[pdonis]

Why is it unethical to charge a fee to developers who want to distribute their software through an app store that Apple owns?

I get that it's unpleasant for developers who don't like the policy, and at some point it might have business consequences for Apple if they don't change the policy, but why is it unethical?

[jeffchien]

>Why is it unethical to charge a fee to developers who want to distribute their software through an app store that Apple owns?

This is only part of the complaint, right? The other parts is that:

* Apple has the only keys to the hardware platform.

* This is in contrast to Google or Steam, who also charge 30%, but do not completely own access to their respective hardware platforms.

* This is also in contrast to physical stores, because if a store does not sell a product (i.e. a grocery store chain does not carry some brand of beer), the product owner can usually still put it somewhere else that the consumer can freely access (excluding transportation costs).

* The policy regarding whether Apple should be entitled to the subscription fee is inconsistent and full of exceptions, which this website illustrates. My cynical take is that these exceptions have no real philosophy behind them, other than the fact that Apple needed certain major apps to be on iOS (i.e. Netflix, Tesla, Bloomberg, etc.).

* Slightly separate point, but still relevant: if Apple is entitled to subscription fees, Apple can make competitors that undercut other subscription services like Spotify, because they don't have to pay themselves the 30% fee. This is what Spotify complained about last year, and what I believe the EU is looking at. [1]

[1] https://www.theverge.com/2020/6/16/21292651/apple-eu-antitru...

(edit log: added newlines for easier reading)

[p1necone]

The fourth bullet point is the most egregious to me. These policies are so overbearing that they're actually untenable, but Apple just gets around that by arbitrarily giving exceptions to companies that are big enough to affect their bottom line.

[pdonis]

> This is only part of the complaint, right?

It's the part I'm interested in. I get that Apple's policy is a pain in the ass to a lot of developers, that Apple is inconsistent and arbitrary about how it applies that policy, and that all this greatly restricts developer access to users of Apple's hardware. What I don't get is how any of this is unethical. Bothersome and irritating, yes, but why unethical?

[acituan]

> Why is it unethical to charge a fee to developers who want to distribute their software through an app store that Apple owns?

Developer don't necessarily want to distribute their software through that app store, they are forced to do that if they want to sell their software to people who happen to use that operating system. Operating system and app store are distinct products, but app store exclusively gatekeeps the functionality the user can achieve through the operating system they bought.

If app store was a standalone offering that aimed to benefit the user, there shouldn't be any problem allowing multiple competing app stores people paid for the convenience of vetted and curated apps and letting the market forces decide the winner. That is obviously not happening.

Therefore, strongarming the ecosystem and stifling market dynamics is the unethical move here. Less competition, less innovation, less user benefit, less developer income (which translates into even less innovation) etc is the price everyone pays in aggregate in order for Apple to exact its rent, which goes to their idle pile of cash or comes back to humanity as a 0.002 grams lighter iPhone++ next year.

[reaperducer]

So you increase the price of your app by 30 to make up for Apple's cut%. It's called business. It happens all the time in every single industry.

If a business' property taxes go up, that cost is passed on to its customers. Why do people think that because something is on a phone that it should be any different?

[twicetwice]

That's also not allowed. I think Hey would be fine charging $142 a year for a subscription in their app, with a little note below saying "you can get this for $99 on our website, the difference is Apple's cut." In fact, if I understand it correctly, the price in-app has to be the same as the price anywhere else. They're literally not allowed to do what you're suggesting and pass the cost of Apple's fee on to consumers.

[reaperducer]

You just Charge everyone the same and don't tell the customers that they're paying Apple's cut.

Just like Hey doesn't tell its customers what percentage of its fee goes to the water company, or the electric company, or to company travel.

This is how business works.

[twicetwice]

So Hey should boost their prices everywhere, even on their own site, to $142, so that they can make up Apple's cut? Which is what Apple demands. I don't think that's reasonable.

I think that you and I are broadly in agreement. If Hey were allowed to charge $142 in their iPhone app, and $99 on their website, I'd think that was much less ridiculous than the situation as it stands today.

[acituan]

> It's called business. It happens all the time in every single industry

And we call those situations market failures. Besides, in this case the market failure is due to a monopolistic mechanism, which doesn't happen "all the time in every industry". If we are going to do markets, let's do it properly.

Increasing price %30 causes a corresponding decrease in the demand, and in aggregate this can cause a decrease in the total profit. The fact that the developer is forced to set a new price point this way is a source of inefficiency for the entire app economy.

