Gruber on iOS In-App Purchases | Hacker News Reader

Gruber on iOS In-App Purchases

daringfireball.net

39 pointskyleslattery61 comments

Gruber's commentary on Microsoft abusing monopoly power over access to Windows customers (http://daringfireball.net/linked/2006/05/01/msft-goog):

“Who, us? Abuse a monopoly in one area to ram something down our customers’ throats so as to build a new monopoly that damages our leading competitor? What would ever make you think we’d do that?”

Gruber's commentary on Apple abusing monopoly power over access to iPhone/iPad customers:

"This sucks for Sony because, for now, they’re locked out of the App Store. It sucks for Amazon and Barnes & Noble too, if I’m right that, going forward, they’re going to have to offer in-app purchasing as an option. But you can’t say it’s surprising that the rules are evolving toward more money for Apple while improving the experience for users"

See, when Apple does, it's "to be expected". When Microsoft does it, let's unleash the outrage.

If Apple is successful in forcing Amazon to fork over 30% for iOS-originating Kindle purchases, then they don't even need to improve their iBooks business - they would get as much money from Amazon for each book sold as they would get directly from a publisher and either destroying Amazon's margins or causing the books to cost 30% more.

Neither option is good for customers and the sooner government steps in and clips Apple's wings the better. Personally I don't want to see more abuse from Apple and enforced toll-roads for access to users of Apple made (but owned by people who purchase them) devices.

It is becoming clearer and clearer that Apple is not satisfied with making bunch of money the ethical way and will use every means available to make even more money unless someone with an ultimate stick steps in and delivers sound beating.

Apple is far from having a monopoly, as the Android users and Apple hater keep reminding us. Microsoft at the time I think had 90% of the market or something ridiculous like that. Amazon is free to take its app to the other 100 tables presented at CES.

I can't wait until the day competition from Android will force Apple to be less arrogant and abusive but we both know that day has not yet arrived. Apple has 99% of tablet market and probably ~50% of smartphone market.

The important figure is that it's 85 million devices as of April last year (http://www.tipb.com/2010/04/08/50-million-iphones-sold-35-mi...).

Do you actually argue that it's ok for Apple to forbid competitors like Adobe, Mozilla, Sony or Amazon from having the same access to 85 million (and growing) users of iPhone/iPad as Apple has? Is it a function of market share?

The cause => effect in those situations is simple. Those who have enough market share to impose abusive terms, do. Whether it is Microsoft with Windows, Apple with iOS or telco companies collecting outrageous fees, they do it because they can. A 90% market share is not necessary.

In all cases it limits competition and as an end result hurts users who pay higher prices and don't get to use innovations that the gatekeeper doesn't like.

Apple has 17.25% of smartphone market share.

http://www.asymco.com/2011/02/01/the-iphone-share-17-25-of-s...

It sounds like you're suggesting that successful companies should help their less successful competitors rather than competing.

You mean like how Microsoft helps Apple by allowing iTunes to run on Windows and allow purchases?

Maybe Apple should block purchases on Amazon.com on Safari on the iDevices and demand a 30% cut. After all, isn't it helping Amazon?

The point is that the iPhone becomes more valuable because of the apps. For example, the iPhone would be more attractive to owners of Sony and other ebook readers if the app was approved.

I think Microsoft should stop helping it's competitor Google by allowing it to work on Windows machines. They should just pre-install a redirect from google.com to bing.com in the hosts file.

You mean...

No.

I mean that the above comment seems to be suggesting that a company that reaches a certain level of success (e.g. Apple's user base) is in the wrong if it doesn't share that success on equal terms with any competitor that would like it. As if reaching that level of success were just a matter of chance and not, y'know...competition. That would be saying that your reward for creating a wildly successful product is to be held back from doing so again.

Since you seem to traffic in absurd examples, try this: Why don't all of these companies just merge into one big company? That way nobody gets blocked out of anything and everybody gets to share the wealth.

>I mean that the above comment seems to be suggesting that a company that reaches a certain level of success (e.g. Apple's user base) is in the wrong if it doesn't share that success on equal terms with any competitor that would like it. As if reaching that level of success were just a matter of chance and not, y'know...competition. That would be saying that your reward for creating a wildly successful product is to be held back from doing so again

All of what you wrote makes sense for a single market. But here things are different. Apple makes phones. Amazon sells ebooks. The conflict of interest started when Apple started selling ebooks and now is ready to devalue it's phone to get leverage in the ebook space. i.e They're leveraging their smartphone marketshare to gather steam in the ebook space. Remind you of MS and Netscape? Pretty similar except for the Windows monopoly part.

