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"What’s weirdest about Apple’s antitrust and PR problems related to the App Store is that the App Store is a side hustle for Apple. " -- that seems to be a feat

by xt00 2y ago

"What’s weirdest about Apple’s antitrust and PR problems related to the App Store is that the App Store is a side hustle for Apple. " -- that seems to be a feature not a bug -- Apple incorporating more and more capability into the base iPhone OS / software stack is what keeps people coming back. There was a mentality years ago that the iPhone was the good hardware plus a bunch of apps -- but over time many of the most important apps have been built in apps / services from Apple directly. So in many ways, if Apple allowed the app store to be more open, then it would allow 3rd parties to actually build a bunch of value there without much control from Apple -- so it would make more money for Apple at the expense of creating a more vibrant set of 3rd party apps that almost assuredly work on both the iPhone and Android phones. So in many ways, Apple probably would be happy with close to zero revenue in their App store as long as people were 100% locked into buying new iPhones and airpods and ipads next year.

jwells89 2y ago
We’ll have to see how it plays out. It’s also possible that iOS having a distribution model similar to that of the Mac opens it up to a bunch of high quality single-platform indieware similar to that macOS has enjoyed for decades, which could help maintain its reputation for better apps.
- joshspankit 2y ago
  macOS has shifted and it’s harder than ever to distribute indieware. Devs must compile with and up-to-date version of Xcode which means they must legally abide by Apple’s TOS even if they don’t pay for the yearly license (and agree to the further agreements), and if they choose to circumvent the App Store the user must know how to unlock the restrictions needed to run unsigned apps and also push through the fear-inducing security warnings. As an HN user that’s “easy” but how many first-timers will be comfortable enough to get to the point where they can actually run that 3rd party app?
  - jwells89 2y ago
    Xcode doesn’t require the yearly fee, it’s downloadable for free, and you can get a barebones compiler toolchain with a terminal command. Devs who distribute outside of the Mac App Store can notarize their apps to make them run without the security warning stuff. I’ve done it to distribute a screensaver on Github, it’s not too bad, no worse than the hoops one needs to jump through to build and distribute apps with some cross-platform UI frameworks.
sircastor 2y ago
> Apple incorporating more and more capability into the base iPhone OS / software stack is what keeps people coming back. I'm reminded that, in a different way (but to the same purpose) several years into Android, Google started shifting features from the OS to their own Services app to keep phones up-to-date with App updates rather than needing OS updates.
jsnell 2y ago
It's not a side hustle. It's probably about 20-25% of their profits.
- SllX 2y ago
  Nah. That little slice of their P&L also includes a lot more than App Store revenue. AppleCare, Apple Music/TV purchases, rentals and subscriptions, Books, Apple Pay fees, Google Search revenue and whatever else you can plausibly call a service under umbrella in addition to App Store revenue. They don’t break out the exact mixture, but we know the Google Search deal is an enormous chunk of it.
  - madeofpalk 2y ago
    I would guess that the majority of Services revenue is from the App Store, and the majority of that is casino games for children.
    - kemayo 2y ago
      Apple doesn't break it down, so this is all analysts-guessing, but the guesses I've seen for the share of Services revenue that App Store represents have been in the 25-35% range. e.g. https://www.trefis.com/data/companies/AAPL/no-login-required/7JGMQ7wT/Breaking-Down-Apple-s-Services-Revenue- https://www.trefis.com/data/companies/AAPL/no-login-required...
  - kjksf 2y ago
    per apple they paid $60 billion to iOS developers. Given 70/30 split, that's $26 billion of revenue to Apple. For context in 2022 Adobe made $17.6 billion. So 30% cut of iOS store is 40% more than Adobe revenue. And I'm guessing the bandwidth + review team overhead is many times lower than, you know, actually paying software developers, marketers, sales people etc. to write and promote software.
    - SllX 2y ago
      For what time period?
madeofpalk 2y ago
> There was a mentality years ago that the iPhone was the good hardware plus a bunch of apps -- but over time many of the most important apps have been built in apps / services from Apple directly I don't think this was ever correct. The iPhone has always been strong on good hardware and software working together. The "wows" of the original iPhone announcement were things like slide to unlock, pinch to zoom on images, and rotating the iPod app to get cover flow.
- pdonis 2y ago
  > The iPhone has always been strong on good hardware and software working together. Yes, but they also have taken advantage of third party developers doing market research for them, just as Microsoft did with Windows in the 1990s. I wouldn't be surprised if that was actually a key reason why the App Store was included in the first place.
seanmcdirmid 2y ago
I rarely download apps these days, but the ones I do are important: my car app, bank security code app, spotify app, Sonos app, just things I need for devices I own but are otherwise free. I would be perfectly happy with a device control ecosystem rather than an app store. It might actually be a better experience. I'm surprised the US didn't go after airtags. This, to me, is the number one reason for owning an iPhone, and something that can't be replicated on Android. Apple is really leveraging their market share here in a way that Android doesn't (for some reason, they totally could and should).
- kibwen 2y ago
  > I would be perfectly happy with a device control ecosystem rather than an app store. The crucial thing is that you can achieve this without needing to prevent users from installing their own apps. Any attempt from Apple to prevent users from installing their own apps is purely because they're terrified at the idea of needing to compete with third-party developers.
  - seanmcdirmid 2y ago
    I don't know, I know plenty of idiots who would take their freedom to install anything and...install anything...and then blame Apple when their iPhone starts running very poorly, or when their private info is exposed, or so on. They would want both freedom and safety.
dangus 2y ago
This take is a tad naive. The App Store absolutely enforces Apple’s preferred position in its marketplace. Apple stifles direct competitors in media (music streaming, TV/movies/video, video games, books). They force competitors like Netflix to pay obscene royalties or abstain from selling subscriptions within their apps at all. This wouldn’t be a restriction on a third party App Store. Another example: you’re not allowed to install a browser with an alternative rendering engine. Apple is forcing their browser engine to have enough marketshare so that developers won’t ignore it. Make no mistake, they absolutely would lose significant browser engine marketshare and developer attention without this arbitrary restriction because a significant amount of users would prefer to install Chrome with Chrome’s rendering engine. If Safari becomes irrelevant to the web then Apple loses economic control to competitors, it’s basically following Microsoft’s 90’s browser strategy with a little twist here. A third-party App Store would allow for consumer choice in that regard. Don’t forget that mobile games are a more lucrative market than all consoles and PCs combined, and Apple is collecting a significant chunk of that revenue via royalties for in-app purchases and advertisements in the App Store. It’s a multi-billion dollar business just for Apple. Make no mistake, this is not a side project. Apple’s services revenue is larger than Mac and iPad sales combined and has the potential for much higher operating margins.
- greedo 2y ago
  Apple's services revenue includes an annual lump sum payment from Google in the neighborhood of $18B per year. In 2023, that was roughly 22% of the revenue, and probably a majority of the profit.
  - dangus 2y ago
    And how much less would that payment be if iOS gave you a choice of default web browsers in randomized order that leveled the playing field? That’s really my overall point here. Everything that is locked down about the iOS ecosystem helps keep that lump sum payment high. For example, you can’t add a custom search engine to the OS preferences. There’s just 5 choices. How much did it cost DuckDuckGo to get on that list? (Probably more than $0)
joshspankit 2y ago
Surprised this is not mentioned already, but it’s a decades-old Apple play to allow some 3rd party innovation, then take it’s core feature and “reimagine it” as an 1st party feature. Further: when it’s been difficult to compete directly, Apple has tools that allow it to control the 3rd party directly: Developer agreements and white-listed internal APIs (and restricting what can be done with them) to name two. And, since they have seen the financial benefits of that control, they have spend years not only building more tools but also refining their legal position.
- joshspankit 2y ago
  Can anyone now imagine an iOS app surviving if it had killer features that made Apple look bad by comparison? Or one that is defiant of Apple’s brand image? I can’t.

