Author: Danielle

In a reality attack destined no doubt to be completely ignored by ideologically deluded regulators and cash-hungry competitors, Apple has published an extensive report that proves the anticipated benefits of lower App Store commissions are not reaching European consumers at all. 

Not only that, but even the developers who do benefit from this ham-fisted attempt at market liberalization aren’t based in Europe.

Are you really surprised? 

After all, the initial implantation of these laws is based on theory, rather than practice. It is, surely, obvious that under free market theory, people will sell goods and services for as much as the market can sustain.

That means that making it cheaper to sell those goods (by App Store changes) will not automatically translate into any wider consumer benefit. But it is more likely to turn into yet more profit for those with goods on sale.

In that respect, there can be no tangible consumer benefits from App Store liberalization, so long as prices charged at that store reflect market demand. All that’s really happening is a different split in profit share. 

Who cares?

The problem is that consumers are directly harmed by the way in which this new fiscal carve up is created. That’s because they are forced to accept heightened security and privacy risks as store fronts multiply — even as regulation over the privacy and security of those stores remains relatively weak. 

Plus, in the case of App Stores, this also means device vendors (Apple, in particular) end up being forced to provide tech support for people who have problems installing apps from third-party operations.  Sure, Apple might not have a legal responsibility to sort these problems out, but it is a company with relatively ethical values and will no doubt spend time trying to help its customers. That’s a cadre of free tech support for those third-party app stores — profitable for them, but at the cost of higher running costs for Apple and a degraded user experience for the rest of us.

Today’s report doesn’t go into all of this, of course. But it’s hard not to see how its criticisms point to the logical conclusion that far from benefitting consumers, App Store liberalization has simply exposed them to potential fraud and other harms, inconsistent user experiences, security threats — all so a few more dollars can land in the laps of the multi-millionaires who paid so much cold hard cash to lobbyists, politicians, and PRs to complain about the so-called “Apple Tax.”

Wake up, people: These folks didn’t resent that so-called tax because you paid it; they resented it because they didn’t get to keep all of it. 

What really happens

And that’s precisely what seems to be happening, according to the Apple report. It’s important to note that this report was conducted by economics experts at Analysis Group (paid for by Apple). I won’t paraphrase the entire thing here; you can read it yourself and draw your own conclusions. What I have done is selected just three choice quotes to demonstrate the argument:

• “The five top-selling developers in EU App Store storefronts in the three-month period prior to adopting the alternative business terms kept the price of their most popular product (defined as a paid app or a specific in-app purchase, such as a particular subscription or a given number of virtual coins) unchanged, even though they experienced a substantial reduction in the commission rate they paid.”

• “Developers’ decision not to pass on commission savings to EU users mirrors Apple’s past experience following the launch of the Small Business Program, which reduced commission rates from 30% to 15% for tens of thousands of small developers beginning in 2021. Less than 5% of those developers’ apps exhibited any price decreases whatsoever after their commission rates decreased.”

• “The findings of this study demonstrate that commission savings as a result of the DMA have not led to price decreases for customers and overwhelmingly flowed to developers outside the EU. Despite lower commission rates, developers maintained, or increased, the prices of 91% of products, accounting for 94% of transactions, and the small number of price decreases appear mostly, if not entirely, unrelated to the lower fees. In addition to developers keeping most of the commission savings for themselves, over 86% of the savings went to developers based outside of the EU.”

So, next time someone bewails the Apple tax, just look at what they do. Are they genuinely complaining about Apple’s business practices, or do they just want to take a bigger slice of the pie? Following the money (and the data) suggests the answer.

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