I was mistaken in my original (now deleted) tweet and have been corrected by a few people
Apple does not keep the 30% commission on a refund the refund happens as you’d expect. I don’t know where I got the idea that it worked the way I thought it did
Misinformation really does spread like wildfire. Even with the number of naysayers on Hacker News we still seemed to have had a lapse in critical thinking.
I've been wanting to get into research on the study of the spread of tweets like this. Anyone have pointers for reading material?
I have sold apps on the App Store for a decade now, and I have to admit I did believe the original tweet. I was going to go through the financial reports during the weekend to verify, but the initial reaction was “of course they would do this, it’s Apple”.
Confirmation bias is usually as a result of previous behaviour allowing us to make assumptions about how something would respond/act. Confirmation bias in this situation is because it sounds in line with how Apple operate elsewhere.
CPC Gray had a video on why rage/anger related materials spread around internet.
TDLR: Materials that cause anger/ rage make people want to reshare it at higher rate (I want to do something) vs positive materials that make you feel good.
“Apple haters”, or Apple customers who have blown tens of thousands on Apple equipment over the years and have noticed their (relatively) recent focus towards maximising their revenue instead of being focused on producing good products.
I continue to use Apple products every day as my daily drivers, and can’t see that changing. Im writing this from my iPad Pro. I’m probably buying 2 new iPhones this year despite them all being too big. I haven’t bought a new MBP in a while as my 2015s meet my current needs better than the new products do.
I found the original tweet totally credible.
I feel more like an “Apple sucker” than an “Apple hater”.
If you found the tweet credible then why did this come up now? When they were testifying before congress? That’s because it wasn’t credible. And the pattern is, some news about Apple comes out, people rage BEFORE getting the entire story, then later learn the truth and calm down. In this case it was a matter of hours.
> the pattern is, some news about Apple comes out, people rage BEFORE getting the entire story, then later learn the truth and calm down
I found it credible. I upvoted the post. I then learnt the truth, and posted that I found the original tweet credible.
There's no rage. There's just me, a long time Apple customer, finding a falsehood believable.
There's more nuance to the world than just 'Apple haters' and 'rage'. You don't have to be an 'Apple hater' to fall for this. You don't have to have been 'raging' to have fallen for this. You can just be (like me) stupid, and happily admit that.
Well next time perhaps look a little deeper. It was pretty obvious to me the poster doesn’t know much about this process. This would’ve come up years ago, this should’ve been a red flag to anybody believing it. But hey, people miss facts all the time. However the specific problem here is why this person didn’t get the facts prior to posting. With how quickly people react to fake news is dangerous these days. So maybe do yourself a favor and play devils advocate next time. Also scroll down in this comments section to find your ragers.
Moments ago, I stepped in to a discussion and corrected some angry people still spreading this misinformation.
My thought was to ask HN editors to run some kind of a correction post, because these angry people had learned of this “fact” here but never saw the follow-up comments. Since @twolivesleft already has a correction post up on Twitter, I just posted that on HN instead.
It remains to be seen if this post does well on HN. I'm afraid it won't, because personal embarrassment isn't quite as fun to spread as anger against billion-dollar companies.
Payment processors generally don't refund fees on payments when the payments are refunded, this isn't new. It's remarkable mainly because (a) it's 30%, not 3% and (b) the App store doesn't position itself as a payments processor the way Stripe does, so it sounds really weird that they would act like one.
If the app store took a 3% chunk and never refunded it regardless of the ongoing status of the transaction, that would put them right in line with other payment processors. It would also still net them billions of dollars, I think!
Credit card companies (i.e., Visa, Mastercard) absolutely do refund fees on payments when the retailer processes a refund. This is why retailers generally require you to use the same method of payment to get your refund.
It's uniquely online processors that do not refund fees.
Notably, it's a somewhat recent change for Stripe.
They had refunded fees but iirc it meant they were paying a small fee per refunded transaction (which in a sense subsidizes apps that incur frequent refunds) which they wanted to stop doing.
They stopped doing it for new customers in 2017. Grandfathered customers saw the policies change in March of this year. My company's account saw the change in late March, while we were all staying at home, so that felt like a gut punch. https://news.ycombinator.com/item?id=22371330 was contemporaneous
> It's uniquely online processors that do not refund fees.
It sorta makes sense, since the online processors are usually middlemen that only make money on the fees they themselves charge. I could see their perspective being "we provided the service; that service is not un-provided because the customer returned the item and you sent them a refund... in fact, you used us even more because we had to mediate the refund transaction!"
I think if the fees were just a few percent, I wouldn't have too much trouble accepting that logic, but from Apple, where it's 30%... not so much.
The card issuers don't care quite as much about keeping the fees in a refund scenario, I guess... though I believe you don't get everything back during a refund, regardless.
Because, money.
I can understand, on a credit transaction, there is a larger risk when a larger amount is spent. But even then I would expect some tiers. But for an online transaction, where there is no real risk to the middleman, it is about making more money.
CC Processors like Visa and Mastercard do refund fees on CC processing, but the interchange or % of return is smaller than the actual gross. You don't necessarily get "all" of your refund, if you're a merchant.
That isn't true. They enable the return of the interchange (from the issuing bank), they do not refund the scheme fees.
In fact, you will pay more on the scheme fees to process a refund, as you need to send another message into the scheme's network - often charged per message or per byte etc.
Interchange is not payment scheme revenue - it is just passed through to the issuing bank.
Visa and Mastercard don't use a scheme fee in the U.S. The credit card system is structured differently here than it is in the EU.
Generally, Visa and Mastercard simply charge more per transaction for different cards in the US. For example, rewards cards cost merchants more, which is why many gas stations won't accept them.
The interchange is higher, sure, but that still goes to the issuing bank. Working with schemes still involves separate fees, as does processing and acquiring.
My experience with PayPal was that they almost always gave me my fees back when I processed a refund (there were corner cases where that didn't happen); it is possible the rules changed or that I am misremembering the extent of the cases when they don't, though (I haven't processed payments in a year and a half).
That's because they're not the same class of processor. The chain is like
Your bank account -> visa/mastercard/discover -> PayPal's merchant bank account -> the person you're paying bank account
PayPal only replaces the ccs when you pay with their wallet. Otherwise they're just orchestrating the money flow (because integrating with the CC companies is a gigantic PITA)
PayPal is not a credit card processor, it is Money transmitter, different legally
Stripe on the other hand is a credit card processor, and as a merchant you get a Merchant account, the same like Authorize.net who used to be the largest online processor before Stripe.
Back in the day (and I have been out of that market for over a decade) Authorize.net absolutely refunded processing fees on refunds
Just to add, PayPal is also most likely a credit card processor, serving as a Payment Facilitator (PayFac), which enables others to become CC Processors. It happens that PayPal and Stripe are money transmitters, which may come with being a PayFac.
Auth.net is a gateway/portal that facilitates CC transactions, and while you may be refunded on processing fees for the use of the gateway, someone, somewhere is likely eating the interchange and most likely occurring at the merchant level.
Notably, Square, founded in 2009 didn't become a money transmitter until sometime in 2013, IIRC, and I think a few laggard states in 2014. This was in service of Square Cash, not the core payments business. They were, however, merchant of record the whole time.
Authorize.net is not a payment processor but a payment gateway.
TSYS, Vantiv, PaymentTech are processors. your merchant account is usually with (i think) the acquiring bank that's part of the Visa/MasterCard/Amex/Discover network.
Didn't PayPal get a bank license which also caused them to close a lot of accounts that were created decades ago by users that weren't old enough for back accounts back then?
"It's uniquely online processors that do not refund fees"
Uniquely those that provide some higher level thing, like PayPal or Stripe. If you have a merchant account, you can get an actual refund for online purchases.
The normal structure for credit card processing is a few cents flat payment plus a percentage of the transaction[1].
Something like 5 cents + 1.5% would be a great deal on payment processing, generally. (Apple is a juggernaut and may have been able to negotiate something else, of course.)
That does mean that for a $0.99 app, keeping the fees would still be more than that 3%, at ~$0.07... but not wildly divergent from the 30% amount.
Where the 30% gets really abusive is for things like Codea, the app being talked about in the Twitter thread. It costs $14.99. So it had presumptive fees of ~$0.28, while Apple's keeping $4.50. That's outrageous.
(Also, I see mixed reports on whether credit card refunds refund the processing fees. It might be contract-dependent.)
Payment processors also don't typically sell their own hardware, then lock said hardware down so that the payment processor's store is the only way to purchase things for the hardware. Payment processors typically allow you to buy a variety of goods from a range of storefronts. Comparing the Apple store to something like stripe or PayPal seems pretty apple and orangy to me.
Square used to refund the fees, they changed that policy when I was there and the reason was just to lose less money on refunds. I'm not sure whether they had to pay interchange on refunds or not.
For reference for folks who aren't familiar - in the US,even 3% would be an above market rate for credit card processing. The big companies like square and stripe are usually 2.9% for $0/year accounts, and rates go down from there. Smaller processors can do lower rates, and if you do over a few $100k/year, you can do lower with the bigger players as well.
For online processing, 3% is by no means above market.
For example, the default price on Stripe (and many others) is 2.9% plus $0.30. For a business with an average order value of $30, that $0.30 adds a full percent, bringing your fees to nearly 4%.
If you do high enough volume, yes, you can negotiate lower prices.
To be fair, Apple and Google do a fair bit more than a payment processor does (basically nothing). Not 30pp more, but it wouldn't be reasonable to expect 3% fees.
I'd guess 10-15% is what is actually reasonable. Microsoft has settled for 15% in their store (because nobody was using it so charging 30% is ridiculous).
Microsoft is not in the business of making money from apps, right now they need growth, it might even be a question of hey so we need to keep the store running. I say only partly in jest but see them change colors if they ever get a dominant share.
So you're saying that companies who have to compete charge less whereas companies with a dominant market position can extract monopoly rents because they lack competition? But people keep telling me that isn't the case for Apple. Shouldn't they be doing the same thing to try to get store market share from Google?
> So you're saying that companies who have to compete charge less whereas companies with a dominant market position can extract monopoly rents because they lack competition?
Not GP, but I didn’t read it that way. I read it as Microsoft loss leadering their store to get growth.
"Loss leader" means losing money one one product in order to get people to show up who buy more of something else. How do you imagine Microsoft's costs for paying a ~3% credit card fee and hosting a ~50MB app are going to exceed 5%? Also, what's the other product they intend to make money on supposed to be?
You can't attract people to the store with low fees and then raise them later or they'd just leave as soon as you do. Unless you would require them to use Microsoft's store and no other, but then you could just do that from the outset, except that it'd leave you with the same sort of antitrust scrutiny that Apple should be under for doing the same thing.
Generally the reasons for rejection are not random except as a matter of uninformed or misinformed perspective. However, if you are saying they have made some mistakes at times, I’d have to agree.
Yes, they do a lot, but not at the moment of, or as part of, processing a transaction. What work do they do specifically for a transaction so that they get to keep 30% of it?
Important difference: with Paypal, the seller decides to issue the refund, not Paypal unilaterally (except in cases of alleged fraud), and the seller can determine how much of a refund to provide.
My account is a five year old business account. My most recent refund I issued was Aug 2019. A line item on the PayPal statement was called "Fee Reversal" for $12.46 USD
However, a read of their current policy shows it's no longer the case - so I'll likely get dinged on my next refund.
Small business owner here...I use Wave for accounting. They absolutely do refund the fee. Shame on the processors who don't refund it, and shame on those who hasn't been doing that since the beginning (Strip, Paypal...) because they are knowingly sticking it to small business owners. I've used Wave for 4.5+ years and this is how I've known it.
"Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details."
> Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details.
That doesn't say anything about what the merchant gets charged. Stripe and PayPal also send the full amount to the card holder, so that blurb would apply to them too. The question is whether the merchant ends up with zero or minus the original processing fees after the refund.
Ditto. Helping some non-profits, we were really hurt by people typo-ing a $10,000 donation when they meant to only donate $100. We quickly learned from that mistake.
We also learned about how credit card thieves test credit cards. We saw hundreds of donation attempts. Stripe had us refund those that went threw, which costed us money in fees. Fortunately we were able to put some quick measures in place to stop them temporarily & then better measures for long term success.
The credit card tests had unique network patterns we could block.
We lowered our online donation limit. Above a certain amount it really is more ideal for a check or some other type of transaction. Though we've had a few people offer to just pay the 3% transaction fee on top of the multiple thousand dollar donation. For those we do a bit more manual process.
For a cost, Stripe also lets you put some additional rules on what type of payments you'll allow & how much info the person has to verify for the payment to be accepted.
We actually raised our minimum online donation limit to avoid issues with those processors. They apparently look for set your own donation sites so they can try to authorize $1 test payments. We changed to a $10 minimum and they seemed to have stopped.
I agree with this. I am a bit frustrated with Stripe for making this a paid service given the cost of payment processing. However, I assume when the fraudulent transactions cause a loss you have to pay for Radar.
I guess it's been a long time since I've been personally responsible for the financial side of Stripe accounts. I think it was 5 years ago when I used to run a lot of test transactions and refund for net $0, but times change. Sorry to lead anyone astray.
That's awesome! However, it WILL result in stripe attracting a LOT of the crappy billers (ie, folks who mislead / make customer unhappy etc). If your business is < 1% refunds, no worry if fees stay. A fair number of business have just 1 or 2 refunds PER YEAR.
Other business obviously have MUCH higher refund rates (sneaky autobill businesses etc). For these loosing 5% on the refunds matters if they have a lot of refunds, so they'll be very tempted by no costs if you autobill and get caught. They'll just autorenew everyone, autosign up and then be VERY good about refunds to avoid chargebacks. Even if just 30% of customers don't catch a few months you end up with real money.
Of course, CUSTOMERS may hate these players, but stripe I guess is focused on what works for the businesses generating lots of refunds.
Having a disincentive for merchants to have many refunds makes a lot of sense.
The reasonable thing to do is to ramp up the fees based on the number of refunds. You want to push away the crappy billers, but not hammer developers that have the occasional bad release.
Does this mean if there's a developer I don't like, I can buy their stuff and refund it to arbitrarily cost them money at no cost to myself and there's nothing they can do about it?
That seems ... not great, especially these days. What happens when mobs of internet morons decide review bombing isn't sufficient and realize Apple will help them cause direct financial harm instead?
I think this is part of what is holding back iPad software. You can't charge $100 for Sketch and lose $30 when someone asks for a refund. Apple designed this around $1-$10 apps where losing $2 at volume is fine.
What is worse, is that Apple doesn't remove the app from the user's device. When you get a refund of a paid app it is on the honor system for them to delete it. It is removed from their account, so they can no longer download/update, but the installed binary is not affected.
A dev flogs an app at 10 and pays 3 to Apple. Then on a refund they lose 3 and the end user has no incentive to even delete the app. Nope, I won't entertain that nonsense.
The only way that I can see for that model to play out is for the dev to factor in a lossrate x 1.3 uplift for their app. That means owners of shiny iStuff are paying Apple an additional unannounced "tax" based on their app churn. Use and discard more apps, then you pay more for the privilege. A dev would have to become a loss adjuster as well: "Hmm assume a 10% return rate" - so the upcharge on my app will have to be:
* My app should cost 10, assuming a fair market.
* I lose 3 on a refund, which happens on 1/10 sales (I was paid 10 on sale, I paid 3 to Apple, I refunded 10 and hence lost 3)
So my price adjustment would be 10 + (0.1 x 3) = 10.30. Yes, it looks like a simple uplift will deal with this. Sales: x, churn rate: c, Apple tax: a. => s' = s + (c.a)
That is anti-competitive behaviour on a gigantic scale. Apple are making the apps that are developed for their platform automatically more expensive by a process that looks suspiciously like stealing.
You're forgetting development and marketing costs.
If there is a sunk cost component that number skyrockets.
Try adding a $5 customer acquisition and $1 developer time.
Thats a $1 profit, you need to sell 3 apps to cover the cost of apples fees. You also need to sell another 6 to cover the sunk costs you don't get back.
So 1 refund costs you 9 sales.
To cover the 1/10, you'll need to charge 10.90, or more likely 11 to cover the moving 30%.
But this is just to break even with your original $1 profit margin.
At work our refund rate is like 30% for Japan. Investigating this, it turns out there is a cultural behaviour where converting at a higher rate early and refunding if it's not a good fit is the normal way of doing things.
And in a past life, general 4% refund/return rate is pretty common across most ecom markets.
Not saying apps are in this boat but if you ignore refunds in business you're in for a bad time.
Or a userbase that for some reason dislikes and abuses you. Maybe you have made enemies because of some random political statemant. A large enough group could ruin you.
> What is worse, is that Apple doesn't remove the app from the user's device.
This. Is. Ridiculous.
We all know this is an intentional design decision by Apple and that they would absolutely not have designed the workflow this way if they had to dogfood their own platform.
Serious question: Is this refund problem as big an issue as commenters here are implying? Is there data that shows that app developers are losing significant money due to Apple's fees not being refunded? I would have guessed that very few people ever request a refund on an app they purchase, but I have no data to back this up.
Here's another example from Wil Shipley where someone purchased 30 education copies and then refunded all of them. Total for the day nets out to -18 purchases and sales of $-360:
If you made say a high profile game that a particularly whiny subset of gamers took notice of, I imagine it could be much worse, but I don't know that this has happened yet. I'd bet money that it will though, and you have to wonder what Apple will do about it.
But Apple does sell one app through the iTunes App Store (Dark Sky, which they recently acquired). They sell several through the Mac App Store.
So, they do dogfood, but obviously they are not depending on revenue to survive here.
Side note: there are a bunch of apps listed under their developer that I had not seen before: Music Memos, Indoor Survey, Texas Hold'em, and Reality Composer.
> So, they do dogfood, but obviously they are not depending on revenue to survive here.
Their pro apps are almost given away for free.
You could argue that $200 for Logic is not free, but similar DAW products costs 4-5 times more.
Not only that, but competitors need to charge you for major updates every couple of years, like any developer. Since Apple released Logic Pro X in 2013 it has kept pushing updates without asking for money.
There's also Apple's continued refusal to allow devleopers to have separate pricing for updates vs new purchases. It's either a free update to the existing app, or it's an entirely new app listing with the same price for new users and people who owned the previous one.
I've seen this circumvented by creating a package deal of the old and new versions, which then gets discounted via the "you already own part of this set" mechanism, but it's a messy experience and not something that many developers have done.
This apps also can use internal APIs without faring to be removed from the app store, they can also do UX practices which are not super compatible with the guid lines and they never need to fear an arbitrary ("accidental") review block/take down.
So it's not at all feeding they own dogfood. Do do so Apple would need to run separate finances and make sure they don't get benefited in the review process.
> We all know this is an intentional design decision by Apple
I see this as a good thing, since it probably means that only the user is capable of removing apps, requiring intent, and that Apple can never remove an app from my device.
Want a refund? Awesome. Delete the software from your phone. Then, go to the appstore, find the app again, and click 'request refund'. If apple wants to improve the user experience, they can offer 'request refund' when someone uninstalls a recently bought app.
That would still mean that Apple would need to have a remote way of scanning every device currently connected to your account (even it's offline..?) to see if you have the app installed anywhere. It's trivial if the app can only exist on a single device and that is the only device that can request the refund. But that's not the reality.
I mean they already track which device things are install and not installed on, a simple popup "please delete this app from all your devices in order to request a refund" would be all it takes .
Or if that's too much of a disruption for users, just requiring the current device to delete it would cover most cases and be better then the current situation.
Users can set each device to automatically download and install newly-purchased apps.
Imagine the case where there is a device you have misplaced (or given to a relative, or had stolen, or ___). You must find every device with auto-download and purge the app from each one before requesting a refund.
So you create a situation where it is possible that the user quite literally can't comply with the terms of the refund.
Perhaps a compromise would be to
1. Delete from the current device; and
2. To verify the status of each app during OTA updates (which, by definition, have connectivity to Apple's servers). Any refunded apps would be greyed-out or something.
It is trivial to track that an app has never been opened on a device and automatically uninstall it in that case. Seems weird to fall all over the notion that 'oh no! apple can delete my apps remotely!' - but you're fine with 'apple can install apps remotely'.
Uninstalling an automatically installed, never-opened app is not a breach of the personality of your device.
Apple is fully controlling your device, they can always do so if they want to even if they currently have no mechanism for it build-in.
(Except if your phone never connects to the internet or a cell-phone at all ;=) )
Also apple could just require the user to remove the app before requesting refund or at least putting it in a partially removed state from which apple then can remove if.
I.e. there is 0 benefit for any serious acting person. Only people who try to rip of app publishing companies profit from it.
I saw it the same way. I'd be a terrible idea to let Apple remove/install AppStore apps without the customer's permission. I don't know if it already does something similar but in the next OS update it could block the usage and force to delete refunded apps.
> Apple automatically reconciles the balance debiting the $100 from the payout balance Apple maintains.
That's the part that puzzles me. If there's a refund, and they penalize me by charging $30 more than I was actually paid, I see that as being problematic. Also, I suspect that it would be illegal in some venues, unless clearly spelled out in the contract. I'll have to spend some quality time, reviewing my contract, to find that...
Yeah, it looks like they can do exactly that. Here's the relevant part, from my agreement:
> 6.3 In the event that Apple receives any notice or claim from any End-User that: (i) the End-User wishes to cancel its license to any of the Licensed Applications within ninety (90) days of the date of download of that Licensed Application by that End-User or the end of the auto-renewing subscription period offered pursuant to section 3.8, if such period is less than ninety (90) days; or (ii) a Licensed Application fails to conform to Your specifications or Your product warranty or the requirements of any applicable law, Apple may refund to the End-User the full amount of the price paid by the End-User for that Licensed Application.
...and here's the (literal) money shot:
> In the event that Apple refunds any such price to an End-User, You shall reimburse, or grant Apple a credit for, an amount equal to the price for that Licensed Application. In the event that Apple receives any notice or claim from a payment provider that an End-User has obtained a refund for a Licensed Application, You shall reimburse, or
grant Apple a credit for, an amount equal to the price for that Licensed Application. In such cases, Apple will have the right to retain its commission on the sale of that Licensed Application, notwithstanding the refund of the price to the End-User.
So that answers the question as to whether or not it does happen; but not whether or not it should happen. I guess developers could ask their congresscritters to grill Tim about it...
That's true; that would be the better solution. Requesting a refund before deleting the app would give the user an error message telling them to delete it.
If you lose the product you bought you can generally not get an refound ;=)
And doesn't apple have some form of remote logout/factory reset feature for lost devices?
EDIT: (Sure requiring remote factory reset for lost devices would not work if it's a iPad which has not internet connection and never gets one again in it's live time, but that would be an acceptable corner case I thing).
If you no longer have access to a device you used to own, you should use findmy to remote wipe it.
If you really didn't want that, then you should at the very least go through the trouble of filing, with apple, that the device is lost or stolen, so that any attempt to return that device to an apple store or reseller to fix it gets it flagged.
