Study defends Apple's App Store commission rates
A study into how Apple's App Store compares with other digital marketplaces concludes that its fees are typical, and that its policing of rules is necessary to maintain consumer trust.
Apple's App Store app
While the EU has launched an antitrust probe, developers have complained, and Microsoft has criticized, Apple continues to say little in response, other than acknowledging that there are complaints about the App Stores that Apple runs.
On Wednesday, a study was published which directly compares Apple's App Store to around 40 comparable digital stores. It was conducted by Analysis Group, and the three authors of it include two vice presidents of the research company, Jonathan Borck, and Markus von Wartburg, plus manager Juliette Caminade. The same three wrote June 2020's study into the economic impact of the App Store.
The study, "Apple's App Store and Other Digital Marketplaces," does not contain a rebuttal to the criticisms, but sticks specifically to being "a comparison of commission rates." It's not an Apple publication or an Apple response, either. The study's authors note that the work was supported by Apple, but says the conclusions are solely their own.
However, figures and comparisons in the 5,000-word study, plus detailed appendices, do support Apple's contention that its practices are in line with the industry. "Our study shows that Apple's App Store commission rate is similar in magnitude to the commission rates charged by many other app stores and digital content marketplaces," it says.
"The commission rates charged by digital marketplaces most similar to the App Store, such as other app stores and video game digital marketplaces, are generally around 30%," it continues. "Marketplaces that distribute digital content such as videos, podcasts, eBooks, and audiobooks generally charge commission rates of 30% or more. Commission rates charged by e-commerce marketplaces vary by industry but sometimes exceed 30%."
"Many sellers currently sell (or previously sold) their goods through brick-and-mortar stores and marketplaces," it points out. "We find that sellers generally earn a substantially lower share of total revenue from the distribution through brick-and-mortar stores and marketplaces than through digital marketplaces such as the Apple App Store."
"When video games are sold in brick-and-mortar stores, developers and publishers jointly collect up to an estimated 45% of the retail price," reports the study. "By contrast, on most digital video game marketplaces, including the Apple App Store, developers and publishers receive 70% of sales, with 30% going to the digital marketplace commissions."
Apple's App Store home screen as seen on an iPad
In more specific breakdowns, the study lists how a 30% commission rate not exclusive to Apple, and is the norm for the Google Play Store, Amazon Appstore, and the Samsung Galaxy Store. There are exceptions to that, such as how Amazon has a 20% rate for video streaming app subscriptions.
The study also notes how Google Play and Apple both reduce their fee to 15% for subscription services, after 12 months. And Microsoft Store includes a 15% tier, but universally levies 30% on games, apps for Windows 8 devices, and "all sales in Business and Education Stores."
While the study goes into other specifics about different rates of commission levied by multiple different app stores, or similar online marketplaces, it is also concerned with how such stores are run.
"The goal of this study is to compare the commission rates of Apple's App Store with those of other app stores and digital marketplaces," says the study. It also serves to "evaluate the App Store commission and associated rules in the context of the business model used both by digital marketplaces and platforms in general."
Those elements of the study conclude that for a marketplace to be successful, there must be "common rules and enforcement strategies" that foster "trust and integrity." It says that Apple "uses a strict vetting process to review the apps, ensuring that they are safe, reliable and bring value to customers."
Apple's App Store app
While the EU has launched an antitrust probe, developers have complained, and Microsoft has criticized, Apple continues to say little in response, other than acknowledging that there are complaints about the App Stores that Apple runs.
On Wednesday, a study was published which directly compares Apple's App Store to around 40 comparable digital stores. It was conducted by Analysis Group, and the three authors of it include two vice presidents of the research company, Jonathan Borck, and Markus von Wartburg, plus manager Juliette Caminade. The same three wrote June 2020's study into the economic impact of the App Store.
The study, "Apple's App Store and Other Digital Marketplaces," does not contain a rebuttal to the criticisms, but sticks specifically to being "a comparison of commission rates." It's not an Apple publication or an Apple response, either. The study's authors note that the work was supported by Apple, but says the conclusions are solely their own.
However, figures and comparisons in the 5,000-word study, plus detailed appendices, do support Apple's contention that its practices are in line with the industry. "Our study shows that Apple's App Store commission rate is similar in magnitude to the commission rates charged by many other app stores and digital content marketplaces," it says.
"The commission rates charged by digital marketplaces most similar to the App Store, such as other app stores and video game digital marketplaces, are generally around 30%," it continues. "Marketplaces that distribute digital content such as videos, podcasts, eBooks, and audiobooks generally charge commission rates of 30% or more. Commission rates charged by e-commerce marketplaces vary by industry but sometimes exceed 30%."
