Apple is letting Tesla skip millions of dollars in App Store fees

AppleInsider · July 12, 2023 12:45PM

Tesla's Elon Musk has previously said he'd go to war rather than pay App Store fees, but Apple appears to have long since surrendered one particularly significant charge.

Credit: Twitter

Apple's App Store rules are many and complicated, and they have been criticized as a "de facto global tax" by Musk and others, chiefly firms who want to run their own stores. But Tesla is seemingly flouting one clear in-app payment rule, and Apple is allowing it.

According to Gizmodo, the issue centers on the Tesla iPhone app's "View Live Camera" feature. Tesla charges $10 per month for features such as a web browser, and that is legitimately excluded from Apple's fees because the browser runs in the cars, not on iPhones.

However, as part of that tier of premium features, it's possible to use the Tesla iPhone app to monitor cameras in the owner's car. A Tesla owner paying this monthly fee can access the camera from the app, and talk to its occupants directly from the iPhone.

So if thieves steal a Tesla, the owner can watch them drive away and verbally point out the error of their ways, all through the iPhone app -- for free. Or at least, without Apple getting anything.

This is one feature in an app that otherwise does not appear to transgress Apple's App Store rules. Nonetheless, this one feature does appear to break those rules and it seems unlikely that it was missed by the App Store review team.

In November 2022, Elon Musk tweeted in his typical dramatic fashion that he would go to war rather than pay Apple 30%. He soon deleted the tweet, and two days later was given a tour of Apple Park by Tim Cook, after which he's not been criticizing the App Store.

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leighr · July 12, 2023 1:03PM

As the “store owner” surely Apple has a right to charge a fee, in this case 30%. Amazon and eBay (as do most other online storefronts) charge a fee to use their service, as does every single bricks and mortar store, when you purchase an item with markup. Supermarkets even charge manufacturers a fee to stock their goods in prominent places in their stores, as this results in higher sales. Apple built the store, developed the customer base, and continues to operate and improve the store. It all needs to be paid for with a percentage of the developer’s profits, which is still 70% more than they would be getting if they didn’t use the App Store. Not to mention that Tesla charges its customers an ongoing monthly fee to access features in the vehicle they have already bought.

rob53 · July 12, 2023 1:16PM

It appears that people don’t think computer-type things, including app stores, should have to follow what “normal” stores have to follow.

sflagel · July 12, 2023 1:27PM

So does Apple take 30% of the monthly fee for any webcam? If so, then it seems Tesla would have to pay, but how do you assess the value of the webcam feature within the monthly subscription fee for the Tesla package?

thinkman100000000 · July 12, 2023 1:29PM

Musk really needs to cut corners, because, you know…………the richest man in the world nickeled and dimmed himself into that stratosphere. Piss and moan about others while you produce OVER PRICED, POORLY FINISHED vehicles that owners pay $10,000 - $XX,XXX over the sticker price for Autonomous driving that IS NOT AUTONOMOUS. Musk would have been a good partner for Barnum and Bailey!

Meanwhile Apple continues to be the largest advertiser on Musk owned, dying social media platform, Twitter. Time to stop play nice with the carnival barker.

freeassociate2 · July 12, 2023 1:44PM

People really need to stop having shit-fits over Apple’s mark-up. EVERY vendor does it (and the entire supply chain gets their pound), some in the hundreds or thousands of percent.

It’s as if folks don’t understand that’s how they get paid. And the ones that do, don’t think of it as graft.

PS - STOP SAYING TAX. Look up the meaning of the word before you abuse it. Apple is not a governmental organization, full stop.

jfabula1 · July 12, 2023 1:47PM

Tesla charged $10 for connectivity such as live traffic, streamings and remote monitoring and controls of the car. Just like your smart phone, you paid extra for calling, texting, streaming unless you’re in wi-fi. Again this is optional for Tesla owner….and if you buy smartphone w No cellular fee payments you cannot do other stuff too. Remember we used to get charged for textings….

bsimpsen · July 12, 2023 2:23PM

I don't see how Apple's 30% would apply to Tesla's $10/mo. Tesla charges that fee through their own payment system, for a service that runs independently of Apple. That's entirely as it should be. Amazon doesn't give Apple a slice of Prime membership fees, even though my phone's Amazon app accesses Prime services.

jbdragon · July 12, 2023 2:41PM

bsimpsen said:

I don't see how Apple's 30% would apply to Tesla's $10/mo. Tesla charges that fee through their own payment system, for a service that runs independently of Apple. That's entirely as it should be. Amazon doesn't give Apple a slice of Prime membership fees, even though my phone's Amazon app accesses Prime services.

Ya, Netflix, Amazon, HBO and others, if you pay directly from them, there is no 30% going to Apple. You can't advertise in your app to go to such and such site and pay there. YouTube, for Adfree service, it's $12 if you pay directly at YouTube, or it's $15 if you pay through the app and the app store. I THINK that is how it is currently. Kindle books from Amazon, you are paying directly at Amazon, not going through Apple.

