I took a hard shot at Epic Games and Tim Sweeney a couple of days ago because I don’t believe their propaganda or that their motives have anything to do with anyone other than Sweeney, Epic and Tencent. I don’t buy the “we’re doing this for all developers” act for a second and I stand by that 100% after a couple of nights of sleep and a lot of discussion back and forth on Twitter.
That said, I am only sticking up for Apple on a couple of points here. First, another business should not be able to interfere with how Apple chooses to distribute its products. Second, they absolutely should be able to charge developers for access to their curated App Store. I believe that these two policies should apply to any company that sells digital goods online.
But that’s where my defense of Apple and how they are currently administering their App Store ends.
So I’m not just shilling for Apple because I am a fan. My disgust for Epic Games capitalizing on a situation for PR and their own gain far outweighs any concern I have for Apple. A two trillion dollar company doesn’t need me sticking up for them. They can take care of themselves. In fact, I have far greater concern for other markets like the one I work in. If Epic Games’ legal strategy were successful (and I don’t believe it will be), it is broad enough to be used against all kinds of closed ecosystems and markets far beyond smartphones and mobile devices. Ironically, it could even be used against Epic and their own store by someone creative enough.
I’ve written about this before, but I thought it would be good to follow my criticism of Epic Games with some thoughts on a few things Apple should do to patch their relationships with developers without blowing up their business model or allowing the hamfisted US or EU governments to do that for them.
Implement a scaled fee system that operates based on usage of resources
First off, I believe that Apple has to come down off of their 30% fee structure, no matter what. However, they can also make the process more equitable for smaller developers by moving to a scaled fee structure that operates off of the resources used by each app and its developer. A small company with modest sales in the store would then pay the minimum percentage because they have the least impact on hosting, storage, energy usage, etc.
I will admit that this is quite different from what I and most other businesses are used to. While the prices of products scale up based on how much you purchase, typically the multiplier that determines the cost of goods goes DOWN with volume, not up. I’m sure Apple would get some pushback from large developers with my proposal. However, I do think they could also add an incentive system to help with that.
Basically, this would give larger developers incremental discounts against their fees for more involvement and revenue generated in the store. There would be incentives based on the amount of revenue generated. This would benefit developers who sell more apps and subscriptions in the Store. I think a “loyalty credit” for devs who have been selling in the App Store for years would also be a good idea. The last step is to implement an immediate discount for apps that use subscriptions, rather than waiting until year two.
So what are you left with? The companies and developers who’s apps consume greater resources but contribute the least revenue back pay the most in fees. Bring that top number down to between 25% and 28% and you have a system that some people will still complain about, but that most smaller developers who want or need to use the Store will be much happier with. I think it was very unwise for Tim Cook to say that they treat all developers the same in the recent antitrust hearing, and he got nailed for it. This proposed system doesn’t treat all devs the same, but it does treat them fairly according their differences in size, scale and contribution to Apple’s ecosystem.
This system also creates a framework where Apple could do what they did with Amazon without having to offer a special deal that no one else gets. The incentives for using more Apple services, like including Prime in the TV app, would be built into the system. It would allow other developers to get access to those same incentives, just on a smaller scale. Even Epic Games incentivizes developers to use its game engine with a discounted fee in their own curated store. How could they argue against this? I believe that this system would put an end to the rank and file Apple developers joining in with the complaints of larger companies like Epic and Spotify who are looking to flex their muscles to get a free ride on Apple’s back.
Create an independent arbitration panel
Binding arbitration is one of the standard methods used to resolve disputes between businesses. I know that Apple tried to approximate this by saying that it would set up the ability to appeal decisions and allow rules to be contested. But how is anyone going to trust a process that Apple still runs internally? I wouldn’t.
The only way to ease the amount of distrust that developers have with Apple’s App Store policies is to create some kind of external, independent review process. If developers and companies know that there is some outside accountability to the system, it will help to rebuild trust that they can eventually get to a fair resolution if Apple is in the wrong. I also think that outside accountability will help to create more internal accountability on Apple’s side. The only way to avoid lots of arbitration reviews is to handle your business by the book up front.
