🙇‍♂️Digital Serf: Is Apple’s 30% Tax Monopolistic?

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Happy Monday everyone!

Or rather, Happy Halloween 🎃

Regardless of whether your culture appreciates the history of Celtic people wearing costumes and lighting bonfires to ward off ghosts in the medieval times (believe it or not, that’s how the tradition started), Halloween has pretty much become a global celebration now.

However, for pretty much the entire Tech industry, Halloween came a week early, as Apple updated its App Store policy, in a move that can potentially have rippling effects on the business models of multiple industries.

While Apple has enabled thousands of developers to build millions of apps, it has been at loggerheads for the exorbitant fees it charges

What is it exactly?

As per a change in their App Store Review Guidelines, developers including any kind of purchase of digital goods/subscriptions within their apps on the iPhone, will have to shell out a flat 30% fee to Apple.

Popularly known as ‘IAP’ or ‘In-App-Purchases’- this 30% cut straight out of the app developers pockets has historically been a controversial topic, with the infamous lawsuit between Apple & Epic Games — the $32 Billion video game company- popular for being makers of ‘ Fortnite ‘

While that lawsuit was ruled in the favour of Apple, & denied Epic’s claim of it being a Monopoly, it still ensured that Apple allowed developers to inform users that there were alternate ways to make payments for in-app purchases/subscriptions.

The lawsuit between Epic Games & Apple was a water-shed case for anti-competitive practices by Big Tech companies

The standard practice adopted by app developers, involves re-directing users to their main website & enabling them to complete the purchase from the web, which obviously avoids the entire 30% tax.

While that is how most developers are now charging users, Apple is making sure it makes life hell for those trying to by-pass Apple’s digital toll-booth.

How exactly?

That includes stuff such as:

💸 Paying money to boost an Instagram Post

🖼 Buying an NFT on an iOS App

📲 Purchasing an Audiobook on Spotify.

While this predatory tactic of Apple has been acknowledged by developers as a pain-point in the past, last week’s changes have seen everyone from Spotify CEO Daniel Ek, the entire Crypto community, Meta & even Elon Musk chiming in to call out Apple on its monopolistic practices.

https://twitter.com/eldsjal/status/1585021459717840896?s=20&t=_um9DSUcAmZw2MrFAk5Lgw

My favourite take was from the Crypto podcast ‘Bankless’, which particularly highlighted how even NFT’s within apps on iOS will now attract the 30% tax, comparing developers building within the iOS framework as a ‘Digital Serfs’ working for the feudal landlord that is Apple.

Keeping the obvious click-bait euphemism aside, I think what they’re trying to say makes a lot of sense.

While creators of NFT’s can still obviously let users buy them on web and not pay the 30% fee to Apple, for these tokens to achieve mainstream adoption, it is inevitable to launch a compelling user-experience for the mobile.

And Google which owns Android & Apple’s iOS, power & control pretty much the entire smartphone industry.

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In fact, even Google was recently fined more than $100 Million by CCI (Competition Commission of India) for their unfair practices around not letting developers use external billing/payment services for in-app purchases.

So while Instagram has built a multi-billion dollar Ad business, Spotify has disrupted the music streaming industry & NFT’s have democratised ownership of art (or has it?), end of the day- they’re nothing but digital serfs to the feudal landlord that is Apple.

In fact, at the height of the Epic Games vs Apple lawsuit, the makers of Fortnite released a parody video of Apple’s original 1984 Advert, highlighting how it had turned into a monopoly it fought against back in the 80s 👇🏻

https://youtu.be/euiSHuaw6Q4

While Apple made this Super Bowl Ad targeted towards IBM being the ‘Big Brother’ monopoly in Personal Computers back then, life came a full circle for them.

Just like any other monopoly throughout the history of corporations, app developers must pay their pound of flesh in order to reap the benefits of having their products being accessible to billions of users around the world via iOS & Android.

Our Take On This?

It is foolish to turn a blind eye towards the amount of value creation Apple has done for humanity, with over a billion iPhones worldwide fundamentally changing how people around the world live their lives.

With over 2 million Apps, iOS has become a mini-economy in its own, with Apple claiming that it helped create 2 million jobs in the US, & helped small businesses/entrepreneurs extend their products to millions of users around the world.

However, charging 30% for every in-app purchase is A LOT.

It is one thing for Apple to go after Meta’s Ad Business specifically, for nascent industries such as Web3, it will simply make it unsustainable for developers to experiment with NFT’s or any other such digital goods.

Does Apple really care? Probably not.

They might claim to do so, but it’s super interesting to see how the entire narrative around Apple has changed, from the company that fought against the ‘Establishment’ to becoming the biggest of them all.

As they say:

“You either die a hero, or live long enough to see yourself become a $2 Trillion monopoly”

Have a good week everyone!

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Originally published at https://incentify.substack.com on October 31, 2022.