Amazon, Google Cave To Apple, Drop In-App Buttons

CWmike writes "Amazon bowed on Monday to Apple's newest App Store rules, and removed a link in its iPhone and iPad Kindle apps that took customers directly to its online store. The move was required to comply with new rules designed to block developers from evading the 30% cut that Apple takes from in-app purchases. In February, Apple CEO Steve Jobs laid down the law. 'Our philosophy is simple — when Apple brings a new subscriber to the app, Apple earns a 30% share,' said Jobs in a statement released Feb. 15. 'When the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing.' Rhapsody updated its iPhone app last week to, among other things, remove the in-app subscribing link. Also on Monday, Google complied with Apple's new rules when it re-released Google Books — which had been yanked from the App Store — minus an in-app purchasing button."

Comments

Cave?

[Anonymous Coward]

How is it caving? They have no choice, it is Apple's platform after all.

Re:Cave?

[sqlrob]

They have a choice. Pull the app.

Re:Cave?

[mswhippingboy]

I just don't get it. Why is it that if Google doesn't want to comply, their only option is to pull the app. But if Google were to strip Apple from it's search engine results, that would be anti-competitive behavior?

Re:Cave?

[Anonymous Coward]

True; they can't just strip Apple from their search engine completely. First, they have to give Apple a chance to sign on to a deal whereby Google gets a 30% cut of any business that they send Apple's way. Seems to be exactly what Apple is doing. If Apple doesn't agree to the 30% cut for the service of Google bringing a new shopper to their site - then they can remove them from the index.

Re:Cave?

[mswhippingboy]

Where did you get this idea?

Oh, silly me. I should have known better to even question Apple's practices. Excuse me while I go and gouge my eyes out now.

Apple makes about 30% profit on their devices. They make 30% profit on apps sold through the app store. Would it really f'in kill them if they let someone else make a buck? What, having the highest market cap of any technology company is not good enough for them?

You're right, IANAL, but I do have a brain and a sense of right and wrong and my "greedometer" gets pegged just about daily every time Apple makes a move.

I used to think IBM was a greedy corporation, then Microsoft came along and made them look like Ed McMurray. Now, Microsoft looks like like a gentle giant compared to the Apple. One big difference that worries me is that Microsoft seemed to care about the bad press they got and occasionally tried to smooth things over. Apple seem to just give the finger to anyone that complains about their business practices, and yet they manage to maintain a religious following, the likes of which I've never seen in 35 year in the business.

Those old Apple 1984 commercials could not be more ironic.

Re:Cave?

[gottabeme]

It's not Apple's product after it's sold to a customer.

There is a fundamental confusion caused by the fact that Apple is providing the app store service for free to purchasers of the iPhone, who have paid a one-time fee (carrier subsidies are a different matter). Apple is asserting control over the service as if people were subscribing to it for a monthly fee.

Oh, wait, are their customers the consumers who purchase their products, or the developers who write software for their products? Or are they the media companies who sell music and movies on iTunes?

Apple wants all of them to be its customers--it wants to make money from all of them for everything that happens.

It's got to stop somewhere--and it ought to be at the first-sale doctrine. But the practical solution is to support Android instead. On the other hand, if Apple is allowed to get away with this forever, and they keep growing, it may become the accepted norm--or is it already?

Damn you Ballmer!!!!!

[Vinegar Joe]

Oh wait......my mistake. Carry on.......

Holy crap

[Dyinobal]

They get a 30% share? that's nuts. It's a shame that their hardware is such a social status symbol for so many people. Dictator Jobs certainly has a nice scam going on.

Re:Holy crap

[PRMan]

So, can Amazon just raise all Kindle prices by 30% when accessed by an iPad? Seems like the only fair thing to do. I'd be happy to get a 30% discount on my Android tablet.

Re:Holy crap

[Excelsior]

No, you have to charge 43% extra to break even when Apple takes a 30% cut. For instance, if a book is 1.00 normally, you need to charge 1.43 because 1.43 * .3 = .429. This means the margin is so high it's not even close to competitive with Apple's own products.

Re:Holy crap

[cgenman]

Actually, if you want to use Apple's system, you pay Apple. If you don't want to use Apple's system, you can't sell digital items through your app. These vendors were only kicking you out to Safari because they had to in order to avoid Apple's 30% credit card processing fee (most processing fees are on the order of 1.5 - 2%). Before Apple launched their system, there were apps that accepted credit cards just fine. You can buy with a credit card in Amazon's integrated shopping app, just like any other Amazon service, because they sell physical goods. The experience is fine. But digital goods Apple takes a cut of (and doesn't even provide download hosting).

The worst abuse comes from iBooks specifically. Say that a publisher offers an ebook version of Harry Potter and the Deathly Hollows wholesale for 10 dollars. And don't think you can argue them down: all of the major ebook retailers have clauses in their contracts that specify that publishers can't sell to other people for less than they're selling to them. So that's 10$. Say that a company needs to make 1$ per transaction to survive as a business.

Apple is charged the usual credit card processing rate of 2%. Therefore, they sell their copies of Harry Potter at $11.25. You, on the other hand, have to pay Apple (your competitor) a credit card processing fee of 30%. Therefore, you have to sell your copy of Harry Potter at $14.30. Even if you squeezed your 10% margin down to nothing, you couldn't come close to competing with Apple's prices. And if you did, you'd just be sending money off to your competitor, who could plow that back into improving their ebook store.

The same is true of iTunes, and anything else that Apple decides they might like to sell on their phones. They already have the built-in advantages of being able to pre-load whatever they'd like onto your phone, and being able to tailor the OS to suit their apps. Any e-market that Apple enters on the iPhone is basically owned by Apple.

It's not Apple's phone. It's your customer's phones. They buy them, pay for them. Apple isn't pre-loading your app or anything like that, they're just making it available on the customer's request. And they ban your customers from getting your app any other way. They even have the legal power to arrest people for getting your app in other ways, though they have yet to do this.

Re:I know we are all supposed to be against this b

[0123456]

Isn't this like Best Buy putting an escape tunnel in a Walmart that leads to a Best Buy store?

Uh, no. It's like Walmart demanding a 30% cut of anything that you buy online from Best-Buy using the computer you bought from Walmart.

Re:Ok, so....

[hibiki_r]

If I understand it correctly though, Apple doesn't just want 30% off of your purchases made through something you downloaded in the app store: If you create an account through your app downloading in the app store, Apple wants to claim 30% of what that customer pays for, ever. Charging someone 30% more than the rest because he happened to sign up to your service originally though an Appstore app doesn't seem to make much sense from a retailer POV.

Re:Ok, so....

[node 3]

...correct me if I'm wrong, but doesn't this mean that I can make 30% more per sale if I develop for some platform other than Apple?

That depends. Are you going to use an established store? Because they all take commission. And if you aren't going to use a store, you'll have overhead involved with billing and sales and support.

The next question is how many sales you can expect to make developing for some other platform. 70% of a large number is better than 84% of a small number.

the longer I have an iphone the more i regret it

[Dan667]

wish I had bought an Android.

Sure glad GM isn't Apple...

[ibsteve2u]

I'd hate for GM to not only tell me who was allowed to ride in my car but also that any burger joint I drove my GM product to had to give Apple a 30% cut of any orders I or my passengers made at their drive-in window.