History of Apple’s bases on the App Store rules

In recent weeks, Apple has made several changes to its App Store rules, allowing a larger number of businesses to access a lower commission rate or circumvent Apple’s mandatory 15% cut at 30%.

But while the concessions may seem like a change in Apple’s approach to app store policy, when examined in the history of the App Store, they are a clear continuation of the strategy being pursued. dates back to 2008.

Historically, Apple has made small changes to its “guidelines,” a 13,000-word document that says what iPhone apps can and can’t do, while defending its core interests that Apple has the right to determine which software can run on iPhones and set their own financial terms for these developers.

Apple has not yet changed its policy of getting 30% of game purchases from the app, which make up the highest revenue category of the App Store. Apple’s App Store earned $ 64 billion or more in total sales in 2020, according to analysis based on Apple’s disclosures.

JPMorgan analyst Samik Chatterjee said in a recent note that he believed the financial impact on the company in an email change would be “modest” and other adjustments that would reduce Apple’s downsizing to some apps at 15 % would be “minimum”.

Regulators and developers who criticize Apple’s App Store have filed several complaints in the last decade: its 30% reduction is too high, its manual application review process is arbitrary and powerful, the App Store it lowers software prices and teaches consumers that upgrades are free.

Thus, Apple has removed categorical exceptions to the 30% quota, allowed software manufacturers the ability to appeal or challenge their rules, and changed individual rules in response to media demands or attention.

The events of the coming months may force Apple to change its policies again. A decision is expected in a trial with Epic Games in the coming weeks. The European Union is examining sanctions and resulting appeals after finding that Apple violated antitrust laws following a Spotify complaint. South Korea recently passed a law that could force it to allow customers to use alternative billing systems.

But looking at the App Store history, Apple is likely to continue to push for private negotiations and public lobbying for smaller non-structural changes to the App Store that address some complaints, but do not change its control over the iPhone software.

Apple’s App Store has faced controversy since its launch in 2008. A year later, the FCC investigated the company for its refusal to approve the Google Voice app.

There is now more regulatory pressure from countries and developers around the world, and it is causing more changes in the rules. Apple made some of the recent concessions due to settlements in a developer lawsuit in the U.S. and an agreement with Japan’s Fair Trade Commission, though Apple is implementing the changes worldwide.

These adjustments basically allow companies like Spotify and parent company Tinder Match Group to overlook Apple’s sometimes 30% reduction in gross sales, addressing a permanent complaint that dates back at least five years. Apple also reduced its takeover to 15% for news apps participating in Apple News, its own news app.

Apple officials say these are significant changes that address the major concerns of software makers.

Some of Apple’s opponents, even those who have called for these changes, say they don’t go far enough and are part of a pattern of dividing their critics by appeasing some of them with one-off rule changes.

“Our goal is to restore competition once and for all, not an arbitrary step and self-service at the same time,” Spotify CEO Daniel Ek posted this week in response to the change in link rule to the Apple app.

“Apple’s strategy is Divide and Conquer: cut special offers for different developer segments,” Epic Games CEO Tim Sweeney said last month in a statement to CNBC in response to the award. Apple News Apps

Epic Games is suing Apple for looking to install its own app store on iPhones, which is the big change Apple wants to fight.

2009: Apple does not approve Google Voice, FCC investigates. A year after the App Store went live, the FCC began investigating its refusal to approve the Google Voice app, which acted as a second phone number.

Apple responded to the FCC, providing many details about its first-time app review process and arguing that it had the right to reject entire application categories.

In its letter, Apple also detailed for the first time its Executive Review Board, a body headed by Apple executive Phil Schiller, which makes final decisions on “new and complex issues.”

The Google Voice app was finally approved in late 2010.

2011: Apple requires payments integrated into the application of digital products, creates the “reader rule”. In-app purchases with a 30% commission were introduced in early 2009. But in February 2011, Apple significantly tightened its control over the App Store by announcing that it would plan to force companies to use the app system. integrated purchases from Apple if they offer digital subscriptions.

