A few weeks ago the dispute between Epic Games, the developer of the famous game Fortnite, and Apple surfaced. Put shore, Epic Games accused Apple to charge an excessive commission for developers and to hinder their users in their freedom to choose where and from whom to download apps, clearly protecting its own products and services on the platform while discriminating external developers. After Epic Games changed its payment processor within Fortnite, cutting Apple off to maintain the contractually agreed commission, Apple decided to delist all Epic Games apps from the Apple App-Store, leaving millions of users without access to the Epic Games applications on their iPhones (t3n, 2020).
While Apple declared the dispute with Epic Games as resolved, terminating the contract with Epic Games, and also suing Epic Games for a breach of contract, further app developers joined Epic Games’ protest, complaining about Apple’s App-Store regulations (t3n, 2020).
By now, nearly 3 months after the beginning of the dispute between Epic Games and Apple, Apple is facing the next round of its App-Store dispute. A coalition has formed, to force Apple and other operators to change their App-Store regulations (Coalition of App Fairness, 2020).
The coalition is called Coalition for App Fairness and is supported by several well-known companies. Next to Epic Games, there are Spotify, Deezer, Matchgroup, Tinder, OkCupid, and many more. Whilst it is clear that their claims are mostly targeting Apple and its App-Store regulations, the requests of the coalition are formulated in a general manner to make them applicable to all App-Store operators (Coalition of App Fairness, 2020).
In total, the Coalition states ten requests for how App-Stores should be regulated, with three of the requests being directly targeted at Apple (Coalition of App Fairness, 2020):
- Apple’s App-Store is subject to anti-competitive guidelines
Apple claims to review all apps carefully before making them available through the app store. Using that process, Apple wants to ensure quality and security for their consumers. However, the Coalition argues, that the heavy regulation by Apple gives Apple the advantage to support its own applications and reduces fairness for external app developers. - Apple retains 30 percent of app sales
As already mentioned, Apple is accused to charge a high commission. The Coalition sees a competitive disadvantage if two apps with similar services, one from Apple and one from an external provider, are competing against each other in the Apple App-Store since Apple can offer better prices for their services as they don’t have to pay the 30% commission. - The App-Store is supposed to restrict consumer freedom
Other than with other App-Stores, the only way a user of an iOS device can access and download an app is through the Apple App-Store. Customers have no freedom of choice about where or from whom they can obtain their apps. The Coalitions claim it to be a huge disadvantage forcing customers to use the Apple App-Store to being able to download apps.
While I see the point of the Coalition asking for more fairness, it also seems a lot like an attempt to shift profits away from Apple back to the app developers. While we discussed the network effects that large communities/networks can have on a product or service, the Apple App-Store is a great example. The benefits that Apple offers to app developers through the Apple App-Store ecosystem are (1) access to millions of users, (2) security, and (3) ensured quality. At the same time, Apple users can benefit from (1) security and (2) quality. Since no one is forcing the app developers to offer their apps through Apple’s App-Store, it is clear that they want to benefit from the quality network and processes that Apple created with its customers, since they promise increased profitability.
With no doubt, these benefits are crucial for the app developers, since they provide the possibility for increased demand and sales. If Apple would respond to all requests stated by the Coalition, opening up its platform, waiving the app approval process, and giving people the chance to download their apps wherever Apple would pose its iOS as well as its customers to the risk of becoming a victim of fraudulent activities. With a lowered level of quality and security, there’s a possibility of long-term negative impacts on user numbers, quality, security, and in the end profits being made.
What’s your take on this? Should Apple give in and reduce its power within the App-Store?
Sources:
https://t3n.de/news/gegenwind-fuer-apple-koalition-1324447/
https://appfairness.org/our-vision/
Image Source:
https://medium.com/the-kickstarter/what-entrepreneurs-can-learn-from-epic-games-attack-on-apple-9efce281a962
