Roger Fingas
Actions by Spotify and regulatory bodies could put "more pressure" on the App Store, potentially even leading to Apple lowering its revenue take, Macquarie Research said on Thursday.
"With growing calls from more robust regulation, we continue to view app store pricing as an area that could see more pressure," it said in a memo. Both Apple and Google are said to be facing legal, regulatory, and competitive challenges to the 30 percent commission they claim from most app transactions.
On Wednesday, Sweden-based Spotify launched a complaint with the European Commission, arguing that Apple takes more money than it should be entitled to, isn't providing information on customers to vendors, and is unfairly limiting third-party access to technologies such as Siri, the HomePod, and the Apple Watch.
Apple Music has an unfair advantage, Spotify indicated, in that it's not only integrated across Apple's platforms, but doesn't sacrifice the 15 to 30 percent of revenue that third-party services do. At one point Spotify offered in-app subscriptions, but at a higher price than through the Web to compensate for lost revenue. It ultimately dropped the in-app option rather than maintain a discrepancy.
Google wasn't mentioned in the complaint, Macquarie noted, but likely because Spotify has more freedom to work around that platform's restrictions.
"The bottom line is that if the App Store commission structure is lowered to 12-20 percent, our overall '20E EBIT [earnings before interest and taxes] forecast for AAPL would fall 7-15 percent," Macquarie said. That would naturally benefit app developers and publishers.
Spotify isn't the only prominent company to abandon in-app subscriptions. Netflix followed suit in December — it wasn't charging extra on the App Store, likely putting a serious dent in its bottom line.
AppleInsider Staff
Malcolm Owen
William Gallagher
Wesley Hilliard
Bon Adamson
Thomas Sibilly
12 Comments
Lost in all this is that in-app renewals second-year onward are charged only 15% (as of 2016), correct? I don't seem to see this mentioned by Spotify or others.
The app developers have a point, but when the revenue is big enough they’re going to leave app purchases anyways.
Netflix isn’t going to pay out 15% let alone 30% unless their business model changed. If they started selling movies within the iOS Netflix App that would probably make it worth it to pay Apple 15%.
Basically, if it’s one payment a year developers will handle payments themselves. But, if their are micro-payments then the ease of use of Apple is worth it.
I’d like to see payments at 15% but I don’t know if Apple is eating any credit card charges.
Th problem is, when Apple invented iPhone and App Store, no one had a clue how big it would get. Now idiots want Apple to pay a penalty for success. The deal was done in 2007-2008. Don't like it? Don't use it.