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Should App Developers Keep Paying the Apple Tax?

3 months ago

The recent move by Tinder to bypass Google Play has sparked a debate about whether the gated gardens of App Stores are worth the hefty 30% cut they impose on developers. Apple's App Store and  Google's Play Store  rack tens of billions of profits annually, by imposing the tax on what is essentially Other People's Apps. They not only charge a tax on app downloads / sales but also on any in-app purchase and subscription. This has sparked a debate that is long overdue: Are Google and Apple justified to impose such a high tax 12 years after the introduction of app stores, and should developers put up with this situation?

Google and Apple provide their own justifications for charging the tax. They have spent years and millions of dollars to develop the infrastructure. They have spent a lot in advertising to gain the trust of their users, and created a large pool of customers willing to pay, enabling developers to reach millions of potential new users with their apps. They offer guidelines, guarantees and review processes that ultimately protect the consumer. Circumventing those charges is a temporary way for Tinder to show a profit in their balance sheets and make savings in the quarterly report, but this seems like a trick. It is like somebody selling shoes outside the shoe store because they do not want to pay a fee to have their stock inside. 

Of course, the situation is more nuanced. It has been many years since Apple and Google built the app store, and their infrastructure costs in no way justify the high rent they are seeking for.  Apple made a profit of 21.7 Billion last year from other people's apps, in exchange for their use of the app store. The costs of running the app store are basically maintenance costs that probably count in the millions, not in the billions at this point. So, indeed it seems they are charging too much for renting a download space.

Second, the two of them act as gatekeepers to the entire ecosystem of apps. All other mobile app platforms have vanished from the horizon and mobile app developers are now left with only two options if they care about profiting from their apps. This allows them to keep their rate at 30% due to lack of competitors, and because, for both of them  the app store is not their main source of revenue, which means they have no strong incentive to undercut each other. Google is in a slightly better situation here, since they allow their users to use app stores other than Google Play, e.g. F-Droid. Apple is much more restrictive, and ties developers really hard to its horse. An antitrust case is weakened by their arguments. Google's policy allows it to escape from nosy antitrust queries, while Apple always claims that its market share is not big enough to warrant antitrust fines. This situation leaves developers helpless and at the mercy of the two big guys. 

Small scale developers already know that the App Store is a wild west where everything goes though a tiny funnel. They compete for users' attention in a very narrow space, often with dirty tricks involving bought reviews, artificially inflated numbers and other black hat techniques. In a way, it seems developers should have not taken the bait from the beginning - they should not tie their fortunes to the goodwill of Apple or Google, a kind of dependence which has always proved problematic. Instead they should have pushed to move whatever functionality they need to the browsers, so they can create web apps instead (the WWW is not regulated by anyone's app store). Unfortunately, Apple's PR machine has been very effective at convincing everyone that they need an "app for that", even if their website was a simple forum. So now they are trapped.

What should be done? At this point only big app makers have any chance of making noise around the Apple tax, and frankly, small developers cannot rely on them to remedy the situation permanently. Big corporations will make some noise, get some concessions or a special deal from apple, and then go back to sleeping with the devil, i.e. paying the tax in an even more exclusionary way. This is a bad solution. Developers should instead actively seek to disentangle themselves, and others from app stores. The mobile web is already good enough for 99% of apps in the app store, outside the category of games. The freedom to deploy their apps wherever they wish is somethiing that they should take back, and should have never given up in the first place. The freedom of users to use whatever app they want in their phone is something they also deserve, and probably should not have given up for the convenience of having an app store. There needs to be a developer campaign to #leave the App Stores.


Are you a mobile developer? How are you affected by the app store tax? What are your thoughts on this?



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