“I think taking 30 percent from app developers is egregious,” says Alex Kantrowitz, publisher of the Big Technology newsletter. “It feels like protection money to me. As long as the company continues to rely on other people’s money to make its bottom line it’s going to turn slodgy, slow, bureaucratic, and I think it will eventually fall apart. Apple should back down because rent collecting is bad for its business long term.”
Alex Kantrowitz, founder and publisher of Big Technology, believes that Apple should back down in its battle with developers like Epic Games because it is bad for their brand and could lead to epic failure for Apple in the long term:
Epic Had Public Relations Campaign Ready To Go
I don’t think it’s any accident that Epic went right after Apple’s brand which Apple has worked very hard to cultivate. Apple is a luxury product. What Epic is doing is trying to make this a battle for Apple where it says, do you want 30 percent of our revenue in the app store? Now you have to go from a company that everybody looks up to to a company that owns what it does, which is rent collects on the app store and takes 30 percent of our revenue.
That’s why Epic has had this public relations campaign ready to go. It’s why it spoke about Apple’s history in the lawsuit. It’s why this was so planned, one move after the other, to show the public that this is actually what Apple is. If Apple is going to take our money they better own what they’re doing.
Apple Taking 30 Percent From Developers Is Egregious
What do developers get from the 30 percent that they pay Apple in terms of the revenue that they hand over to stay on the app store? They get the right to exist, that’s one thing. They get quick payments, that’s another. What else are they getting and is that amount of money actually worth it? Would they be paying anybody else that amount of money unless that other person had a monopoly?
I don’t think it is worth it. I think 30 percent is egregious. It feels like protection money to me. Maybe we get somewhere in the 10 -15 percent range, that seems like the right amount for a developer to pay to Apple because Apple does provide some value. But the number right now is just totally out of whack and it exists because Apple has a monopoly on that store. It’s good that we are seeing somebody challenge what Apple’s doing.
Apple Is The Only Show In Town For Developers
Apple is basically the only show in town. If you don’t like what’s going on inside Walmart you go to your neighborhood store. If you don’t like what’s going inside the Apple app store where are you going to go? Maybe you can go to Google but Google is doing the same exact thing. I do think that Apple should definitely charge developers for what they’re getting.
The question is do developers have any wiggle room so that they can have an opportunity to negotiate with a company like Apple? What Epic is showing is that is not really the case. This is how markets (should) work. You want to have the ability for the supplier and the demander to figure out a price that makes sense versus the supplier just setting the price and your sort of out of the market otherwise.
Apple Will Eventually Fall Apart If It Doesn’t Back Down
Apple should back down because rent collecting is bad for its business long term. You have to decide as a business, do you want to make your money milking your asset or do you want to make your money innovating into the future? Right now Apple has decided that it wants to be a rent collector. It’s worked out fine under Tim Cook, I won’t deny that. If you think about Apples’ long term sustainability does it want to build a culture where it’s business is taking a fee off of other people’s businesses or does it want to force itself to invent its way into the future?
If I’m Apple I’m thinking long term. I want to have a more inventive culture, not a more asset milking culture. As long as the company continues to rely on other people’s money to make its bottom line it’s going to turn slodgy, slow, bureaucratic, and I think it will eventually fall apart. If I’m Apple, the case right here is to back down and think about where I’m going in the long term and it should be in an inventive way and not a rent seeking way.