Google is already preparing to do this in South Korea, as a result of recent legislation there.
Commissions on outside payment methods are something most analysts agree are specifically allowed under the terms of the Epic v. Apple ruling, but 'allowed' and 'preferable' are quite different — one theory I've seen is that this filing is simply leverage, intended to get a stay on the ruling that is due to allow links to external payment methods starting on December 9.
tl;dr: state of ads in chatbots
Confused about the state of advertising in AI chatbots? Me too. I researched the latest, so you don’t have to:
This week's big story is clearly the fallout from the Meta/Facebook earnings report. We'll get to that in a minute.
But first: a few thoughts on the ever-unfolding situation around alternative in-app payment methods, this time for dating apps in the Netherlands. There have been so many 'alternative payment methods' stories over the last year that you might be thinking 'wait, another one?'
If so, I don't blame you. The short version this time:
But the Byzantine twists of each new version of this story are much less interesting than the clear pattern that is starting to emerge: while these showdowns are always phrased around allowing alternative in-app payment methods, that's just a means to an end: the real objection is the 15-30% commission rate.
I think the unspoken assumption here has been that the commercial models behind the App Store and Play Store are the digital equivalent of a Prince Rupert's drop, and that forcing Apple and Google to budge even slightly on payment methods would cause the whole thing to shift.
In other words, most seemed to hope that if Apple and Google could be forced to allow alternative payment methods in even a small jurisdiction, they would either quickly give up, or decide to overhaul the entire system.
That's not what has happened, at all. In reality, the result so far has been much closer to scorched earth, trench warfare. In every case, Apple and Google are giving only the bare minimum in concessions necessary to comply with the literal letter of each new law, while making sure each change is a Pyrrhic victory for those who brought the complaint (for an example of what I mean, just see the scrupulously detailed guidance above)
One can't entirely blame them for this approach — no one enjoys it when their product roadmap is dictated by court order — but the unfortunate thing is that all this ultimately harms the broader mobile ecosystem. Yes, there are many issues with walled garden app stores. Discoverability, high commission rates, and mercurial review decisions are just a few examples.
But there are also major benefits (no one really wants a return to the days of Windows 98, when an antivirus scanner was the only thing standing between your computer and total anarchy), and avoiding heavy-handed regulation via a few thoughtful compromises would seem like a worthwhile trade.
WWDC 2022, A Tangible Demonstration of Care
What is it like to attend WWDC in person? By all accounts (including this one), it's an amazing, awe-inspiring experience.
If you're reading this newsletter, you may be used to thinking of Apple as a vaguely antagonistic elephant in a world full of mice. With things like the ongoing controversy about App Store commission rates and all the disruption caused by the IDFA Apocalypse over the last two years, a glowing endorsement like this one might seem like cognitive dissonance.
I don't think these are actually at odds. I believe Apple genuinely does care about indie developers. The small, independent dev teams building niche apps that might even be uniquely possible only on iOS, ideally monetizing via in-app purchases or subscriptions. They're the ones who make sense to Apple, who fit into Apple's worldview and use the iOS ecosystem the way Apple wants it to be used (the article above about 'getting Sherlocked' notwithstanding), and who often feel something like Apple's 30% commission rate is a pretty good deal.
Unfortunately, somewhere along the line — as companies get larger and their iOS apps become a part of the end user relationship instead of the entire thing — that care starts to gets smothered by ideology and other business considerations.
Following the case of 'Apple v. Everybody'...
Apple seems intent on taking on the entire world to protect the margins on its App Store business. In our last issue, we covered Apple's proposed changes to the EU App Store to meet compliance issued by the European Commission (EC) Digital Markets Act (DMA). What's followed has read comically like a middle-school feud. Grab the popcorn folks, it's gonna get catty:
Meanwhile, Epic works hard to keep a second front against Apple alive in the U.S.:
If you find this a bit much, you're not alone. But keep in mind, we're talking commissions worth billions of dollars, so it's no wonder these companies are squaring off so publicly. I find an exchange between Eric Seufert and Ben Thompson on a recent Stratechery podcast (paywall) especially salient:
Eric Suefert: "People don’t recognize whenever you see a price in the App Store that was optimized for gross revenue by the app developer. So, you cut that feed, it’s not going to trickle down to the consumer; they’re not going to pay less."
Ben Thompson "100%....There is so much competition on the App Store that prices have long since been driven down to their optimal level and taking the fee. All it does is shift money from Apple’s pocket to Epic’s pocket."
At the end of the day, we'll likely see some resolution in the middle, but the only real change will be the shifting of profit between juggernaut's balance sheets.
The Small Business Program is a huge, clever U-turn by Apple
Via a middle-of-the-night press release, buried in the middle of this week's Apple Silicon MacBook noise, Apple just announced a new program to cut App Store commission rates from 30% to 15%…for ‘small businesses’.
In other words, commission rates are cut in half for all of the companies that hadn’t really been complaining all that loudly (perhaps because they lacked a tall enough soap box), but which everyone was assuming made up the silent majority.
It’s a great chess move. The impact on Apple’s App Store revenue will probably be statistically insignificant, and the big tech companies that are complaining loudly now look a whole lot more lonely.
Google Play to pilot third-party billing option, starting with Spotify
Yes, this is the mythical 'third-party in-app payment option'.
No, this is not a 'get-out-of-commission-free card'.
The details of this pilot program are not public, but that doesn't mean we're without precedent: Google already offers a similar program in South Korea, and the commission rate is only reduced by 4% for non-Google payment methods.
The Apple v Epic lawsuit is ongoing (recap: Fortnite tried to enable in-app purchases without going through the App Store framework, and got kicked off the platform by Apple in response), and it's bringing to light some very interesting details.
This thread is FULL of fascinating scoops, but the clear theme is that Epic wants to demonstrate that the App Store's benefits aren't worth Apple's 30% commission.
Apple will allow Dutch dating apps to use other payment options within existing apps
In related news, Apple finally blinked in its ongoing dispute with the Netherlands Authority for Consumers and Markets.
Brief recap:
The newest development: now Apple announced its plans no longer include requiring a completely separate app just for the Netherlands. Still unchanged: a required pre-payment warning modal (very similar to the example above), and a 27% commission rate with mandatory audit rights to Apple.
The ACM hasn't indicated yet whether it considers this satisfactory…so the drama continues for at least a little while longer.
Apple Will Let Content Apps Like Netflix, Spotify Link to Their Websites to Sign Up Users
This has been hanging in the air ever since Apple's settlement with the Japan Fair Trade Commission last fall.
It sounds big on the surface, but read the details and you'll see Apple is basically playing the 'take my toys and go home' card. Per the documentation page, some of the restrictions required for an app to use this new option:
Also, Apple is requiring apps to show a scary-looking fullscreen warning to users before sending them to the website destination — you can see the mockup on this page, about half-way down.