Didn't exactly that happen with Microsoft with Windows and Office?

>your reward for creating a wildly successful product is to be held back from doing so again

Err, how would Apple be held back from creating a killer ebook app and succeeding by the merits of it rather than sitting around and charging a tax on all the ebook purchases on iDevices? How does this benefit the user?

So you mean creating a successful product by beating competition in one market should allow one to automatically make another successful product in another by riding roughshod over the competition leveraging the earlier success beyond just using the profit as capital?

So, do you think Microsoft shouldn't have been punished for bundling IE(it was actually better than Netscape at that point) with Windows ? They didn't even ban Netscape or attempt to tax it, they just bundled their browser with a very successful OS which is not a matter of chance but, y'know...competition.

Yes - I think it totally and completely and wonderfully fine for Apple to forbid competitors from having access to their tablet.

Apple needs to focus on one thing, and one thing alone - user experience. Unless they have a some clear monopolistic position, and attempt to leverage that into a new market - they are also well within their legal rights.

If Apple loses sight of the user experience, and if they screw up my Amazon reading experience (I've read north of 20 books on my iPad - so this _directly affects me) - my next tablet will not be an iPad - I like the amazon reading platform - and I'll go see what Android, or, hell, WP7 tablets look like. Apple doesn't need to care about Amazon, or Sony - they need to care about me.

Apple should feel free to abuse the heck out of their competitors, as long as it does so in a legal way and doesn't impact their users.

I note that Amazon hasn't been too generous allowing me to access the Apple or Barnes and Nobles E-Books on my Kindle? I find it strange that nobody is complaining about that lockhold. I don't even have the option.

You okay with that ex-post facto? I mean, I bought said tablet knowing I could buy and read my kindle library on it....

umm you bought it and agreed to a fairly open ended license agreement from Apple. That's based on Apple's credibility, which is their responsibility to maintain and your responsibility to judge.

You don't agree to licenses, they're given.

I can still read my Kindle Books on my iPad. I will be pissed off like you wouldn't believe if that ever changes, as I spend 10-15 hours a week reading on it. Pissed off enough that I would actually consider not picking up the iPad2, yes.

I think there are tens of thousands, if not hundreds of thousands of users exactly like me. Apple isn't stupid - they'll come to some kind of agreement with Amazon that extracts their pound of flesh out of Amazon without impacting (or, heck, perhaps _improving_) my user experience.

I'm fine with that - they made a great tablet, they should be able to profit all they can.

Just don't screw with _my_ experience.

Oh I agree. Apple knows if they don't, tons of us are buying a kindle, not an iPad 2. I almost just bought a kindle upon reading this.

Scary scenario: Lets say Apple and MS get to 50% share each on desktops/laptops. Won't that mean they could do whatever abuse they want to without scrutiny just because none of them is a monopoly?

>But you can’t say it’s surprising that the rules are evolving toward more money for Apple while improving the experience for users — that’s win-win from Apple’s perspective.

How is it an improvement to be unable to read the books you've already bought or movies you have already rented on the iDevices?

Even Microsoft didn't pull such shit for Netflix on the Xbox 360. And the consoles are subsidized for a big loss which was to be made up by purchases by the customers.

Apple makes a profit on every iDevice sold, every iApp sold, through iAds and on the $99/year developer fee. No wonder they're literally swimming in cash but still pull such new shit for even more control and money. If Microsoft did something like this with Windows, they would have more money than what the US has in circulation, which is probably where Apple is heading.

At some point the industry is going to tell Apple to get lost and stop supporting the iDevices which is going to hurt Apple, which coupled with Android's rise might push Apple into a niche like on the desktop.

>Apple makes a profit on every iDevice sold, every iApp sold, through iAds and on the $99/year developer fee.

What evidence do you have to support the allegation that Apple makes a profit on every App sold?

Firstly, there's the cost of having the application tested, approved, uploaded and categorised. There's also the cost of hosting the app as well as the credit card processing fees. Users have the right to re-download any app they've purchased in the past. What about a 99c app that weighs in at 2GB? Does Apple really make a profit after credit card processing fees and bandwidth costs?