by xt00 2y ago

jwells89 2y ago

We’ll have to see how it plays out. It’s also possible that iOS having a distribution model similar to that of the Mac opens it up to a bunch of high quality single-platform indieware similar to that macOS has enjoyed for decades, which could help maintain its reputation for better apps.

joshspankit 2y ago
macOS has shifted and it’s harder than ever to distribute indieware. Devs must compile with and up-to-date version of Xcode which means they must legally abide by Apple’s TOS even if they don’t pay for the yearly license (and agree to the further agreements), and if they choose to circumvent the App Store the user must know how to unlock the restrictions needed to run unsigned apps and also push through the fear-inducing security warnings. As an HN user that’s “easy” but how many first-timers will be comfortable enough to get to the point where they can actually run that 3rd party app?
- jwells89 2y ago
  Xcode doesn’t require the yearly fee, it’s downloadable for free, and you can get a barebones compiler toolchain with a terminal command. Devs who distribute outside of the Mac App Store can notarize their apps to make them run without the security warning stuff. I’ve done it to distribute a screensaver on Github, it’s not too bad, no worse than the hoops one needs to jump through to build and distribute apps with some cross-platform UI frameworks.

sircastor 2y ago

> Apple incorporating more and more capability into the base iPhone OS / software stack is what keeps people coming back. I'm reminded that, in a different way (but to the same purpose) several years into Android, Google started shifting features from the OS to their own Services app to keep phones up-to-date with App updates rather than needing OS updates.

jsnell 2y ago

It's not a side hustle. It's probably about 20-25% of their profits.