It seems bizarre in the extreme that you'd want to somehow protect your privacy by not reporting your stolen stuff as stolen with apple, but that you opt in to a system where installing apps requires going through a single vendor.
There's more than one way to do this. If the purchase is refunded on the device, the app can be uninstalled at the same time; this is how Google does it. If the app is refunded on another device or in the browser, then all it takes is for the app store to keep track of app licenses (which it already does) and remove apps when their license disappears.
It seems odd, though, that Apple wouldn't have an API that allows locking app functionally behind licenses; on Android [1],
> With Google Play Licensing, your application can query Google Play at run time to obtain the licensing status for the current user, then allow or disallow further use as appropriate.
> ...
> Note: The Google Play Licensing service is primarily intended for paid applications that wish to verify that the current user did in fact pay for the application on Google Play. However, any application (including free apps) may use the licensing service to initiate the download of an APK expansion file.
In other words, the licensing service checks for both IAPs as well as if you've paid for the app itself.
> that Apple wouldn't have an API that allows locking app functionally behind licenses;
This is what their subscription system does, though. I'm not familiar with their for-pay app setup, but for subscriptions you can monitor the receipt and see what it's status is. Perhaps you can't do it from there, but I know when even an free app is installed, you still get receipt information written to the device.
They absolutely have the ability to do that though, they clearly have the ability to shut a device down entirely too based on the iOS activation system.
I probably wouldn't go as far as 'dystopic' either.
By that definition, if you want to be realistic about it, every OS vendor with regular software updates has the ability to do anything they like on any device they like.
Can you explain that point a bit more? It doesn't seem to make any sense to me. You revenue is going to be number of sales * price - (number of refunds * price * 0.3). Factor, and you get price * (sales - number of refunds * 0.3). Your unit cost is 0, so the only thing that matters is if your revenue exceeds your fixed costs.
I don't see how this would explain a disincentive to charge higher prices.
You missed the key point of the OP: you only get 70% of the gross revenue (units * price), but when a user requests a refund, you the app developer have to pay out of pocket to return 100% of the price back to the user (Apple doesn't refund the 30% it took off the top). So you are losing 30% on every refund, and in the extreme case, if every sale is refunded (i.e. from a malicious online viral thing directed against you), you can lose unlimited money scaling linearly with the number of sales (again, if every sale is refunded or close to it).
EDIT: ofc in the Twitter thread, there's few disputing that if this is actually true, or if maybe Apple does different things in different markets, etc. so everything with a grain of salt I suppose
I'm not the person you're asking, but I can probably try to explain.
Take other payment processing platforms like Stripe as an example. Stripe charges $0.30 + 2.9% to process a purchase.
To help build your (and my) mental model:
Price of item -> Stripe revenue (rounded)
$1 -> $0.33
$5 -> $0.45
$100 -> $3.20
Apple's 30% cut makes sense if they were expecting most apps to be roughly $0.99 (anecdotally, I remember this being true during the early days of the App Store) and the (presumed) few apps that cost more than $1 would be the "whale" developers that would subsidize Apple software development. But nowadays apps are a lot more powerful, feature-full, and development-intensive so higher prices are required for any hope of profit.
So the math you have is right, it's just that the path to profit is a lot harder when the ONLY way to sell your product is to have >=30% cut out immediately upon sale. Some stores set a minimum (e.g. $5) sale amount for using a credit card and those payment processing platforms have fees orders of magnitude less than Apple's App store
Perhaps the refund-rate is higher on $100 apps than $1 ones? If you find out your kid made an unauthorized purchase of $2 you're not likely to refund it, if its $100 you definitely will.
That’s the problem with paid apps... but I also believe now it’s a problem with devs not validating the app receipt to check for refunds and prevent access.
For in-app purchases, up until a few years ago, users would always have access to them (even after a refund) then it followed the same rules as paid apps - access always maintain but one couldn’t restore.
Subscriptions however are unique as a server would constantly check the receipt from Apple, which would show a refund flag, so you could block access. Now they even send you a push notification to your server to indicate a refund.
With iOS 14, in-app purchases will get a “notification” when a user receives a refund on device (with IAP encompassing subscriptions).
Lawsuits only really work if you know who to sue. And if they live in a country that will honor your country's court's decisions. And if they have money.
Tortious interference, also known as intentional interference with contractual relations, in the common law of torts, occurs when one person intentionally damages someone else's contractual or business relationships with a third party causing economic harm.
There might be something subtly illegal here - but I assume Apple would just refuse to honor the refund if they thought it was fraudulent - so it wouldn't be up to Apple to collect damages - it'd be up to the other party to collect their refund (assuming they can legally compel Apple to pay up)
How does that apply? In hypothetical this thread has been discussing nobody is damaging the contractual relationship itself nor is anybody preventing either company from fulfilling their contractual obligations. In fact, it's the strength and continued operation of the contractual relationship that would cause the economic harm. I don't think tortious interference applies here.
I would guess that buying an app with the intention of harming the app creator by doing a refund is against the ToS, and I think that's fair (since the purpose of the refund mechanism is to allow the buyer to change their mind for some "good faith" reason - even something like a change of mood is fine, but "to harm the creator" is obviously not)
> Tortious interference, also known as intentional interference with contractual relations
I think it would depend on the local jurisdiction's definition of the tort. A purchase/refund scheme would not induce Apple or the vendor to breach their app store contract, but it would deprive the vendor of its expected economic benefit.
No, I don't believe it would apply. Tortious interference is when you interfere with the contractual relationship itself. In this case the continued obligations is what would drive the economic harm, thus tortious interference wouldn't apply.
How is that fraud? "Everyone, buy this product and return it to the store for a full refund," doesn't sound like fraud to me. It doesn't result in personal or financial gain to the people perpetrating it, either.
edit: so who is in trouble here? The person calling for people to do it with their twitter following or the twitter followers? I'm not saying that buying the app and returning it is not fraud if you entered into the transaction in bad faith and with intent to cause damage to the dev, I'm saying calling people to do that is not fraud.
You would be fraudulently filling out the request form - unless Apple has a "Reason for refund: For the Lulz" in its drop down box. You would also probably committing some sort of credit card fraud by enacting a transaction in bad faith.
I think the form is definitely fraud but I wouldn't be surprised if Visa went after you for something as well, they need to actually process all those charges and charge backs and it does cost them some amount of money to do so.
You are entering into a purchase agreement without the intention to actually purchase the item - that is most definitely fraud. It's like ordering a brand new car without the intention to actually ever pick it up, but instead to cost the dealer money. If you're acting maliciously that's definitely fraud.
I completely agree and understand. My statements were about the person inciting others to commit the fraud without so many words. Basically, I was saying it is not fraud to tell your twitter followers to buy and return an item. It may be conspiracy though.
Perhaps you missed my point. I'm simply suggesting that the answer to this rhetorical question is yes, you could do that, but you'd be a jerk for having done so. Having an internet army do jerk-like things for you occurs all too frequently.
Will they? In some jurisdictions they are required by law to grant refunds. In others, they still have very little incentive to control refund fraud, what with the fact that they're still making money rather than losing it.
It would be one thing if they said "We're keeping the credit card processing fees so that we don't lose money," but to keep the whole 30% cut is just petty.
Are they obligated to do business with you? Typically the answer is no, but some countries (like Germany) stores can't ban people if they're the only store in a town. I'm not sure if this would work for Apple, but it might if you already own an iDevice.
I couldn't say. But here's the bit of their terms of service (for USA) that mentions refunds:
> All Transactions are final. Content prices may change at any time. If technical problems prevent or unreasonably delay delivery of Content, your exclusive and sole remedy is either replacement of the Content or refund of the price paid, as determined by Apple. From time to time, Apple may refuse a refund request if we find evidence of fraud, refund abuse, or other manipulative behavior that entitles Apple to a corresponding counterclaim.
Which makes it sound like they aren't granting refunds at all for anything except failure to deliver the product.
And yet when I look at their actual refund request form it has options for "I did not mean to buy this, child bought without permission, I did not mean to subscribe, I did not mean to renew subscription, my purchase did not work as expected, in-app not received." So clearly not all purchases are final.
I don't think it's a good look for Apple to be issuing refunds at their sole discretion and then turning around and making someone else pay for it. You're just supposed to trust them that the magic fraud prevention box is doing its best?
> In some jurisdictions they are required by law to grant refunds.
I think the jurisdiction you’re talking about is the EU, and it’s not quite that clear cut.
As a general rule online merchants do need to provide refunds, unless it’s a digital good, and they provided an explicit warning during the checkout flow that the sale isn’t refundable.
If you ask for refunds from Apple for apps they’ll introduce that warning into the checkout flow for future app purchases, which will disappear again after enough purchases.
So Apple do have some basic, compliant, controls that means you can’t just keep buying apps and getting refunds.
> In the EU you have the right to return purchases made online or through other types of distance selling, such as by phone, mail order or from a door-to-door salesperson, within 14 days for a full refund. You can do so for any reason – even if you simply changed your mind.
There is a potential exemption for digital content "if you have already started downloading or streaming it and you agreed that you would lose your right of withdrawal by starting the performance," but Apple does not appear to have its customers agree to that.
Specifically called out in their UK conditions:
> Right of cancellation: If you choose to cancel your order, you may do so within 14 days of when you received your receipt, without giving any reason.
> Apple does not appear to have its customers agree to that
Actually, with an EU iTunes account, you have an additional popup dialog you have to agree to with every in-app purchase where you have to agree that it does not qualify for the exemption.
That popup will only appear if your account has already been flagged by Apple for refund abuse. It certainly does not appear every time.
They have an "I would like to cancel this purchase" option in the EU for a reason, which gives you an unconditional refund within 14 days as long as you didn't get that popup when purchasing.
FWIW, I don't recall ever seeing this in the UK - I've just tried an in-app purchase, and it just gives the "Double-Click to Pay" FaceID screen (which lists description, account, and price, but no information about refunds/exemptions).
The popup will appear after approving the Face ID prompt IIRC, as an additional confirmation before finalizing the transaction, but as I said it only starts appearing if Apple detects refund abuse and flags your account.
Apple will start applying that exemption if you abuse their refund process. One or two refunds in a short period is usually enough to trigger it, and it disappears again after some “good behaviour”.
It seems pretty random when it's applied though. Some got it after just one refund, meanwhile I've had multiple refunds, and I got that popup once for a $1 purchase but then never again and I was able to request a refund again.
The theme is fraud which is what large amounts of refunds are treated as.
Cite me that it's not fraud if that's not good enough for you, I'm not really interested in proving fraud is not just allowed to run rampant in a payment system in the very thread about how doing this exact thing would be abusive and need to be stopped somehow.
You don't know that large amounts of refunds are treated as fraud, its just wishful thinking, as i thought.
In the EU i have a right to a refund, there is no part of that right that forbids me from repeating that purchase. Since we have established that Apple don't suffer financially from obeying these rules to the letter, i see no incentive for them to treat this kind of thing like fraud.
They might, but you have not established this, and i don't think its a fair assumption to make.
Getting a refund from Apple is really difficult, so I don’t think this would be a problem.
I once forgot to cancel a subscription, cancelled one day after renewal, and they would NOT refund me. It was a time based pricing model, so it’s not like I could’ve used any in-app credits.
Not for apps, at least in the UK - I've had four different apps (and one in-app purchase) refunded for a variety of reasons[1] without an issue.
