Apple threatens to remove Jack Dorsey-backed Damus app over in-app transactions
Apple has already made it known that it's not a fan of in-app cryptocurrency transfers, and now it's banging that drum again for a decentralized social messaging app backed by Twitter co-founder Jack Dorsey.
Apple App Store
The app is called Damus, and it's based on the decentralized social network Nostr. With that specific integration, Damus is capable of sending in-app micro donations via Bitcoin to other users.
Sending Bitcoin is handled by the Lightning Network, which means users can send fractions of Bitcoins to one another instantly and "almost" free of charge. These specific transactions are known as "zaps" on the social network.
Damus has been ordered by Apple to remove this particular feature from messages, according to The Street. The company has notified the decentralized social messaging app that they may be removed from the App Store if they do not comply, but they can remain in the digital storefront if they remove the feature within 14 days of the notice.
On Twitter, the official Damus account tweeted:
Damus will be removed from the app store in 14 days, apple says zaps are not allowed on their platform because they *could* be used by content creators to sell digital content. This is right before we're about to give our talk at the oslo freedom forum on how decentralized social pic.twitter.com/uAK1U0UBet
-- Damus (@damusapp)
Apple says the ability to send these micro transactions via the app is "selling digital content," which is not allowed. However, the Damus account did twee that "zaps on profiles" are still allowed.
Dorsey tweeted in response to the Damus account that Apple is "incorrect" in its definition of "zaps," and that sending the fractional Bitcoin to other users is "tipping," and a "form of feedback." He says that it's a general misunderstanding on Apple's part.
Twitter CEO Elon Musk tweeted out in response to the situation, saying, "If Apple competes against the whole world, Apple will have the whole world against it. This is not a winning scenario." He would go on to note Apple's App Store tax of 30% on in-app transactions is a "major concern."
Musk purchased Twitter in 2022, while Dorsey is the co-founder of the microblogging social network. The pair of billionaires have had their issues in the past, but appear to be on the same page regarding this particular situation.
As mentioned above, this isn't the first time Apple has found itself in similar waters. The company has said Coinbase "gas" fees as in-app transactions, which should be under Apple's umbrella tax. And NFT trading companies avoid the App Store due to Apple's tax, saying the rules in place from the company make existing in the digital storefront "untenable."
Read on AppleInsider
Comments
Are you suggesting that cryptocurrency is a joke? Or am I misinterpreting your comment?
Under normal circumstances, I'd agree with you, but in this case, I think that Apple is wrong. They are stepping way over a line with this demand, to the point of being a brutal dictator.
Regarding the 30%, I've always gone to bat for Apple, but now I think it's time for them to seriously reconsider the rates. For digital goods (eg. game credits, etc.), Apple should NOT be collecting 30% of EVERY transaction! If I spend $4.00 in a game, why does Apple deserve $1.20 of that? Those transactions should have a much lower cut... say 5%... enough to cover credit card processing.
I fully agree with Apple charging a tax on apps sold in their store, but in-app purchases for digital goods doesn't cost Apple much of anything.
I make absolutely ZERO in-app purchases because developers are charging too much, likely because of the 30% cut going to Apple. (Yes, I know it's lower in some cases).
If there were no charge on in-app purchases, all apps would be priced at $0 and charge everything via IAP.
Apple having the monopoly they do is a real problem.
Say in the past, a person playing Fortnite (by Epic Games) on iOS made an IAP of $4 ($8 in Fortnite virtual bucks) for a virtual outfit that looks "cooler" than the ones that came free with the Fortnite game, that was available for free in the Apple App Store.
Apple would have gotten a $1.30 commission for their part in ..... creating and constantly improving their mobile hardware to play games on, .... creating, maintaining and constantly improving iOS that runs on their mobile hardware, ..... supplying the software and SDK's nearly for free to developers, so they can profit from creating apps for iOS, ..... provides a seamless way for all developers to charge and collect payments (including the proper taxes) from their customers (not every developer have their own payment system already set up.) , pays for the CC transaction fees, ...... spending 100's of millions of dollars every year to attract new iOS users and to keep current iOS users from switching, ....... maintain an app store where any developer can list their software for free (providing they meet Apple App Store policies) ...... and making it so that iOS users can seamlessly download and install apps without fear of having their devices infected with malware/spyware or having to supply their CC info to a third party.
While Epic on the other hand kept $3.70 for providing the Fortnite player with a "cooler" looking "virtual" outfit that cost no more to make and supply than the free outfits that came with their free Fortnite game. It's not like shipping is expensive or they must cover damages and losses during shipping or there are a lot of returns due to players ordering the wrong size or they run the risk of overstocking these $4 "cooler" looking virtual outfits in a rented warehouse or that they are perishable with a short shelf life so new ones have to be ordered every so often to replace spoiled supply. How much do you think it cost Epic to make another digital copy of an outfit that they have probably already sold 10's of 1000's of, once they made the original one? Would you tell Sweeney (CEO of Epic) that he shouldn't be charging $3.70 for something that doesn't cost much of anything? Surely you must think this when they charge $10 ($20 in Fortnite bucks and $7 in real dollars after commission.) for an even "cooler" looking "limited edition" virtual outfit.
https://okuha.com/are-digital-products-profitable/
And you think Apple was the one charging too much on that $4 IAP? Get a clue.
FYI- Most, if not all, of the most profitable games uses the razor/blade business model. That is to give away or sell the razor at a loss and make a ton of money selling the blades for it. And it's a highly successful business model, when done correctly. These developers give away their games with the hopes of making up for it with IAP in the game. These developers didn't pay Apple anything to give away their iOS game apps, using the Apple App Store. Free apps that are fully functional on iOS devices. Thus Apple is entitle to make up for that with their commission. (Over 93% of apps in the Apple App Store are free.) And the likes of Epic Games, are titled to charge what they can for IAP because there are lots of consumers like you, that will not spend money on IAP, even though they installed and are using their free apps.
Are you suggesting that creating an entirely new ecosystem of hardware, software, and services, plus all the infrastructure and employees required to maintain it, nearly from scratch, is hard? That it might take a lot of time and cost a lot of money?