Besides forced price increase is not the only harm done by the monopoly of the App Store. As this website exemplifies, it has monopoly over ontological decisions (whether a certain type of app can exist or not), over design decisions (signups, in app purchases etc) and whatnot. These are further points of inefficiency or outright failure. Apple might or might not be doing a good enough job making the best out of these decisions, but the bottom line is we don't have a choice of another player emerging with potentially better choice-making and therefore a better app store.

[pdonis]

> we call those situations market failures.

To the extent that this situation is a "market failure", it's not one that's fixable except by users changing their preferences.

> in this case the market failure is due to a monopolistic mechanism

Apple only has a "monopoly" on their own app store because they built it. Users are not being forced to use iPhones; they choose to because they believe iPhones give them better value overall than the alternatives. That's called free market competition, not monopoly.

[acituan]

> it's not one that's fixable except by users changing their preferences.

By definition market failures can't be fixed by market dynamics. That is why state does tons of interventions/regulations to make it work.

> That's called free market competition, not monopoly.

No. Vertical integration means there is no free market at the integration point to begin with, which integration of a software application store with a physical phone is. We are talking about a $50bil/year market that is not free.

[pdonis]

> By definition market failures can't be fixed by market dynamics.

That's why I put "market failure" in quotes. If you think anything fixable by users changing their preferences isn't a "market failure" by your definition, fine, then the Apple situation is not a market failure by your definition.

> That is why state does tons of interventions/regulations to make it work.

No, the government does tons of interventions/regulations to favor particular market players, under the guise of "fixing market failures". In almost all cases, these interventions/regulations actually make things worse overall, but of course they make things better for the particular market players that were favored.

> Vertical integration means there is no free market at the integration point to begin with

Throwing around buzzwords proves nothing. Apple created the iPhone and its app store. It can do whatever it wants with them because it owns them. It has the market share it has because users have freely chosen to use its products instead of those of its competitors. That's the essence of a free market. The fact that you don't like doesn't make it not a free market.

[pdonis]

> If app store was a standalone offering that aimed to benefit the user, there shouldn't be any problem allowing multiple competing app stores people paid for the convenience of vetted and curated apps and letting the market forces decide the winner.

And if all that would benefit users more, users would be demanding it, or switching from iPhone to something else. But they're not. Users seem overall to be quite satisfied with what they are getting from their iPhones. So your claim here appears to be empirically false.

> strongarming the ecosystem and stifling market dynamics is the unethical move here

All this depends on your factual claim above being true, which, as I have noted, it appears not to be, based on actual user behavior.

But let's put that aside and assume that your factual claim is true. If that makes what Apple is doing unethical, then probably every single large corporation on the planet is unethical. Certainly every large corporation in the tech industry is. They all do these things; they just don't all do them with an app store.

[acituan]

> Users seem overall to be quite satisfied with what they are getting from their iPhones. So your claim here appears to be empirically false.

A lack of reduction in observable demand doesn't imply an absence of cost.

Let's say the cost of having a singular app store for the user can be expressed as 99$, but the average utility they derive from using their iPhone is valued at 100$. It would be rational for that user to still prefer iPhone despite incurring great cost and we wouldn't see any drop in demand.

> Certainly every large corporation in the tech industry is. They all do these things; they just don't all do them with an app store.

That is appeal to tradition. Indeed, monopolistic nature of tech combined with vertical integration is a large unsolved problem of our era and it haven't completely played out yet.

[pdonis]

> A lack of reduction in observable demand doesn't imply an absence of cost.

Waving your hands and throwing random numbers around doesn't imply a presence of cost.

> That is appeal to tradition.

It is no such thing. I'm just trying to figure out what your actual position is.

> monopolistic nature of tech combined with vertical integration is a large unsolved problem

Which makes it clearer what your position is: you think the problem with tech is "monopolistic nature combined with vertical integration".

I disagree. I think the problem with tech is that it is giving away valuable things for free, or selling them at or below cost, in order to capture users and sell their data and their eyeballs or corner markets. Apple is actually the least guilty of this of the major tech players; I'm far more worried about Google and Facebook and Amazon than I am about Apple. But at any rate, that problem is not a problem of monopoly and vertical integration. It's a problem of shortsightedness in general--putting short term gain and convenience over long term stability and trust.

[acituan]

> Waving your hands and throwing random numbers around doesn't imply a presence of cost.

Come on, let's not go in circles. I posited there is a cost to user in being locked into a single app store. You claimed if there was such cost, we necessarily would have seen decrease in user demand. My handwaving numbers were to demonstrate that it doesn't have to be true, there can be substantial user costs without any decrease in user demand.