[1] One listed features that were actually (expensive) in-app purchases, one didn't work, a new app had been released but they were still selling the old non-updated one as well (and I bought the wrong one), and one was just really clunky and borderline unusable; the in-app purchase was purchased by mistake (my thumb was resting on the home button and I hit something that triggered a purchase in the app by mistake, so it went straight through TouchID)
Returns are limited. At some point I returned 3 or 4 things pretty quickly, because I had an old iPad and some apps didn't advertise compatibility well enough and then you get put in a "special" category of "you can't get a refund unless you are very, very obnoxious or there is a very real reason".
this would happen to you with paypal and credit card chargebacks, no idea if this is still the case (but it wouldn't surprise me). you lose the money and an additional 10$ fee, for every transaction. so someone could send you 5$ in 5 transactions, chargeback and you'd be out of 55 dollars.
> Yeah Apple keeps their 30% no matter what. So if someone refunds an app they get the whole amount back, Apple keeps 30%, and the developer has to cover that extra amount
Seems like a pointless technicality. If somebody refunds my $100 app and Apple "keeps" $30 from me, that means the next person who buys my app only earns me $40. I've lost $30 either way.
Or if the same person buys the app again later (maybe using a different Apple ID) then you lose 60$ out of the money they would have paid for your app - to view it a different way.
The fact that that is even a thought screams silly and childish in my mind, but then again life has taught me that 'maturity' really is a social construct and the rule of law and contracts really should be the only baseline expectation of human behavior from strangers.
Also - that plotline from SV where he just buys pizza from thd pizza startup that is operating at a loss seems like the same idea as this but just slightly different. Business is funny
It's a bit different when a company is completely voluntarily engaging in self-destructive behavior - when it comes to the app store it is voluntary that folks post their apps there but Apple has an absolute monopoly on the market.
That nuance makes a major difference for sure in the situation. Mind I'm not rationalizing any behavior from either party. It's more an observation on the state of current affairs and how we've allowed it to come to this.
Oh it's absolutely terrifying - I just think it's important to highlight that in this situation there's a large power inbalance that doesn't exist in the SV example. It's likely most developers didn't walk into having an App knowing how this weird refund rule worked, so for most folks (if this is an issue) you've got the sunk cost of building the app already and have the choice of 1) putting up with Apple's arbitrary rules or 2) unlisting your app from the store and accepting that you'll never see another dime off your labour.
"which I think adds weight to the argument that is unfair behaviour by Apple"
Apple takes back from the developer exactly what they gave the developer. This has been verified by a number of people, and this submission is just farcically wrong.
How is this nonsense front page on HN? Is this community this clueless?
Do you have any sources for your claim? The original claim - i.e. developers lost money for each refund - is backed not only by the original post, but also by several other sources linked in the comments.
Which sources would those be? Someone linking to preliminary text of Apple's refund policy when they were forming the app store in 2009? Because that is meaningless.
Apple takes back exactly what they gave the developer. There are zero sources demonstrating otherwise (and the source of this links a basic sales chart -- guess what, that doesn't prove his point whatsoever). There are literally a half dozen developers replying to him countering his claim, yet it's remarkable seeing the gullibility of this crowd regarding a simply absurd claim.
The guy's trump card is that they had "negative days". No shit. One day they had more refunds than sales. That doesn't mean Apple is taking an extra 30%.
EDIT: Even the Reddit story on this absurd tweet now has a top comment refuting it, and a wide acknowledgment that they need to be more discerning. HN -- all the top comments are falling in line. My two comments are at -1. LOL. My bio that this place is Dunning-Kruger demonstrated writ large holds true. What an embarrassment.
Calling people idiots without citing sources is really unproductive. If you're right, cite sources, so folks can be educated. Trusting a random hn user who doesn't back up their claims is something even @hn_check would scoff at.
The site guidelines ask you to email hn@ycombinator.com instead of doing this. Had anyone done so, we might have seen it and been able to do something in time.
If you charge $10, you get paid $7, and if the customer refunds, Apple removes $10 from your account – you'll be $3 worse off than if the customer never purchased anything.
I'm the guy that posted that excerpt from the agreement. I was actually shocked that no one else had, as there are millions of copies of it out there.
But I do appreciate the anecdotal stories from folks that actually processed refunds.
Apple is entitled to yank the extra 30%, but it seems that they don't do it. That's not uncommon. Lawyers will often add stuff to contracts that they don't intend to enforce, to give them leverage and cover, in unique situations.
I have never had to process a refund, so I don't know.
EDIT: LOL the guy retracted it and noted that he was mistaken. Every clown who repeated this and argued the unfairness of it, like rattray here -- delete your accounts.
>If you charge $10, you get paid $7, and if the customer refunds, Apple removes $10 from your account
BUT APPLE DOESN'T DO THIS
There are literally dozens of developers with monetized apps saying that Apple does not and has not done this in this thread and replies to the tweet. There is one guy misrepresenting some facts. The overwhelming truth according to the pitchfork mob of HN is the lie. Amazing.
The gullibility of this crowd is simply incredible. Do you not think this would be bigger news than "hey look, some guy says something billions of dollars into app store sales".
cc @ dang -- rattray is intentionally spreading hilariously dumb misinformation to make HN look like a bunch of stupid assholes.
Hilariously this is auto-dead. Of course it is. Yet another of so many times HN has been so catastrophically off the mark. This place is a den of absolute idiots, time and time again. And when it is realized it goes to auto-dead time. Absolutely fucking embarrassing for anyone who is proud of their association with this shithole of stupidity.
On the Play Store there is a two hour window after purchasing apps where you can simply return to the store and refund your purchase yourself as the 'buy' button temporarily turns into a 'cancel purchase' button. This feels like the future to me, not some regressive scheme where refunds are discouraged and 'taxed'.
Absolutely – I don't want to feel bad for the developers of apps I return either. Sometimes the app just isn't very good, or doesn't do what I thought it would. I shouldn't have to feel guilty about returning it.
A Statement of Tim Cook for the House of Representatives claimed that "For the vast majority of apps on the App Store , developers keep 100% of the money they make." [1]
How can this be even remotely true if Apple takes a 30% commission for every sale in the App Store?
The idea that they could make less than 100% of the money that they "make" under these terms reminds me of the Simpsons episode where Bill Gates "buys out" Homer's fake business Hyperglobalmeganet.
He's referring to the fact that most commerce on the App Store is for physical goods and services (Airbnb, Amazon, Uber, food delivery, etc). Apple doesn't take a cut of those transactions.
Yeah, they also don't take a cut of the regular day job salary of an app developer who writes an app on the side, or his inheritance from his mother, or his niece's dog.
1) Free apps with advertisements. Paid apps are by far the minority.
2) I guess this statement is related to subscription models like spotify. If you acquire the user outside of the apple ecosystem and they subscribe on your own website and then download your free app from the app store, you get to keep 100% on the revenue that the user generates as well.
Ah, the ad thing makes sense. It's technically true but the meaning conveyed in the statement is quite different.
As for the subscription model, I've thought about that but developers that aren't huge companies have a hard time NOT integrating in-app purchases for cloud services (see "Hey", which had to use social media to get their update approved [1]), so it couldn't be the "vast majority of apps".
No, you just aren't seeing the 'tax' the same way. Google (and Facebook, and admob, etc) all take a cut of ad revenue, and it's even higher than 30% - in some cases much much higher.
No most apps aren’t ad supported mostly games are. The ad supported apps are not real business but side hustles or one time, one hit apps that die quickly.
He’s probably saying these are free apps which Apple doesn’t take any money for, and the money the developers keep are from ads or fees from clients and so on.
App stores need heavy regulations. It's not only Apple but Google and even steam to a small extent. Apple is of course the biggest offender as they heavily guard their monopoly with code signing enforcement. This shouldn't have been legal. They are the very definitions of predatory competition squashing monopolies.
I don't see what kind of regulation Steam needs. They are hardly the only storefront on the platforms they support, aren't the default one, have almost no exclusive content, and don't even take a cut if you sell Steam keys on other stores.
What is there to regulate? If you don't like their terms you can sell on a different store or distribute yourself, there's nothing stopping you like there is on a typical iPhone or Android device. And frankly their terms are pretty damned fair. For the longest time they took such a hands-off approach to their marketplace that people got angry about that instead!
The family plan settings on an account are certainly not an example of getting it right. You can share a library, have multiple linked accounts, but the instant any one of those accounts fires up a game all other accounts are locked out of the entire library. Not just the game that is currently running, but the everything. Valve missed the entire point of having a family account setup and every time I mention this I get “shut up pirate” as the response because having kids isn’t a valid use case.
Basically every internet game/app store does this differently. Google's, Apple's, Xbox, PlayStation
I think even the Nintendo Switch is more fair about it, but I haven't checked it directly
This has burned me really badly. I had an account with hundreds of Steam games, and then my dad got hooked on some of the VR games I'd bought and set up on a Vive machine in the living room upstairs. I had to make a new account to be able to play new games. Then my nephew got hooked on one of the games on the new account, so I ended up giving it to him and making a third account for myself. That one only has a couple of games on it, since I've mostly just transitioned to playing stuff on GoG and the Nintendo Switch
Netflix. Amazon Prime. HBO. Disney+. HULU. Epic. Microsoft. GOG. Apple App Store. Google Play.
In most cases the regular plan is the family plan because most people live in a family and the extra features don’t harm people with individual accounts at all.
It's not close to an ideal solution, but I've started working around this by distributing all new games I get between three different accounts, all part of the same family. That way playing a game only renders 1/3 of the library unavailable to others, instead of all of it.
If the games you play are single-player (mine are), then simply run steam in offline mode to play your games. That way anyone sharing your account is unaffected. You can also use shady steam_api.dll replacements to not tell Steam you're playing at all (I'm actually quite glad something like this exists, I've been locked out of shutdown activation servers and other dead platforms in the past)
My biggest complaint about Steam is Valve’s retail sales. They sell a DVD with the installer for Steam and then you have to download from Steam even though you’re holding a physical DVD in your hands.
Me as a kid on Christmas morning 2004 unwrapping the Half Life 2 disc only to realize it’s a 6.5GB download over my 14.4k dial-up connection. My parents bought the physical disc for a reason, because we had a shitty Internet connection.
They definitely did not get everything else right.
I'm surprised you couldn't install the game itself from the disc. My physical copy of the orange box installed steam, but it also game with the game data on multiple discs.
Steam actively banned users for getting chargebacks and defrauded ~20,000 Australians seeking refunds, Australia's like 5% of their users so they probably defrauded several hundred thousand more people worldwide. They're not a consumer-friendly company at all they just had an epiphany about their liability and updated their refund policy while being sued for a little tiny fraction of their thievery.
Steam is not a monopoly. You can install other stores and you can acquire and install software directly on your computer.
AppStore and, to lesser extent, Google Play are monopolies, that severely restrict rights of their users, no matter what people say that 'Apple is not a monopoly because you can buy another phone'
I remember when we didn’t have app stores. All we really need is decentralized app publisher trust. Centralized app publishing will always be abused by the publisher in the long run. It’s just too powerful and tempting to not stack the deck in your favor as the app store owner.
What if the choice really is to only make things lucrative for restrictive shop owners vs malware authors? So far those have been the only two options.
I think Microsoft did a good job with its drivers program. It was solving different (but similar) goals, and the bar was kind of high, but they essentially did a good job with their driver signing system. A web of trust approach is not horrible. You should know the reputation of software publisher before you install an app. App stores do a lot of static analysis and screening, and they yank unsavory apps, but their profit motive is suspect and inevitably biases them towards maintaining that model rather than giving the optimal environment that favors users and publishers.
What if choice to maximize revenue by all means. Like creating extra costs for developers or creating obstacles for developers who have lucrative business and it wants to control it too.
