Spotify but isn’t subject to the same 30 percent. European Union regulators said as much last week in a preliminary finding. Changing that rule now, before things get finalized — and before other suits pile in — could give Tim Cook and the company some breathing room.