Apple, Google is facing growing uprising above app store & tax; & # 39;



A kickback against the app stores of Apple and Google is gaining momentum, with a growing number of companies saying that tech giants have too high a load & # 39; collect for connecting consumers with developer products.

Netflix and video game manufacturers Epic Games and Valve Corp. belong to companies that have recently tried to claim the app stores or complained about the cost of the toll that Apple and Google ask for.

Grumbling about the economy of the app store is not new. But the number of complaints, combined with new ways to reach users, undermining regulatory oversight and competitive pressures are undermining what has now become digital gold mines for Apple and Google.

"It feels like something that bubbles up here," says Ben Schachter, analyst at Macquarie. "The dollars are just going to be that big, they just do not want to pay billions from Apple and Google."

Apple and Google launched their app stores in 2008 and quickly became powerful marketplaces that matched the creations of millions of independent developers with billions of smartphone users. In return, companies absorb up to 30 percent of the money that consumers pay to developers.

For most of the decade, companies have been praised for their contribution to building an app economy that is expected to grow to $ 157 billion in 2022 from $ 82 billion last year. But more recently, smartphones and apps have become so important to reach customers that these app stores are being criticized for conquering too much of the loot. Instead of supporting innovation, Apple and Google are being discussed as tax collectors that block the flow of dollars between creators and consumers.

"They are very aggressive to ensure that companies are not trying to work around their invoices," says Alex Austin, co-founder of Mobile Company Branch. "They have entire teams that review these flows to ensure that they receive their taxes."

Last week, Schachter co-authored a report arguing that current app retail prices were unsustainable. Apple and Google take 30 percent of the subscription budgets and in-app purchases on iPhones and Android phones with the Google app store (in fact, all outside of China). About two years ago, the companies reduced that discount to 15 percent in some cases.

If app storage fees were to fall to a mixed percentage of 5 percent to 15 percent, that would lead to a 21 percent discount on Apple's revenue before interest and taxes, to budget 2020, Macquarie estimates. Google could lose up to 20 percent according to the same measure, according to the real estate agency. The technology giants are expected to earn more than $ 50 billion each in 2020, before interest and taxes, according to the forecast data from the analysts compiled by Bloomberg.

This is particularly worrying for Apple investors who expect the App Store to support the growth of the company's services business. Apple often emphasizes the financial success of its App Store in conference calls with analysts.

Google from Alphabet Inc. is sensitive considering his legal problems. A recent anti-trust rule from the European Union requires the company to stop automatically installing its app store on Android phones in Europe. (Google is fighting the accusations.) This can force more app makers to evade Google, attract customers through the internet or through collaborations with other companies. "Everyone around the world is looking for ways to push back against American tech," Schachter said. "This feels like a natural way to tackle it."

Complaints about taxes on the app store became louder in 2015 when Apple and Google went deeper into the digital content activities, making them rivals and not just digital distribution partners. In 2015, music streaming company Spotify Technology SA began emailing customers with the fact that they had to cancel subscriptions purchased through Apple's app store.

On Tuesday, video stream company Netflix said it is testing a way to bypass Apple in-app subscriptions by sending users to their own website. Currently, Netflix users on iPads and iPhones can subscribe via the App Store's in-app purchasing system. This makes subscription simpler, but also gives Apple a 15 percent discount on those subscriptions. And from May, Google Play billing for Netflix was not available to new or returning customers, according to the Netflix website.

On iPhones in the United States, Netflix was the # 1 entertainment app of consumer spending and the most downloaded entertainment app in the Google Play Store for the past 90 days, according to App Annie, who follows the industry.

The video game industry has also worked to avoid app taxes this year. Valve & # 39; s Steam, the largest distributor of video games for PCs, was planning to release a free iPhone app that allows gamers to keep playing while they are away from their computer. Apple has blocked the app. Shortly thereafter, the tech giant has updated the app rating guidelines to ban everything that looks like an app store in an app or gives users the ability to browse, select, or buy software that is not already owned or licensed belongs to the user. .

More recently, Epic Games, the maker of hit video game Fortnite, has chosen to dump Google's app store. Epic executive Tim Sweeney said that the 30% app store fee has a high price & # 39; is in a world where publishers have to bear the costs of developing, operating and supporting their games.

"Intermediaries distributors are no longer needed," he added.

Fortnite has cashed $ 200 million in the Apple App Store since its release in March, according to Sensor Tower, which tracks app purchases. Apple could earn $ 135 million from the title, Sensor Tower estimates, while Google is missing at least $ 50 million.

A Google spokeswoman did not want to comment. In defense of the app store model, Apple and Google have made clear their ability to filter out fake apps and malicious software and distribute apps extensively. The companies process the identity and payment details and take the registration process off your hands. Promotion in their app stores can transform a company's assets from one day to the next.

Indeed, only the most popular online services can run the risk of being in the app stores of Apple and Apple. Skipping these powerful distribution channels is a & fool & # 39; s message & # 39; for most publishers, according to Danielle Levitas, a senior vice president at App Annie. And some other game developers join Epic. Electronic Arts Inc. and Glu Mobile Inc. stick to their current distribution system, which includes app stores.

According to branch co-founder Austin, this shows how broken the system is. Most developers want to use the app stores, but some hesitate to pay Apple and Google, so they have to use their chances on the internet, he said. His company offers software tools that allow companies to identify paying subscribers before being directed to their apps.

"If you're a small, up-and-coming business, you can not really sell subscriptions to the mobile internet," he said. "Reducing the app store's load would effectively reduce the last hurdle for a large proportion of businesses."

– With help from Bloomberg & # 39; s Lucas Shaw.


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