- Apple this week got in a standoff with Hey, a new subscription email service, over integrating in-app purchases into iOS apps and taking a commission of up to 30% on the purchases.
- The confrontation with Hey, which was created by Basecamp, erupted as the EU announced it would launch an antitrust investigation into this levy that Apple imposes on in-app purchases.
- Spotify complained to the EU last year that it was anticompetitive of Apple to impose this tax while operating competing apps like Apple Music.
- Match Group, the dating-app conglomerate that owns Tinder, also criticized the tax on Tuesday.
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Apple is facing a sudden public backlash from developers large and small against the tax it imposes on some in-app purchases.
Though apps can be hosted on the App Store for free, Apple charges a commission of 15% to 30% on certain purchases made in the app. If, for example, you buy a premium Spotify subscription through Spotify's iOS app, Apple takes a 30% cut. The same fee applies to other digital-content purchases, such as virtual items or e-books.
This week, a buzzy new subscription email service called Hey said Apple was trying to strong-arm it into integrating in-app purchases so it could get this commission, Protocol first reported on Tuesday.
According to Protocol, Hey, which comes from Basecamp and costs $99 a year, doesn't let you subscribe or pay inside the iOS app.
Soon after launching on Monday, Hey tried to roll out an update fixing some bugs in its iOS app, then received an email from Apple rejecting the update. The email suggested that Hey had broken the rules by not implementing Apple's in-app purchase system, which automatically takes the 15% to 30% cut. An Apple reviewer later said that the app might be removed if it didn't comply.
Apple's developer guidelines say that while apps can offer users access to services or content they've previously purchased, they cannot "directly or indirectly target iOS users to use a purchasing method other than in-app purchase." The guidelines also say that apps can't offer access to new, paid features within the app — they must offer in-app purchases.
Hey's executives had thought the rule didn't apply to them because the app allows people to sign in to something they are already subscribed to, as is the case with platforms like Netflix and Slack, Protocol reported.
"There is no chance in bloody hell that we're going to pay Apple's ransom," Basecamp's chief technology officer, David Heinemeier Hansson, tweeted on Tuesday. "I will burn this house down myself, before I let gangsters like that spin it for spoils. This is profoundly, perversely abusive and unfair."
According to Protocol, Apple enforced the rule because Hey is a consumer app rather than an enterprise app.
Heinemeier Hansson said the policy was enforced inconsistently. "The Basecamp app has been in the App Store for YEARS offering access to a subscription bought elsewhere," he tweeted. "The store is FULL of apps doing just that. Even other email apps!"
—DHH (@dhh) June 16, 2020The Stratechery analyst Ben Thompson said on Twitter early Wednesday that he had received multiple emails from developers saying they'd had similar experiences. He suggested this was a recent reinterpretation of Apple's policy.
—Ben Thompson (@benthompson) June 17, 2020Bad timing for Apple
The standoff between Apple and Hey happened as the European Union launched two antitrust investigations into Apple, including one focusing on the 30% App Store levy.
The EU investigation was set in motion in 2019 when Spotify filed a complaint saying that levying the tax while running a competing music-streaming business, Apple Music, meant Apple was giving its own service a leg up by artificially inflating Spotify's prices; Spotify argued that in order to make up for the fee it passed on to Apple, it would have to increase the price of its subscriptions.
An e-book company made the same complaint to the EU in March. Though the European Commission did not name the company, the details matched those in a Financial Times report that identified the complainant as Kobo, owned by Rakuten. Kobo declined to comment when contacted by Business Insider.
Apple hit back, saying the EU was "advancing baseless complaints from a handful of companies who simply want a free ride, and don't want to play by the same rules as everyone else."
Another app-developer heavyweight came out swinging against Apple on Tuesday. Match Group, which owns a host of popular dating apps including Tinder, OKCupid, and Hinge, issued a statement criticizing the tax on in-app purchases.
"Apple is a partner, but also a dominant platform whose actions force the vast majority of consumers to pay more for third-party apps that Apple arbitrarily defines as 'digital services.' Apple squeezes industries like e-books, music and video streaming, cloud storage, gaming and online dating for 30% of their revenue, which is all the more alarming when Apple then enters that space, as we've repeatedly seen," Match Group said.
"We're acutely aware of their power over us. They claim we're asking for a 'free ride' when the reality is, 'digital services' are the only category of apps that have to pay the App Store fees. The overwhelming majority of apps, including Internet behemoths that connect people (rideshare/gig apps), or monetize by selling advertising (social networks), have never been subject to Apple's payments systems and fees, and this is not right.
"We welcome the opportunity to discuss this with Apple and create an equitable distribution of fees across the entire App Store, as well as with interested parties in the EU and in the US."
Apple was not immediately available to comment on Match Group's statement when contacted by Business Insider.
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