Btw, curating is basic responsibility of every storefront. It's something even your Brick and Mortar Store does.
If the web really did take over you don’t think platforms would be any less restrictive when they control the main browser on their respective platforms?
The iPhone is an Apple product. The App Store is an Apple product. The libraries and development tools needed to create iOS apps are Apple products.
Traditionally the company that develops a product gets to decide what features that product has. There are various laws that require a product be safe to use, is not misrepresented and does what it is advertised to do, but beyond that there are very few actual features of products that they are required by law to have. Maybe some standards they need to meet.
Sometimes companies will invite other companies to join them in adding features to a product. A TV company might add licensed audio technology from Dolby, a car company might add licensed software for infotainment or navigation software, and they may charge their customers for the added software features.
This is how games consoles work, you buy the console from the manufacturer, who licenses other companies to write games for their product as add-on modules. In the past CDs and cartridges were used, but now this often happen via downloads. These games are developed using the console manufacturers tools, run against their code libraries on the device and are clearly an extension of their product. This has been an established approach for many decades. When my kids were toddlers I bought an educational toy where you could buy little cartridges for it that added educational features.
That's all the App Store is. It's a feature added by Apple to their product for adding optional features to the device. As in many cases in the past, across many types of device, this is a feature added by the manufacturer and your relationship as a customer remains with them.
There is no law requiring that a device containing a computer, be it a car, TV, games console, phone or whatever have any specific features to enable loading additional software. That's just not a requirement that exists, and if a device does have a mechanism to add or update its software, there are no laws about how that must or must not be implemented, that I'm aware of anyway.
If you disagree that this is the way it should be that's fine, that's absolutely your right, but can you explain how such laws should be drafted. What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
Anti-monopoly legislation seems like a good starting place. Game console app stores are, at least in my opinion, equally exploitative, but Apple is one of the most problematic publishers out there. Being able to run whatever software you want on general purpose hardware isn't what this is about (although you should be able to, as the FSF has been saying for years). It's that Apple can't monopolise the market like this, so the government should be able to force them to allow competing app stores.
Apple has a monopoly on designing the features of it's products and on deciding who they do business with and on what terms, that's all. What other monopoly do they have?
Youre not actually answering my questions. Exactly what features should Apple, Samsung, Pinephone, etc be required to implement? How should we decide what products these new requirements should apply to? Who gets to specify those features and certify compliance?
I'd advocate for letting customers choose where they get their software after they've bought a device. Artificially coupling device and software repository increases switching cost, stifling competition.
I'm not a legislator, but I'd like to be able to run an app store of my choosing. I'd like to be able to use my general purpose computing device as a general purpose computer, instead of Apple's business connections deciding who I get to do business with. So far as not implementing features, if the bare tech were exposed, I'm sure people would be very happy to implement it outside of Apple. Just because they perpetuate the platform doesn't mean they should control how I use it. As to implementation (i.e. enforcement), that's just whataboutism because the government is more than capable of regulation.
I think this is where we get into the weeds. How do we specify what is a general purpose computer? How do we specify a legally mandated mechanism for installing software? I'm not expecting you to do so now obviously, but isn't the fact that it's so hard part of the problem? This is an incredibly tricky area to start legislating about. Theres much more to this to hitting Apple with a 'monopolist' stick.
This is why there are regulatory bodies and people's entire career devoted to this. The government can create regulatory bodies to answer these questions and then regulate companies.
I don’t think saying it’s someone else’s problem to sweat the details cuts it. It sounds too much to me like wanting to wave a magic wand to make the problem go away, but there is no magic wand. Never, in any of the debates I’ve had on this, any of the blog posts a I’ve read about it, even the EFF articles about this (and organisation I have enormous respect for), has anyone actually tackled this issue of saying how a law like this would work in any specific way and what devices it should or should not apply to, specifically.
OP didn't say Apple was breaking the law. They said that they need to be regulated. There's a difference. Make all the equivalences you want, at the end of the day the government has a mandate to regulate business practice to benefit the consumer. If that means treating a mobile phone as a platform but not a game console, so be it.
It's different when TV manufactures put Dolby in charge of advertising and supporting the feature. Then charge them a cut of their profit, with little to no recourse or dispute mechanisms.
Besides that, it could be argued that running software is the feature. What software does is not a feature of the iPhone. Like a recipe is not a feature of a stove.
We are buying the device, it's a tool, and we should control how it's used.
Apple's view is that the third party software that runs on their phones, which they provide to you and which they charge you for, very much is a feature of their phones.
I agree it's a tool and you should control how it's used, but you're demanding that Apple implement specific features for you that they don't want to implement. How do you intend to coerce them into doing that? Who gets to specify precisely how those features are implemented?
I agree that what you do with your phone after you bought it should be up to you. If you can find a way to jailbreak it, I think you should be allowed to do that. In fact I've jai-broken iPhones and iPod Touches before. However I don't think I have a right to tell apple how they make their products, or to force them to implement features for me that I get to specify.
A stove is not a satisfying example. The recipe in this case is developed using Apple's kitchen utensils and delivered in a recipe book printed by Apple. There are entanglements between Apple and the Developer that go beyond the "tool vs method" abstraction. Some of these are forced on the Developer.
Power is power, and power needs to be accountable to those subject to that power. A company that makes commodity screws and bolts has no power over me: I can find a different commodity screw and bolt company. A company providing key tech infrastructure had quite a bit of power over me. We live in an information society. Why should a few people in the bay area unilaterally get to kick people out of that society?
Common carrier regulations on railroads provide a model for regulating critical tech infrastructure that happens to be privately held. I'm as big a fan as it gets of the capitalist market-based way of organizing society, but even I acknowledge that at large scales, companies need to play by a different set of rules, one that makes them accountable to the public. The alternative is essentially the subversion of democracy. You can take a purist approach to corporate autonomy all the way to its natural feudal end, but I'm not going with you.
Please understand I don't in any way mean to pick on you. The comment has 8 paragraphs that are mostly a description of how property rights work. Analogies to how they worked in other markets, examination of the law, etc. This detail is all very clear and I appreciate it because it helps me understand your point of view.
It is less clear to me, why the current situation of property rights is good. Of course many bad things (and for that matter many good things) have been done in the name of how property rights worked at one time. But in democratic societies we decide how things work, so in that sense we are the author of things like property rights, we decide how we want them to be based on our values.
> If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
I don't know if they have "broken the law" but there are certainly similarities to historical situations.
You discuss game consoles and licensing games. I might suggest from Sega v. Accolade that a hardware marker's ability to license games exclusively was quite controversial at that time, was ultimately reversed by courts.
In DOJ vs MS, Microsoft was convicted as an illegal monopoly for (among other things) illegally bundling software with Windows, and using technical means to keep Netscape off the platform.
I am sure that Apple has great arguments for why they are different than these cases, and a lot has changed since then. At the same time, some things are similar. It's really about our values. Is the law about encouraging companies to innovate new ways to lock out all their competitors? Or is it about helping competitors? Or helping the large companies? Society has not yet decided, so the question has no answer.
> What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
Personally? My designer regulation is one where we have a tiered regime which gets worse the bigger you are.
So, for a small startup that serves basically nobody, we have the current regime, or maybe even we remove some things. There's still regulation on things like HIPAA and SEC rules, fraud, etc. I would also be in favor of much stronger privacy regulation, and limiting arbitration clauses, mostly because a lot of adtech is fly-by-night.
Once you reach some threshold, we regulate at a basic level. This is probably defined as some combination of revenue, daily active users, units sold, subscribers, employee/contractor headcount, but let's just call it a $10m company. Here you fill out a form once a year with an address the regulators can write letters to you, send in your EULA and privacy policy, and there's a list of basic rules like "don't sell user data", "make your software accessible", that are mostly on the honor system unless someone complains in which case the regulator writes you letters.
As we go up in orders of magnitude it becomes a bigger deal. By the time we get to FAANG, you have a regulatory team looking at individual products full-time, the same way we have inspectors in food or finance or anything else. For Apple specifically, maybe "users can jailbreak their device, subject to certain warranty consequences", "all first-party apps will only use public APIs", "developers of first-party apps will find out about new APIs the same time as everyone else", etc.
Exactly. If anyone wants to run an app store, fine, but I must be allowed to "side load" apps onto my device so that I don't have to participate in the app store economy.
To avoid unhealthy competition that endangers competition itself, regulation is required. Humans have tendency to monopolise.
Regulations makes competition important for benefit maximization. Apple would have long bought and closed by Microsoft if not for Regulation. AMD would have had suffered end.
Sure, but people aren't paying to go to prison. They are paying for a nice bed. Apple just happens to keep the bed in prison, which is where you must go if you want to use the bed.
The vast majority of apps are malware. In both Apple's and Google's app stores. It's gotten to the point that apps are assumed to harvest all information they have access to, store it permanently and sell it to anyone who asks.
It's the software ecosystem that has changed, not the definition. Spyware was always included. You can check the history of wikipedia article on malware if you don't believe me.
May be a stupid idea, but I always feel that appstores should be independent from device and service providers. Consumers should have the flexibility to not get tied to certain distributors of software. Even if apple and Google are not prevented from hosting appstores they should be required to support third party ones as though they were native.
But the regulations you are looking for should be on the device manufactures not the app stores. Require Apple to allow other app stores to be installed that has the same level of access to the OS and APIs that their native app store has, as well as direct app downloads from the internet with the same level of access (maybe with some extra hoops for security controls).
That would solve the problem. Someone will spin up a better App store. Someone already has in fact. If you jailbreak your iPhone you get access to a second app store (https://cydia-app.com) which has apps that Apple won't put in their regular store.
A simple regulation that would fix this without overbearing price controls is to require manufacturers to allow users to sideload their own app stores.
Regulation granted! There are
now many stores on Apple devices. But the platform still requires code signing from Apple for code to run and must still abide by all existing Apple policy including entering into a contract with Apple that 30% of all revenue from your app on iOS is paid to them.
Regulation granted! You can now download and install apps directly from the internet or locally with no pesky store to act as an intermediary. However, you still require Apple code signing for the app to run and for that your app must go through the regular App Store approval process.
>Apple is of course the biggest offender as they heavily guard their monopoly with code signing enforcement.
What monopoly? Apple controls maybe 8% of the desktop/notebook market and ~13% of the smartphone market. They don't even come close to qualifying as a monopoly.
That isn't how monopolies work or are defined or classified. Revenue has nothing to do with market control.
Even if we rewrite the dictionary and legal texts, Apple would be part of a duopoly, not a monopoly. If you try to redefine monopoly to mean that Apple has a monopoly over their own platform, then you better start lawyering up because essentially every company in America has a monopoly.
I think people want Apple to be classified as a monopoly because they see their behavior as unfair. But they aren't a monopoly and your recourse as a free American citizen is to just not buy Apple products. The fact that you are able to buy from a competitor with zero personal harm is absolute indication that Apple is not a monopoly.
> Even if we rewrite the dictionary and legal texts, Apple would be part of a duopoly, not a monopoly.
If Apple has pricing power because people don't move to competitors, they are a monopoly in the eyes of the law no matter how many players are in the same commonly-described market segment and what their sizes are.
> If you try to redefine monopoly to mean that Apple has a monopoly over their own platform
If that platform is sufficiently sticky that pricing changes don't induce people to switch to competitors, that's exactly what the law already does, no redefinition needed.
> then you better start lawyering up because essentially every company in America has a monopoly.
No, most don't, though they tend to seek them (what do you think a ”moat” is?)
