Australian court is the latest to attack Apple on behalf of rich corporations
Apple Fellow Phil Schiller has been testifying in an Australian Federal Court about the origins of the App Store in 2008, and it's just the latest example of pointless attacks on the company.
Phil Schiller (left) and Steve Jobs with the first online App Store promo
Let's be clear -- Apple has apparently shafted suppliers, and its illegal anti-union measures are shameful, but it doesn't get criticized for any of that. What it gets hauled over courts for is the fact that it has the temerity to charge 30% for sales made through its App Store.
Apple is further hounded for how it tears 30% out of the hands of every developer, big or small, rich or poor -- and of course it doesn't.
If you listen to its critics about this, if you listen to the questioning that The Australian reports is now being put to Apple, you would think that it's end of the world type stuff. That Apple is an affront to human decency because it charges a fee.
And every attack on Apple for this is being made on behalf of each of us individuals. We have been systematically robbed by the trillion-dollar Apple corporation, apparently, and it is only through the likes of other corporations like Spotify and Epic Games that we will ever see justice.
You just have to ignore that these selfless other corporations simply want you to be paying them instead of Apple. None of them would be pretending to stand up for the little guy if it were their pockets that the money was going into.
A 30% fee is fine, even if it was 30% across the board. It was fine in 2008 when the App Store started and it remains fine today -- even though Apple often does not charge that full amount.
As it has from the start, Apple gives a free ride to any app that is itself free. It gets all of the benefits of being on the store without any of the costs.
Otherwise, the 30% figure is just one of several fees Apple levies. If your app is a subscription one, for instance, then you are charged 30% for a subscriber's first year -- but then only 15% for each year thereafter.
Developers can also apply to pay only 15% under Apple's Small Business Program, introduced in 2020. A developer qualifies for this if their app income is less than $1 million annually.
There are also apps that are collectively known as reader ones, where users consume previously or separately bought media. So the Amazon Kindle app is free and Amazon pays no fees, for instance.
How we used to live
If developers disagree with all of this, take away the App Store. Take us back to when software came in boxes.
It cost money to make those boxes, to make the CD-ROMs that went in them. It cost cash to distribute those boxes to stores around the US.
And then those stores had to be paid. Not only did they of course require a cut of the retail price, since that is literally how their business has to work, but there was more.
Stores had limited shelf space so to get a product onto them was not easy. If something is wildly popular then the store would be daft not to just put it there, but nothing gets to be wildly popular out of nowhere.
So firms had to pay the stores to display their products. This still happens today -- go into a supermarket and those goods positioned prominently at the ends of rows have paid to be there.
If you were a developer selling software before there was an App Store, you would have been extraordinarily lucky to receive 30% of the retail price you set.
Compare that to the App Store, where there is no fee for being on it, there is no finite shelf space, and there is no distribution cost. Plus the App Store instantly gets you global distribution, not just the US, and Apple handles the madly complex worldwide tax systems for you.
Every app from every developer, of any size, got that potential exposure the moment the store opened in 2008 -- and they even got it for nothing, if their app was free.
Apple made money when you made money -- and according to Phil Schiller, that wasn't even a real consideration. Under cross examination by Neil Young, KC, for Epic Games, Schiller said "We knew we were going to generate revenue [but] we didn't set it up as one of two goals we articulated."
It's not clear what those two goals actually were, but it's easy to see that Apple's focus was really on selling more iPhones. It's possible that the second goal was to have the potentially large costs of running the App Store be paid from its earnings.
"Are you telling His Honour you made the decision without any investigation into what stream of revenue would be produced by imposing a commission of 30 per cent?" asked Young.
"Correct," replied Schiller.
Schiller further said that he didn't recall ever looking at any risk/benefit analysis, nor any financial estimates, when the decision was made to create the App Store. He also said that he had not realised that the decision was a major one until after it was launched and became the success it did.
Much is being made in the Australian court of this unusual approach to create a revenue-generating business, and in particular how there is very little documentation from the time. The implication is that this lack of documented evidence was in some way deliberate, but Schiller says it's just how things were.
"I'm not trying to be difficult," he said at one point. "When [Steve] Jobs came back in 1997 he set this process up."
"In one of the earliest meetings... someone was taking notes," said Schiller. "He stopped and said why are you writing this down? You should be smart enough to remember this."
According to Schiller, most executives stopped taking notes after that.
Steve Jobs announcing the App Store in 2008. The fee structure got applause
Schiller makes Apple sound like more the kind of company it was when it started out in a garage, than now when it is a trillion-dollar worldwide success. Perhaps it still was, back in 2008, when it was doing well but was really only on the cusp of becoming what it is today.
The App Store was certainly a major contributor to Apple's ultimate success, but Apple made that store just like it made the iPhone. No one had to buy the iPhone, just as no one had to go on the App Store.
Having countless trials now, and even whole countries regulating over practically imaginary consumer harm, is a waste of court time. It is a boon for lawyers, it has the potential to be of great value to rival corporations, and it does nothing for us consumers at all.
Apple is not some faultless hero, not even close, but its failings are nothing to do with the App Store. Pretending that they are is just lining the pockets of other firms who wish they'd had the same success.
