I've just seen a lot of outrage and sarcasm on Twitter (via Techmeme) over Apple's new app review guidelines, which amount to a further expansion of Apple's monopoly abuse through its app tax as well as its app review tyranny:
"Permissionless innovation, as long as you don’t cross the biggest corporation in the world."
"Funny how fast Apple went from 'ads are bad' to 'the greediest ads mfer on the planet.'"
"Wtf. Apple has become the Big Brother that their iconic commercial rallied against."
There are three major changes, and they are distinct enough to discuss in separate sections of this post:
All of those problems would best be addressed by forcing Apple to allow third-party app stores, with even "the King of the Apple Geeks" being in favor of a Microsoft mobile app store. While Apple could still try to self-preference its own App Store in some ways, the rules just have to make it clear they can't provide non-App-Store-specific APIs only to apps that are distributed via their own App Store or degrade performance. Any technical restrictions on third-party app stores and the apps they carry could be proven with the help of technical experts--an effort that would be almost nothing compared to the various hurdles Epic Games has to overcome in its current dispute (though I think they'll win a reversal of the district court's ruling).
"Current events" app review guideline: borrowed from Google, inspired by Orwell, and inherently subjective
Steve Jobs, quoting a painter, said in 1996: "'good artists copy; great artists steal' -- and we have always been shameless about stealing great ideas." Given that Apple does enforce its own IP--such as currently four design (not technical invention) patents against a smartwatch maker--its approach may have something in common with what is called Soviet-style negotiation: "what's mine is mine, what's yours is negotiable."
While Steve Jobs originally considered Android a "stolen" product (and felt betrayed by Eric Schmidt, Google's former CEO who knew about the iPhone because he was on Apple's board of directors), Google and its OEMs have sometimes been first to come up with innovations.
In commercial terms, particularly with respect to their treatment of app developers, the two companies look closely at each other's decisions. Now Apple has added the following to section 1.1.7 of its App Store Review Guidelines in order to specifically list a subcategory of Objectionable Content:
"Harmful concepts which capitalize or seek to profit on recent or current events, such as violent conflicts, terrorist attacks, and epidemics."
Google has had that kind of rule for years, in a more detailed form:
"Sensitive Events
"We don't allow apps that capitalize on or are insensitive toward a sensitive event with significant social, cultural, or political impact, such as civil emergencies, natural disasters, public health emergencies, conflicts, deaths, or other tragic events. Apps with content related to a sensitive event are generally allowed if that content has EDSA (Educational, Documentary, Scientific, or Artistic) value or intends to alert users to or raise awareness for the sensitive event."
Google also provides some examples, such as "[a]ppearing to profit from a sensitive event with no discernible benefit to the victims."
Google already had that guideline in place before the COVID-19 pandemic, and its COVID app review guideline was then derived from the Sensitive Events guideline, while Apple's COVID app guideline referenced its broader Objectionable Content rule.
The most important difference between Apple's new rule and Google's long-standing one is that Apple more broadly makes reference to "recent or current events," with only the examples ("such as") being specifically what falls under Google's elaborate definition of sensitive events.
Given that--as someone noted on Twitter--any news app "capitalize[s] or seek[s] to profit on recent or current events," it all comes down to "[h]armful concepts" in the end. I wouldn't have a problem with that if Apple really meant "harmful" the way a court of law would interpret it if a government sought to prohibit an app. The problem here is that Apple's app review is inherently subjective and grossly inconssitent. Just yesterday, Wired published another article on that topic: Apple's App Review Fix Fails to Placate Developers (noting that "[c]reators say projects still get blocked for no good reason")
Some may wonder whether it shouldn't actually be in any reseller's discretion to select what it carries, but that is simply the wrong perspective here:
If Amazon doesn't want to carry your book for all the wrong reasons, someone else like Barnes & Noble would likely offer it. Not being on Amazon would definitely be a major disadvantage and that could also raise competition issues, but at least there is a way of reaching thes same customers. If Amazon rejected too many books on unreasonable grounds, customers would increasingly look for those books--but also for other products--in competing stores. In Apple's case, however, the App Store is the only store in town. It's like you're a farmer in a remote location and there is only one small town where you can sell your produce, and one store operator not only has a shop but also the power to prevent anyone else from opening an alternative shop.
