2019.03.14 Apple's App Store Margin

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Apple has terms on their App Store that their cut is 30/15% (30% the first year subscriptions or purchase -- 15% on later years of reoccurring subscription). For small companies that have no marketing or facilities for bringing their App to market directly, this is completely reasonable. For larger companies that have their own infrastructure and promotions, and are forced to use Apple's (which they don't need), or those with razor thin margin businesses (like music/content streaming, books, etc), this is monopolistic usery. So it's been a fight since Apple created a one-size-fits-all solution, that doesn't fit everyone well.

In the latest skirmish (2019.03.14) AppleInsider (perpetual Mac fanboi’s that will ALWAYS defend Apple) are shockingly defending Apple’s cut and vilifying Spotify, because Spotify is trying to take Apple to EU court knowing those wacky EU regulators hate American tech companies, because they’re not European. Spotify is from the land of Abba (Sweden), so as a member of the EU is likely to get preferential treatment. Either way, there’s pressure on Apple -- but this pressure is of Apple's making. They could have been flexible before the fight got this far. (They have had a decade+ to fix this).

I'm pretty neutral on this:

  • On one hand, Apple’s cut is a bit high and excessive for some markets/businesses, and their lack of variability is a problem of their own making
  • On the other, I’m not sure Apple’s technically a monopoly since Microsoft crushes them on desktop sales and Android crushes them on mobile, and companies CAN sell both inside and outside of the store and just charge ≈20-30% premium (to pay Apple their cut on the in-app sales). So companies coerced, but they are not forced.
  • Apple's not hurting the companies, they're hurting the customers of those companies (if the companies pass-thru the Apple tax).

But that’s all a distinction without a difference to the EU, since Apple does control 100% of their platform, and they love to stick their regulatory fingers wherever they can, especially to make a Super-Nationalistic point against all those non-EU companies. The EU replaced Fascism (Corporate National Socialism), with Fascism (Corporate Super-National Socialism) -- which is another distinction without a difference. The fact on whether it is one Country, or a group of Countries doing it, doesn't change the morality/ethics in anyone's mind, but the fascists doing it. But rule #1 about Fascists, they don't know what Fascism is, and are nose-blind to their own smell/actions.

Personally, I'd pass through the costs to the customers, and trust them to figure out where that surcharge comes from. They can buy direct and get the discount, if they care. Or they can pay Apple the premium for discovery, anonymity and convenience: as the supplier, I really don't care about that, nor should I. (As long as I'm getting my price). Trust the customers to figure it out in the long term.

Letting this go to court is going to get ugly. What is usery or a fair rate? We’ll see if the EU takes this up, and what it comes down on… or if Apple caves and lowers their rate prophylactically to avoid the regulators pulling a number out of their anti-American hat. But letting the EU regulators decide what's fair, likely won't end well for anyone. I find it interesting that if the EU sets a margin that’s fair, say 5 or 10% (just wild guess), that means someone gets to suit Spotify back if their margins are higher than that? If the EU does it to American companies, what does the U.S. and Canada do? (Let alone China). The Gini might be hard to get back in the bottle.


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