After more consideration than I’d planned, I think this new anti-steering judgement against Apple, if it stands, will have considerable impact on Apple and the web.
The web has a large and competitive market for payment providers with just about every feature a developer or distributor could want, at low, low prices.
Apple has been cultivating its walled garden, farming developers with a 30% cut right off the top for over 16 years. Apple was fully immune to any competitive threats with policy that prevents App Store developers from linking users to web payment options, or even telling their users from within the app that payments could be made at the developer’s web site.
Apple has done everything in its power to maintain that wall, to hold onto its outrageous 30% cut with a defense it thought impenetrable. All the while, outside that wall, on the world wide web, competition forged a broad and capable ecosystem around payment processing.
The wall is now broken. It has not been removed, and Apple’s grip remains strong but it is like the breach of the Deeping Wall at Helm’s Deep; Once thought impossible, it is the new reality.
Through that opening, App Store developers will be one user click away from collecting payments on the web, freed from Apple’s extortion, regaining a larger portion of their customer payments.
Big players like Spotify that already maintain capable payment setups on the web will immediately update their apps to offer users a web payment option rather than using Apple’s in app payments (IAP.) One link click and the developer and user both win, sometimes dramatically so.
Smaller apps will need to find a web payment provider and possibly other web providers to cover the parts of Apple’s offering they require. Once they’ve determined it’s a better deal and signed up for those services, developers can add a link and any kind of promotion they want to any part of their app experience. I expect new users will be shunted directly to the web payments while existing users may receive incentives to move payments out of the app and away from Apple’s huge cut.
If that’s where we land, Apple has two choices.
The first is deploy a new App Store developer agreement that attempts to recoup the losses Apple is facing with new fees or increases on existing fees.
The second, and far better option is for Apple to do the right thing and compete. Apple could immediately drop its rate from 30% to 10%, globally, and commit to making the developer and customer experience of the App Store the best in the world. Asserting its commitment to excellence, to being the best, Apple could seize this opportunity to invest in the App Store experience and take it from barely tolerable to awesome.
Apple absolutely can compete on a fair playing field, and this one is still tipped in their direction, so they have no excuses. Make the App Store great and win developer loyalty on the quality of the service, not the strength of the walls.
We’ll just have to wait to see which way Apple goes.
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