"Many sellers currently sell (or previously sold) their goods through brick-and-mortar stores and marketplaces," it points out. "We find that sellers generally earn a substantially lower share of total revenue from the distribution through brick-and-mortar stores and marketplaces than through digital marketplaces such as the Apple App Store."
"When video games are sold in brick-and-mortar stores, developers and publishers jointly collect up to an estimated 45% of the retail price," reports the study. "By contrast, on most digital video game marketplaces, including the Apple App Store, developers and publishers receive 70% of sales, with 30% going to the digital marketplace commissions."
Apple's App Store home screen as seen on an iPad
In more specific breakdowns, the study lists how a 30% commission rate not exclusive to Apple, and is the norm for the Google Play Store, Amazon Appstore, and the Samsung Galaxy Store. There are exceptions to that, such as how Amazon has a 20% rate for video streaming app subscriptions.
The study also notes how Google Play and Apple both reduce their fee to 15% for subscription services, after 12 months. And Microsoft Store includes a 15% tier, but universally levies 30% on games, apps for Windows 8 devices, and "all sales in Business and Education Stores."
While the study goes into other specifics about different rates of commission levied by multiple different app stores, or similar online marketplaces, it is also concerned with how such stores are run.
"The goal of this study is to compare the commission rates of Apple's App Store with those of other app stores and digital marketplaces," says the study. It also serves to "evaluate the App Store commission and associated rules in the context of the business model used both by digital marketplaces and platforms in general."
Those elements of the study conclude that for a marketplace to be successful, there must be "common rules and enforcement strategies" that foster "trust and integrity." It says that Apple "uses a strict vetting process to review the apps, ensuring that they are safe, reliable and bring value to customers."
Comments
”But Apple has a monopoly on iOS!”
My store my rules.
Apple does have a monopoly on iOS. Not in the sense that there are no alternatives if you want a mobile device - but more on that later - but rather if you own an iOS device or if you are an app maker who wants to access owners of iOS device them Apple is the only way for you to get apps on that device or reach Apple users. So in that sense Apple has more of a monopoly on the billions of iPhones, iPads, watches and Apple TV devices that it has sold than Microsoft ever did on Windows PCs. The fact that Windows had about 98% of the PC market at the time wasn't the issue. The DoJ never did anything to, say, force the adoption of Macs or Linux. They simply altered the way that Microsoft handled Windows.
Now back to "no alternatives if you want a mobile device" ... I dare say that Apple advocates try to have it both ways. 99% of the time, Android is a garbage ecosystem privacy and security issues and bad products that offers no quality apps to its users and no way for developers to make money that everyone should stay away. That leaves Apple with a monopoly on the ability to reach enterprises and affluent users on a platform that offers privacy, security and quality control. Maybe this isn't a compelling argument for the promulgators of free-to-play mobile games than can effectively run on cheap hardware like Epic Games and Fortnite, but if you are BaseCamp - or Microsoft - and need to be able to offer a secure, private consistent user experience to paying customers then iOS/iPadOS/watchOS/tvOS is the only way to go. And to those customers Apple is the only gate.
Again, Apple advocates are 100% in favor of this argument in every other context. In every other context Apple advocates claim that a developer is wasting is time dedicating any resources to putting apps on Android because he will never make any money on anything except games that force you to watch an ad every 3 minutes or lootbox/gacha type games that target developing countries. Or Apple advocates claim that developers should reject Android on principle even if they could make money because they should want no part of the privacy, security and copyright infringement issues that Google, Samsung, Xiaomi and the rest are clearly guilty of. It is only when the anti-trust arguments are raised that these very same people say "what monopoly? Android exists! Android is a great platform for targeting enterprise and affluent customers! So anyone who doesn't want to play by Apple's rules can just put their apps on Android, advertise them and get rich! The banks, hospitals and government agencies that require security and privacy with their devices, apps and data? Let BaseCamp use Android to target them! They'll be completely fine and NEVER get sued because some data snooping app that Google allowed in the Play Store stole classified government or sensistive user information!"
Again, all the people who believe this in any context other than to avoid Apple getting sued for anti-trust, raise your hands. All the people who are really happy going around reciting "Android is for poor people" and "no one" (or no one but Google and Samsung) makes money off Android" and "Android is just a spyware platform for terrorists and foreign governments" in every other use case ... you know who you are. And the people who are filing these antitrust lawsuits as well as the regulators and judges who are going to weigh them know the arguments of this type that Apple advocates have been advancing in blogs, the mainstream media etc. for over 10 years too. All these plaintiffs have to do in order to stop the "what about Android?" argument in its tracks is cite Tim Cook's own repeated public statements attacking Android over security and privacy. Or cite Phil Schiller's statements stating that school children who use Chromebooks and other Google platform products are going to fail because they aren't going to have the superior engagement that iPads offer. It is going to be impossible to claim that Android is a viable alternative for enterprise app developers when you have Apple executives like Cook and Schiller saying that it isn't! All app developers have to do is say that they avoided Android because Apple executives like Schiller and Cook have spent the last 10 years telling them what a terrible idea it is to put apps on an insecure platform that is based on a stolen product in the first place!
