Apple & Google Face Backlash Over App Store "Tax"?
Written by Lucy Black   
Thursday, 23 August 2018

A new report, and a Bloomberg commentary on it, claims that there is a revolt against the app stores building. Given the current state of the market this seems reasonable, but is it true? There are some interesting statistics to suggest that Apple and Google really need to hope it isn't.

 Image result for app store

The Bloomberg report is mostly a compilation of separate events tied together by a report by Ben Schachter, a well-known analyst at Macquarie:

"It feels like something bubbling up here, The dollars are just getting so big. They just don’t want to be paying Apple and Google billions."

The "they" isn't specified but it seems to be Netflx, Epic games and Valve that are credited with making moves to try to get their in-app purchases moved to their own online stores. So far, so vague; and there certainly isn't a suggestion of a ground swell of revolt from the "peasants". The closest we come to that is an attempt to get a pressure group together The Developer Union Wants To Negotiate Nicely With Apple. This was back in May and at the moment the supporter count stands at 570 developers responsible for 667 apps. Not really much pressure on Apple then. I don't know of a Google pressure group - comment if you do.

It seems the suggestion is that the big players are trying to find ways to not pay Apple and Google for getting very little in return. The report states that the "tax" for selling apps is up to 30%. It seems fair to call this a tax in the case of Apple because there really isn't an alternative to the Apple App store. In the case of Google this isn't so clear, as there are alternative app stores to Play, but given that only Play is preinstalled on most Android phones, the monopoly of sales is still fairly clear.

An interesting statistic is that if Apple cuts its commission to between 5% and 15% it would knock 21% off its earnings. Who would have thought that Apps were that important to it. The estimate is that Google would lose 20% as a result of the same measure. The market is worth $50 billion each for Apple and Google in 2020 according to Bloomberg.

The report then goes on to list the big players taking steps to circumvent the Play store and at best in-app and subscriptions via Apple's App Store as selling though it is unavoidable. The point is that if you are big enough the users will beat a path to your door and they will trust you. This leaves the rest of us fairly out in the cold as far as a revolt against the app tax is concerned.


An aspect of the situation that isn't discussed in the report is the roll of Apple and Google as brokers with no investment in the product. For example, you sweat day and night to create an app that is, to you, invaluable. Google and Apple have put no effort into creating the app and almost no effort into selling the app. They get their cut no matter which app sells and if they can increase the sales volume by reducing prices then so much the better. With no stake in the game, they don't even purchase stock, which most other online or bricks-and-mortar shops have to do. They sit back and wait for app submissions, do a bit of checking that the apps are within guidelines - guidelines that are often mostly to do with protecting the apps store's profits and wider commercial interests of Google and Apple.

Apart from a few big names trying to reduce Google and Apple's cut of the profits, I don't think that there is much evidence of any sort of revolt against the app tax, which is a very sad conclusion.



More Information

Apple and Google Face Growing Revolt Over App Store ‘Tax’

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A backlash against the app stores of Apple Inc. and Google is gaining steam, with a growing number of companies saying the tech giants are collecting too high a tax for connecting consumers to developers’ wares.

Netflix Inc. and video game makers Epic Games Inc. and Valve Corp. are among companies that have recently tried to bypass the app stores or complained about the cost of the tolls Apple and Google charge.

Grumbling about app store economics isn’t new. But the number of complaints, combined with new ways of reaching users, regulatory scrutiny and competitive pressure are threatening to undermine what have become digital goldmines for Apple and Google.

"It feels like something bubbling up here," said Ben Schachter, an analyst at Macquarie. "The dollars are just getting so big. They just don’t want to be paying Apple and Google billions."

Last Updated ( Thursday, 23 August 2018 )