backlash<\/strong><\/a>\u00a0against app stores run by Apple and Google in recent years, with a growing number of developers saying the tech giants are collecting too high a tax for access to consumers\u2019 mobile devices.<\/p>\nThe European Commission is the first major regulator to launch a formal investigation into this issue. Apple is the target because Google\u2019s Android app store offers more choice on payment methods.<\/p>\n
\u201cThe most likely outcome is a ruling that limits Apple\u2019s ability to restrict information about other purchasing options,\u201d Amit Daryanani, an analyst at Evercore ISI, wrote in a note to investors on Tuesday.<\/p>\n
The App Store is the only way for most consumers to install apps on the iPhone, and in most cases, Apple takes a 15% to 30% cut from developers offering subscriptions.<\/p>\n
Many of these aren\u2019t allowed to facilitate purchases outside of the App Store, ensuring Apple gets its cut. Some apps are allowed to function without a subscription bought through Apple, but these apps can\u2019t direct users to buy the service outside of Apple\u2019s digital walls.<\/p>\n
The Netflix app tells users they can\u2019t subscribe to the service inside the app. \u201cWe know it\u2019s a hassle,\u201d the app says. Other services choose to use Apple\u2019s payment system because it\u2019s often simpler for customers.<\/p>\n
But in some cases, that makes the product more expensive. For example, the Soundcloud Go+ streaming music service costs $9.99 through its website, but $12.99 when bought through Apple\u2019s App Store.<\/p>\n
It may be more useful and less costly for consumers if apps could tell people they can buy subscriptions outside the Apple App Store. If that happened, though, more developers may stop using Apple\u2019s in-app payment system and the company would lose revenue.<\/p>\n
Fees from App Store transactions are estimated to be the largest contributor to Apple\u2019s Services revenue, a business the company is trying hard to expand. Any slowdown here would be a concern for Wall Street.<\/p>\n
If Apple\u2019s cut dropped from 30% to 5%, that would knock about 11% off the company\u2019s earnings per share, Daryanani estimated on Tuesday, calling that a worst case scenario.<\/p>\n
Basecamp Chief Technology Officer David Heinemeier Hansson\u00a0complained about Apple\u2019s rules on Twitter<\/a><\/strong>, just hours after the European Union launched its Apple investigations.<\/p>\nThe executive said Apple threatened to remove Basecamp\u2019s new Hey email app if it did not add the ability for users to buy a subscription via the App Store — and pay the extra fee to the tech giant.<\/p>\n
\u201cWe did everything we were supposed to with the iOS app. Try downloading it (while you can?),\u201d Hansson wrote. \u201cYou can\u2019t sign up, because Apple says no. We don\u2019t mention subscriptions. You can\u2019t upgrade. You can\u2019t access billing. We did all of it! Wasn\u2019t enough.\u201d<\/p>\n
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