Apple believes its decision to open the iPhone to third-party development in 2008 created a “new and unique” mobile technology environment, which then resulted in an “explosion” in software development that “significantly benefited” third-party app developers and consumers alike.
Its claims were made in a submission [PDF] to the Australian Competition and Consumer Commission (ACCC) in response to its probe of app marketplaces. The local arm of the iPhone maker claimed the Apple App Store created competition and launched an entire industry around mobile app design and development. It also said the Apple App Store lowered the barriers to entry for developers.
The ACCC’s probe is examining the consumer, developer, and supplier experience. It is also focusing on the use and sharing of data by apps, the extent of competition between Google and Apple’s respective stores, and whether more pricing transparency is needed in the local mobile apps market.
Apple has argued it needs to “compete aggressively”, saying it is in competition with the likes of Samsung, Google, Huawei, TCL, and Oppo. But, as highlighted by Match Group in its submission [PDF], there are no significant suppliers of mobile app marketplaces in Australia, or globally, other than Apple and Google.
See also: US antitrust probe finds ‘alarming pattern’ of innovation-stifling practices
Currently, app developers are not able to publish and distribute an app on an Apple mobile device without using the Apple App Store.
“Distributing apps to consumers via an app distribution channel outside of the App Store is likely to result in Apple claiming the app developer has breached its developer agreements with Apple,” Match Group clarified.
“This would result in the developer losing access to their developer accounts and development tools for Apple’s mobile device operating system, iOS.”
Match Group is responsible for dating apps such as Match, Tinder, Hinge, OKCupid, and Plenty of Fish.
“An Apple mobile device user could ‘sideload’ an app marketplace onto their device. However, this practice is not permitted by Apple mobile devices and would require sophisticated hacking skills,” it continued.
The ACCC published the submissions to its inquiry on the same day Fortnite publisher Epic Games announced it would launch legal proceedings in Australia against the local arm of Apple to continue its fight with the iPhone maker over its app store practices.
The claim, filed at the Federal Court of Australia, alleges Apple’s conduct in the Apple App Store is a misuse of market power and substantially lessens competition in app distribution and payment processes.
Epic brought proceedings against Apple in the United States in August, accusing Apple, as well as Google, of being anti-competitive and monopolistic. The accusations arose after both tech giants removed Fortnite from their respective app marketplaces after Epic implemented its own in-app purchase system, which circumvented app store fees.
Apple receives a 30% commission on purchases made through the App Store for: Purchases of paid apps; in-app purchases of digital content; or digital subscriptions purchased for use in an app. After the first year of digital subscriptions, Apple receives a 15% commission from those subscriptions.
In defending the 30% cut it takes from developers through the App Store, Apple’s submission said developers generated more than $413 billion globally from the sale of physical goods and services and $45 billion from advertising through their iOS apps in 2019.
Apple, however, announced a new scheme on Wednesday. The scheme, called the “App Store Small Business Program”, slices commission rates in half from 30% to 15%.
“Existing developers who made up to $1 million in 2020 for all of their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission,” Apple said. “If a participating developer surpasses the $1 million threshold, the standard commission rate will apply for the remainder of the year.”
On the use of data, Apple said it does not seek to monetise customer data.
“This is not, and never has been, Apple’s business model,” it said. “Apple is singularly focused on selling products to consumers.”
Match Group clarified, however, that app marketplaces collect app usage statistics, including the number of times each app on a device is opened, the amount of time it is open for, and the time it is opened. This is in addition to collecting valuable transaction and billing data where developers use app marketplaces’ own in-app purchase facility.
“This data includes customer lists, the purchasing activity of individual users (which can be used for all manner of purposes, including their propensity to purchase subscriptions) and the success of subscriptions,” it said. “Some developers are required to use these in-app purchase facilities.”
See also: Apple’s antitrust fight could spell the end of iOS as we know it
Offering further insight from the developer world, Match Group explained the Apple app review process.
“While developers respect that app review processes are in place to enable a level of quality control to benefit end-users, in some cases, it is unclear when an app developer will be subject to certain conditions while other apps offering similar services are not,” it said. “This confusion impacts developers who are unable to push through updates to their apps. Features which were once approved by the app marketplace in one review process could be considered non-compliant in the next review.”
As an example, Apple rejected an app update to Down Dog’s yoga app on the basis that the app did not automatically charge customers following the expiry of a free trial. Apple eventually backed down and approved the update.
After banning streaming games, Apple in September tweaked its App Store rules to allow services such as Sony PlayStation, Google Stadia, and Nvidia GeForce Now. But Apple requires these services to submit an app for each game rather than only vetting the game-streaming service app. Microsoft has objected to that rule.
Microsoft publicly criticised Apple’s rule changes because they would require, for example, that Microsoft list its cloud-streamed games individually on Apple’s App Store and limit any app marketplace by Microsoft to a directory which links users back to the games listed on Apple’s App Store.
“It therefore appears that the changes might not truly allow developers to run a gaming app marketplace in competition with Apple’s App Store,” Match Group said.
“These restrictions prevent the core innovations that make cloud game streaming attractive to customers — they prohibit the offering of a game catalogue that enables gamers to access and stream multiple games,” Microsoft added in its own submission [PDF] to the ACCC.
“The Apple App Store policies make no practical or technical sense and unnecessarily create home screen clutter, time-consuming extra steps, and engineering difficulties. These policies exclude game streaming services from the App Store by making them unattractive to gamers and unworkable for providers.”
Microsoft said certain app stores, such as Apple’s App Store, have become critical gateways to the world’s most popular digital platforms, and because of this, it believes that such app stores must operate fairly in a way that promotes competition, innovation, and choice.
Google used its submission [PDF] to tell the ACCC that the launch of Android, as the “first truly open and comprehensive mobile platform”, disrupted and opened up the “stagnant mobile industry” by lowering barriers to entry and expansion and creating choice at every platform level.
“Android’s openness allows: Anyone to freely and independently use the Android source code to create differentiated products; device manufacturers to decide which and how many apps to preinstall on their devices; developers unfettered choice to distribute their apps via one or multiple channels (preinstallation, a variety of Android app stores, and downloading from the Internet); and users to fully customise their devices irrespective of any initial app preinstallations by device manufacturers,” it wrote.
Google said the diversification provided by Android led to a surge of competition and innovation in the app development and distribution space, to the benefit of users.
It said Android stood for choice at every level, including apps and app stores.
Huawei also decided to throw its thoughts at the ACCC, in the form of a slide show [PDF]. It says it nurtures developer growth and development, via effective promotion and monetisation.
“Huawei Developers helps a global developers promote and monetise their apps through joint operations, Huawei Ads, pre-installation, and a wide range of other services,” it wrote.