>If Apple has pricing power because people don't move to competitors
I'm not taking sides, or claiming I'm an expert on economics, but isn't the question with monopolies always "what is the market, and what are the competitors"? If you accuse someone of being a monopoly, they will always define their market as widely as possible, but if you are an antitrust lawyer trying to win a case against them you will define it as narrowly as possible. There's always a sufficiently wide or narrow definition for either side to win. And every business has some pricing power and some friction for their customers. Everyone talks about investing in companies that have a "moat" which seems to be understood as something more than many companies have, but less than a monopoly.
> I'm not taking sides, or claiming I'm an expert on economics, but isn't the question with monopolies always "what is the market, and what are the competitors"?
Pricing power is a key way in which that question is answered: if an actor doesn't have it, the people to whom business goes when they raise prices are the rest of the market they are in. If they do have it, there are no actual competitors.
Your argument here is basically that Apple charges a lot so they must be a monopoly. Wanting something to be true doesn't make it true. Apple's share of the smartphone market is shrinking, not growing. The basic premise of your argument is factually invalid.
The fact that Apple can charge a premium despite being a minority player, and despite their marketshare shrinking, is evidence of their excellent marketing, not a monopoly.
To be a monopoly you must either have a dominant position in the market or your behavior must be such that you are attempting to gain a dominant position in the market. Or you can just make shit up because you don't like Apple.
> Your argument here is basically that Apple charges a lot so they must be a monopoly.
You are wrong in two respects.
First, I am not taking a position o whether Apple meets the test for monopoly.
Second, the test is pricing power (the ability to raise prices without defection to competitors) not “high prices”. This is more important than how many players might be in any popular description of the market, because it is test of whether those other players are in fact competing with the player in question, or whether they are in objectively separate markets even if the usual popular description is of a single market.
> Wanting something to be true doesn't make it true
Correct, wanting “are there more players in what is typically described in the press as the market in which the actor is participating” to be the main legal test for monopoly instead of pricing power does not make it so.
Competitive? It is an oligopoly with tacit collusion on price fixing. This is the exact reason why anti-trust legislation exists.
A competitive market would be one in which the platform providers were forced to divest from the app markets, and support competing app markets which meet requirements, and which actively compete on features and price.
If cars only supported gasoline from manufacturer gas stations, and 95% of the market was controlled by cars from GM and Ford, and once you bought a GM car you could only buy gasoline from a GM gas station, would you call the gasoline market competitive?
To extend the metaphor, let's say it was technically possible to use third-party gas stations, but the manufacturers had hidden this ability, and it required a small amount of mechanical knowledge to enable, and maybe voided your warranty, would you then consider the market competitive?
It's does, but between Google's certification process putting restrictions on device manufacturers and the fact that usually those alternative app stores can't be installed from Google Play, asking side the untrusted sources scare tactic against users, and Google Play protect so closely integrated in the OS now, theyre not really viable market places.
At best I guess we could say Google has a carrot approach where Apple prefers the stick.
It seems like a pretty clear duopoly to me, Apple and Android are the only two mobile platforms, and rather than compete with each other on price they are just both leaving their cut at 30%. Personally it’s not even the 30% I mind so much as, maybe there are cool new products like new mobile browsers that are just forbidden by the app stores and so we will never get them.
You can’t claim poor market share as evidence. If iOS and the Play Store are “good enough” for people to not seek alternatives, and for devs to still publish apps, then 30% might not be a big enough cut.
Huh? Which space is competitive? Apple and Google are pretty much the only shows in town and even more restricted is that the App Store is the exclusive store for iOS.
In fact, they don’t even really compete with each other. Play is only on Android and App Store is only on iOS.
You could say Android and iOS compete with each other, but once someone has bought a phone, they do not have a choice of where to buy apps.
Not really, at least not in a sense that different products and stores compete.
When I buy a phone I can choose from multiple models, then once I choose a model I can choose a store where I want to buy it. These 2 examples are competitive. Then I can choose what app I want to buy, but I can't choose anymore where I buy it (at least on IOS). There's no competition between stores. There's just competition between phone manufacturers that ends the moment you choose the phone, from then onwards is a monopoly (or near monopoly in case of Android)
The stock market is heavily regulated. Commodity markets are regulated. It's actually the slowness and corruption of the law makers that we're still without any regulations to virtual markets.
It is a false comparison to put Disney land (owned by Disney) and iOS devices (owned by Apple customers) side by side.
We already had battles on this front, Microsoft had to offer competing browsers for some time at least in the EU. Manufacturing the platform ceases to afford dictatorship when the device reaches a large enough share of the population imo.
If we still had anti-trust enforcement, this should set precedent against what Apple is doing here today. We already decided this issue in the 80s and 90s, making a specialized locked-down computer (i.e., a "game console") does not entitle you to own the entire software market for that device. And so long as you don't steal copyrighted materials to do so (see Nintendo v Atari), you are allowed to reverse engineer and sell your own software for these devices, without any royalties or licensing owed.
If you want iPhones to be treated like "gaming consoles" instead of computers, then it is already legal to jailbreak an iPhone, distribute your own apps (or entire app store) and sell to iPhone users, without ever paying Apple a single penny.
It's even legal by precedent to modify other people's software when selling your own third-party software (see Game Genie / GameShark lawsuit, it's legal to sell a program that modifies someone elses copywritten software, so long as you don't include or redistribute the original copywritten code).
Sure, but they are allowed to implement any technical measures they want to block third-party software distribution. If you can hack it to make it work Apple can't sue you but they can definitely make it harder and don't have to help or support you.
Which competitors to $car_manufacturer engines are there for $car_manufacturer cars?
This is a stupid question. Whether or not there is competition on iOS doesn’t matter as long as there exists viable competition on any viable platform.
...and if all car manufacturers bought engines from the same factory (TSMC), used the same satnav (except one brand, who had a slightly-worse in-house clone), and an accelerator and gearbox from exactly one source (Google search) would you be more concerned about anticompetitive behavior? What if the manufacturers were allowed to produce "accessories" like batteries, tires, and child seats that refused to work in any other car, and actively sued repair shops that weren't official dealerships?
Apple and Google may be competitors, strictly speaking, but the reality is they've pretty well carved up the market between premium buyers mostly concerned with fit+finish, prestige, and compatibility with other Apple devices, and the operating system and network infrastructure for, well, everything else.
It's absolutely a duopoly, and so minimally competitive: either Google or Apple would happily claim leadership status, but neither party really wants the other to go away lest actual competition or government intervention cause them to lose control of their patch of ground.
> Apple and Google may be competitors, strictly speaking, but the reality is they've pretty well carved up the market between premium buyers mostly concerned with fit+finish, prestige, and compatibility with other Apple devices, and the operating system and network infrastructure for, well, everything else.
Somehow there are heaps of expensive android phones that sell just fine. The flagship Samsung phones cost more than any iPhone.
> It's absolutely a duopoly, and so minimally competitive
Well no, there are tons of smartphone manufacturers with viable products.
> "Which competitors to $car_manufacturer engines are there for $car_manufacturer cars?"
Interesting and rather unfortunate that you should use that example, since the landmark Magnuson-Moss Warranty Act famously invalidated automakers attempts to revoke their products' warranty if aftermarket parts were installed. It's a clear example of a consumer-hostile practice that was deemed to be unfair and regulated, even though no monopoly was involved.
It’s amazing that a decade and a half later Apple still hasn’t fulfilled Steve Jobs’ original dream of merging the web and apps.
He wasn’t saying third party apps should be HTML5 just to stall for time. He really believed it. And it was a good idea and still is.
Processors, memory, bandwidth, and browsers have all advanced by leaps and bounds and yet the dream remains unrealized and Apple is the most to blame. They got addicted to the ill gotten gains of their walled garden and can’t bring themselves to kick the addiction. Rent seeking is a powerful force.
It’s pathetic for a company so good at being honest with themselves and moving forward when they know what the best future is.
The App Store shouldn’t exist at this point. It has outlived its usefulness. It’s in their users’ best interests to move beyond it. And yet maybe it’s too traumatic and daring a move for anyone other than Steve Jobs to attempt.
Tim Cook could drop the headphone jack because it didn’t damage the bottom line but dropping the App Store would actually cost something in the short term even if it is the right thing to do for everyone in the long term.
I think they were creating a walled garden and this was just lip service. Blaming it on state of tech/HTML5/etc was easy. The app store could be open from administration/censors and thus would function exactly like the web even if native code was required. The frustrating part of current state is they censor who, what, and how can be brought to market and the 30% cut is just egregious.
Apple has a history of pushing along after Steve left without any true vision until he returns. If anyone will return from the grave it's probably Steve. When he does he will probably VR Apple phones and we'll be in a new era.
> It’s amazing that a decade and a half later Apple still hasn’t fulfilled Steve Jobs’ original dream of merging the web and apps.
Because Google exists, and is diametrically opposed to this vision. The past decade have shown constant examples of these two visions of the future clashing. Google wants more people on the internet. Apple wants more people on their devices.
Interesting. I wonder if it varies from region to region perhaps? Going to do a bit more research as this guy seems quite convinced they are taking the cut but evidently you’ve experienced otherwise!
Yeah I'm not sure what the discrepancy is. This afternoon I'm going to dig a bit more into my records.
In my data right now I see a few examples of an $80 purchase match to $56 in proceeds (70%) matched to $56 of a refund.
I can't say I think the 30% fee is appropriate anymore, but this particular case being made about refunds does not appear to be accurate for me at least.
Could be that this developer is confused, maybe the way Apple represent the data is confusing in the records or something... in which case my apologies for spreading false information, but he seemed pretty convinced!
To go deeper into the rabbit hole, lots of people dislike Apple, so this tweet could have been a calculated effort to further tarnish Apple's reputation.
Plan:
1. Create fake news that X people see.
2. Wait until X is large.
3. Delete fake news, use "plea ignorance" apology to save face, that Y (Y << X) people see.
Congrats you now have a large number of people who now have an even worse opinion on the subject of the news. Repeat steps to cause even more damage.
Pretend to be the victim, whip up a whole lot of free PR sympathy and then make the minor change to the app and resubmit whilst no one is paying attention.
One developer has said (below) this didn’t seem to be the case for him, so it’s possible the original tweet poster was confused.
I have heard this rumour before and it does sound like Apple deserve the right to do this, so perhaps it varies on a case by case or region by region basis? But seems to be hard to find concrete information either way strangely!
I have requested several refunds by reporting a problem saying that the app didn’t work the way I thought it would. Automatically approved and refunded.
So to update and add to their old slogan: Think different... but we still keep our 30% cut
Tech in general has quite a few things about itself it needs to fix. Is it ethical for Apple to write the OS, run the store, sell its own wares AND compete with people it charges, eg 30%, to compete? Same question for other stores, eg Google? Both companies have analytics to determine which of the crop is successful and therefore needs to be harvested. Is this a level playing field? Do we expect such? Should we?
These aren't trivial or straightforward issues. It will be interesting to see over the next 20 years how this plays out. It would be better with a shorter time frame but... nothing involving legalities is usually fast.
Charging 30% to competitors that it doesn’t charge to itself isn’t really a problem because of opportunity cost. If an Apple product takes revenue from a competitor that’s paying them 30% then they still have all the costs of running their competing service and make less money from their 30% cut. The margins have to be really good for such a thing to be worthwhile.
Apple keeps on abusing their dominant market position to make huge profits at the expense of small developers. They subject apps to huge fees, then release competing apps at the same price (such as Apple Music). They prevent companies from selling ebooks on from their apps without taking a huge cut, again, despite the fact that they have a competing app in iBooks. These are perhaps the most egregious examples, but the list is very long of other complaints.
