Elon wants to go to war with Apple. History suggests it’s probably not going to make a difference.

Elon Musk sent Twitter staff a memo on Thursday confirming job cuts would be announced on Friday.Carina Johansen/Getty Images

  • Elon Musk isn’t the first — or necessarily most powerful — exec to take on Apple’s App Store fees.

  • Industry insiders from developers to CEOs have long decried the 30% fee, dubbed the “App Store tax.”

  • Lawsuits, regulatory bodies, corporations, and many others have failed to enact much change.

Elon Musk publicly launched a tirade against Apple this week, decrying the iPhone maker’s “secret” 30% fee for all in-app transactions on its iOS platform.

While Musk is new to this particular fight, it’s part of a war that’s been waged in the tech industry for years now: Over the years, everyone from independent app developers to CEOs have decried Apple’s “monopolistic” grip over its App Store, requiring the use of its in-house payment processing service.

Still, Musk is arguably the most mainstream public figure to challenge Apple, and his very public stance on the issue shines a light on what had been a relatively niche issue for app-dependent businesses. For Musk, who’s stated his intentions to turn Twitter into an “everything app” that rolls social media together with shopping and other forms of online payments, that 30% cut could present a meaningful drag on the business.

“It’s a very unique thing to have someone who’s also the richest man in the world to have the same problems that a small app developer — that maybe has one or two employees — is also experiencing,” said Rick VanMeter, executive director of the industry. group Coalition for App Fairness, a frequent critic of the so-called “Apple Tax.”

At the same time, Musk’s riches and influence may not be enough to turn the tide and get Apple to be relentless. Over the years, Apple has fended off lawsuits, regulators from around the world, and its peers in the tech industry — none of which had much success in getting Apple to change its approach to in-app payments.

But history might not be on the new Twitter owner’s side. A high-profile lawsuit, global regulators, and major companies have all tried changing Apple’s app payment systems with little success.

Epic Games challenged Apple even more directly

The most high-profile challenge to Apple’s fees came in 2020, when Epic Games sued after its mega-popular game “Fortnite” was pulled from the App Store for offering users discounts if they used non-Apple payment methods to purchase digital goods.

A decision in the lawsuit came in late 2021, when a judge decreed largely in Apple’s favor except for a concession that the iPhone maker must let developers link to non-Apple payment methods. Both parties are currently appealing the decision, leaving the ultimate outcome and impact of the legal clash uncertain.

Epic’s challenge was, however, successful in advancing the larger cause of putting pressure on Apple to change its ways. Shortly after the suit was filed, a group of companies including Spotify, Tinder parent Match Group, Tile, and Blockchain.com formed the Coalition for App Fairness, with the self-appointed mission of advocating for a more balanced dynamic between apps and their marketplaces. .

The coalition introduced 10 principles that it wants all app marketplaces to follow, including a request to get rid of “unfair, unreasonable or discriminatory fees or revenue shares” and a more basic plea to let developers communicate with their users more directly.

Apple has largely resisted regulation

Apple CEO Tim Cook.

Apple CEO Tim Cook.REUTERS/Eric Gaillard

VanMeter of the Coalition for App Fairness said the renewed attention to the App Store’s 30% transaction fee re-emphasizes the problem and the need for legislative solutions.

Regulatory bodies in the United States, Australia, Japan, South Korea, Russia, and other countries with significant iPhone users have also set their sights on Apple’s App Store payment structures. The European Union, Japan, South Korea, and the Netherlands are just some of the jurisdictions that have successfully passed laws targeting the “Apple Tax,” with others like the United Kingdom expected to follow suit soon.

The US, however, has so far not joined in — though a bill called the Open App Markets Act has languished on the Senate floor since its introduction in February.

“If the United States does not act, it really risks falling behind these other jurisdictions that are moving forward to address the issues of competition in the app market,” VanMeter said. “The United States has a real opportunity here to be a leader in that discussion.”

Even in those places where Apple faces new laws that curb some of its power, however, the tech giant hasn’t always shown full compliance. Dutch and South Korean regulators have clashed with Apple, which has so far made few if any changes to how it does business in those countries.

All of which means that Musk and his followers are joining a fight that’s been raging in public and private spheres for a while now, and it’s not clear that he’ll be successful in pressing Apple into rethinking things. But Evercore ISI analyst Mark Mahaney also says that the weight of his influence does change things at least somewhat.

“I don’t know that it’s any different,” Mahaney said. “I don’t know that he’ll get a quick resolution to that any time soon, but his voice will matter.”

Read the original article on Business Insider

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