As for the $99/year developer fee, there are costs involved in providing support, moderating forums, and approving applications.

You mean it cost millions to approve and sell Angry Birds? Bandwidth is pretty cheap these days and most apps are quite small.

>As for the $99/year developer fee, there are costs involved in providing support, moderating forums, and approving applications

I am sure Xcode costs a lot to develop etc. But Apple still gives it away to developers and has free documentation, examples, forums etc. Why?

You're excluding the benefit of the Apps which make the iPhone more valuable to the users and are a big reason that people buy iPhones. No wonder Jobs like to tout the 300k+ app number every chance he gets.

My assumption has always been the primary reason for the $99 cost is the code signing, similar to buying an SSL cert. There may also be a bit of a filter-function involved: if you aren't willing to spend $99, they don't want you in the playground.

Honestly, I really doubt they are making much money on developer tools (unlike, say, Microsoft). Remember, you only need to pay the $99 to publish (not to develop) and only one person per company has to pay it, so of those 300k+ apps, the actual number of developer subscriptions is a lot lower.

>My assumption has always been the primary reason for the $99 cost is the code signing.

It costs so much to run a program to sign a binary file with your private key? Am I missing something here?

>similar to buying an SSL cert

These people must be having a lot of cash to burn through then. http://www.startssl.com/?app=1

Apple may not make money on developer tools wrt software, but they certainly sell plenty of macs to developers as a requirement to develop for their platform.

Apple may not have a monopoly on the raw number of physical devices in the world (except tablets), but aren't they "winning" from a profits perspective? Isn't that what Gruber has celebrated for years: that Apple makes more money selling one phone than any other company on Earth? That they're beating Microsoft and Google at the only game that matters to a corporation, the bottom line? But since the global market share of iOS devices is less than 50% + 1, Apple can do absolutely anything they want?

Sorry for all the questions. But Apple can't have it both ways: either they're a plucky underdog fighting tooth and nail against the big boys, or they're in a dominant position and have some responsibility that comes with leadership. Specifically, not jerking around other companies with fickle, frequent policy changes.

There is no "responsibility that comes with leadership." There is fiduciary responsibility, which they are doing a good job with (which may include "jerking other companies around"), regardless of market position. There is responsibility to your customers, because no company can survive without that (which also may include "jerking other companies around"). But if there isn't clear monopolistic behavior, there is no responsibility to other companies.

Apple may have 90%[1] of the mindshare in the market, but they can't use that position to keep somebody else from entering the market and they can't use their position to control another market.

I want to be able to read books using the Kindle app. I will be pissed if I can't. It will make me seriously consider whether to get an iPad or an Android tablet when they get good enough (since that will be my primary reading platform at that point). But Apple has every right to do that. They aren't keeping Amazon from entering the electronic book market in any way, and I can find dozens of devices roughly equivalent to my iPhone that I can read those Amazon books on.

Kicking ass does not a monopoly make.

[1] Yes, I made this number up, but I think it is a reasonable approximation of something you could never quantify, anyway.

There's no Kindle app for Barnes&Nobles' Nook or Sony's Reader, there's no iBooks app for Amazon's Kindle either. Apple is the only ebook reseller that allows other ebook resellers on its platform. It's to be expected that Apple wants to charge the other ebook resellers for the privilege.

How much Apple wants to charge publishers and distributors is unclear, but I have a feeling that we'll find out more at tomorrow's launch of The Daily [1].

[1] http://edition.cnn.com/2011/TECH/mobile/02/01/the.daily.peek...

Google is also in the ebook business. I doubt they are going to try to take a percentage of Amazon or B&N's sales.

Google doesn't manufacture ereaders, phones or tablets. It sells a mobile OS and it's the proprietor of one of many app catalogs for Android. It also has little control over which ereader apps are shipped with Android devices (except for the one Samsung model they sell).

As for its ebook store: they launched it less than two months a go; it's impossible to tell what their plans are. Outside of the US, they only offer books that are in the public domain. Even within the US, they don't seem very interested in selling ebooks: 'Google eBookstore' is only one of dozens of available retailers within the Google eBooks app.

http://googleblog.blogspot.com/2010/12/discover-more-than-3-...