Read on AppleInsider
Comments
I am supposedly being represented by all of these champions of freedom... only problem is, i completely disagree with their actions, so I feel like no-one is actually representing me, a consumer, and someone who happily chose to purchase the phone that I did. There was no-one with a gun to my head.
It's even more galling when seeing these attacks on Apple that none of these people were around to prevent Microsoft 'acquiring' the whole Desktop' metaphor for Windows, or of Google copying IOS, or Samsung copying the physical design of iPhones. Maybe it's been claimed that with hindsight all of these things were obvious - but it doesn't change the fact that no-one had these things on their drawing board until after Apple came along and showed the way.
It's largely accepted that Apple has changed entire industries, and particularly personal computing and mobile phones, but this article rightly highlights how Apple changed the whole software distribution model. As a consumer, I believe largely for the better. I wish all these people would please go back to trying to download software on their Nokia 3320s. Or hell, even their Palm and Blackberry mobiles.
People experience a juggernaut going from lost cause to lost cause in courts while taxing customers on memory, taxing developers, blocking app-installations, and blocking upgrades. Apple should go win some hearts.
So, here's hoping: 🤞
luck. They will get what they refuse to pay for, a ton of garbage apps with plenty of malware, including some from their governments.
So there was no note-taking after the observation that notes were in fact being taken?
I wonder why notes were being taken at all. Probably because it was absolutely normal behaviour in all meetings up to that point!
And poor Phil has no 'recollection' of financial analysis!
All of that relative to the Apple financial side of things yet on the App Store rules and regulations side of things (commissions for developers included) it was no doubt a note taking frenesí with no financial stone left unturned.
Of course proving anything is probably not easy.
Each to their own but I'm not swallowing any of it.
Sign of a crankpot — when one disagrees with facts and engages in conspiracy theory as an alternative explanation to the facts.
Tighten that tinfoil, my man!
Likewise, the grocery’s in-house bakery has even *more* of an advantage over vendor baked goods, because they don’t pay rent, they’re subsidized by the store itself. How unfair! Where is the DOJ to protect consumers!?
lol
Or by foreign protectionism of their own companies.
Governments seem not to care about the real safety and concerns of consumers. Again the real world examples of other businesses or organizations that were ignored by the US justice department—the 6% stranglehold that American relators have on real estate transactions, ticketmaster, credit card fees, payday lending etc etc.
You speak of tinfoil but let's be frank here. Being barred from lying is great. I'd hate for anything other than that to be the case but don't you think it's more 'tinfoil' to think that plays out without exception?
And doubly barred?
You know, you even have an ex-president and his lawyer who seem to be spending more time in legal proceedings than out of them. Under oath and whatever you want, but do you actually believe a lot of what is said? Really? Triply barred?
Your honour, I don't recall.
Simple and very difficult to prove. All the more reason to actually take notes, don't you think?
This is now about app developers ability to negotiate with apple over that value they bring versus the mandated fee Apple takes.
In your Walart example, a typical supplier works with Walmart over the sell price, shelf location, Walmart's margin, promotion times, end caps, marking support, discounts etc.
No App supplier is able to do this with apple. It's a take it or leave it scenario.
There needs to be a balance between the consumers right to buy an apple phone, the consumers right to purchase any app they want on that said phone, the price that the App developer would like to offer that App at (and in-turn the consumers propensity to pay that price), versus Apple's 30% markup.
Developers should be able to negotiate, this is what this is about.
it explains so much about the nexus of entrepreneurism and just who is entitled to benefit from those activities. And the role of government in capturing those benefits for the loudest voices.
Once upon a time there was a little red hen who scratched about the barnyard until she uncovered some grains of wheat. She called her neighbors and said 'If we plant this wheat, we shall have bread to eat. Who will help me plant it?'
"Not I, " said the cow.
"Not I," said the duck.
"Not I," said the pig.
"Not I," said the goose.
"Then I will," said the little red hen. And she did. The wheat grew tall and ripened into golden grain. "Who will help me reap my wheat?" asked the little red hen.
"Not I," said the duck.
"Out of my classification," said the pig.
"I'd lose my seniority," said the cow.
"I'd lose my unemployment compensation," said the goose.
"Then I will," said the little red hen, and she did.
At last it came time to bake the bread. "Who will help me bake bread?" asked the little red hen.
"That would be overtime for me," said the cow.
"I'd lose my welfare benefits," said the duck.
"I'm a dropout and never learned how," said the pig.
"If I'm to be the only helper, that's discrimination," said the goose.
"Then I will," said the little red hen.
She baked five loaves and held them up for her neighbors to see.
They all wanted some and, in fact, demanded a share. But the little red hen said, "No, I can eat the five loaves myself."
"Excess profits," cried the cow.
"Capitalist leech," screamed the duck.
"I demand equal rights," yelled the goose.
And the pig just grunted.
And they painted "unfair" picket signs and marched round and round the little red hen, shouting obscenities.
When the government agent came, he said to the little red hen,
"You must not be greedy."
"But I earned the bread," said the little red hen.
"Exactly," said the agent. "That's the wonderful free enterprise system. Anyone in the barnyard can earn as much as he wants. But under our modern government regulations the productive workers must divide their product with the idle."
And they lived happily ever after, including the little red hen, who smiled and clucked, "I am grateful, I am grateful."
But her neighbors wondered why she never again baked any more bread.
Reagan was a genius.