How long will they get away with this before antitrust regulation kicks in? They are so focused on extracting rent that they keep on poking this sleeping bear, and it eventually will be a huge problem for them. If they don’t reverse course, expect to see large reductions in their profits and stock price when this happens.
App Stores are doing to software developers what supermarkets did to food producers and most other manufacturers: moving all power and profit to distributors.
It is somewhat ironic that so many people who helped so many other sectors disintermediate again (by building websites), are now busy actually intermediating their own.
Assuming your numbers are accurate, 3% of users time is spent on non-top-10 apps.
There are 3.5 billion smartphone users. [0] Smartphone usage statistics suggest that an average person spends 2 hours and 51 minutes per day on their mobile device. [1] This works out to a cumulative total of 3.6 trillion hours of use per year. 3% of that time is 109 billion hours a year in non-top-10 apps.
You might not become a millionaire with your app being part of the 3%, but there's still real money there.
I also argue that it's the heavy commissions which push nearly every App to an ad based model, or physical services Apps which don't charge anything.
This in turn shifts more and more apps in the direction of invading our privacy with invasive ads libraries, leading to also worse privacy as a consequence. It's already pretty hard to convince users to pay for an app, the 30% cut almost guaranties it will be a bad business model.
Amazon FBA seller here. I came to look for the Amazon comment. Their returns are pretty messed up and hurt the sellers. Customer can return for any reason and the seller has to eat it. Often times it is very hard to track returns down if people return the wrong stuff. If it's broken or damaged, amazon will side with the customer 100% of the time. On top of all that, if you dispose of a damaged, non-sell-able item, they will list it in amazon warehouse, we agree to that in the TOS by having an FBA account.
If someone knows how to work with their system better regarding returns, let me know.
I stopped selling on Amazon nearly 10 years ago. FBA was a newly introduced feature which was the trigger for me see Amazon's disrespect for 3rd party sellers.
They skim the seller for the sale (because they do the marketing for you).
They skim on payment processing (it costs them less than they charge)
They skim for exposure (ads are almost a must have to ever appear in search results).
They then skim on delivery via FBA (they charge more than it costs them).
And they skim on warehousing via FBA (the pricing was already unbelievable back then).
Fast forward 10 years, they have started to skim sellers off their business analysis and risk taking effort (They have the data, and will compete with 3rd party sellers on products that sell decently enough, and even place their product before yours).
I've recently taken the time to edited and publish a book that is in the public domain, on their KDP platform, a few days later I see that Amazon is selling that same book and even redirect customer clicks from my page description and book cover to their line item to buy.
>a few days later I see that Amazon is selling that same book and even redirect customer clicks from my page description and book cover to their line item to buy.
Can you expand on this? I'm not sure what you mean exactly. Is Amazon redirecting direct links to your free book to a non-free version?
Does "customer refunds your paid app" mean the customer requests and gets a (full) refund from Apple for a prior app purchase?
(I would say "returns" not "refunds" ... Apple is the one refunding, not the customer. The customer receives the refund. But I guess this is some kind of regional/informal usage I'm not familiar with.)
If so, that's BS. Apple could reasonably keep transaction costs of something like 5%, but the full 30 is crazy.
You buy an app for $10, Apple gets $3, the developer gets $7.
You refund the app (through the Apple App Store), you get your 10$ back, but that whole 10$ comes from the developer, unlike the 7/3 split when you first purchased it.
So in the end, the developer has lost money due to the refund.
I just looked at our app store connect Sales and Trends page and for a $10 item: Apple proceeds $7 to developer and takes back $7 again from the developer on a refund.
If I get a 30% commission for a sale when the customer is referred by me and at some point in the future the customer asks for a refund I don't give my commission back. Our transaction was done when the original sale was made.
Devils advocate argument: A refund (probably) reduces the LTV of customers, and Apple has no control of the cause of those refunds, whether it be a buggy app or misrepresenting features.
The ethics of this scheme are debatable but it should be assumed that some refunds are legitimate and Apple loses tangible customer $LTV from some refunds.
This is not a valid comparison, there is no referral or commission happening here.
Compare it more to sales tax, which is a much closer comparison because it is required as part of the transaction in a monopoly ecosystem (much like a sales tax is in a country).
If a vendor adds tax to a price, and then charges the customer, and the customer gets a refund, the customer get the sales tax back, but the vendor then doesn't have to remit that tax to the government (and if they've already remitted it, they can apply for a credit).
I mean would it feel better if you got paid $10 but then Apple immediately billed you $3 for marketing and sales services?
Because that’s basically Apple’s whole thing. If you want you can just ignore their existence. You can run a very successful business on the web, Android, Windows. But getting your app on iOS and in front of their customer base is really valuable. Better than any billboard or FB ad. They know that customer acquisition is hugely expensive and that being able to sell on their platform will make you more money than not and so they charge like it.
The difference between having Spotify on iOS that can’t mention that premium exists (because that would be using iOS as a marketing vector which Apple charges for) and therefore has to do their own customer acquisition, and being able to convert customers in-app makes a big difference.
I guess in Europe iStuff isn't as overwhelmingly popular as in USA, so when I hear things like that I am always amazed at how could anyone (a developer) in their mind ever cooperate with Apple. Even writing and getting a new app to their store is a huge feat, they take a huge cuts when you make money, and when you don't they can charge you "30% of what you could make" anyway. This is just absolute nonsense.
So, they do have an incentive to let the iTunes fraud continue. Seems like a couple times a year one of my families accounts is hacked, they spend $100s and we have to dispute. We get the money back but it's costly to the devs at 30%
I would assume fraud would be fully refunded, no? This is more about legitimate Apple-sanctioned returns, not fraudulent transactions. I may be wrong, but I hope I'm not lol
This is Apple's US terms for developers of paid apps:
> You shall reimburse, or grant Apple a credit for, an amount equal to the price for that subscription. Apple will have the right to retain its commission on the sale of that subscription, notwithstanding the refund of the price to the End-User.
The answer is that you're thinking of it the wrong way. See it this way:
You make 3 sales of $100. One gets refunded. You get paid $200 - $90 = $110 instead of $140, because in practice Apple pays you in batches and doesn't pay immediately for each purchase.
You make three sales of $100 each. One is returned. You get $70 + $70 + $70 - $100 = $110. Apple gets $30 + $30 + $30 - $0 = $90.
That is, you get $70 for each purchase but lose $100 for each refund. Apple gets $30 for each purchase and loses $0 for each refund.
Apple has real costs for each transaction and the refund is not really its problem so it makes sense that it keep those transaction costs. But those aren't anywhere near 30% (well, actually on a $1-$2 purchase it might be, but too far beyond that).
Yeah I guess that's a clearer way of explaining it. I thought that part of the explanation was clear but re-reading it, I can see that was the main point that was being missed by the person I responded to.
I would guess what happens is actual money does not change hands when a purchase is made.
Instead, Apple keeps records of what it owes each developer, and at some later date (likely monthly), it makes one big payment to the developer.
Thus at purchase time, Apple enters +$70 in the records it keeps of what it owes a developer. And at refund time, it enters -$100. So the net effect of a purchase and then refund is +$70 + -$100 = -$30.
I am not a developer but I presume that Apple doesn't pay you every single time someone buys your app. So they would take the extra $30 out of your balance with them. Or, if there is no balance they will just put you into negative balance so that the next time you sell a $100 app you will only get $40 instead of $70.
This is Apple's US terms for developers of paid apps:
> You shall reimburse, or grant Apple a credit for, an amount equal to the price for that subscription. Apple will have the right to retain its commission on the sale of that subscription, notwithstanding the refund of the price to the End-User.
I just looked at our app store connect Sales and Trends page and for a $100 item: Apple proceeds $70 to developer and takes back $70 again from the developer on a refund.
Purchase:
Customer pays $10.
Apple keeps $3.
Developer gets $7
Refund should be:
Developer has $7 deducted from current owed "royalties"
Apple refunds $10 to the customer.
Is Apple actually taking $10 from the developer and giving it to the customer? That would be theft. The developer is not obligated to cover refunds beyond the profit/royalty they originally made on it.
That's exactly what's happening. The developer actually loses 30% of the purchase price due to the refund (they are now 30% in the hole instead of break even).
Frankly from my point of view this is criminal. We kept payments for our product outside the app for years, and now Apple closes that ability too, by forcing any app that accepts payments of any kind to also accept Apple Pay. We've had to basically hide the ability to find it in the app so that people will go to the website first.
It's not just Apple. Look at the state of business app stores: appExchange (Salesforce), Slack, Jira plugin marketplace,and so on. They are all milking as much as thry can.
Add this to the long list of how the App Store doesn't serve the needs of application producers are their customers, and because the needs of these very important members of the app ecosystem aren't being served it really isn't serving Apple as well as it could either.
Their customers are not developers, never have been, and never will be.
We see what "serving developers" has done to the web in general - a genuine mess. Perhaps the fee is a bit much and the refund should come with a return, but as an apple product owner, I like the general experience of my iPhone and its app stores, and I don't want them to cater to devs over me.
....but Apple processes payments for App Store purchases? And they pay to maintain the store. Storage, bandwidth, updates, those are all “work” as well. I do think 30% is quite high, but this comment seems to consider Apple a charity house that should provide these services for free
Despite the fluid nature of consideration in contract law there are checks to ensure you can't demand $5000 for a single aspirin. That seems like it'd come into play here. The 30% only makes sense in the context of it paying for more than payment processing, and consequently if the marketing wasn't effective I'd not pay for it.
Don't forget that Apple takes a yearly developer license. You're claiming that the 30% cut that they keep on a refund is used to cover payment processing (typically priced around 3%) and the marginal cost of the bandwidth to distribute that single copy of the app? Even for $0.99 apps that price is outrageously expensive. AWS, notorious for their high bandwidth pricing, costs ~2 cents per GB on S3. This is 33 cents for a dozen MB.
Nobody is saying Apple shouldn't get paid here, but keeping 30% is insane.
People are powerfully invested in beliefs they have about the world. Those beliefs become part of who they are. Facts which contradict those beliefs may be interpreted as an attack on them as a person and so must be rejected even though facts don't give a shit what you believe.
You aren’t required to sell apps for Apple platforms. Has anyone even looked at what it takes to make and sell console games?
Do you know how much manufacturers earn on products sold in grocery stores? Far less than 50% of the retail price. When distributors are involved, it’s even less. The company that makes a bar of soap might get paid $1, the distributor gets $1 and the retailer sells it for $3 and has the right to return unsold product. And shipping costs aren’t included in these amounts. The manufacturer gets $1 but also has to pay shipping to the distributor.
People complaining about 30% have no idea how real world businesses operate. They are in some kind of fantasyland. Don’t forget, the App Store also handles your worldwide sales tax payments, fraud protection, chargebacks, hosting, distribution, your storefront, your payment processing and gives you worldwide availability for your app in the specific local currencies.
If those services aren’t of value to you, then don’t sell apps for iOS. Certainly Windows Phone has some users, or perhaps create your own device and ecosystem that offers terms you find more amenable. This is Hacker News, not crybaby news: you don’t like the status quo, then get some friends, start making a better system, raise some money, then compete. If you think 30% is predatory, then make a system that only charges $what_you_think_is_fair.
As far as Stripe, they take more than 3%. And for connect accounts, the percentage is closer to 3.5% not to mention you get charged $15 or $20 for a chargeback. What’s Apple charge developers for chargebacks? Zero. How often do developers have to challenge chargebacks with Apple? Zero. If you are selling using Stripe, it can become a significant expense, depending on your industry, especially gaming.
It’s my feeling that people complaining about 30% have no idea of the expense of “doing it themselves.”
