5 ms·

Why does Apple make a minority of developers finance the entire App Store?

39 points by walterbell 1y ago

oneplane 1y ago
TL;DR: profit (direct and/or indirect). I don't know if they do, but I do know the universal answer to all of it: because that's what makes the big bucks. While there will always be inefficiencies and weird situations, multinationals that stick around for a long time and make lots of money do so because there are a bunch of people working there who have to figure out how to make money and keep making that money.
- jocaal 1y ago
  Like most things in life, the profit that companies make follows a decaying exponential, the so called power law. Most of the money is in the big winners.
CrimsonCape 1y ago
In a parallel universe, it seems like the opposite billing policy makes more sense: for paid purchase of apps, Apple should take zero commission. For in-app advertising revenue, Apple should take commission.
- nrb 1y ago
  In yet another parallel universe, in-app advertising doesn't exist and paid purchases have a flat-fee commission commensurate with the cost of providing that service.
SoftTalker 1y ago
Why do a minority of taxpayers finance the government? Because they are the ones who have the money.
- dylan604 1y ago
  man does this miss the mark. most of the uber wealthy pay less than middle class. when you have money, you can afford to do things with that money that avoids paying taxes for your full value.
  - kgwgk 1y ago
    > The top 1 percent of taxpayers (AGI [Adjusted Gross Income] of $663,164 and above) paid the highest average income tax rate of 26.1 percent—seven times the rate faced by the bottom half of taxpayers. > In all, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $864 billion in income taxes while the bottom 90 percent paid $599 billion. https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025/ https://taxfoundation.org/data/all/federal/latest-federal-in...
    - demosthanos 1y ago
      The first paragraph is the nominal tax rate and the claim that OP is offering is based on the idea that the ultra wealthy find ways to avoid that tax rate and end up paying less than middle class income earners as a percentage of their income. I believe that this is true. The second paragraph is the actually relevant stat, though: for all that they avoid the nominal tax rate, they still pay the majority of all taxes.
      - kgwgk 1y ago
        > The first paragraph is the nominal tax rate No, that's the effective tax rate for the top 1% in aggregate: Adjusted gross income: $3,309,589,000,000 Tax paid: $863,631,000,000
        demosthanos 1y ago
        Oh, my bad! You're right.
    - jjani 1y ago
bitpush 1y ago
> Apple today announced the global App Store ecosystem facilitated $1.3 trillion in developer billings and sales in 2024, according to a new study by economists Professor Andrey Fradkin from Boston University Questrom School of Business and Dr. Jessica Burley from Analysis Group. That opening reads wrong. Yes, the study was funded by Apple but the conclusions are of the authors. But yet it reads as "Apple today announced that .., according to a study". It will be like Pizza Hut saying "Pizza Hut today announced that their pepperoni pizza is the best ever, according to a review posted by pizzalover123 on Yelp"
MangoToupe 1y ago
This is such odd framing. Apple fully owns the App Store; it isn't financed at all. People pay into Apple for access to their market. Finance doesn't even enter the equation.
- bitpush 1y ago
  That's a gross characterization of what's going on. When I download Uber on App Store, the business relationship is between me and Uber (and Apple doesnt and shouldnt come into the picture). Do you think Ford needs to get a cut if a user buys Michelin tyres of their Ford Car? Will you argue that Michelin needs to "pay into Ford for access to their market"?
  - lesuorac 1y ago
    If you walk into a Krogers and buy a pint of Bryer's ice cream I can definitely understand Kroger getting a cut.
    - einszwei 1y ago
      But we also understand that Krogers can’t expect a cut of every transaction on Xbox just because the Xbox was purchased from Krogers.
      - oneplane 1y ago
        Unless Krogers maintains the Xbox software and Xbox servers and Xbox business processes so it can keep functioning.
        echaozh 1y ago
        Um, does a mall normally gets a cut in all the sales which happen in the stores on its ground? The mall surely keeps the stores running by providing services like security, parking, advertising to attract people, etc.
citizenpaul 1y ago
Because they like their monopoly? More players in the game means less control. It's the dictator playbook. Minimize your key supporters.
cyberax 1y ago
> A full 84 percent of the apps in the App Store pay nothing to Apple when you download or use the app. That’s not discrimination, as Spotify claims; it’s by design This is a bald-faced lie. To develop an app for the App Store, you need to spend: 1. $100 a year on the certificate. 2. Around $500 a year on Apple hardware (amortized). This is way more than you need to develop for Microsoft, even with their official tools.
