I don’t think anyone can dispute that Apple makes some really good devices. The iPhone has been a solid device since its inception and the MacBook is as good as it’s ever been.
I’m not sold on either the Apple Watch or the iPad. However, they are well built.
Apple also makes sleek and well thought out software for those devices. iOS for the iPhone, MacOS for the Macs and so on.
That’s a really good position Apple finds itself in. Controlling both the hardware and software allows for some crazy level integration not possible otherwise.
All that talk of the Apple ecosystem hinges on this. Apparently, if you still want to exercise your right to pick devices you want, limit yourself to one or just two Apple devices. If you collect all, you will struggle to leave Apple’s garden.
Mowing down the garden
Speaking of the garden, the European Union (EU) wants to set some goats loose in it. The EU has been on a tear lately, forcing Big Tech to play nice. They have been tearing down all the carefully built walled gardens Big Tech gatekeepers had erected.
Gatekeepers are important market players that hold considerable market power and provide at least one core platform service in the EU’s book.
They designated Apple’s App Store a “gatekeeper service” because it acts as an important gateway between businesses and consumers.
That makes sense to me. I am a consumer of music (or more accurately, Spotify’s excellent recommendation algorithms) and the App Store is the gateway to all the Spotify goodness I need in my life (I have no time for Apple Music).
The only way to listen to Spotify on my iPhone is by downloading it from the App Store. So, I am forced to go through Apple’s App Store when my arrangement with Spotify has nothing to do with them.
To add a little insult, Apple takes a huge portion, 30%, of the money I pay Spotify for their service. “Kuripwa kugara,” as that guy used to say.
The EU looked at this and said it couldn’t stand. People should be able to deal directly with the businesses they want to deal with.
They should be able to download apps from outside the App Store and make their own payment arrangements that cut Apple out.
In short, the European Union aimed to enable users of Apple’s hardware to download apps from different app stores and allow developers to utilise their own payment systems, thus avoiding Apple’s fees.
The Mafia responds
We talked about Apple’s brilliant devices but what can’t be disputed too is that Apple rules with an iron fist. They have been called the “Mafia” by developers for years.
They believe it’s their devices and their operating systems and so they get to set whatever rules they want. I believe Apple hates that we download apps they did not make themselves. We should be happy with the excellence they give us, we don’t need anything else.
So, when the EU forced their hand, Apple still found a way to comply with the letter of the EU’s regulations whilst completely undermining the spirit.
Apple released some new business terms that those seeking to use alternative app stores or payment systems would use and they are ridiculous.
Apple introduced what they call a “core technology fee” and developers would have to pay 50c per user after the first 1 million installs. That’s the price you pay for your alternative app store.
This works out for truly small developers but once you cross that 1 million mark, like Spotify, it gets very expensive that you’re better off sticking with the old App Store rules.
Apple also had a smackdown for those looking at alternative payment system. First off, you need to apply for this priviledge and if granted said priviledge, you will need to pay 27% to Apple, instead of 30% like in the old terms. It’s 12% instead of 15% for small developers.
Well, it’s only a 3% drop. It’s small but it’s something, I guess. Except, that’s before you pay your third-party payment processor. That payment works out to about 3% or just over in most cases. So, you end up paying 30%, or a little more in the new deal.
Apple is trolling people now. They made sure the maths works out like that.
Developers mad mad
Of course, developers are mad about this. As they should be. Apple made a bad faith effort to comply with EU regulations.
A group of app developers that call themselves The Coalition for App Fairness said, “These changes do nothing to enhance consumer choice, lower prices for in-app purchases or inject competition into Apple’s walled garden. It is precisely this type of abusive, monopolistic behavior that makes it imperative for Congress to pass the Open App Markets Act.”
Spotify said, Apple “will stop at nothing to protect the profits they exact on the backs of developers and consumers under their app store monopoly.”
Some smaller developers said stuff like, “What they came up with is the best proof that they are massively abusing their market dominance. Apple is basically behaving like a dictator.”
“If I was the European Commission, I would probably look at this as an insult,” said Proton CEO and I agree, this is an insult.
These developers are pressuring the EU to not accept Apple’s bad faith compliance. The developers have raised up such a stink that the EU is not going to accept this, I’m almost certain of it.
I think Apple might have overplayed their hand here. This is not going to work. The developers have some power for the first time ever because they have the ear of the regulators.
Apple has until the 7th of March to comply. Yes, they technically complied but after March 7 I think they are going to be forced to properly comply.
Crazy story indeed. I’ll leave you with a quote from some small developer, “Apple holds app providers ransom like the Mafia. Anyone wanting to provide an iOS app must pay a ransom to Apple; there’s no way around it.”
We’ll see how long they can hold on to their Mafia ways.
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