In-App Purchase Gatekeeping

In this blog post at SplatF, Dan Frommer describes how Amazon, Kobo and others have been forced to remove all trace of their external stores from their iOS applications if they do not want to pay Apple a cut of all revenue from purchases originating in the application.

For example, the Kindle app no longer has a “Kindle Store” button, which used to open Safari and take you to their store. Now, on opening the application, it’s not really obvious how one, you know, gets books to read.

I don’t like the direction this is taking, and it’s nothing to do with whether vendors can afford to pay Apple’s cut. To me, Apple forcing apps to either remove links or funnel money through Apple’s infrastructure is fundamentally about an abuse of power.

Apple’s argument here, of course, is one of “consumer gain”, long-term. The story goes: people have iTunes accounts, the devices are bound to these accounts, we can offer a safe buying experience via these accounts, users on iOS should therefore only purchase via these means which will (somehow) benefit them.

Of course, that’s not the real story. It’s hard to imagine that these rules are not simply designed to funnel as much money as possible to Apple from use of their devices.

You’ll note that this is not typically how a hardware/software business works. Buying an something through a program—such as a 3rd-party web browser like Firefox—on a computer does not typically require the program’s writer to pay the OS vendor money. Usually, the user pays for the OS and hardware, which pays the OS and hardware vendor for those items. The OS vendor doesn’t then have an ongoing revenue stream purely related to the fact that they sold the OS. Their revenue comes from selling the hardware or OS itself.

Even a services business usually only charges for direct use of their service, for example a transaction flowing through a payment provider. On this basis, the use of the Apple provided in-app purchasing framework and service backend gives Apple reasonable grounds to take a cut because they are an enabler of the transaction.

On these grounds, externally created and run stores, such as Amazon’s, shouldn’t be prevented from having links out from their apps to their stores:

  • The app vendor has paid to be in Apple’s developer program.
  • The user has paid for their device.
  • The app vendor isn’t using un-paid-for Apple hardware or software, bar Safari, to facilitate the purchase.

It looks to me very much like Apple have no real grounds to forceably charge app vendors for purchases made through their applications which do not use the Apple provided purchasing platform. Claiming that the app vendor should pay Apple purely because they are using the iOS platform, mandating this via the App Store monopoly on app distribution, is a hollow argument. It rings particularly hollow as the prevalence of apps is a large part of the stickiness of the iOS platform. Screwing developers in this manner seems like having one’s cake and eating it.

The second, perhaps more convincing, argument that the vendor is delivering the application for free, and then making money from delivering content via their store thereby cutting app revenue from Apple is also spurious. As mentioned above: the vendor has paid Apple to develop on their platform and the user has paid Apple for their device/OS combo. The app delivery mechanism of the App Store adds very little value to the overall iPad+app+content equation here, so Apple receiving little revenue seems reasonable.

Overall, it feels a bit like milking their platform for more than it’s worth from Apple.