App Store Chief Says Apple Aimed to Level Playing the Field for Developers
By Stephen Nellis
July 28 (Reuters) - On Wednesday, Apple Inc Chief Executive Tim Cook will face questions from U.S. lawmakers about whether the iPhone maker's App Store practices are unfairly granting it power over independent software developers.
Apple manages the App Store which is the core of its $46.3 billion annual business in services. Apple's commissions range from 15% to 30% on a lot of App Store orders, its prohibitions on attracting customers through outside sign-ups and the opaque and unpredictability of its app-vetting procedure have been criticized by app developers.
In an interview with Reuters, Philip W. Schiller, Apple's senior Vice President of Worldwide Marketing and the highest executive of the App store, stated that when the App Store first launched in 2008, 500 apps were included. However, Apple executives viewed it as a purely experimental way of offering the lowest commission rate to lure developers.
"One of the ideas we came up with isthat we'll treat all apps on the App Store the same way. That's one set of rules that applies to everyone No discounts, no special terms, no specific code, everything applies to all developers in the same way. That was not the case in PC software. Nobody thought like that. It was a complete flip around of how the entire system was to work," Schiller said.
Software that was sold in physical stores meant that the software had to be paid for shelf space and prominentness. These costs could eat up to 50 percent of the retail cost. Small-scale developers were not able to gain access to.
Bajarin said the App Store's predecessor was Handango, a service that around 2005 let developers distribute apps over mobile connections to users' Palm and other devices for 40% commission. gaming
Apple took the App Store to the next level with the App Store. And at 30 percent, they were better value," Bajarin said.
However, the App Store had rules: Apple reviewed each app and required the use of Apple's billing system. Schiller stated that Apple executives believed that users are more confident in buying apps if their credit card information was safe.
"We believe our customers privacy should be secured in this manner. Imagine if you had to input credit cards and payments to every app you've ever used," he said.
Apple's rules began as an internal list but were published in 2010.
Developers have complained to Apple regarding commissions throughout the years. Apple has since widened the areas that developers are allowed to apply. In 2018, they allowed gaming companies such as Microsoft Corp , maker of Minecraft to let players access their accounts as long as the games also included in-app payments from Apple as an alternative.
"As we spoke with some of the most famous game developers, like Minecraft and Minecraft, they told us that they understood the reason why the user should be able to buy the subscription directly on their device. We have many customers who purchased their subscriptions and accounts elsewhere - on an Xbox or a PC, or on the internet. It's a major obstacle to getting onto your store,'" Schiller said. "So we came up with this exception to our own rule."
Schiller stated that Apple's cut aids in financing the vast system of developers: Thousands of them maintain secure servers that deliver apps, and also to develop the tools needed to create them.
Marc Fischer, the chief executive of the mobile technology company Dogtown Studios, said Apple's 30% commission was justified in the beginning of the App Store when it was the cost of global distribution for a then-small company like his. However, now that Apple and Alphabet Inc's Google have an "duopoly" on mobile app stores, Fischer said, fees will be much lower - possibly the same as the single-digit fees payment processors charge.
"As a developer you are forced to accept the cost," Fischer said.
