Recently, Bloomberg reporter, Mark Gurman reported that Apple will allow iPhone users to sideload apps. This will be the first time such a thing will happen on the iPhone. However, iPhone users will not get to do this until the iOS 17 arrives. This also means that app developers can be exempt from paying fees for listing programs in the Apple App Store. Sideloading apps means that users can download apps from channels other than the official App Store without listing the program on the Apple App Store. That means developers are exempt from paying the usual 15% to 30% fee to list their programs on Apple’s App Store.
Apple said the addition of the sideloading would undermine privacy and security protections. The company claims that millions of iPhone users rely on its security and privacy features. It argues that sideloading apps will leave users vulnerable to malware, scams, data tracking and other issues.
However, the EU’s Digital Market Law (DMA), which came into effect on November 1, 2022, requires Apple to open up its services and platforms,. Apple will face high fines if it violates EU laws. The practice could expand beyond the EU if other countries introduce similar legislation. For example, the U.S. is considering legislation requiring Apple to allow sideloading.
This change may have a certain impact on developers and Apple. Developers can sideload apps to avoid paying fees to list their programs in Apple’s App Store. However, Apple may need to make some changes to comply with the European Union’s digital market law. At the same time, this change may also have a certain impact on the privacy and security of users, and users are required to use it with caution. Well, users have since argued that whoever is sideloading apps is well aware of the risks. If Apple is truly sincere, all it needs is a prompt warning to users about the risk of sideloading before they install any app.
Apple Tax – the history
The 30% cut of any transactions made on the Apple App Store has been a topic of controversy for years. Let us look at the history of the 30% cut, popularly called the Apple Tax. There are also issues around this “tax” and recent changes made by Apple to address these issues.
Apple popularized the 30% cut, applying that rate on any purchases of an app in 2008. Then a year later any transactions inside of apps for digital goods and services, such as a virtual currency in a game or a subscription to a music, TV, or dating app. Apple does not take a cut of apps’ sales of ads or physical products. At the time, there was far less pushback from app developers, in part because the App Store was so nascent and the digital transactions were complex without Apple’s help. With Apple, “it was pretty much one click and that was it,” said Phillip Shoemaker, a former senior App Store executive, who left Apple in 2016.
Criticisms of Apple Tax
The 30% cut has been criticized by app makers like the game company Epic and the music service Spotify. They argue that it is too high and that Apple’s right to a large cut of their sales is unfair. Tesla CEO, Elon Musk has also criticized Apple’s App Store fees, calling the cut that Apple takes from developers “definitely not ok” and likening it to a “30% tax on the internet.” Musk has also said that the fee is “literally 10 times higher than it should be.”
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In 2020, the commission was the subject of a legal dispute between Apple and Epic Games, the developer of the popular game Fortnite. Epic Games argued that the commission was anti-competitive, and the case has brought the issue of the App Store commission into the spotlight.
Recent Changes Made by Apple
In September 2021, Apple agreed to allow media apps, including newspapers and streaming services, to add external payments links to avoid paying the iPhone maker a 30% cut of the purchases made through the App Store, amid growing scrutiny of its practices. These companies will get to bypass Apple’s in-app payments system by sharing a link to their website with App Store users who sign up for a subscription. Apple earns a 30% fee for payments users make to these apps for subscribing to their services.
Apple’s App Store Small Business Program allows developers that make less than $1 million per year in App Store sales to receive a 15 per cent commission through the program for as long as they qualify. This program was introduced in November 2020 to grant smaller developers some concessions while still hanging on to its 30% cut.
Impact on the mobile phone market
The Apple Tax has had a huge impact on the mobile phone market, with Apple’s premium pricing strategy influencing the pricing of other devices. Many Android brands have introduced premium devices with similar or higher prices than Apple devices. This has resulted in a shift towards higher-priced mobile phones.
The premium pricing strategy has also contributed to Apple’s market share, with the company holding a significant share of the premium mobile phone market. However, it has also resulted in criticism from some users who feel that they are paying too much for Apple products.
In recent years, there has been increased competition in the mobile phone market, with many Android brands introducing high-end devices at lower prices. This competition has put pressure on Apple to justify its premium pricing strategy, and the company has responded by introducing lower-priced devices, such as the iPhone SE.
In conclusion, the 30% cut of any transactions made on the Apple App Store has been a topic of controversy for years. While some argue that the fee is too high, others believe that it is fair due to the convenience and ease of use that the App Store provides. The App Store Small Business Program and the recent decision to allow media apps to add external payment links are steps that Apple has taken to address some of the concerns raised by developers. However, the debate over the 30% cut is likely to continue as the app economy continues to grow and evolve.