I think people are smart enough to see a Login or whatever and go directly to the site, which you can do in Safari on your IOD device and pay like that directly. So you're still on your iPhone or iPad. Tesla is doing the same thing as everyone else. So I don't think Apple has given them some kind of special deal.

maltz · July 12, 2023 2:50PM

sflagel said:

So does Apple take 30% of the monthly fee for any webcam? If so, then it seems Tesla would have to pay, but how do you assess the value of the webcam feature within the monthly subscription fee for the Tesla package?

Only if the fee is charged in-app, as I understand it. I don't see how this is any different than Ring camera plans, etc.

thedba · July 12, 2023 2:58PM

freeassociate2 said:

People really need to stop having shit-fits over Apple’s mark-up. EVERY vendor does it (and the entire supply chain gets their pound), some in the hundreds or thousands of percent.

It’s as if folks don’t understand that’s how they get paid. And the ones that do, don’t think of it as graft.

PS - STOP SAYING TAX. Look up the meaning of the word before you abuse it. Apple is not a governmental organization, full stop.

You're correct. Very few understand Apple's role in the app store and the 30% or 15% overhead they charge.

Many think that a dev who sells through the app store, did all the work and all Apple has to do is sit back and collect.

Well, NO!

Apple's system collects the money from the customer, whether it's a one time purchase or recurring fees (like Disney or Paramount subscriptions) and Apple's systems then distribute the money out to the Devs while keeping their 15 or 30%. But Apple is also responsible for charging the customer any state/provincial/federal taxes and then sending that money back to the appropriate government. The adjustments made to those systems and ensuring that these exchanges all go smoothly are all on Apple's shoulders.

One can always argue whether 15 or 30% is too much but like others have said, that pretty much is the norm in the industry.

As for the article, my feeling here is that Tesla Motors are exploiting a loophole, one that Apple may be willing to live with for the time being.

mknelson · July 12, 2023 3:17PM

rob53 said:

It appears that people don’t think computer-type things, including app stores, should have to follow what “normal” stores have to follow.

Especially when the App store allowed the software companies to eliminate distributors and retailers (screwing them over in the process) and take 70% of the sales price, when it used to be closer to 30%.

danox · July 12, 2023 3:22PM

rob53 said:

It appears that people don’t think computer-type things, including app stores, should have to follow what “normal” stores have to follow.

At all normal stores, you pay to squat on the shelf, so in that regard, yes App stores should follow the same rules…….

dave2012 · July 12, 2023 4:51PM

rob53 said:

It appears that people don’t think computer-type things, including app stores, should have to follow what “normal” stores have to follow.

This confuses me! Two questions:

1. If the App Store was like a 'normal' store then once you've bought an app you wouldn't have any subsequent payments - so why are there ongoing fees?

2. Why does this happen on IOS but not on Mac OS?

kurai_kage · July 12, 2023 6:07PM

I think the premise of the article is just wrong. The model you should be comparing it to is the Kindle or Audible app. The Tesla app is a gateway to activities, primarily interacting with your car, similar to the Kindle app. If you pay the $9.99 a month for enhanced cellular network features, you get additional features in the car as well as some additional app features (if your car supports it). You aren't paying the $9.99 through the app, you aren't buying anything, so this is parallel to Kindle where there is no storefront, but you can see your library and read books. Audible has similar functionality, but it also has a storefront. I only use credits, and if I buy those credits on audible.com then I'm free to browse the storefront on my device and buy and then listen to audiobooks. However, if I run out of credits and try to buy something the app prompts me to buy credits. If I buy them in the app, not only do I pay more, but some of that money goes to Apple. I could choose to switch to a browser and buy the credits at audible.com where they are slightly cheaper. If the Tesla app is used for purchases that unlock functionality in the app, then I'd expect some of that money would go to Apple, but in this case that isn't happening. You are paying outside the app and gaining some additional functionality.

I'll also point out that paying the $9.99 a month for enhanced cellular network features doesn't guarantee you any additional Tesla app features. My wife's 2018 MX doesn't have an internal camera and doesn't support the external camera monitoring feature enabled by Sentry mode, but my 2021 MS does support it. We both pay the $9.99 a month, but I get a bit more functionality enabled by the newer car hardware/software.

thedba · July 12, 2023 6:20PM

dave2012 said:

rob53 said:

It appears that people don’t think computer-type things, including app stores, should have to follow what “normal” stores have to follow.

This confuses me! Two questions:
1. If the App Store was like a 'normal' store then once you've bought an app you wouldn't have any subsequent payments - so why are there ongoing fees?
2. Why does this happen on IOS but not on Mac OS?

01. There are no ongoing fees for apps that charge an upfront price and then you own it. The game "Monument Valley" comes to mind. I bought it and now I own it. I can redownload it with no additional fees if I replace my iPhone.

Subscription apps are different (Disney+, DAZN etc.) They constantly churn out new content and that "content" has a cost ($9.99/month $19.99/month or a yearly $149/year to name but a few examples).