Retail is crazy miserable for the person actually MAKING the product.
Getting INTO stores is hard. The store can dump product back onto you - so they have no risk. The price on shelf has NOTHING to do with what you get, if you are small you are already going through some intermediaries. Ie, person making product, packing, shipping to distributor (some make you pay cost to get it to them), then distribution costs then retailer markups then return handling yadda yadda. THEN retailers will ask you to run promos and give them discounts or they will drop you.
3%? EVERYONE would pay that. In retail I'd say person making product gets maybe 20%? 80% is taken by others?
It is true, and I don’t see anyone on that thread saying it’s not. I see a guy confused about whether it’s the consumer or developer that eats the fee - it’s the developer.
This is exactly how it works:
* Customer pays $10
* Apple owes developer $7 (to be paid in 4-6 weeks)
* Customer asks for refund, Apple sends them $10 back
I believe the real answer is that they do keep it (at least sometimes) for chargebacks but not for regular refunds.
I've seen the discrepancy in our own accounting, and as mentioned elsewhere, it's in the App Store terms. But Apple's dashboard doesn't show a clear difference between chargeback and refund, and maybe that's where the story originated.
HN won't let me amend my comment above, but I stand by the claim that this happens on chargebacks. Otherwise the App Store Connect numbers don't add up.
I think the truth has some nuance, but that doesn't work on the internet, it's got to be either an outrageous story or "total fake news".
People keep talking about 30% cut but it's actually more than that if you look outside of U.S.
Apple takes more than 30% cut for in-app purchases made in other countries. For example, an in-app-purchase (IAP) you sell in USD for $15.99 is translated to 1249 Indian Rupees and you get a proceed of 741 Rupees which is only 59%. So Apple keeps the rest 41%. Today's (when I wrote this) exchange rate shows approx. 76 rupees for 1 USD so the amount they charge the user is pretty accurate but Apple put so much wiggle room in their favor. This is true for other currencies as well.
This is unfortunate. I recently searched the App Store for “ssh tunnel” and Prompt 2 came up. I bought it without much thought as I heard about.
Now I should have done my research but it doesn’t support tunneling or I couldn’t figure out. Some research told me that no iOS ssh client will. So I requested a refund and got it.
In this case I think the blame was on Apple. Not the author of the app.
It's Apple's fault that they made a standard ssh feature impossible on ios, yet still allow apps to be called "ssh".
No dvd player manufacturer created a dvd store where they sell dvds called "The Beatles" but every Beatles dvd is missing Ringo because their dvd store censors Ringo, but dvds are still named The Beatles.
From the perspective of an iPhone user, Apple does a reasonable job of keeping nefarious apps out of the app store (not prefect, maybe not even great, but reasonable). Most apps that have a set price and not a subscription are reasonably priced and one does not feel/notice that Apple takes a 30% cut. The end user experience is reasonable.
I feel like getting rid of the app store, or even just allowing side loading, would open users up to a lot of nefarious software.
If we assume that consumers like the App store and that its not going away, how do we satisfy developers but allow consumers the comfort of the walled garden?
I don't think the issue is that Apple is keeping its fee even with a return. That on some level is fair. They are providing a service to the developer.
The bigger question is whether their cut should be 30% in the first place.
30% was chosen by the first store of this type and it's just never been questioned by platforms. I just read that Valve recently changed their agreement to be a sliding scale based on sales (30% to start, falling to 20% if you hit certain numbers).
But as far as I know, Microsoft, Sony, Apple, and Google all do a 30/70 split on digital sales.
Not as much collusion as simply lack of competition.
You don’t have any other options for most of their respective platform and there isn’t enough incentive to compete on the pricing.
Also even when there is competition there are rules that prevent you from lowering pricing in one store vs the other (there are some exceptions) so if you end up say selling a game on the PC and you set the retail price as $60 and you launch it on 3 different digital content distribution platforms while you might make more money on one platform than the other there is no difference for the end consumer so there isn’t an actual competitive incentive to reduce your cut as a digital distributor unless you think you can get an exclusivity deal.
They could take 70% or 95% and there will still be posts saying that the market is 3.5 billion people and 5% isn't bad because Apple/Google do all of the marketing.
Other than games, MS is a 15/85 (or 5/95 split if the customer purchases via following a deep link from the publisher’s site or app) split on digital sales.
I have mixed feelings about this and understand there are cases where it is unfair and where it is a fair penalty.
I see the case where your child spend money via an in-app purchase in Roblox. Where The kid buys USD 1k in robux and the Roblox app never complain... Where we are using two factor authentication and all kind of measures to protect credit card purchases. So, I think you can blame Roblox or Apple for not adding these measures. This is like a dark pattern hidden in the "frictionless" payments via apps.
The last time this came up, in 2009, I looked at my reports and concluded the same thing- when Apple reported a refund, they were deducting 70% of a sale from my future earnings, not 100%
This is a critical consideration in these 30% store fees. They come off the top, before funding any developer costs. As a result, Apple and Google make more profit from most developers' games than the developers themselves. That is terribly unfair and exploitative.
Nobody seems to be taking this to the logical conclusion. If Apple's behavior is not desirable, then don't build apps for the Apple app store. They're apparently providing enough value in giving developers access to premium customers that this aggressive behavior is worth the trade-off for many developers.
Apple's app store provides value to developers and customers because it is the only method of delivering apps to iphones. If there were other app stores that charged 20% less for the apps, then developers and customers would use those.
(nitpick) The use of the verb "refund" seems confusingly wrong in this sentence. Neither the customer nor the paid app is paying back any money. I know it's Twitter, but it'd make a lot more sense to say "When Apple refunds a customer of your paid app..."
One more reason for society as a whole to get rid of greedy tech monsters dependency like Apple in long term.
Remember You often have a choice to not support this platform and move towards web by default even if it is not easy (Apple enforce to use their web engine to make sure you are in a slave position on iOS)
They should refund half of the 30% to pay for their costs and whatever, like a handling service. Unfortunately that still means the seller is paying for returns, but Apple probably is legally required in most countries to refund the buyer fully, what do I know.
Of note: as of last October, if a PayPal merchant refunds a customer for any reason, PayPal is no longer refunding their payment processing fee. The merchant will need to refund that to the customer at their own expense to grant the customer a full refund.
A fair and equitable App Store model that also protects users would be one where it’s opt-in. Apple vetting an app should be independent of distribution. Developers can then choose whether they want to use the App Store or not.
This probably lower incentives for App devs to create refund situations. For example you attempt to get people to download your app by misrepresenting it. Most will not get refunds, and the Dev gains from such behaviour.
Stripe started doing this as well, as of a few months ago. Makes it tougher to be generous with refunds for people, knowing that we literally lose money doing so.
Fortunately their cut isn’t the massive 30% that Apple takes.
The “cost” of refunding a $9.99 app is the same as the “cost” of refunding a $0.99 app. Sure, let them keep some amount for payment processing but it should be a constant.
PWA web app needs a store to be the distributor for small web apps, making it easier for small developers to monetize more than just ads. Where is Mozilla, MS, Google, Amazon?
Most likely, but the fees are more like 30p + 2.9% (atleast in the UK, on PayPal) or something similar, which on a 99p app would be 30%, but on a $15 app it's obviously nowhere near 30%.
This is a serious misunderstanding by someone in a pretty incredible way. Literally a single person claiming this and _multiple_ people refuting it from their own experience.
Yet it's top of HN. Amazing. A lesson to never, ever trust anything here because the masses clicked an arrow.
Of all the chatter around anti-trust, has anyone broached the app store and apple’s monopoly on iOS software?
I am using the term in a colloiquial, non-legalistic sense.
My fear is that politicians are invested in tech stocks, like the rest of us and pretty much anyone with a mutual fund, so they are unlikely to act in a pro-consumer manner.
If you went and bought a new car for $50,000 and then needed to return it and get a refund you wouldn't be very happy if the dealer gave you $45,000 back and said "Sorry, the salesperson gets to keep their commission. They earned that money." The dealer wouldn't be very happy if the salesperson said "No, I'm keeping my $5,000. I did my part and I earned that money." If there's a refund then everyone gives their part of the money back.
Apple were part of the transaction, so if there's a refund they should return the money they earned. They can't just ignore the customer's wishes to get the money back, and they can't just pass the loss on to the developer. Neither would be fair.
Perhaps the refund is caused by the store itself? Is it inconceivable that the distribution, visibility and framework caused the customer to misjudge the product?
Because the customer is getting a refund because they're asking Apple to unwind the transaction. Apple makes the customer whole, Apple makes Apple more than whole, and Apple makes the developer less than whole.
Seems fair to me. Apple provided with you a service and charged your for it. It is a cost associated with distributing / developing your product. Why should Apple be responsible for refunding you? It was not their fault that the customer decided their money back.
Apple prices the exact same things into hardware distribution too, but when you ask for your money back there they give it back in full, not minus the “service” they already provided you.
And I think that’s great! I just don’t think they need to be forced to do it. If I were Apple I would definitely refund. But I don’t agree that it should be an obligation for them to do it.
No it’s not fair. This can be a tool that competitors use to hurt you financially. If the customer gets a refund the slate should be wiped clean. That’s fair.
It’s easy to think it’s fair because the cost to Apple is low. But in principle, let’s assume that it costs Apple a significant amount of money and effort to make the transaction happen, for which they charge you that 30%. Seems unfair then that Apple has to be held responsible for refunding a service they provided when it was not their fault the customer wanted the money back for your product.
Well yeah, I still need to pay shipping for amazon to send me a product even if I need to return it because it's broken. I would have no product to return if I did not pay for the shipping to receive the product.
Apple would justify that 30% being non-refundable by saying "you would have never had that client to refund if you did not give us that 30%". They did their job, they got you the client, you were the one who did the bad job and made the client pursue a refund.
You pay a toll to cross a bridge, but it turns out to be the wrong bridge. You don't get your toll back, you still crossed the bridge.
Apple's responsibility is to the transaction. Their job as a marketplace is to make transactions happen. By making the initial transaction happen, they get their 30% cut (if you think 30% is too high, that's fine, but that's not what we're talking about here).
The customer's experience is now in the developer's hands. If the experience is botched, somebody has to cover the full refund. Since the bad experience happened outside of the transaction, it's not Apple's responsibility, it's the developer's; they need to shoulder the full refund. It wasn't Apple that fucked up.
If the user didn't understand the app before buying, that's still on the developer. If the app has issues because of some dependency on wonky Apple implementations, that's up to the developer to communicate to potential clients. The developer is responsible for the experience after the purchase is made, therefore they are responsible for the full refund if the client wants one.
Isn't marketing Apple's job. If the message was communicated it would be upto them.
The problem is Apple doesn't need paided third party apps as much as they use to. The app store gave them runway to develop important apps internally. Big name/vendor free apps are welcome.
My point is that the fee is about “delivering you the customer”. Apple delivered you the customer. That the customer and you were unhappy is no bearing on their ability to deliver that customer to you.
Apple has all the reasons to entice the customer into buying the product and encouraging them to do so by offering a full refund, and they take none of the risks because the make the same money either way.
I am surprised of how many people don't see the conflict of interest here.
Marginal cost is often not a good way to evaluate things.
A person who focuses only on marginal cost will say "It only took you an hour to make that" while discounting the decades of training it took to be able to.
A person who focuses only on marginal cost will say "I could have made this at home" while discounting the reasons why they didn't.
The amount refunded minus the continuing value to the user of the returned product (absent the value already extracted from the product by the user), of course.
https://twitter.com/twolivesleft/status/1288625617873694721?...