Summary: Apple controls what apps get onto iPhone and iPads via its full control over the iOS App Store. Every app (and its updates) need to be reviewed by Apple staff before it’s allowed in the store -- and Apple puts in place its own rules for what is and what is not allowed.
One of those rules is that Apple takes a 30% cut of any sales. That fee has become somewhat controversial, especially among service providers who don’t rely on the App Store for discovery, but whose customers likely come on their own -- including Spotify and Epic Games. Spotify, in particular, has urged users to subscribe directly, to avoid having to pay the additional amount per month to cover Apple’s fees. In response, Apple forbade Spotify from even mentioning that it’s cheaper to subscribe outside of the App Store, which is now a central piece of an antitrust fight that is ongoing in the EU.
Perhaps because of all of this, Apple has had to make decisions about whether or not to allow apps in the App Store that seek to avoid paying Apple’s cut of the fees. In August of 2020, Matt Mullenweg, the CEO of Automattic, and the founder/lead developer of the WordPress content management system, announced that the iOS app for WordPress had been frozen by Apple. The given reason was that Apple believed that WordPress was trying to avoid the fees for in-app purchases.
This was the cause of much confusion, as many people noted that the app did not actually sell anything. While WordPress.com does offer paid hosting plans (and domain reselling), that was not a part of the WordPress app. However, as Mullenweg’s tweet showed, Apple was noting that because somewhere else in WordPress.com’s business, it sold things, that meant that WordPress had to pay it a 30% cut of those sales (even though they were outside of the app itself) in order to keep the app in the App Store.
Decisions to be made by Apple:
- How thoroughly should the company be reviewing the business models of apps in the App Store to determine whether they can be included?
- What actually constitutes an attempt to get around the App Store fee?
- Will app developers take advantage of exceptions to the rules if Apple does not follow them closely?
- Should the company allow alternative ways of getting apps on the phone outside of the App Store?
Questions and policy implications to consider:
- When a company builds an entire device ecosystem, should it be able to set its own rules for what apps are allowed on the device?
- Can content moderation decisions raise antitrust concerns?
- Are there policy implications of a single entity reviewing what apps are allowed on a device?
Resolution: As this story got more attention, Apple apologized and restored the WordPress developer account. However, its statement on the matter implied that WordPress had “removed” an option in the app to pay for hosting plans:
We believe the issue with the WordPress app has been resolved. Since the developer removed the display of their service payment options from the app, it is now a free stand-alone app and does not have to offer in-app purchases. We have informed the developer and apologize for any confusion that we have caused.
But users of the app say it never had any in-app purchases at all. The only thing it had were descriptions of WordPress.com Premium offerings, but no way to buy them. Mullenweg said that, before going public, he had asked Apple if removing those mentions would restore the account, and Apple had said it would not.
The reinstatement appeared to take Mullenweg by surprise.
In January of 2021, Apple also moved to lower the cut it took for in-app payments from “small” developers (those making less than $1 million a year in annual sales) to 15%. It was also revealed that Apple quietly cut a special deal with Amazon to charge the retailer a 15% cut for Amazon’s Prime Video app.
Written by The Copia Institute, March 2021