Apple, Google app store practices stymie competition, Japan trade report says
According to a recent report by Japan's Ministry of Economy, Trade and Industry, limitations applied to developers marketing their wares through proprietary app stores run by Apple and Google are a hindrance to smartphone app industry competition.
Apple Store in Omotesando, Tokyo.
The ministry's report on app store practices includes data from a survey of app developers conducted in collaboration with the Japan Fair Trade Commission, reports Nikkei. Results show Apple, Google and other brands with smartphone app store platforms undermine competition by asserting control over their respective distribution channels.
While not in violation of Japan's anti-monopoly law, practices like restricting acceptable payment methods and limiting app pricing to preset tiers inhibits competition, the ministry report found. Apple's 30-percent levy on all iTunes and App Store sales -- commonly referred to as the "Apple tax" -- was mentioned by name, with some participants in the study group arguing the practice is an abuse of Japan's laws.
Pricing freedom is another developer gripe. In Japan, Apple mandates app prices be rounded to the nearest ten yen denomination, a policy enacted to simplify the purchasing experience for consumers -- and likely bookkeeping for accountants. The company applies identical restrictions to App Stores in the U.S. and other international locales.
Finally, the ministry report questions Apple's refund practices. As it stands, when a user insists on a refund, the app developer must stump not only for its take of the original sale, but also the 30 percent commission taken out by Apple.
Japan's FTC plans to investigate the issue and "may choose to conduct on-site inspections if there is sufficient suspicion of regulation breach," according to one unnamed official.
Apple jumpstarted the app economy with its launch of the App Store for iPhone in 2008. Preloaded on every iOS device since then, the store has become a vital piece of the iOS experience. Though Apple benefits from the ability to offer its customers a vast universe of apps, the developer community was arguably most impacted by the App Store's introduction.
With the App Store, independent developers have equal footing with large studios and even established companies, all of whom are marketing their wares to millions of captive users.
Coincidentally, Apple last month published a webpage touting the company's contributions to the Japanese economy, including revenue generation and job creation related to the App Store ecosystem. Specifically, some $9.6 billion was paid out to 532,000 Japanese developers in 2015 alone.
Apple Store in Omotesando, Tokyo.
The ministry's report on app store practices includes data from a survey of app developers conducted in collaboration with the Japan Fair Trade Commission, reports Nikkei. Results show Apple, Google and other brands with smartphone app store platforms undermine competition by asserting control over their respective distribution channels.
While not in violation of Japan's anti-monopoly law, practices like restricting acceptable payment methods and limiting app pricing to preset tiers inhibits competition, the ministry report found. Apple's 30-percent levy on all iTunes and App Store sales -- commonly referred to as the "Apple tax" -- was mentioned by name, with some participants in the study group arguing the practice is an abuse of Japan's laws.
Pricing freedom is another developer gripe. In Japan, Apple mandates app prices be rounded to the nearest ten yen denomination, a policy enacted to simplify the purchasing experience for consumers -- and likely bookkeeping for accountants. The company applies identical restrictions to App Stores in the U.S. and other international locales.
Finally, the ministry report questions Apple's refund practices. As it stands, when a user insists on a refund, the app developer must stump not only for its take of the original sale, but also the 30 percent commission taken out by Apple.
Japan's FTC plans to investigate the issue and "may choose to conduct on-site inspections if there is sufficient suspicion of regulation breach," according to one unnamed official.
Apple jumpstarted the app economy with its launch of the App Store for iPhone in 2008. Preloaded on every iOS device since then, the store has become a vital piece of the iOS experience. Though Apple benefits from the ability to offer its customers a vast universe of apps, the developer community was arguably most impacted by the App Store's introduction.
With the App Store, independent developers have equal footing with large studios and even established companies, all of whom are marketing their wares to millions of captive users.
Coincidentally, Apple last month published a webpage touting the company's contributions to the Japanese economy, including revenue generation and job creation related to the App Store ecosystem. Specifically, some $9.6 billion was paid out to 532,000 Japanese developers in 2015 alone.