I think we all know this is a direction regulators in the US and Europe will eventually head in. Apple would be wise to beat them to the punch and tout it as a way they are improving the transparency of the App Store and its rules.
Rebuild the rulebook
For the step above to work, Apple has to do this first. They have to clarify the rules. For real this time. They have to actually put all of the rules and policies in a document, including all of the unwritten polices that they seem to know, but aren’t actually written down for any of us. And they absolutely have to remove any sense that they are making crap up as they go along. It’s been 10 years. That has to go. There’s no excuse for it at this point.
There are two different directions Apple can go in here. They can keep the system they have, where different classes of apps are treated differently, or they can make the same rules apply to all apps across the board. One rulebook would be quite complicated. The other would likely be a lot simpler, but could lead to some situations that are difficult to manage down the road.
Personally, I think Apple would be best served by creating a flat rulebook. This means no more exceptions for “reader” and media apps that email and gaming apps don’t get. It is going to seem like a much fairer system if everyone has access to the same capabilities and features. This means that Apple would have to re-think how its looking to be paid for certain services. I know streaming gaming services play into this because, forget about just Apple Arcade, they will cut into all gaming purchases on iOS. I can’t really blame Apple for not wanting to let a competitor make a lot of money off of their platform while getting absolutely nothing in return and that’s almost certainly their fear with services like xCloud.
I think that last bit is why Apple hasn’t done this already. It’s why they have held onto their vague rules and policies and unilateral enforcement. As a company, they can’t afford for the App Store to bottom out in a year or two the way that iTunes did when music streaming became the norm. And I don’t think they want to get into games streaming, themselves. This is the big hangup, but if Apple doesn’t answer these questions and solve these problems themselves, others are going to do it for them. It’s time to move.
Allow outside subscription apps to link to an external website
This simple step would clear up a lot of confusion with business apps and apps like Kindle, Netflix and others. Apple just needs to allow devs to link back to their websites for signup to services that aren’t offered through the Store. This wouldn’t be a browser window that opens inside of the App Store or a server-side trick like Epic used to implement their little rules violation that got them booted off the App Store. This would be a link that would kick the user over to Safari to do something external to the Store. Some of you may even remember when Apple allowed devs to do this in the early days of the App Store.
Like Google does with sideloading apps, I think Apple would be well within their rights to force a popup when a link like this is clicked informing the user that they are signing up for something outside of the App Store, and that Apple’s policies, security and privacy protections do not apply. As long as they don’t go over the top and make it “too scary,” as Tim Sweeney would say, it would at least inform users that they are playing outside of the sandbox, so to speak.
This is a small step, but it would restore a little common sense to the App Store. I think it would also be appreciated by developers who concentrate on business and enterprise customers. I’m sure they answer questions about how to log in and create accounts for their App Store apps quite often.
These four steps won’t solve all of Apple’s problems. There are still questions of whether they should or will eventually be forced to allow other app markets or sideloading. There is the question of alternate payment processing. I do know this, though. If Apple wants to preserve those two platform staples, they are going to have to fix everything else.
What these four steps would do is restore trust in the processes that govern Apple’s App Store. I think it would also make more developers feel like they are being treated fairly by Apple, rather than taken for granted or completely ignored while paying 30% for the privilege.
I think this would also diffuse at least some of the antitrust sentiment in Congress. It may be too late for Apple to avoid any regulation, but I think these steps being taken beforehand would include them in the process, rather than putting lawmakers in the position where the feel they must be punitive to make a statement. This window is already closing, so Apple would need to move quickly to have a chance to turn the tide.
Doing any one of these things would be a big step for Apple. All four would be a massive shift. Since they haven’t taken any real action yet, I have my doubts the company will do anything until the barbarians really are pounding the gates. However, I think Apple’s board and executive team can save itself a lot of trouble by taking these steps on their own today.