Justice Department lawyers are 'scrutinizing' Apple's App Store payment policies

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U.S. Justice Department lawyers are reportedly "scrutinizing" Apple platform rules that require developers to use its payment system for purchases.

Credit: Apple
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.
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Comments

  • Reply 1 of 30
    EsquireCatsEsquireCats Posts: 1,268member
    Effectively it’s a question whether Apple can approve apps for their own store, if they are in any way compelled to approve an app. Or if they are permitted to knowingly weaken device protections by allowing unlimited side loading. (I.e 3rd party app stores.)

    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.)
    castcore
  • Reply 2 of 30
    viclauyycviclauyyc Posts: 849member
    Will they also sue Walmart and Whole Food.

    well, they might sue Whole Food first, after all it own by Jeff.
    williamlondonsvanstromjeffharrisGeorgeBMac
  • Reply 3 of 30
    sflocalsflocal Posts: 6,110member
    Better set their sights on Costco too while they're at it.  
    williamlondonsvanstromdewme
  • Reply 4 of 30
    wood1208wood1208 Posts: 2,920member
    Whole lawyer profession needs to be regulated what they can and not do and charge for services. When someone can't do STEM or other field that requires hard study, they become lawyer. Most members of US congress and senate are lawyers by profession. No wonder we can't get things done right in Washington.
    williamlondonrotateleftbytejeffharriselijahg
  • Reply 5 of 30
    KTRKTR Posts: 280member
    wood1208 said:
    Whole lawyer profession needs to be regulated what they can and not do and charge for services. When someone can't do STEM or other field that requires hard study, they become lawyer. Most members of US congress and senate are lawyers by profession. No wonder we can't get things done right in Washington.
    Yeah, after mailing 1.4 billion dollars in stimulus checks to dead people.  Of course, Trump will say its not his fault...lol.  Im sure the government purchase apps from the store.  It would be in their best interest not to disrupt the the ecosystem.  Questions is, who's servers is the app store being hosted on?
  • Reply 6 of 30
    DAalsethDAalseth Posts: 2,853member
    How they pay has nothing to do with building a secure "walled garden".
    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.
    edited June 2020 elijahg
  • Reply 7 of 30
    svanstromsvanstrom Posts: 702member
    DAalseth said:
    How they pay has nothing to do with building a secure "walled garden".
    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.
    To you it's one app that you "once upon a time" got from the AppStore; to Apple it might have been 7 major revisions, each with 13 minor updates, with on average 11 bugfix-updates… where every single one of those not only could have been an attempt to sneak something real bad into the AppStore, but that also gets autoupdated on people's devices.

    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.)
    edited June 2020 uraharajeffharrisjdb8167Gilliam_BatesbshankGeorgeBMacdewme
  • Reply 8 of 30
    castcorecastcore Posts: 141member
    DAalseth said:
    How they pay has nothing to do with building a secure "walled garden".
    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.
    Why should Apple allow these Apps to be In a store they setup for free? So if no 30 percent flat fee, maybe they should charge rent for being in the store monthly?

    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!
    bshankGeorgeBMac
  • Reply 9 of 30
    em_teem_te Posts: 41member
    DAalseth said:
    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.
    You know who they remind me of? Hollywood. Actors who get a share of the profits of movies they they didn't even put up money to film. But wait there's more! Actor's then get a cut of the profits of all toys sold that are based off of a character in the movie. The toy is just Indiana Jones which is a hypothetical character, yet Harrison Ford gets a cut! But wait there's more! If the movie studio wants to film a sequel using another actor wearing the same hat and clothes and whip, that's not allowed unless they pay Harrison Ford for that privilege! Hollywood is crazy.
    edited June 2020
  • Reply 10 of 30
    Seriously.. if app developers don’t like the rules, FK off and go to Android or something..  so sick of these guys whinging. It’s the best eco system for apps, and that costs money. Don’t let the door hit you on the way out!!
    jdb8167Gilliam_Batesdewme
  • Reply 11 of 30
    svanstromsvanstrom Posts: 702member
    em_te said:
    DAalseth said:
    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.
    You know who they remind me of? Hollywood. Actors who get a share of the profits of movies they they didn't even put up money to film. But wait there's more! Actor's then get a cut of the profits of all toys sold that are based off of a character in the movie. The toy is just Indiana Jones which is a hypothetical character, yet Harrison Ford gets a cut! But wait there's more! If the movie studio wants to film a sequel using another actor wearing the same hat and clothes and whip, that's not allowed unless they pay Harrison Ford for that privilege! Hollywood is crazy.
    It's not (always) crazy if you understand the perspective…

    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.
  • Reply 12 of 30
    uraharaurahara Posts: 733member
     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.”
    Too high by which standards, compared to what? To the desire get all the money and get costly infrastructure for free?
    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. 
    svanstromDany26
  • Reply 13 of 30
    With ebooks, Apple lost an antitrust ruling specifically because they had tried to collaborate with publishers to raise the price of bestsellers. The idea was that customers were being harmed because the price was driven higher through an organized effort between store operator and clients, despite the fact that it was Amazon that had total control of the ebook market. In the case of the App Store, there isn't any collusion to raise prices. The cut Apple gets has never increased, and in some situations has been decreased (subscriptions). The store itself is dominated by the freemium pricing model, where customers can download the app for free and then choose whether or not to pay $$ based on the IAP being offered...so the price paid ultimately becomes entirely individual and completely out of Apple's control. As far as pricing goes, there doesn't seem to be much of an antitrust case. 
    svanstromjdb8167bshank
  • Reply 14 of 30
    avon b7avon b7 Posts: 7,882member
    Effectively it’s a question whether Apple can approve apps for their own store, if they are in any way compelled to approve an app. Or if they are permitted to knowingly weaken device protections by allowing unlimited side loading. (I.e 3rd party app stores.)