Those who bought the Nook or Reader knew that from the outset. This isn't a move against Amazon - I expect that Amazon isn't going to lose any sleep over pulling their app from the Apple App Store. This is (would be should Apple enforce this against established players) a move against people who bought Apple products expecting certain services to be provided, much like Sony's decision to remove the OtherOS feature from the Playstation.

Only unlike Sony's removal of the OtherOS feature, Apple doesn't need people to buy Apps through them to turn a profit.

My understanding is that no services have been removed. Users can still use the Kindle and Nook apps, and can continue to buy books using the Amazon and B&N websites.

"Amazon isn't going to lose any sleep over pulling their app from the Apple App Store."

There are 160 million devices that run Apple's iOS, including 15 million iPads. Amazon has sold less than 10 million Kindles. Amazon customers want to read ebooks on their mobile devices, not on a desktop computer. Amazon knows this, they can't afford to leave iOS. In the most extreme scenario they'll offer a web app for MobileSafari instead of a native app, circumventing the App Store.

the sooner government steps in and clips Apple's wings the better

What exactly do you want the government to do?

If you look at Microsoft's anti-trust case (http://en.wikipedia.org/wiki/United_States_v._Microsoft) government imposed several rules on Microsoft e.g. required them to publish all protocols and APIs (e.g. Exchange protocol) so that other can create interoperable implementations. They were forbidden from doing different OEM pricing (so they couldn't strong arm OEMs by requesting that they pay more for a Windows license unless they make some concession in favor of Microsoft) etc.

More generally: "the Settlement's requirements were primarily designed to ensure there were stringent oversight procedures and explicit requirements to prevent Microsoft from engaging in "Predatory Behavior" or other practices that might form a "Barrier to Entry"".

It's not hard to identify Apple's 'predatory behavior' that creates 'barrier to entry' that could be rectified by government imposed rules.

One such 'predatory behavior' that creates 'barrier to entry' is inability to sell (or give away) applications that are not approved by Apple. Solution: Apple needs to allow installation of applications without approval by Apple. Technical solution: sideloading, third party stores like on Android.

Another 'predatory behavior' is the rule under discussion i.e. Apple disallowing all forms of commerce other than iTunes (which results in 30% tax to Apple). Solution: the rule needs to go away.

There are more predatory rules in the app store agreement (like inability to write interpreters which means no Firefox for iPhone) but they wouldn't be important as long as the biggest predatory rule was eliminated: inability to install apps that are not approved by Apple.

Is there a precedent for conditions of a uniform voluntary agreement being considered "predatory"?

Edit: The parent comment did not deserve downvotes, folks.

I'm not sure what uniform means in that context but "voluntary" is not a good standard because it's too loose a word.

Again, going back to Microsoft's case: reportedly Microsoft demanded OEMs to stop dual-installing competing BeOS on Windows machine or else they would have to pay more for Windows license. For the OEM that was voluntary contract in that they had a choice: quit the business selling Windows machines, be less competitive than other OEMs (higher prices or smaller margins) or stop dual-installing Microsoft's competitor. The third option was the most compelling but neither was fair or good for competition or users.

Apple is in the same position as Microsoft was: they can impose whatever restrictions they want on access to iPhone/iPad users. Acceptance of those rules is "voluntary" on part of Amazon or Sony or Mozilla or me, but that doesn't meant that those rules are fair or good for competition or users.

I for one, would like to see Firefox on iPad but it's not going to happen thanks to "voluntary" agreement between Apple and Mozilla that Mozilla "voluntarily" couldn't accept. And that's just one example of things that I would like to see on iPad but won't.

Microsoft was a monopoly. They tried to leverage that monopoly by winning a new market. The monopoly was not illegal. The leverage market share in a new market is not illegal. The leveraging a _monopoly_ into a new market share was what they were found guilty of.

Apple has had the tablet in the market for less than a year. Let's see how things work out for a few years before we call them a monopoly, shall we?

I think Apple would be very, very happy to exit 2012 with 75% market share in tablets - the point at which they can't really be called a monopoly anymore.

I think the more relevant case here is United States v Paramount Pictures. To paraphrase (poorly) the decision: You can make movies, distribute movies and/or show movies, but you can't do all three. I hope at some point app stores as the only way to introduce software onto your purchased hardware will be struck down as violating anti-trust laws. But, I'm no lawyer.

http://en.wikipedia.org/wiki/United_States_v._Paramount_Pict....

