Apple From Inc.
The annual conference for software developers started on Monday. It came up with something unusual for the iPhone maker: app developers unhappy with the terms of its App Store.
CEO Tim Cook kicked off the week-long Worldwide Developers Conference, typically a pep rally for the company and its acolytes, with a virtual event streamed on the company website that revealed the planned software changes. for this year. Those included updates to its iMessage texting system that include new ways to share photos and changes to FaceTime video calling software that aims to improve sound quality by reducing ambient noise, among other updates.
“We are excited to share our latest technologies with you and with Apple’s incredible community of millions of developers around the world,” said Cook. “Their creativity and innovative applications continue to provide new and meaningful ways to enrich people’s lives.”
This year’s event comes on the heels of Apple’s courtroom brawl with “Fortnite” maker Epic Games Inc., which highlighted the increasingly thorny relationships some developers have with a company that controls access. to the more than 1 billion iPhone users around the world.
Last month’s trial, in which Epic accused Apple of inappropriate monopolistic behavior, culminated a year of rare dissension among app developers. The period has included public sparring with Facebook. INC.
CEO Mark Zuckerberg and Mr. Cook’s defense before Congress of Apple’s behavior.
At the heart of developer complaints is money. Some dislike the new privacy rules Apple recently enacted that disrupted the digital advertising industry. Others hate the commission, up to 30%, that Apple assumes on the digital income generated through the App Store.
Apple has denied the accusations that it is a monopoly and has defended that its commission is in line with that of its rivals and is fair for the value it has created. Apple has said that Epic wants to avoid paying its fair share to use the App Store.
“The future of Apple’s acceptance rate with developers is the elephant in the room at this year’s WWDC,” said Gene Munster, managing partner at Loup Ventures, a venture capital firm specializing in technology research.
On Monday, Apple is expected to reveal its latest operating systems, including iOS 15, which may have additional privacy features, changes to notifications, and new features for its messaging system, which rivals Facebook’s WhatsApp messaging app.
After Epic’s lawsuit was filed in August, Apple cut its commission to 15% from 30% for apps with $ 1 million or less in revenue, a decision Cook said was related to small business concerns. .
A small portion of the applications generate more than $ 1 million. Most of the applications in the App Store are free and do not pay commission. Free games make money primarily through in-app advertising, so Apple doesn’t charge a sales cut.
Cook has vigorously advocated the change as a way to protect users’ privacy and help them control how their data is used. But in January, Zuckerberg said Apple had every incentive to “use its dominant platform position to interfere with the operation of our apps and other applications.”
On Monday, Zuckerberg took another shot at Apple, saying that Facebook would not collect a portion of the earnings from live performances, subscriptions and other forms of earnings from creators until 2023. “And when we introduce a revenue share, it will be less than 30% taken by Apple and others “, Mr. Zuckerberg wrote on his Facebook page.
Amid the complaints, Apple has tried to highlight what Cook has called an economic miracle unleashed by the App Store.
Apple recently released a report estimating that the turnover and sales facilitated by its App Store increased 24% to $ 643 billion last year compared to 2019, driven by quarantined users seeking to avoid in-person interactions. Investors were rewarded last year with stocks that nearly doubled in value.
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The App Store is a big part of Apple’s so-called services unit, the part of the company’s business that Cook is banking on to drive growth after previous years of slowing iPhone sales. Nick Rodelli, director of CFRA Legal Edge, an investment research firm, estimates that app store commissions, along with the money generated from making Google the default search engine on their devices, account for 40% of Apple’s pretax income.
Since the launch of the App Store in 2008, the number of applications available has increased from 500 to approximately 1.8 million.
The tensions make this year’s developer conference even more important. Apple invested more than $ 50 million to host the event, according to court testimony from Phil Schiller, the Apple executive who oversees the App Store. In a typical year, 6,000 developers would attend in person and tens of millions more would see it online, he said. This year’s more than 200 sessions are held virtually and posted online.
During the Epic trial, U.S. District Judge Yvonne González Rogers, who is expected to rule on the case in the coming months, confronted Mr. Cook with survey data that she said indicated that the 39 % of developers were very dissatisfied or somewhat dissatisfied. with Apple’s distribution services.
“How is that acceptable?” she asked.
In his testimony, Cook said he was unfamiliar with the document, but noted that Apple rejects about 40% of the applications submitted to the store each week. (An Apple lawyer later pointed to a 2019 internal survey that said 19% of developers reported they were dissatisfied.)
“There is definitely some friction in the system,” Cook said, adding that strict standards ensure that users have good experiences on the App Store.
The suggestion that 39% of developers are unhappy with Apple is a surprising figure for those who have followed Apple closely. “Apple is used to having 99% satisfaction with its customer base,” said Ben Bajarin, principal analyst at Creative Strategies Inc.
Epic vs. Apple
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Write to Tim Higgins at [email protected]
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