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App Store Chief Says Apple is Aiming to Level the Playing the Field for Developers
By Stephen Nellis
July 28 August 28, 2008 (Reuters) - Apple Inc Chief Executive Tim Cook will be challenged by U.S. lawmakers on Wednesday regarding whether Apple's App Store practices give it unfair control over independent software developers.
Apple has a tight grip on the App Store, which is the core of its $46.3 billion-per-year services business. Developers have criticized Apple's commissions ranging from 15 30 and 15 percent on many App Store purchases, its prohibitions on pursuing customers for outside signing-ups, as well as what some developers consider to be an unreliable and insecure application-vetting procedure.
However, when the App Store first launched in 2008 with 500 apps, Apple executives saw it as a test of offering a low-cost commission rate to draw developers, Philip W. Schiller, Apple's senior vice president of worldwide marketing and chief executive of the App Store, told Reuters in an interview.
"One of the things we have come up with is that we'll treat all apps in the App Store the same - one set of rules for everyone, no special deals, no special terms, no special codes, everything applies to all developers in the same way. That was not the case with PC software. No one could have imagined that. It was a complete reverse of the way the whole system was supposed to function," Schiller stated.
Software sold in physical stores meant that software had to be paid for shelf space and prominence. These costs could account for up to 50 percent of the retail cost. Small-scale developers were not able to gain access to.
Bajarin stated that the App Store's predecessor was Handango. Handango was a service that allowed developers to offer apps over cellular connections, to the Palms of users in exchange for 40% commission.
With the App Store, "Apple took that to another level. And at 30%, they were a better value," Bajarin said.
The App Store had rules. Apple reviewed each app and required that its billing system be used. Schiller declared that Apple executives believed that users would feel more confident purchasing apps if their payment data was secured.
"We believe that our customers' privacy is secure this way. He added that he could imagine if you had credit cards and payment for every application you used.
Apple's rules were initially an internal list but were published in 2010.
Developers have complained to Apple regarding commissions throughout the years. Apple has narrowed where they will apply the commissions. In 2018, they allowed gaming companies, such as Microsoft Corp , maker of Minecraft and Minecraft, to let players access their accounts as long as their games included in-app payments from Apple as an alternative.
"As we spoke to some of the biggest game developers, such as, Minecraft, they said"I totally understand why you want the user to be capable of paying for it through their device. We have many customers who purchased their subscriptions or accounts on other platforms - an Xbox, a PC or even the internet. IPAGD'S BLOG Schiller said that it's a barrier to accessing your store. "So we made this exception to our own rules."
Schiller said that Apple's cut aids in financing an extensive network of developers: Thousands of them maintain secure servers that deliver apps, and also to develop the tools needed to create them.
Marc Fischer, chief executive of Dogtown Studios mobile technology firm said Apple's 30% commission was justified in the early days. It was the cost of global distribution to small companies like his. Fischer said that the fees should be lower now that Apple and Alphabet Inc have an "duopoly" that means that they both have the ability to provide mobile app stores.
"As an entrepreneur, you have no choice but to accept that charge," Fischer said. (Reporting by Stephen Nellis, San Francisco; Editing done by Greg Mithcell & Steve Orlofsky