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Given that so much of Apple's profits are from extortionate App Store fees... I can't help but think this is a classic "commodify your complement" strategy from
by reissbaker 5y ago
Given that so much of Apple's profits are from extortionate App Store fees... I can't help but think this is a classic "commodify your complement" strategy from Google. The lion's share of Google's revenue comes from search: if cutting subscription fees on the Play Store forces Apple to cut their take on the App Store by half, then Apple loses considerably more than Google — and Apple's loss is Google's gain. And if Apple doesn't cut their rate... It's a lot harder for them to argue to regulators that they shouldn't be forced into having oversight, since it's no longer standard to take so much.
- alexjurkiewicz 5y agoSearch and Play Store come from the same company, but is play store revenue really a complement to search? How does removing play store fees improve Google's search moat?
- reissbaker 5y agoAndroid was explicitly created to give Google leverage in the mobile space and drive more web usage + search: https://www.theatlantic.com/technology/archive/2013/12/the-day-google-had-to-start-over-on-android/282479/ https://www.theatlantic.com/technology/archive/2013/12/the-d...
- paxys 5y ago> if cutting subscription fees on the Play Store forces Apple to cut their take on the App Store by half Will it though? Or will the fee just become another "premium" differentiator between the two? The average Android phone sells for $250, but that hasn't discouraged Apple from pricing iPhones at 3-5x that. Other than strong government regulation (or the threat of it), I don't see Apple ever willingly reducing the App Store tax.
- reissbaker 5y agoOne of Apple's arguments in the Epic case was that 30% was standard; if it's not, it makes it look worse to courts and potential regulators.
- worrycue 5y agoEven if Google decides to become the exception, there are other stores on other platforms using 30% commissions for it to still be considered the standard. https://www.ign.com/articles/2019/10/07/report-steams-30-cut-is-actually-the-industry-standard https://www.ign.com/articles/2019/10/07/report-steams-30-cut...
- threeseed 5y agoApple reduced their "App Store tax" in 2020 from 30% to 15% for small businesses i.e. the majority of app developers. https://www.apple.com/au/newsroom/2020/11/apple-announces-app-store-small-business-program/ https://www.apple.com/au/newsroom/2020/11/apple-announces-ap...
- thow-58d4e8b 5y agoFor the majority of app developers, but almost surely for a small minority of their app store revenue
- crakenzak 5y ago> and Apple's loss is Google's gain. Elaborate? Apple is not involved in the search market, and I don’t see how them not making as much money on their own platform benefits Google in any way. Note: I still think the value that Google Play and App Store provide to developers is not worth the 30% (or 15% in this case), but just want to understand your reasoning.
- andreareina 5y agoI'd guess Apple has less money -> worse products (or less effective marketing) -> Apple loses market share to Android -> Google gets more data -> Google makes more money I'm not sure how valid it is given the absolute mountain of cash Apple is sitting on.
- threeseed 5y ago> Given that so much of Apple's profits are from extortionate App Store fees Apple earns ~20% of their revenue from all their services not just App Store [1] Given they don't break out their App Store profit numbers I think you should provide your source. [1] https://www.statista.com/statistics/382260/segments-share-revenue-of-apple/ https://www.statista.com/statistics/382260/segments-share-re...
- reissbaker 5y agoI am responding to a poster claiming 37% of Apple's profits are from the App Store. I'm not sure what their source is; it seems at least somewhat believable to me, since the profit margins for Apple on App Store revenue are extremely high (analysts estimate 78% [1]), so even if App Store revenue is a smaller percentage of total revenue, the other revenue costs more, and those costs cut down their percentage contribution to total profits. Regardless, it's fairly widely reported that the App Store is much more lucrative for Apple than the Play Store is for Google. 1: https://www.marketwatch.com/story/how-profitable-is-apples-app-store-even-a-landmark-antitrust-trial-couldnt-tell-us-11622224506 https://www.marketwatch.com/story/how-profitable-is-apples-a...
- concinds 5y agoI'm the OP and I just compared what Apple gets from the App Store (around $21.7m estimated in 2020 which I saw in Barron's, but it's probably an overestimation since I don't think it takes into account the 15% rate below $1m) to Apple's 2020 profits ($57.4m). It's really a back-of-napkin thing, just meant to show the similarity in scale, and how damaging it would be to companies if this revenue went away.