That problem is exacerbated by the way it works in practice. Apple does not pre-aprove apps based on developers inquiring about whether a certain type of app (that they would describe, but not yet submit) would be approved or rejected. You have to submit a finished product. (You may also get some indication when submitting a beta version for TestFlight distribution, but you'll likely be fairly close to a final product at that point.) Then, if Apple says no, the whole investment was lost--with a decision being made by an app reviewer who may only have spent a couple of minutes looking at your app (they really get very little time per app). As the Wired article I linked to explains, the appeals process solves the problem to only a limited extent.
It would be good to see some legal action over app rejections that raises the issue. There is the Coronavirus Reporter case, but an effort led by a major class action law firm would be preferable.
Content-based rejections that go beyond what is legally required are censorship.
Another very subjective guideline is mentioned in that Wired article: that apps are rejected because they are not considered to be sufficiently useful or unique. Kosta Eleftheriou--famous for exposing App Store scams all the time--brought a case, and it was settled.
App tax on promoted social media posts: bad news for social networks (particularly Facebook and Twitter) and small businesses
Apple has added a paragraph 3.1.3(g), the first part of which explains that Apple's in-app purchasing (IAP) system is not mandatory for pure Advertising Management Apps. For instance, the Google Ads app shows you how your campaign is going, and you can also make some modifications to a campaign or start a new campaign, and that is separate from IAP. But where Apple now imposes an app tax is if the purchase of a promotion such as a "boost" for a post is made in the very same app that displays it. You can "boost" tweets or Facebook posts within those apps, and so far that was not considered an IAP, but now it is.
Apparently, dating apps like Bumble have operated like that for some time. The difference is, of course, that generating more views of a profile on a dating website is functionally and commercially closer to a premium subscription or other premium feature of a dating app: it's not a two-sided market, while there is a structural difference between the way in which a company promoting a tweet or Facebook post uses that platform as compared to the other side of that market, which is the huge number of people who read those posts or write their own without an intent to ever pay for promotion. In other words, on dating apps everybody is dating and a boost is just dating on steroids, but on Twitter or Facebook, it's not like everybody is advertising.
Big-budget advertisers will not be affected, or at least not in most of those situations, as they will use dedicated advertising apps. But small businesses will often just pay for boosting a social media post, and they will normally do it where they post. Without them even knowing, they will further enrich Apple. They won't know as Apple prohibits that app developers tell customers the truth and make them aware of a less expensive alternative to get the same service. (This actually is an area where Epic's anti-anti-steering injunction could help, but it's just a small part of the problem and the real battlefield in that case is federal antitrust law, not California Unfair Competition Law.
Neil Katz, who has won four Emmys, asks an interesting question:
Apple has done the nearly impossible. Execute raw monopoly power while maintaining a highly trusted premium brand.
— Neil Katz (neilkatz.eth) (@neilkatz) October 24, 2022
Has anyone else ever pulled it off?
My answer to this is that old Spanish saying (from Don Quixote) that translates as "the pitcher goes to the well so often that it ultimately breaks." It is truly astonishing that Apple continues to expand its app tax regime, especially since this is an additional indication of its unfettered (after)market power, despite all of the legislative and regulatory pressure and pending lawsuits. But it's too early to tell whether this will end well--or will actually end like Cervantes's "cántaro" and break. I've said it on a couple of earlier occasions: Apple is taking some risks here. Imagine a scenario of Epic Games winning and bringing a major damages claim later, and all the bad press it would generate for Apple, with so much dirty linen being washed in public at a jury trial. Imagine a letter that goes to many millions of Apple customers, telling them that they're now entitled to money because Apple (in this scenario of a class action succeeding) illegally overcharged them.