And everyone who sincerely believes that Cook, Schiller etc. are wrong ... say so. And do it in contexts other than Apple getting sued for antitrust. You won't and everyone knows it.
Monopolies aren't illegal, and your defining the market as "the ability to reach enterprises and affluent users on a platform that offers privacy, security and quality control" is ridiculous. Under your illogical analysis, you could redefine a lemonade stand as a monopoly because it provides "the ability to reach the affluent people who live near 123 Smith Lane and drive past the lemonade stand on their way to work."
regarding antitrust candidates: how about Continental Automotive Korea? Glenmark Pharmaceuticals Inc.,? Martinair N.V. ? Florida Cancer Specialists & Research Institute LLC?
Ridiculous. Knockoff Apple products EXIST. That's all we need to know. The fact these knockoffs exist, regardless of security holes, knockoff apps, spyware, malware etc. doesn't change the fact THEY EXIST and provide a dirty alternative market.
I 100% agree that no one should support knockoffs of anything.
What's your point?
The fact is there are multiple phones with various operating systems...pick one. You don't like the choice create your own company and challenge the status quo.
Developers are free to write for any platform they choose.
As a consumer, I don't need or want multiple app stores. I'd much rather have a secure trusted app store.
Saying Apple's App Store is a monopoly is similar to saying PlayStation Store is a monopoly. It's a gate to enforce quality and maintain consistency of the user experience.
The ones that are negatively impacted are the ones that are now obsolete, the producers and distributors. Similar to iTunes. Now the creators get the lions share of the profits and not the middle men.
The App Store was so new conceptually that they essentially rewrote all the ‘rules’ and made retail game stores a dated concept at day one. Only retroactively the sheer scope of it all has become apparent; Apple is not just another ‘store’, they are a gatekeeper to all content on their global ecosystem. Like any government or country that becomes too big, a company becoming a monopolist is a danger to the free market.
Seems everyone wants to tell Apple how to run their business...
1. Apple should offer lower price phones. Well Android and PCs have proved this model is not sustainable and market share is not a true measure of success no matter what the "news" and "analyst" want us to believe. To me this market is served by the used iPhone market.
2. Apple should support my "fill in the blank" or should provide me access to "fill in the blank". MS and now Google have proved that it is near impossible to be everything to everyone and unwilling to put in the same amount of effort as Apple to insure compatibility without compromising the user experience.
When we do we end up catering to the lowest common denominator and/or creating workarounds and compromising security and or privacy.
If vanilla works then Apple Si wouldn't have come into existence. Apple didn't create their own Si to stick it to Intel they crated b/c Intel didn't want to or could not invest in itself. I mean really how much more are we going to squeeze out of the x86 architecture? Why does Windows still support 32-bit? Apple knows when to cut bait and move on and now they are in a position to do so. It's not 1984 anymore.
So I will put forth that Apple is NOT obstructing a free market and competition and therefore not a monopoly. That they in fact would welcome competition. Instead others cannot or will not step up and "Think Differently"!
In my opinion, what "needs addressing" is the consumers willingness to accept mediocracy and/or for always looking at price over value. Which is finally happening and more likely the reason Apple is valued at 1.5T b/c we voted with our wallets and put them there; a position they have earned.
So we cannot apply a the old term monopoly to Apple, in fact, when the US tried to address Rockefeller's monopoly, he remained a majority shareholder in all the resulting companies and ended becoming far more wealthy that he probably would have become with just Standard Oil.
Why would I need to compare between app stores? This is not Best Buy where I am comparing a Sony vs. LG. I am looking for apps that can do a certain function that I need and I can compare and read reviews of those apps all on one place, in one App Store.
A lot to parse here, but let's start with the above statement:
Apple literally focuses like a laser on privacy and security issues. To that end, it develops a nearly bullet-proof Ap Store that stops those issues in their tracks.
So you are arguing that they should OPEN UP their secure system because, in your opinion, it "leaves Apple with a monopoly". That's a form of "we had to kill the patient to cure him".
Unbelievable what twisted logic can come up with....
"Coca Cola has a monopoly on Coca Cola!"