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Is the Apple App Store a monopoly?



Good morning. This is Fortune writer Aric Jenkins, filling in for Adam.

The eye-popping 30% fee that Apple charges developers to conduct sales through its App Store is fair and inline with other digital marketplaces like the Google Play Store, according to a study commissioned by… guess who?

That’s right. Apple is on the defense ahead of its Monday antitrust hearing in front of the House—which will also feature top executives from Google parent Alphabet, Amazon, and Facebook. Apple says the study, in which economists from Analysis Group to compare the App Store to peers like Google, Microsoft, Airbnb, and Uber, will provide data for CEO Tim Cook to cite in his testimony.

The base 30% rate that Apple charges for paid apps, in-app purchases, and the first 12 months of in-app subscriptions, the study found, matches the Amazon Appstore, Samsung Galaxy Store, Microsoft Store, and even video game marketplaces like Xbox, Playstation, and Nintendo. But there are some discrepancies (see the tables in this piece for a precise breakdown), such as Amazon charging only 20% for video streaming subscriptions, or game platform Steam dropping its percentage once sales exceed $10 million. And Apple and Google themselves lower in-app subscription fees down to 15% after the first year.

Why is Congress (plus the European Union!) so peeved at Apple in particular? Well, roughly 1.5 billion devices actively run Apple’s iOS, and the only way developers can get to them is through the Apple Store. Some with high standing—Netflix, Spotify, Amazon—have decided they aren’t going to pay that fee, and instead make customers sign up outside of the app. But other, much smaller developers are at the complete mercy of Apple. Without that brand recognition, they can’t bank on customers taking additional steps to purchase their products or services.

As if that wasn’t enough, Apple has been accused of promoting its apps over competing third-party ones, as well as over the company’s direct rivals.

“Yeah, yeah,” you might say. “Apple has every right to prioritize its own products on its own store.” And it’s a compelling argument. At the end of the day, Apple completely revolutionized the modern app marketplace. It leads to hundreds of billions of dollars in e-commerce, plus jobs and satisfied customers. Don’t like it? Buy or develop for an Android phone. And even then, you would be subject to the same principles, according to that Analysis Group study.

Just remember that analyst estimates pegged Apple’s take of App Store sales at $15 billion last year—roughly twice as much as its next largest rival, Google. And when Apple is the sole gatekeeper to that much money, it has little incentive to protect developers or everyday customers.

Is that a fair price to pay for access to one of the world’s most prized operating systems, and the devices that run on it? That’s the question Congress will start digging into on Monday. 

Aric Jenkins


This edition of Data Sheet was curated by Aaron Pressman.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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