We don't know the end of the story yet, and I'm optimistic that we'll see a turning point on "November Fortnite" (11/14; the date of the Ninth Circuit hearing).
Apple views NFT sales only as a threat to its app tax regime, doesn't care about rendering many NFT sales in iOS apps impracticable
Apple's imposition of its app tax on NFT sales has previously been criticized. Now Apple has codified its rules, with the following passage (added to app review guideline 3.1.1) being particularly important:
"Apps may use in-app purchase to sell and sell services related to non-fungible tokens (NFTs), such as minting, listing, and transferring. Apps may allow users to view their own NFTs, provided that NFT ownership does not unlock features or functionality within the app. Apps may allow users to browse NFT collections owned by others, provided that the apps may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase." (emphasis added)
The last part is an anti-steering rule, and I just mentioned anti-steering toward the end of the previous section.
The passage I highlighted is really the central one: Apple doesn't want NFTs to be used to circumvent its app tax. That part is furthermore reinforced by the following revised passage (also part of guideline 3.1.1):
"Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, cryptocurrencies and cryptocurrency wallets, etc."
The foregoing is clearly anti-innovative. For example, why shouldn't it be possible for an app to unlock a feature or some additional content if someone scans a QR code at an event? It's just that Apple generally prohibits it because otherwise there would be a risk to Apple that someone would bypass its app tax.
Epic Games' founder and CEO Tim Sweeney noted that Apple's rule is based for both crypto lovers and crypto haters:
To cryptocurrency enthusiasts, this means Apple is now adding a 30% tax on your so-called "true ownership" of digital goods.
— Tim Sweeney (@TimSweeneyEpic) October 24, 2022
To cryptocurrency detractors, this shows Apple's motivations are only money. For digital items, they support NFTs they tax, and ban NFTs they don't tax. https://t.co/RWZC1rSUwh
Apple's approach is indeed reminiscent of what Roman emperor Vespasian did almost 2000 years ago when he taxed public urinals and responded to criticism with the famous phrase: "Pecunia non olet." ("Money doesn't stink")
Unfortunately, Apple goes beyond this. Vespasian's urine tax was just a tax, but not a restriction. By contrast, Apple's decision to subject all NFT sales to its app tax deals collateral damage to web3. Jason Baptiste explains this very well in a Twitter thread:
Make no mistake about it - Apple is now the largest threat to Web3 with their most recent App Store Guidelines that they published today. Apps Are Bullshit Part Deux. A thread below on the implications this has for Web3 & Crypto 🧵
— Jason L. Baptiste | jasonlbaptiste.find (@JasonLBaptiste) October 24, 2022
The issue I wish to highlight here is in this part of the thread:
What does that mean? You can't just use IAP to offer something for let's say $54.20 or $69.69. You have to use pre-set prices such as .99 or 14.99. Each price point is its own "items", requiring its own approval. The tech literally cannot work for NFTs/marketplaces.
— Jason L. Baptiste | jasonlbaptiste.find (@JasonLBaptiste) October 24, 2022
I'm not taking a position on web3 here other than that it's legal until governments--not Apple--declare it illegal. Blockchain innovation is perfectly legal innovation, and Apple has no right to stifle it.
The fixed price matrix for iOS IAP offerings makes many NFT transactions unworkable. For example, auctions can't work that way.
Matthew Ball has highlighted a problem that would exist even if one made NFT sales work within Apple's price matrix:
"A 30% tax on all trades of virtual goods means that, unless it appreciates 40% or more between trades, every transaction drives its value to $0, with Apple devouring all the value.
"Buy a $1k skin, if you sell it at $1k, you've lost $300 and Apple has made $600, yet no value made"
At some point we may see a major web3 class action against Apple, but for class action law firms it's preferable to wait until they can bring a sizeable damages claim.
Maybe some iOS users will migrate to Android for NFT trading purposes. If they don't have to carry a trading platform with them all the time, they will probably just use desktop and laptop computers.