Comments
I lived there for 3 years, just before modern smartphones caught on.
Years ago, NTT DoCoMo, Japan's leading provider, had a CLEAR monopoly on cellular service and had a proprietary data/sms network called "i-Mode" which only worked on approved handsets with pre-loaded software made by Sharp, Sanyo and Sony. When the iPhone came out in '07 DoCoMo didn't see Apple as a threat. A competing provider,Softbank, brought the iPhone to Japan on its GSM network as a way to steal share. Before this, the Japanese cellular networks were not compatible with any phones made overseas and Japan was commonly referred to as the "walled-garden" or "the Galapagos." By the time modern cell phones began gaining momentum in Japan, DoCoMo tried to leverage their dwindling power by demanding that Apple make a DoCoMo version of the phone with company branding and pre-loaded software for its proprietary network. To their credit, Apple didn't budge and DoCoMo finally gave in when Apple proved to be more powerful than a cellular network.
Don't even get me started on NTT's land line service, which required that you buy non-refundable "usage rights" for about $800 for the privilege of having a phone subscription! (https://bbapply.com/tele/kenri.html)
After this, and many other shenanigans involving NTT, Japan finally wants to investigate a monopoly! Unbelievable!
Screw them.
And even if in this case it would be true, I'd take higher security and flawless update procedures any time over even more competition.
And it's now 15%, not 30%.
And it was Apple that created its own AppStore, and unlike Goog's copy, it actually SUPPORTS competition and fair trade, and creates wealth for its developers.
And where is this huge problem of refunds being developed? And who is a random country with no experience in selling online apps by third party developers, or even creating and maintaining an OS coming from with this??
Good grief, METI, get a grip - if you really want to be in the game, how about supporting Japanese software developers and hardware companies to create a Japanese OS that is based on UNIX and BSD shareware yourselves! As any country can!
With the Indian Government thinking every smartphone vendor will implement their specifications for identification, the FBI crying for access, the Japanese bureaucracy claiming App Stores are anti-competitive and other such instances, it looks like all governing bodies are very ill-equipped to the rapidly changing world.
The only thing I see amiss here, if true, is Apple asking the developer to refund 100% when a customer asks for it. it is only fair that Apple refund 30% and the developer refund 70%.
Why even go so far to look at Windows? We have a perfect example of the fucked-up situation that open mobile platforms provide with Android! No protection for anyone who tries to deliver value to the platform, including even bloody Alphabet (stupid fucking name!).
I bet you my bottom dollar (yen) that this is another angle of attack on Apple from the US via the TPP.
What a crock. Apple is no more obligated to allow any and all unfettered access to their app store than a consignment store is obligated to allow any and unfettered access.
The way I read that is "One of our big contributors is unhappy with your restrictions and so we're going to whine and moan and posture about how evil you are for not letting them do whatever the hell they want."
The major issues with the current model are:
Making apps for large companies has become my major source of income. My own apps are barely making profits, they are just a showcase for my technical skills, attracting new business customers.
The app that I am currently developing is moving to a different model, used by companies like Evernote, Trello, Spotify. A basic version of the app is free, the user can enable additional features by making a purchase on the website, that I have to build anyway. So I am avoiding the 30% tax by Apple and Google, I only have to pay between 2 and 3% for the credit card handling. If I talk to other app developers, they (with the exception of game developers) are also moving in that direction
Not dismissing all of your points or saying that Apple couldn't make improvements now that app development is a more mature market, but part of your argument is really that there's too much competition, not too little. You specifically say that it was easier to make money earlier in the App Store's history because fewer apps = better visibility. How does that support the idea of the App Store being anti-competitive? Also, I don't think the argument regarding "I have to do my own marketing" is all that effective since it's a common practice in markets outside of digital app stores.
Governments see people making money and all they look for is a way to get a hold of more of that money for themselves.