At first, Apple offered exceptions for products like the Kindle or the New York Times, where users may have purchased e-books or digital subscriptions outside of the app. But companies still needed to implement in-app purchases with Apple’s reduction, at the same price as their out-of-app subscriptions.

This did not work for many publishers, who wanted to maintain their direct relationship with customers. By June, Apple had backtracked on some of its most draconian guidelines, allowing companies to pass on the 30% share to customers or, if they wished, not offer any purchases built into Apple’s app.

Shortly afterwards, Apple’s head of marketing, Phil Schiller, began questioning Apple’s 30% share and suggested lower levels of revenue sharing, such as 20%, according to an email posted as apart from the Epic Games test.

That’s when Apple began imposing its first restrictions on redirecting users from the app to the publisher’s website, which were reversed in recent weeks.

2016: Apple reduces second-year subscription reduction to 15%. In 2015, Spotify had publicly challenged Apple’s restrictions on tested subscriptions, first emailing customers to tell them it’s less expensive to subscribe directly, rather than through the App Store. This is contrary to Apple’s guidelines and is one of the rules that was officially clarified as part of Apple’s concessions last month.

Shortly afterwards, Spotify removed purchases built into Apple’s app and began a process to challenge Apple’s rules with government regulators.

In 2016, Apple announced that it would amend its revenue sharing agreement, specifically for subscription applications. Apple still charged 30% in the first year of subscription, but subscribers lasting more than 12 months would cost the app a gross sales rate of less than 15%. Apple also opened up subscription billing to all apps in the App Store and introduced search ads, which allowed developers to pay for a better location on a search page in the App Store.

The announcement also came months after Schiller publicly took over oversight of the App Store, replacing Chief of Services Eddy Cue, although Schiller had been involved in App Store policy since principles.

Although Schiller is no longer a senior vice president of Apple, he remains an Apple employee with the title of “fellow” and continues to lead App Store policy.

2019: Apple’s back tracks in parental control apps, introduces the appeals process. When the annual Apple Developer Conference began in 2020, the App Store had received considerable antitrust attention, specifically for its ability to reject applications, especially applications that competed with Apple’s features, such as parental control applications that allowed users to set the screen time limits for children.

Apple reversed some of its policies on parental control apps in 2019 after negative media attention, allowing some of them in the store and creating software tools that they could use to create their apps.

But the skirmish highlighted that the process of reviewing Apple apps was arbitrary and sometimes kept app updates on minor details or, worse, because the app didn’t comply with purchase rules since of the application.

Developer protests over the app review continued to grow until 2020, and at Apple’s annual developer conference, Apple said it would implement an appeals system for developers to challenge Apple’s rules. , although many app makers say it has not resolved its complaints with the approval process. .

2020: Apple reduces the reduction to 15% for small businesses. Last November, Apple introduced the Small Business Program, a high-profile olive branch to lawmakers and app developers.

It reduced the take from 30% to 15% for any company that earned less than $ 1 million a year through the App Store. But because apps are a win-win business, it didn’t hurt Apple’s finances too much; an estimate at the time suggested that the top 1% of app publishers generate 93% of App Store revenue. But it did reduce the rates of most individual app developers.

Documents in a 2021 agreement said the creation of the Small Business Program was due to a class action lawsuit.

2021: Apple reduces the reduction to 15% for news applications participating in Apple News, allows developers to direct users to alternative payment systems. Antitrust attention in the App Store intensified in 2021. Earlier this year, Apple CEO Tim Cook testified in a lawsuit over App Store practices against Epic Games. Several states and the U.S. Congress introduced bills that could force Apple to allow alternative app stores.

In August, Apple reduced the subscription reduction for any publisher from 30% to 15%, targeting a developer segment that had struggled with changes to the App Store in 2011. There was a problem, however, those news apps had to participate in Apple’s news aggregator (News apps aren’t the main money-making entities in the App Store).

Apple also agreed to a class action lawsuit with smaller U.S. developers, paying $ 100 million and clarifying guidelines on applications they email to their own customers.

In September, Apple settled with the Japanese FTC and said “reader” apps could be linked to register customers to subscribe to their own websites. These three changes addressed issues that first emerged in 2011 when Apple created the reader rule.