News

Developers Unhappy with New Apple App Rules; Antitrust Investigation Possible

• By Keith Ward
• February 22, 2011

Apple is riling up many in its developer community with new restrictions on what companies can sell within -- and outside of -- iPhone and iPad applications.

The source of the anger is Apple's new App Store Subscription policy. In essence, Apple tells application developers that if they offer subscription-based services outside its App Store, that those same services must be offered in the App Store, and at the same price. In addition, developers can't even route potential buyers to non-App Store places for subscriptions or content. The key language that has developers up in arms:

"Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app."

Subscriptions sold through the App Store will net Apple 30 a percent commission, a situation that the developer of the app Readability says "smacks of greed." Rich Ziade added that:

"to impose this course on any Web service or Web application that delivers any value outside of iOS will only discourage smaller ventures like ours to invest in iOS apps for our services".

Readability is far from alone. TinyGrab, a developer of a screenshot app, says it's stopping "all active development" on its iPhone app:

"30% is a ridiculous amount to ask us to fork over, considering that we already pay $99 a year for the privilege to develop apps for the Mac App Store and a further $99 a year to develop apps for the iOS store ... Never mind that Apple also get a cut of any revenue that we generate from selling our apps through their stores, they now want in on our account and subscription service."

The technology press is similarly unimpressed. "Essentially, Apple proposes to annex a developer's subscription business--then charge that firm 30 percent for the privilege," writes Rob Pegoraro in the Washington Post.

Apple has imposed a June 30 deadline for companies to bring apps into compliance with the policy. The new rules, however, could be getting Apple in hot water with the U.S. government. According to the Wall Street Journal, antitrust officials are "looking at the terms" Apple's imposing for possible future action. The article cautions that this is in a preliminary stage, and may not lead even to an investigation. But the antennae of the European Union has also been raised, the article states, so Apple could be looking at antitrust issues on several continents.

MacRumors.com is reporting that Apple CEO Steve Jobs, in response to a developer's query about whether Software-as-a-Service apps (which by their nature are subscription-based) will be affected by the new rules, indicated that they wouldn't. "We created subscriptions for publishing apps, not SaaS apps" was his terse response, as reported by the site. Until Apple clarifies its new policy, confusion is likely to continue.