SllX 2y ago
Nah. That little slice of their P&L also includes a lot more than App Store revenue. AppleCare, Apple Music/TV purchases, rentals and subscriptions, Books, Apple Pay fees, Google Search revenue and whatever else you can plausibly call a service under umbrella in addition to App Store revenue. They don’t break out the exact mixture, but we know the Google Search deal is an enormous chunk of it.
- madeofpalk 2y ago
  I would guess that the majority of Services revenue is from the App Store, and the majority of that is casino games for children.
  - kemayo 2y ago
    Apple doesn't break it down, so this is all analysts-guessing, but the guesses I've seen for the share of Services revenue that App Store represents have been in the 25-35% range. e.g. https://www.trefis.com/data/companies/AAPL/no-login-required/7JGMQ7wT/Breaking-Down-Apple-s-Services-Revenue- https://www.trefis.com/data/companies/AAPL/no-login-required...
- kjksf 2y ago
  per apple they paid $60 billion to iOS developers. Given 70/30 split, that's $26 billion of revenue to Apple. For context in 2022 Adobe made $17.6 billion. So 30% cut of iOS store is 40% more than Adobe revenue. And I'm guessing the bandwidth + review team overhead is many times lower than, you know, actually paying software developers, marketers, sales people etc. to write and promote software.
  - SllX 2y ago
    For what time period?

madeofpalk 2y ago

> There was a mentality years ago that the iPhone was the good hardware plus a bunch of apps -- but over time many of the most important apps have been built in apps / services from Apple directly I don't think this was ever correct. The iPhone has always been strong on good hardware and software working together. The "wows" of the original iPhone announcement were things like slide to unlock, pinch to zoom on images, and rotating the iPod app to get cover flow.

pdonis 2y ago
> The iPhone has always been strong on good hardware and software working together. Yes, but they also have taken advantage of third party developers doing market research for them, just as Microsoft did with Windows in the 1990s. I wouldn't be surprised if that was actually a key reason why the App Store was included in the first place.

seanmcdirmid 2y ago

I rarely download apps these days, but the ones I do are important: my car app, bank security code app, spotify app, Sonos app, just things I need for devices I own but are otherwise free. I would be perfectly happy with a device control ecosystem rather than an app store. It might actually be a better experience. I'm surprised the US didn't go after airtags. This, to me, is the number one reason for owning an iPhone, and something that can't be replicated on Android. Apple is really leveraging their market share here in a way that Android doesn't (for some reason, they totally could and should).

kibwen 2y ago
> I would be perfectly happy with a device control ecosystem rather than an app store. The crucial thing is that you can achieve this without needing to prevent users from installing their own apps. Any attempt from Apple to prevent users from installing their own apps is purely because they're terrified at the idea of needing to compete with third-party developers.
- seanmcdirmid 2y ago
  I don't know, I know plenty of idiots who would take their freedom to install anything and...install anything...and then blame Apple when their iPhone starts running very poorly, or when their private info is exposed, or so on. They would want both freedom and safety.

dangus 2y ago

This take is a tad naive. The App Store absolutely enforces Apple’s preferred position in its marketplace. Apple stifles direct competitors in media (music streaming, TV/movies/video, video games, books). They force competitors like Netflix to pay obscene royalties or abstain from selling subscriptions within their apps at all. This wouldn’t be a restriction on a third party App Store. Another example: you’re not allowed to install a browser with an alternative rendering engine. Apple is forcing their browser engine to have enough marketshare so that developers won’t ignore it. Make no mistake, they absolutely would lose significant browser engine marketshare and developer attention without this arbitrary restriction because a significant amount of users would prefer to install Chrome with Chrome’s rendering engine. If Safari becomes irrelevant to the web then Apple loses economic control to competitors, it’s basically following Microsoft’s 90’s browser strategy with a little twist here. A third-party App Store would allow for consumer choice in that regard. Don’t forget that mobile games are a more lucrative market than all consoles and PCs combined, and Apple is collecting a significant chunk of that revenue via royalties for in-app purchases and advertisements in the App Store. It’s a multi-billion dollar business just for Apple. Make no mistake, this is not a side project. Apple’s services revenue is larger than Mac and iPad sales combined and has the potential for much higher operating margins.

greedo 2y ago
Apple's services revenue includes an annual lump sum payment from Google in the neighborhood of $18B per year. In 2023, that was roughly 22% of the revenue, and probably a majority of the profit.
- dangus 2y ago
  And how much less would that payment be if iOS gave you a choice of default web browsers in randomized order that leveled the playing field? That’s really my overall point here. Everything that is locked down about the iOS ecosystem helps keep that lump sum payment high. For example, you can’t add a custom search engine to the OS preferences. There’s just 5 choices. How much did it cost DuckDuckGo to get on that list? (Probably more than $0)

joshspankit 2y ago

Surprised this is not mentioned already, but it’s a decades-old Apple play to allow some 3rd party innovation, then take it’s core feature and “reimagine it” as an 1st party feature. Further: when it’s been difficult to compete directly, Apple has tools that allow it to control the 3rd party directly: Developer agreements and white-listed internal APIs (and restricting what can be done with them) to name two. And, since they have seen the financial benefits of that control, they have spend years not only building more tools but also refining their legal position.

joshspankit 2y ago
Can anyone now imagine an iOS app surviving if it had killer features that made Apple look bad by comparison? Or one that is defiant of Apple’s brand image? I can’t.