Justice Department lawyers are 'scrutinizing' Apple's App Store payment policies
U.S. Justice Department lawyers are reportedly "scrutinizing" Apple platform rules that require developers to use its payment system for purchases.
Credit: Apple
In July 2019, the U.S. Department of Justice launched a probe examining major tech giants like Apple and Google. For Apple, the investigation centered on its App Store and developer policies.
As recently as mid-June, lawyers from the department have met with developers and are inquiring about Apple's specific policies surrounding in-app purchases, Bloomberg reported Friday.
Developers who have spoke with the DoJ were apparently asked about whether Apple's 15% to 30% cut of in-app purchases was too high. At least one said that the scrutiny should be aimed more at the fact that Apple doesn't allow alternative payment systems.
The Justice Department is interviewing both large and small developers, including David Heinemeier Hansson, the founder of Basecamp.
Heinemeier Hansson recently made headlines when he complained that Apple was blocking updates and threatening to remove the Hey email app because of its lack of in-app subscription options for new customers.
Apple eventually approved several new updates to the Hey app after it implemented an open and free tier to users. Apple SVP Phil Schiller has maintained that no changes to App Store policy are coming after the dispute, though a new dispute process that allows developers to challenge specific guidelines rolled out at WWDC.
The Justice Department has been interviewing developers since mid-2019, though the inquiry is said to be "continuing" and no final decisions have been made. "Most" of the investigation's resources are aimed at Google's advertising business, however.
Apple has been under increasing antitrust scrutiny since 2019 for some of its app ecosystem policies. In a recent interview, Rep. David Cicilline, the House antitrust committee head, called Apple's App Store fees "highway robbery."
On Wednesday, the Justice Department and a coalition of state attorneys general were also said to be planning another antitrust investigation into Apple's policies. Apple has also faced antitrust probes in Europe.
Credit: Apple
In July 2019, the U.S. Department of Justice launched a probe examining major tech giants like Apple and Google. For Apple, the investigation centered on its App Store and developer policies.
As recently as mid-June, lawyers from the department have met with developers and are inquiring about Apple's specific policies surrounding in-app purchases, Bloomberg reported Friday.
Developers who have spoke with the DoJ were apparently asked about whether Apple's 15% to 30% cut of in-app purchases was too high. At least one said that the scrutiny should be aimed more at the fact that Apple doesn't allow alternative payment systems.
The Justice Department is interviewing both large and small developers, including David Heinemeier Hansson, the founder of Basecamp.
Heinemeier Hansson recently made headlines when he complained that Apple was blocking updates and threatening to remove the Hey email app because of its lack of in-app subscription options for new customers.
Apple eventually approved several new updates to the Hey app after it implemented an open and free tier to users. Apple SVP Phil Schiller has maintained that no changes to App Store policy are coming after the dispute, though a new dispute process that allows developers to challenge specific guidelines rolled out at WWDC.
The Justice Department has been interviewing developers since mid-2019, though the inquiry is said to be "continuing" and no final decisions have been made. "Most" of the investigation's resources are aimed at Google's advertising business, however.
Apple has been under increasing antitrust scrutiny since 2019 for some of its app ecosystem policies. In a recent interview, Rep. David Cicilline, the House antitrust committee head, called Apple's App Store fees "highway robbery."
On Wednesday, the Justice Department and a coalition of state attorneys general were also said to be planning another antitrust investigation into Apple's policies. Apple has also faced antitrust probes in Europe.
Comments
Side issue: if apps can run their own transactions, then Apple might need to be charging them rent for existing in the store, and similarly those apps must report their earnings - I.e no single flat fee for appearing in the store, rather their rent is based upon their earnings. (This approach would be most similar to how retail leases work.)
well, they might sue Whole Food first, after all it own by Jeff.
Alternative pay systems and something less than the 30% cut should have happened before now. In addition, but related to the alternative payment system issue, is that Apple grabs 30% of sales on things bought with an App even if it has nothing to do with Apple, subscriptions, services, and such bought directly from a 3rd party, but using an App that once upon a time was loaded from the AppStore. This is abusive and I would expect the DOJ to come down hard on it.
And Apple has only themselves to blame.
If you do the math on some major app where the devs can be trusted the profit for Apple becomes ridiculous; but that's where those companies either have their own separate solutions, or are glad to offload payment solutions and subscriptions to Apple.
The ones yelling about unfairness are mostly the people doing creative math in their heads about how rich they are going to get, and somehow think that the only thing keeping them from becoming the most popular app ever is Apple charging for their services. (Those people are of course also joined by lawyers, politicians, and people thinking they are saving the future of the human race by sharing their perfect knowledge of everything in web communities.)
this is like you telling your landlord you feel like you should only pay half of the rent he wants. What will he do if you say that? Report you to collections and evict you!
Doing the money-math the money-people estimate that having Actor A in Project B is worth 100 million in revenue.
(If you think that's a ridiculous number you should just imagine where the Indiana Jones franchise would be today with some forgettable talentless actor staring.)
So… let's say that after more money-magic they come up with 10 million being an acceptable amount to give to get Actor A.
But… what if they don't have 10 million for Actor A, or the project fails to make any money?
Well… they might give Actor A 1 million to sign, and enough of a cut of future revenue that Actor A will make his 10 million when the project reaches 100 million in revenue.
The actor is actually an investor here, investing his time for a future payoff. If the project tanks, the actor won't get paid according to market value; but if the project becomes a huge new franchise the actor will get paid big time.
The actor isn't really just a person getting paid for manual labor, the actor has value such as market recognition, suitability for the part, ease to work with, as well as past profitability making it easier to attract investors; and so on. So there's huge value here, and people are hedging their bets by not paying upfront; with the downside being that if they keep making a ridiculous amount of money longterm, then the actor also gets paid a ridiculous amount of money longterm.
If I don’t like the price of one seller I go to another.
Who is investigating the prices for Ferrari und Bugatti? It is too high for me. I want it for free every weekend.
It never has been.
It boils down to competition. Or the lack of it in this case. Let's wait and see what comes of it.
There is no reason to believe that a third party App store or payment processing system could not be even more secure than Apple's. Sideloading doesn't even come into it. Any third party App Store would install Apps through Apple's approved method (assuming that Apple is obliged to open things up).
Personally, I've always said this has been a problem. We'll see how it plays out. One option would be to require iOS device purchasers to sign an agreement accepting the Apple imposed restrictions and acknowledging all the limitations for the purchaser prior to purchase. I think Apple would voluntarily change its practices in such circumstances, though.
As I said at the start none of this has anything to do with running a secure walled garden
You rent a store front to run your business. But the landlord wants a cut of your sales. You sell more and they get a bigger slice. Oh but the landlord gets to tell you what upgrades you can charge for and what you have to give away for free. Oh and the landlord also gets a cut of your sales even if they come out of your home office and not the store front you are renting.
See how abusive this is?
Running a secure AppStore isn't something that happens just for free with just some person clicking a like/dislike-button once when a new app is first published.