If you don't like Apple's product, then don't buy them. It's pretty offensive when you say, "the sooner government steps in and clips Apple's wings the better". You're talking about the government seizing someone's property and completely violating my ability to freely associate with whomever I want on my own terms.

There's a problem with the apparent user experience logic here. By all indications, what Apple really wants (aside from a 30% cut that Sony, Amazon, and Barnes & Noble will gladly give them in hell) is for users to have a single (iTunes) login to purchase any kind of content inside apps.

Problem is, a single login is impossible. In any of the ebook cases, users will have to log in twice: Once to authenticate for iTunes, and once to authenticate with the ebook store – otherwise their new purchases remain orphaned on the iPad and their existing library is stranded in the cloud.

So, there goes the UX angle. All that's left is the financial angle Apple can't possibly expect the other ebook retailers to cave on. This, then, leads ultimately to the possibility that Apple simply wants them off the App Store. Which decreases the value of the iPad for anyone invested in those ecosystems. Maybe Apple never wanted them as customers, anyway?

Apple doesn't care nearly as much about being the single login as it does about being the single currency for digital goods.

This is eerily similar to the situation that Android phone manufacturers face from the carriers—either let Verizon et al get their cut and impose their restrictions or don't get access to their network. Verizon is routinely critizied for sticking their fingers in others' pies. On the other hand Apple gets accused of "improving the experience for users".

I wonder what this means for services like Netflix. Will the Netflix app be required to offer an in-app purchase for Netflix service?

That's a pretty stupid move on Apple's part, IMO. All everyone has to do is 1) put in the in-app purchase and 2) mark it up 43%.

There are people out there who are going to pay the 43% premium because it's slightly more convenient. Most people will be "smart shoppers" and "go to the Amazon page".

Then again, what are they doing? Think about it. They're looking oppressive, but in exchange they get better UX. Most people will circumvent it for better prices, but that doesn't tarnish Apple's UX image. In doing this, they're just following their current policy.

Supposedly the "Agency Model" that most publishers have moved to in their dealings with Amazon guarantee the publishers 70% of the purchase price of the book.

In which case marking the book up with a 43% premium wouldn't change anything; Apple would still eat 30% and the publishers would eat the other 70%.

30% markup as "Shipping and Handling" :OD

For most ebooks (those from all of the big 5 publishers except Random House), agency pricing means only publishers -- not Amazon, Sony or Barnes & Noble, can change or set the prices. And, as already been noted, publishers also get 70% of the price they set. So 30% to Apple equals nothing for anyone else...

Hush... don't give them any ideas!

Gruber hardly ever gets this close to criticizing Apple. I guess there's a line which even the most ardent Apple defender isn't willing to cross.

I'm still waiting to hear more from Apple's side on this but if it turns out that they really do feel they can be this capricious and selectively self-serving in their enforcement of the rules there's no way in hell I'd consider building a business on their platform, no matter how lucrative it might be in the short term.

That's funny, I thought it was just the opposite. It's amazing how far out of his way Gruber was going to avoid any criticism beyond the harmless dig at the rules changing without the rules having been changed. He even went so far as to suggest this would actually improve the user experience!

And Amazon did specifically get critiqued for strong-arm tactics in that post, so it's not like he was just in a cheerful mood and didn't want to say anything negative about anyone.

Gruber hardly ever gets this close to criticizing Apple.

This comment reveals a level of self-delusion that's perhaps unhealthy. Especially seeing as Gruber has a pretty long history of strongly criticizing Apple's policies for the App Store...

It’s baffling to me that some people really think that Gruber never criticizes Apple, not even from a position of ignorance (“I don’t read much Gruber writes anyway but it seems to me that he hardly ever gets this close to criticizing Apple.”) but from a position of authority (“Gruber hardly ever gets this close to criticizing Apple.”).

I have seen harmless headlines than the one Gruber uses for this article called “linkbait” on HN.

My concern is this - does this nullify my ability to use Feint or Urban Airship instead of Apple's iAP? If so, that freaking sucks, and it might be the deal breaker for me.

I love native apps, and I love Apple, but more than anything, I like choice and ease of use.