> giving away valuable things for free, or selling them at or below cost, in order to capture users and sell their data and their eyeballs or corner markets

You're close but not there. Being able to give away things for free come from the giant profits accumulated through monopolistic vertical integration. Google has a compute platform that runs a search engine/youtube that sells adds that is viewed through their browser that runs on their mobile phone. Those are multiple integration points (though not all are monopolistic). If for example Google were to pay for an external compute platform that is not theirs, they would have to pay for the profit margin of the service provider, but without is all of that money stays within the company, and that is one of the factors that enable them "giving away valuable things for free".

Data integration is a completely different game. Selling data to outside is the least powerful way to make money out of it, especially if you have other data and products. It is akin to a 3rd world country selling their raw resources. What makes the most money is the integration of multiple data sources through multiple products and even 3rd party vendors. The magic of an SQL join is that joining table-a and table-b can yield more information that neither a and b had alone. When you join the data of a browser and a search engine and 3rd party information you bought to sell more clickable ads, that is when the most money is made out of the data. The more money you make, the more you can run loss leaders, buy competitors, create barriers of entry (a la app stores), and meanwhile damage the entire ICT ecosystem in the name of even more money. That is why ensuring market health is important.

[pdonis]

> I posited there is a cost to user in being locked into a single app store.

And the person to judge that question is the user, not two people having an argument on an Internet site. And not app developers either.

> You claimed if there was such cost, we necessarily would have seen decrease in user demand.

I said that if there is no discernible change in user demand, that means the users, who are the ones in a position to judge, evidently don't see a significant enough cost to change their behavior. Any change in the cost-benefit relationship will change the behavior of some users. Sure, they won't all switch from iPhones to something else, but some percentage of them will.

> Being able to give away things for free come from the giant profits accumulated through monopolistic vertical integration.

No, it comes from having some other source of revenue besides the users of the thing that is being given away for free. "Monopolistic vertical integration" might help in getting other sources of revenue, but it's not the root problem. The root problem is that the actual users of the service are not the paying customers, someone else is, so the incentives of the provider are skewed.

[MrStonedOne]

Think of a flee market. Lets say this flee market runs their own PoS system that tables can use, they require all sales happen via this PoS system "to protect customers from hacking", and they charge a percentage for providing this service, higher then normal under the guise that the transaction is being conducted on their property, they are "hosting" the "sale" under their roof, so they set the terms for it. Seems fair and good, ish

Now lets say that they also own the city bank, and they are the only one allowed to take their bank's debit card as payment. Most people don't use the other, newer bank because everybody they know is using the flee markets bank as it was first. So if you want to take credit card payments you have to sale at the flee market.

Is it still fair and good for them to continue to set all terms relating to how sales are conducted in a selfish way when they have a monopoly gained in part from first mover advantage? eh, maybe, maybe not.

Now they say that if you sale any spare parts or consumables for a product that was originally sold at the flee market, you must only do so at the flee market.

Is it still fair and good for them to use the fact that the transaction is happening on their property to set higher fees on these follow up transactions when they require these follow up transactions to happen on their property? While exploiting a first mover advantage that causes more of the initial transactions to happen on their property?

Never forget that you can't just look at each piece, the whole matters too.

Each individual piece of the macro is ethically an "eh" at most, but the whole is a bit more then "eh"

[pdonis]

> the whole

Is nothing like the situation with respect to Apple, so I don't see how your extended analogy here is relevant.

[dan-robertson]

I think it would be ethical to charge a fee to distribute software. You can imagine a world where each upload to the App Store would cast say $100. But the issue people complain about is that they are forced to use Apple as a middleman for all their payments and that Apple charges exorbitant fees for this

[reaperducer]

So don't be on the App Store. Problem solved.

Make it a web site. Make it an Android exclusive. Do any of the dozen other things you need to do to be a success. You don't have to be on the App Store to survive. Hundreds of thousands of developers and their programs aren't.

[vore]

Making it a website is inconvenient for many reasons compared to an app. Making it Android exclusive sucks for people who have iPhones, and it's a tall order to ask anyone to switch away from an iPhone they have already purchased. The problem is categorically not solved here.

[pdonis]

> The problem is categorically not solved here.

The "problem" being your convenience. Sorry, that's not anyone's problem but yours.

[curyous]

It’s the size of the fee that is unethical.

[zeroimpl]

Taxes are paid by the consumer. Ideally developers should price things based on how much revenue they want per transaction, and have the 30% fee shown to the user.

If that were the case, there would be nothing unethical about a 30% tax nor a 90% tax.

Therefore, it’s not the size that’s the problem, but the fact that the tax isn’t communicated to the consumer, and also that Apple wants you to charge the same price in-app as elsewhere (though I’m not sure if that part is enforced)

[pdonis]

So what determines how large the fee has to be for it to be unethical? I don't see any principled way to decide, which makes me doubt your argument here.