Zarf Updates

(Headnote: Somehow January is an eleven-post month on this blog, which is a personal record. Yes, that includes four IGF blog posts that I cued up in December, but even aside from that it's been a big writing month. On top of starting a new job! I don't know what happened! Sometimes the interesting topics rattle down the chimney and well up between the floorboards.)

Apple just announced new App Store policies, which include a "Core Technology Fee" which is charged per install. I whaled on Unity pretty hard for announcing a similar fee, so I figured I should compare Apple's version.

The short answer is, this is very different policy and I don't think Apple is screwing developers over. With a few exceptions, which I will get to.

The big differences are:

• Apple's CTF terms are opt-in. If you want to continue using the old App Store terms and fees, even in the EU, you can.
• The CTF is offset by a reduction in Apple's App Store cut. If you opt into the new terms, Apple will take 10% of App Store revenues instead of 15%/30%. (For sales in the EU.)

The upshot is that the new terms are probably an improvement for most paid apps that sell in the EU. The CTF is "per install per year", but it kicks in over 1,000,000 installs per year, whereas the reduced App Store cut is across the board. If you have a very popular free (or ad-supported) app, the new terms could hurt you, but then you just don't opt in.

(For a great deal more detail, see John Gruber's analysis or probably a thousand other articles that I haven't read.)

(I can imagine an edge case where you have a modestly popular paid app and a very popular free app. Gonna have to do your own spreadsheets on that one. In any case, the addition of new opt-in terms can't hurt you in an absolute sense.)

To get into Apple head-ology, which is never a sure bet but I do it anyway:

It's pretty clear that Unity's motivation for their fee changes was, "Crap, we need more money, and developers are the only people we can get it from." Apple is very much not in that position. Apple is reacting to new EU regulations about App Store gatekeeping.

I'm not going to say that Apple was forced into these terms by the EU. Apple's whole deal is "we do what we want". But it's safe to say that Apple was perfectly happy with their original App Store deal; they would have left it as-was forever. That's why they are continuing to offer the old terms as an option.

This, at root, is how Apple's news is different from Unity's. Unity changed their deal without warning, without recourse, and left developers terrified of what next year's deal would be like. Apple is very clear on what deal they want to offer. Any attempt to budge them from it will be met with a full-court legal battle.

(Possible exception: Apple's Small Business Program, which gives people like me a break on App Store fees. That wasn't a direct response to regulation, but Apple announced it right after the Epic lawsuit was filed. That was surely meant to burnish Apple's legal image. And also to contrast Apple with Steam, which gives a break to the largest developers.)

In the context of the EU's Digital Markets Act, Apple's strategy is obvious:

• The EU says we have to allow sideloading of iOS apps and alternate payment processors.
• This cuts into our App Store revenue stream.
• But we can claw some of that back by shifting part of the App Store fees into a technology fee. Developers who keep using the App Store won't care (overall). If you stop using the App Store, we still get some money.

It's not that Apple needs the money. (Good grief no.) From their point of view, it's the principle of the thing. Regulators can tell Apple to allow more options, but they can't tell Apple to not make money. Apple's response to the steering-link ruling a couple weeks ago was exactly the same: okay, we'll allow the links, but we'll still make money off them(*).

Of course this is why Tim Sweeney (the Epic guy) is spitting tacks. Ditto Spotify and so on. This whole thing, or at least the public face of it, was kicked off when Epic decided, "Let's sell Fortnite on iOS without giving Apple a cut."

Of course he couldn't say that. He had to talk about "app fairness" and gatekeeping and monopoly storefront control. And now we (or at least the EU) have regulations about monopoly storefront control, which don't actually say that Apple can't charge Epic a fee. So Apple smirks and charges Epic a fee.

Is that against the spirit of the regulation? It's certainly against the spirit of what Tim Sweeney wanted. And Spotify and so on. But that's not the same thing.

Speaking as someone who is neither Tim Cook, Tim Sweeney, nor a EU regulator, I find the outcome hilarious. I suppose the lawyers will be back in court soon enough.

(* For what it's worth, I agree with Gruber's take on steering links: Apple's position on them is a liability to the company. That's a bad hill to nail your mast to. Or some such mixed metaphor. But this is separate from the question of App Store control.)

As for me personally:

At a very rough estimate, I could make an extra five or six bucks a year if I accepted Apple's new EU terms. (I would be going from 85% of EU App Store sales to 90%, on long-tail revenue.) Not worth it.

In some sense it's free money, but I have a well-established procedure for extracting sales data from Apple's site. Not mucking up the spreadsheet format is definitely worth five bucks a year to me. Also, I hate change. So I'll leave well enough alone.