    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.)
    That isn’t what it boils down to at all. 

    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. 
  • Reply 15 of 30
    avon b7 said: 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).
    IMO, I don't think that's the kind of thing that could be decided by a court case. How would they be able to rule that Apple is required to provide competition for payment processing systems in retail when the rest of the industry is not? That sounds more like a legislative issue to me. Developers are complaining about it, but I haven't seen anyone citing relevant laws that would shed some light on why it could be considered an antitrust issue.
    svanstromjdb8167SpamSandwichbshank
  • Reply 16 of 30
    DAalsethDAalseth Posts: 2,853member
    svanstrom said:
    DAalseth said:
    How they pay has nothing to do with building a secure "walled garden".
    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.
    To you it's one app that you "once upon a time" got from the AppStore; to Apple it might have been 7 major revisions, each with 13 minor updates, with on average 11 bugfix-updates… where every single one of those not only could have been an attempt to sneak something real bad into the AppStore, but that also gets autoupdated on people's devices.
    And why can't developers charge for revisions and updates? Apple's rules. I've gotten multiple updates to LumaFusion, Procreate, Affinity Designer, and others that I would have been willing to pay for. But Apple set up the store so you buy once and then get updates free forever, which is ludicrous. Oh look now they want to push developers to a subscription model so they get their 30% every month even if the developer does nothing.. That's BS. I don't rent software and have abandoned packages that have gone to that. It's just a money grab and Apple is going to get nailed for it. 

    As I said at the start none of this has anything to do with running a secure walled garden
  • Reply 17 of 30
    DAalsethDAalseth Posts: 2,853member
    castcore said:
    DAalseth said:
    How they pay has nothing to do with building a secure "walled garden".
    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.
    Why should Apple allow these Apps to be In a store they setup for free? So if no 30 percent flat fee, maybe they should charge rent for being in the store monthly?

    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!
    If you want to use a rent analogy how about this.
    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?

  • Reply 18 of 30
    svanstromsvanstrom Posts: 702member
    DAalseth said:
    svanstrom said:
    DAalseth said:
    How they pay has nothing to do with building a secure "walled garden".
    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.
    To you it's one app that you "once upon a time" got from the AppStore; to Apple it might have been 7 major revisions, each with 13 minor updates, with on average 11 bugfix-updates… where every single one of those not only could have been an attempt to sneak something real bad into the AppStore, but that also gets autoupdated on people's devices.
    And why can't developers charge for revisions and updates? Apple's rules. I've gotten multiple updates to LumaFusion, Procreate, Affinity Designer, and others that I would have been willing to pay for. But Apple set up the store so you buy once and then get updates free forever, which is ludicrous. Oh look now they want to push developers to a subscription model so they get their 30% every month even if the developer does nothing.. That's BS. I don't rent software and have abandoned packages that have gone to that. It's just a money grab and Apple is going to get nailed for it. 

    As I said at the start none of this has anything to do with running a secure walled garden
    You're straight up delusional if you think that validating an app maybe 1000+ times during its lifetime, as well as pushing the update to millions of phones, doesn't cost anything at all for Apple.

    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.
    jdb8167bshank
  • Reply 19 of 30
    MisterKitMisterKit Posts: 508member
    It is really difficult to picture things if the App Store was brought down. I’m not interested in participating in a system that allows rogue apps to be side loaded on my i-devices. Wait! Here is the answer! All Apple has to do is sell an Apple branded Android phone! For the same price as the Apple iOS phone! Customers and developers want an open, reckless, do it your own way open system, well here it is! As for me, I’m staying with the closed, wall gardened, secure iOS Apple devices.
    svanstromjdb8167bshank
  • Reply 20 of 30
    JBSloughJBSlough Posts: 92member
    MisterKit said:
    It is really difficult to picture things if the App Store was brought down. I’m not interested in participating in a system that allows rogue apps to be side loaded on my i-devices. Wait! Here is the answer! All Apple has to do is sell an Apple branded Android phone! For the same price as the Apple iOS phone! Customers and developers want an open, reckless, do it your own way open system, well here it is! As for me, I’m staying with the closed, wall gardened, secure iOS Apple devices.
    Looking at it with out an App Store it’s not difficult at all. Actually Apple has done this on the Mac. We have Gatekeeper, with three options: Mac App Store only, signed apps off the web and anything goes. They could in theory use that model but ditch the anything can be downloaded option. That way all apps will have to follow certain rules (I don’t see sand boxing going away) to get signed but would be freer in a sense (maybe this would be a way for a porn app to get on). 
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