Apple has lost its confidence

No, I don’t mean how Tim Cook didn’t wear the Vision Pro until Vanity Fair shot a polished photo of him doing so. I don’t mean canceling its car.

I mean believing that its solutions and services are the best, and can stand up to the competition.

That’s the overall vibe emerging from Apple’s desperate attempt at clinging onto IAP (in-app purchase) revenue by any means necessary — even by rebranding it as a Core Technology Fee in its pseudo-compliance with the EU’s Digital Markets Act. The new fee — €0.50 for each first annual install per year over a 1 million threshold for apps distributed outside the App Store — is just another way for Apple to get at the money generated by iOS apps. That revenue comes from in-app purchases and subscriptions, which Apple commissions at 15% to 30% depending on developer size, type of app, and other factors.

Essentially, Apple is now claiming that the platform offering developers distribution is not, in fact, the App Store, but rather the entirety of iOS. And developers should surely have to pay tribute to access iOS and its myriad APIs and frameworks, or so Apple believes. (The fact that developers already do so as part of their Apple Developer annual fee seems to be ignored.)

While Apple may be correct that the iPhone itself is the best way to reach some 1.5 billion users globally who would be interested in downloading and paying for mobile apps, it has forgotten that access to popular apps also helps to sell iPhones. If the iPhone didn’t have Facebook or Instagram or Google or Spotify, but Android did, would people not switch?

What’s worse is that Apple doesn’t seem to think that IAP can stand up to the competition: app developers’ websites.

In reality, Apple’s IAP is the most natural and easiest way to buy things on the iPhone, whether that’s virtual goods or currencies in games, subscriptions to favorite apps, paid downloads, micropurchases, and more. You simply double-tap a button and look at your phone to make a transaction. It’s incredibly simple, fast, and relatively painless. (Except when you cave and purchase boosters to pass that tough level in Candy Crush, of course. That’s painful.)

IAP is arguably the best way to buy things on iPhone and gives Apple a huge competitive advantage. It could stand up to competition, but Apple is behaving as if it could not.

App developers are convinced that if they could only advertise lower prices on their websites and could point to those websites from inside their apps (or steer users, in Apple lingo), they could avoid the App Store commissions. They think consumers would naturally jump through these extra hoops for the better deal — a few dollars off, perhaps. If Apple simply required that IAP be offered as an option besides these links to the web, I think developers would be surprised to find that many consumers would still be more interested in the convenience and ease of use that IAP offers, compared with the meager savings they’d offer.

We won’t know, of course, because Apple refuses to allow developers to fully compete in this way. Sure, “reader” apps — a made-up category encompassing apps selling digital goods — can offer a link to their website, but with a lot of caveats in tow, e.g. they cannot mention their discounts and prices.

Plus, every time Apple is asked to comply with some court ruling or new regulation, its team of lawyers works to find the loopholes. Developers have to apply for permission to break the rules, typically, which Apple then approves (or not!), via a system called “Entitlements.” (A term that always makes me laugh for the double meaning it conveys).

Apple also finds a way to make breaking the rules less affordable. Whether that’s knocking down the commission by only 3%, as it did for dating apps in the Netherlands — which may not even cover the cost of using an external payment processor — or to 10%-17%, as it did for the DMA, while adding 3% on top of that if using Apple’s payment tech, and, of course, the adding the new Core Technology Fee.

In another timeline, I can imagine a place where Apple handled this entirely differently.

Years ago, when developers started their bellyaching about IAP and App Store commissions, Apple could have just lowered its commission rates across the board and dropped its anti-steering clause. Let developers promote their prices, let them do whatever they want! In that other reality, Apple wouldn’t care because it knew IAP was the better solution and that it would still win.

And if it was worried, it could have spun up its incredible marketing team and convinced the world that its IAP solution was better. That the App Store was better. It could have touted the benefits of the double-tap and Face ID. It could have highlighted the ease of canceling App Store subscriptions — compared with the (sometimes illegal) labyrinth of navigating developers’ own websites to find the ‘delete my account’ button.

It could have even built a dashboard where users could toggle on and off subscriptions with ease and track their usage. Pay for MAX this month because “Succession” is on? Toggle on. Turn off your vacation planner’s premium upgrade because your trip is now over? Toggle off. New release of iOS added widgets? Toggle on Widgetsmith and customize away. Planning a ski trip? Toggle on Slopes Premium to track your winter adventures! Imagine the fun that could be had when you could quickly see at a glance what you were paying for, how much it cost, and turn your favorite apps’ subscriptions on and off like this. That would sell consumers on IAP, as well.

Apple could do it, too. Remember that this is the same company that convinced consumers that Apple cares about their privacy, when it was really setting the stage for Apple to compete in the ad market by leveraging the data it collects on iPhone users for personalized ad targeting — while limiting third parties who do the same. You can now quickly opt out of tracking when you install a new iOS app. But does anyone off the top of their head know how to opt out of Apple’s own personalized ads? (It’s Settings → Privacy & Security → scroll allllll the way to the bottom to Apple Advertising, then Toggle off Personalized ads, if you’re curious.)

The fact is, consumers probably think Apple isn’t tracking them because it cares about their privacy, when in fact, it is doing just the opposite. It is tracking them and pretending that it’s saving them from tracking! That is the power and craft of Apple PR. I tip my hat to them for their masterful work.

But they wouldn’t even have to market IAP as hard.

Apple’s IAP could easily compete with alternatives — because it’s a simple, native functionality that’s built into iOS. IAP was already on third base here. Let developers shout in their apps that their website is cheaper, and let them pop up discounts and deals if they want. Consumers will just as likely uninstall the app for annoying the heck out of them as they would click through to save a few dollars on a subscription they may never figure out how to cancel.

IAP is the best solution for how it’s built, how it’s integrated, and how it converts users to payers.

The question is, why isn’t Apple confident of that?