Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support and the money that flows through it all.
The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day using apps, rivaling TV. Apps arenât just a way to pass idle hours â theyâre a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.
In this Extra Crunch series, we help you keep up with the latest news from the world of apps, delivered on a weekly basis.
This week, one story completely took over the news cycle: Hey vs. Apple. An App Store developer dispute made headlines not because Apple was necessarily in the wrong, per its existing rules, but because of a growing swell of developer resentment against those rules. Weâre giving extra bandwidth to this story this week, before jumping into the other headlines.
Also this week we look at whatâs expected to arrive at next weekâs WWDC20, the TikTok clone Zynn getting banned from both app stores (which is totally fine, I guess!), Facebookâs failed attempts to get its Gaming app approved by Apple, as well as some notable Android updates and other app industry trends.
Main Story: Hey vs. Apple
One story dominated this weekâs app news. Unless you were living under the proverbial rock, thereâs no way you missed it. After Basecamp received App Store approval for its new email app called Hey, the founders, David Heinemeier Hansson and Jason Fried, turned to Twitter to explain how Apple had now rejected the appâs further updates. Apple told Basecamp it had to offer in-app purchases (IAP) for its full email service within the app, in addition to offering it on the company website. They were not happy, to say the least.
This issue came to a head at a time when regulators are taking a closer look at Appleâs business. The company is facing antitrust investigations in both the U.S. and the E.U. which, in part, will attempt to determine if Apple is abusing its market power to unfairly dominate its competitors. In Heyâs case, the subscription-based app competes with Appleâs built-in free Mail app, which could put this case directly in the regulatorsâ crosshairs.
But it also brings up the larger concerns over how Appleâs App Store rules have evolved to become a confusing mess which developers â and apparently even Appleâs own App Store reviewers â donât fully understand. (Apple reportedly told Basecamp that Hey should have never been approved in the first place without IAP.)
Apple has carved out a number of conditions where apps donât have to implement IAP, by making exceptions for enterprise apps that may have per-seat licensing plans for users and for a set of apps that more directly compete with Appleâs own. These, Apple calls âreaderâ apps, as they were originally directed making an exception for Amazonâs Kindle. But now this rule offers exceptions to the IAP rule for apps focused on magazines, newspapers, books, audio, music, video, VoIP, access to professional databases, cloud storage, and more.
That leaves other digital service providers wondering why their apps have to pay when others donât.
Apple didnât help its argument, when earlier in the week it released a report that detailed how its App Store facilitated $519B in commerce last year. The company had aimed to prove how much business flows through the App Store without Apple taking a 30% commission, positioning the portion of the market Apple profits from as a tiny sliver. But after the Hey debacle, this report only drives home how Apple has singled out one type of app-based business â digital services â as the one that makes the App Store its money.
Appleâs decision to squander its goodwill with the developer community the week before WWDC is an odd one. Heinemeier Hansson, a content marketing expert, easily bested the $1.5 trillion dollar company by using Appleâs hesitance to speak publicly against it. He set the discussion on fire, posted App Store review email screenshots to serve as Appleâs voice, and let the community vent.
Amid the Twitter outrage, large publishersâ antitrust commentary added further fuel to the fire, including those from Spotify, Match, and Epic Games.
For more reading on this topic, here are some of the key articles:
- TechCrunchâs exclusive interview with iOS App Store head, Phil Schiller. The exec said Appleâs position on the Hey app is unchanged and no changes to App Store rules are imminent. âYou download the app and it doesnât work, thatâs not what we want on the store,â he argued. (Except of course, at those times when such an experience is totally fine with Apple, as in the case of âreaderâ apps.) Schiller also said Basecamp could have avoided the problems if Hey had offered a free version with paid upgrades, or if it offered IAP at a higher price than on its own website.
- Daring Fireballâs comments on the âflimsinessâ of Business vs. Consumer as a justification for Appleâs rejection of Hey. John Gruber points out that the line between whatâs a business app and a consumer app is too blurred. Apple allows some business apps to forgo IAP if they sell enterprise plans (e.g. per seat plans) that often involve upgraded feature sets that arenât even iOS-specific. But in this day and age, whoâs to say that an email service doesnât deserve the same ability to opt out of IAP in order to serve its own business user base? After all, what if it upgrades its paid service with web-only features â why should Apple get a cut of that business, too?
- App Store policy criticism from The Verge. Nilay Patel sat down with Rep. David Cicilline (D-RI) and Basecamp CTO David Heinemeier Hansson to discuss the plight of Hey for its The Vergecast podcast. Cicilline said Appleâs fees were âexorbitantâ and amounted to âhighway robbery, basically.â He said Apple bullied developers by charging 30% of their business for access to its market â a decision which crushes smaller developers. âIf there were real competition in this marketplace, this wouldnât happen,â he added. The Vergeâs Dieter Bohn also argued that Appleâs interpretation and enforcement of its App Store policies is terrible.
- Basecamp CEOâs take on Appleâs App Store payment policies: Basecamp, the makers of the Hey app, put out a company statement about the App Store rules. The statement doesnât add anything new to the conversation that wasnât already in the tweetstorm, except the Basecamp response to Schillerâs suggestions which was something along the lines of . The bottom line is that Hey wants to make the choice for its own business whether it needs the benefit of being able to acquire its users through the App Store or not. One way requires IAP and the other does not.
- Voxâs Recode examines the antitrust case against Apple. The article doesnât reference Hey, but lays out some of the other antitrust arguments being leveraged against Apple, including its âsherlockingâ behavior,
Headlines
Apple has denied Facebookâs Gaming app at least 5 times since February
The Hey debacle is only one of many examples of how Apple exerts its market power over rivals. It has also repeatedly denied Facebookâs Gaming app entry to its App Store, citing the rule (Apple Store Review Guidelines, section 4.7) about not allowing apps whose main purpose is to sell other app, The NYT revealed this week.
Facebookâs Gaming app, which launched on Android in April, isnât just another app store, however. The app offers users a hub to watch streamers play live, social networking tools, and the ability to play casual games like Zyngaâs Words with Friends or Chobolabs Thug Life, for example. The latter is the point of contention, as Apple wants all games sold directly on the App Store, where itâs able to take a cut of their revenues.
One of the iterations Facebook tried was a version that looked almost exactly like how Facebook games are presented within the main Facebook iOS app â a single, alphabetized, unsortable list. The fact that this format was rejected when Apple already allows it elsewhere is an indication that even Apple doesnât play by its own rules.
Zynn gets kicked out of App Store
Image Credits: Zynn
Zynn, the TikTok clone that shot to the top of the app store charts in late May, was pulled from Appleâs App Store on Monday. Before its removal, Sensor Tower estimates Zynn was downloaded 5 million times on iOS and 700,000 times on Google Play.
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