Independence Day: How developer and customer revolt will de-throne Apple
240 years ago, our founding fathers decided they were sick of paying ridiculous taxes for the privilege of being part of of the British Empire.
After considerable deliberation, they did the calculus and weighed the benefits against the potential negatives, and signed the Declaration of Independence on the Second of July, 1776, at the Second Continental Congress in Philadelphia, Pennsylvania.
Those who signed it were pretty successful guys, and had prosperous business interests under the rule of colonial England. Almost half of them were lawyers.
Taxes, overall, were the proximate cause. But there were certainly other reasons why we declared independence from England.
The colonists felt that the Crown was imposing too many restrictions on what they could do and they had no representation in England on the passing of laws that affected them directly.
Today self-determination and democracy seem like a given in the US, even during these tumultuous times. But if you're a developer on Apple's iOS App Store, it's a completely different ballgame.
As a developer you aren't even allowed to mention to your customers that they can buy directly from you, outside the App Store. You can't even say "Visit our website for current pricing" without a link.
It's practically North Korean in its ham-fistedness. Kim Jong-Il would congratulate Apple on its mastery of authoritarianism.
And oh boy, the taxes. It's one thing to charge a 30 percent cut on apps, but to take a 30 percent cut imposed on everything you sell, including subscriptions and any ongoing revenue, is preposterous.
This week via Peter Kafka on Recode, we heard the rumblings of revolution from Spotify, the popular streaming service that runs on iOS, Android, Mac, and Windows.
Specifically, the company is protesting the fact that Apple is imposing oppressive restrictions that make it very difficult for Spotify to do business.
Spotify alleges that its music streaming app for iOS, which is subscription based, has had a recent version update rejected because the new version promoted subscription sales within the app, which presumably are sold through transactions outside the App Store itself.
While Apple does not require apps like Spotify to use its billing service -- which takes an aforementioned 30 percent cut on every transaction -- you cannot advertise you have the ability to buy subscriptions outside of the app itself.
Other companies such as Amazon have found a way around this, by displaying content that has been bought or subscribed to externally, like the Amazon Music and Amazon Video apps, which essentially are "benefits" of already being an Amazon Prime member, and most of the content consumed is under the auspices of being part of Prime.
Indeed, in the iOS version, you can buy content on the Amazon web site, but not linked from the app itself.
Amazon was the first to end-run this with the Kindle application when Apple first put these business rules in place in 2011 -- it simply removed the Kindle Store functionality, and added language about logging in with your Amazon account to download subscribed content that conformed with Apple's policies.
The app became a pure "Content Receiver."
As with Amazon Video and Amazon Music, you can't buy any books with the Kindle app, but once you log in, it syncs everything you've bought or subscribed to on the web site, or on a regular Kindle device.
In case you were wondering, sales of physical goods through the Amazon app for iOS don't fall under Apple's In-App Purchase (IAP) Review Guidelines. eBay, Groupon, and other companies that sell physical goods with iOS apps don't fall under this either.
If you are a company like Amazon that can create a large program like Prime to shoehorn everything under the category of a subscription benefit, and if people know to come to you directly, then not offering subscription renewals through the app itself is not a big deal.
But for a company like Spotify whose entire business model is subscription music streaming, that's a big problem.
You'll notice in the IAP guidelines text Apple mentions "We will update these guidelines in the coming weeks for the subscription changes launching this fall."
I'm guessing these yet to be updated guidelines are not going be good news for companies like Spotify. Maybe even Amazon.
Why is Apple getting all aggressive about this now?
I suspect it has something to do with The Game of Services which I wrote about in 2013. It also has to do with the fact that now iPhones and iPads have effectively hit total market saturation, the only thing left to make money from is attach rate.
In other words, stuff you offer after the initial product sale that has "stickiness". That the company is reportedly in talks to acquire Tidal, the Hi-Def music streaming service started by rapper Jay-Z, is particularly telling.
Basically, Apple is like a car manufacturer that also also owns the highways those cars travel on. It also owns the rest stops which have 3rd-party gas stations, convenience stores, and fast food restaurants paying rent and transaction fees as a cost of doing business as well.
It made the rules by which those 3rd parties could do business. That's fine. Certain rules are necessary to optimize the end-user experience at the rest stop.
The most delicious Apple rumors of 2016
The problem is that Apple has now decided it wants to be inside the gas station, convenience store, and fast food businesses themselves.
Any of those existing rest stop tenants who are now finding themselves in competition with Apple not only have to agree to high transaction fees for each sale, but they aren't allowed to tell you verbally or via signage that you can buy gift cards at Wal-Mart when you get off the exit to pay for goods the next time you come back.
It should also go without saying that legislative authorities in different countries should closely examine if Apple is truly respecting the commerce laws of those markets.
I think the larger question is, at what point do these independent businesses feel that maybe they should pack up shop and put up a shingle elsewhere?
For the 18th-century American colonists this had to be a very difficult decision. King George was a nutcase, but he was a known nutcase and there were tangible benefits for America to continue be a colony.
Like the recent UK referendum to "Brexit" from the EU, breaking off from the Apple Crown still has a ton of unknowns.
With the App Store, you certainly are going to have your "loyalists". These are big companies that know that despite how insane King Tim is, breaking off from the Crown is just not in their best interest.
But there will be a lot of developers as well as end users that may see the benefits of using other platforms and 3rd-party best-of-breed services instead.
As Apple to continues to flex its muscle to quash the colonists, we need to examine collectively whether or not it is worth the price of admission into the iOS ecosystem when Android and potentially, other platforms are friendlier places to do business.
And as iOS becomes more and more defined as a "luxury" product when comparable products from Chinese device manufacturers begin to cost 60 or 70 percent less, the end-user calculus points toward tossing the "tea" in Apple Harbor.
Presumably everyone who does business at the App Store will also do business at Google Play, or via an Android side-load, where it is less restrictive and innovation may not be as blocked.
Perhaps a new 3rd-party, truly independent app store that is not tied to Google or an existing player is called for, so that developers and end users can truly self-determinate.
I don't know if Spotify is going to break off from the Crown and decide to put up its permanent shingle at Android and Windows and as a 3rd-party Mac or web-only app.
It might back down. Then again it might not. It could be that a "Tea Party" protest in the traditional sense is at hand.
Is it time to throw the iOS tea into Apple Harbor and declare independence from Evil King Tim? Talk Back and Let Me Know.