02. It happens in MacOS, iOS, tvOS etc. Only difference, in MacOS you are allowed to go to outside sources (not the App Store) for your apps. Many Devs have decided to bypass the Mac app store entirely. It works because it's always been like that on that platform.

dave2012 · July 12, 2023 7:35PM

thedba said:

01. There are no ongoing fees for apps that charge an upfront price and then you own it. The game "Monument Valley" comes to mind. I bought it and now I own it. I can redownload it with no additional fees if I replace my iPhone.
Subscription apps are different (Disney+, DAZN etc.) They constantly churn out new content and that "content" has a cost ($9.99/month $19.99/month or a yearly $149/year to name but a few examples).

So from what you're saying the App Store IS like a 'normal' store. So when rob53 says:

'It appears that people don’t think computer-type things, including app stores, should have to follow what “normal” stores have to follow.'

Then the 'people' he's actually referring to are people at Apple who think this entitles Apple to mark up in-app subscription fees? So these Apple people don't seem to realise there's no connection between where you buy an app and the consequential future payments. No connection I can see, anyway.

And from what Kurai_kage says there are two different ways to pay these subscription fees:

1. on the web

2. in the app

If someone chooses to pay in the app then presumably Apple is actually charging a processing fee? In which case 30% or 15% sounds too high to me. This suggests to me that Apple is using its monopolistic position to profiteer. Can't say I particularly understand it though!

chadbag · July 12, 2023 8:13PM

So, I do t have a Tesla. So can’t see for myself. But is this feature one that you buy through in-app purchase? If not then no, Apple is not overlooking fees.

(I know others have brought this up).

thedba · July 12, 2023 8:20PM

dave2012 said:

thedba said:

01. There are no ongoing fees for apps that charge an upfront price and then you own it. The game "Monument Valley" comes to mind. I bought it and now I own it. I can redownload it with no additional fees if I replace my iPhone.
Subscription apps are different (Disney+, DAZN etc.) They constantly churn out new content and that "content" has a cost ($9.99/month $19.99/month or a yearly $149/year to name but a few examples).

So from what you're saying the App Store IS like a 'normal' store. So when rob53 says:

'It appears that people don’t think computer-type things, including app stores, should have to follow what “normal” stores have to follow.'

Then the 'people' he's actually referring to are people at Apple who think this entitles Apple to mark up in-app subscription fees? So these Apple people don't seem to realise there's no connection between where you buy an app and the consequential future payments. No connection I can see, anyway.

And from what Kurai_kage says there are two different ways to pay these subscription fees:

1. on the web
2. in the app

If someone chooses to pay in the app then presumably Apple is actually charging a processing fee? In which case 30% or 15% sounds too high to me. This suggests to me that Apple is using its monopolistic position to profiteer. Can't say I particularly understand it though!

Take a look at Reply #10 from "yours truly" as to why Apple may take a cut of 15% or 30% from in app purchases or subscriptions.

Could that "overhead" be lower? A separate debate I guess.

Some bigger app developers do require you to subscribe via the web for their services (Netfllx, Microsoft come to mind) and Apple gets $0 dollars from the customer.

Others OTOH (Disney+, Hole19 a golf app) are willing to let you go through the app store and Apple's cut and if those apps are popular, then Apple gets even less percentage wise.

There's no right or wrong here and like I explained before, it's not like Apple is just sitting back and collecting. They do offer additional services to both the app developer and ease of use to the customer.

dave2012 · July 12, 2023 8:53PM

thedba said:

Take a look at Reply #10 from "yours truly" as to why Apple may take a cut of 15% or 30% from in app purchases or subscriptions.
Could that "overhead" be lower? A separate debate I guess.

Thanks, sorry, yes you've answered already! So it's a processing fee. Well then, 15% or 30% sounds way to high for that - it sounds like Apple are exploiting us. Maybe it would be a good idea if Apple were forced to show an alert that it may be cheaper for us to go directly to the developer's website.

thedba · July 12, 2023 9:11PM

dave2012 said:

thedba said:

Take a look at Reply #10 from "yours truly" as to why Apple may take a cut of 15% or 30% from in app purchases or subscriptions.
Could that "overhead" be lower? A separate debate I guess.

Thanks, sorry, yes you've answered already! So it's a processing fee. Well then, 15% or 30% sounds way to high for that - it sounds like Apple are exploiting us. Maybe it would be a good idea if Apple were forced to show an alert that it may be cheaper for us to go directly to the developer's website.

I wouldn't take my word for it but I'm pretty sure that "processing fee" as you put is part of the reason. There may be other reasons and yes, one of them could be "greed".

Either way I haven't looked deeply into Apple's financial reports to answer with any kind of authority.

As for the alert where Apple directs the customer to alternate payment methods via the DEV's website, that's old news.

It was an issue and I think one of devs was Netflix at the time, where they wanted to put a message with a hyperlink in the description of the app in the App Store and Apple clearly said "NO". To my knowledge this isn't an issue any longer and like I mentioned Microsoft, Netflix, Adobe cloud I think, only have subscriptions to their services through their webpages. Apple gets, you guessed it, $0.00. And no Apple will not give them free advertising in the app store dangling a free hyperlink to the customer.

Apple is letting Tesla skip millions of dollars in App Store fees

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