This is going to be nasty for nasty for Apple if they push it too far, and they may already have. I wouldn't be surprised to see an AG get involved. Either an app can prompt you to buy books in Safari or not.

Does anyone know what mechanism Sony's app uses for book purchases? Is it all in-app? That seems a clear violation of the rules. The Kindle app doesn't work this way, all purchases are done through the browser.

Until this is clarified (by Sony or Apple preferably), how can anyone get all uppity about this?

Maybe Sony's app blatantly violates the existing rules.

Let me point out a major inconsistency in Apple's position.

You can buy music from Amazon. You can load that into iTunes. You can then play it on your iPhone/iPad/iPod.

Why can't you do the same for Kindle (etc) books?

For Apple to take this position is terrible for the users. iBooks for example has nothing in Australia (beyond Project Gutenberg). Literally, nothing.

For Apple to deny a user access to Kindle books that Apple doesn't themselves offer just because they didn't get their 30% cut is simply ludicrous.

Gruber bashing is popular here but let me just quote one part:

> Translation: We haven’t changed the rules, but what used to be allowed is no longer allowed.

Doesn't sound like Apple apologism to me.

I'm really disappointed Apple is playing semantics on this one, arguing their vague rules haven't changed, just that how they've decided to interpret them and the enforcement steps they're taking, have.

One could argue Amazon might accept a smaller cut but that is a real problem for Apple. They sell a significant amount of iTunes credit through retail channels and that is sold at a discount of probably 15-30% (eg in Australia you can always find some big retailer selling 2x$20 for $30 or better although better is much rarer).

So Apple could decide to take a smaller cut and make a loss on that with retail iTunes credit hoping that the people who pay through credit card balance it out but I have trouble believe that'll happen, particularly since I can't see Amazon accepting anything more than 10%, if that.

"You can buy music from Amazon. You can load that into iTunes. You can then play it on your iPhone/iPad/iPod. Why can't you do the same for Kindle (etc) books?"

When you buy music from Amazon, it's in MP3, a format that iTunes supports natively. For ebooks, Amazon uses the proprietary Mobipocket format, which only their Kindle app can read. Apple's ebook reader app uses ePub, as do most other ebook resellers, like Barnes&Noble. That's why ebooks bought through Barnes&Noble work just fine in Apple's iBooks.

>Doesn't sound like Apple apologism to me.

There's just a hint:

>It’s hard to imagine Amazon accepting a 70/30 split from Apple. But I can’t see Amazon pulling their iOS Kindle apps, either.

In Gruber's mind, Apple isn't responsible if the iOS Kindle app gets pulled, Amazon is.

Does anyone else find it ironic that much of the Apple store is powered by one-click purchasing, a patent that Apple licensed from Amazon?

Jeff Bezos must be kicking himself over that one.

Not as much as the U.S. Patent and Trademark Office is kicking itself over granting that patent, I imagine.

Serious question: Is it within the terms to charge extra to make the 30% back?

It's downright ridiculous if section 11.2 is applied universally. So does Apple get a cut of Cisco's WebEx contracts whenever a customer decides to fire up the free iOS app? Does Apple get a cut of OverDrive's contract to deliver eBooks and audio books to local libraries if someone downloads the iOS app? This doesn't even make sense.

Are Netflix and Hulu going to hand over 30% of their subscription fees to Apple if the user wants to fire up the service on an iOS device? Is that even feasible?

Are the Apple tax examiners going to look for login screens and reject apps based solely on that now?

No, probably not. It's probably just a cover for Apple to beat up on its competitors (Amazon, Barnes and Noble) and to let everyone else (Netflix, Hulu) get a free pass. Much like how Apple singled out Adobe yet allowed Appcelerator and UNITY to continue without pause.

If a user uses the IRS's Tax App, should Apple get a 30% cut?

I'm not sure about the IRS, but I know for a fact non-profits have been in a bind with Apple for years for just that reason. Apple wants 30% of the donations. Or rather, Apple will not allow credit card transactions that do not go through in app purchase.

Every charity wants to arm its people with an iPad or send out a free iPhone app to collect donations. Ever notice how there aren't any?

No. I don't have an iPhone. After watching Apple sell a Title I junior high where I was interning a lab full of IIGS machines in 1991, I haven't had much stomach for them.

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