- bilbo0s 1y ago
  I'm thinking Spotify would shout even louder indignations if smaller App Store developers don't even have to pay the $100. But look, everyone is not gonna be happy with whatever structure Apple or the courts come up with. The courts might come up with a structure where people pay nothing unless the users use Apple payment systems to buy in-app. Guess what Spotify, you're still gonna be financing all the developers who'd rather choose to pay nothing and instead put up with the headaches and chargebacks of using payment systems outside of Apple. Spotify doesn't want to finance the rest of us? Fine, when the time comes, make that choice not to use Apple payment systems. Now you're not financing the rest of us. But you can't say, "I want to use Apple payment systems because the chargebacks are lower and people trust them more", on the one hand; and say, "but Apple should not use any of the money I generate to float infrastructure for other developers to also use their payment systems", on the other.
  - cyberax 1y ago
    There's a novel way: charge app developers the costs of running the AppStore, with a reasonable profit margin on top. To make it fair, have it as a separate unit, that Apple itself has to use for internal apps.
- GeekyBear 1y ago
  > This is way more than you need to develop for Microsoft Windows, by default, will block apps from lesser known developers unless they shell out quite a bit more than $99 a year for an Extended Validation (EV) Code-Signing Certificate from a certificate authority that Microsoft finds acceptable. https://stackoverflow.com/questions/48946680/how-to-avoid-the-windows-defender-smartscreen-prevented-an-unrecognized-app-fro https://stackoverflow.com/questions/48946680/how-to-avoid-th... Also, Mac Minis are a one time $500 purchase, and will be good enough to use for more than one year.
os2warpman 1y ago
One of my favorite things about Hacker News is how much we like to bitch about Apple.
- nullwarp 1y ago
  To be fair it's not hard, there is no shortage of things to complain about.
  - deleted 1y ago
    [deleted]
- surgical_fire 1y ago
  As opposed to the countless sycophants in every Apple thread making excuses for the company?
  - kmeisthax 1y ago
    [dead]
jonathanstrange 1y ago
I don't think the author uses the term "free rider" correctly. Apple chooses who has to pay based on whatever criteria they like. To me, those listed criteria make sense, for example it would make no sense to charge developers who make their apps available for free, since they would then stop publishing them in the app store and that would concern a lot of useful software.
- eviks 1y ago
  Or they wouldn't since they would still like to generate those $1.3T, not everything distributed for free is completely free. Moreover, they currently *are* charged to distribute, the apple developer program isn't free.
  - jonathanstrange 1y ago
    So the "free rider" claim was even more misleading, I suspected that but didn't want to base my criticism on a hunch. Thanks for clarifying that!
    - lapcat 1y ago
      > So the "free rider" claim was even more misleading The Apple Developer Program is $99. Note that this is not just for the App Store but also for distribution on the Mac outside the App Store, as well as access to other developer resources. I didn't mention it because it's a drop in the bucket, totally negligible compared to the billions of dollars per year in App Store commissions that Apple collects from developers. If $99 were the only fee, then hardly any developers would complain, except perhaps hobbyists. For professional developers, and for Apple's overall revenue, $99 is practically nothing.
mrweasel 1y ago
How on earth is Apple doing $1.3 trillion in billings on the App Store? My kid asked if we could buy an iPad game last week, that was like $12. I can't remember when I last bought something in the App Store (iPhone or macOS) beyond that. Some people would have to buy insane amounts of stuff. Are they counting their own subscription products as well, like AppleTV og iCloud?
- Discordian93 1y ago
  I believe it's game "whales" who spend thousands on in game purchases.
  - WindyCityBrew 1y ago
    Also a steady stream of people that unknowingly have subscriptions. If you have older parents or grand parents, show them the subscriptions screen in the app store from time to time.
- fragmede 1y ago
  People spend a truely stupendous amount on in-app purchases a dollar or two (or fifty) at a time. A friend's easily spent a couple hundred on Monopoly over the course of a year.
- jjani 1y ago
  They're talking about "facilitated by the App Store ecosystem" so it includes everything from online shopping to advertising. 1 billion iPhone users spending/generating on average $1000 on their phones per year? Seems reasonable. I think even if you just consider Amazon, the Amazons of elsewhere, supermarkets etc, Ali, it goes on and on. Their combined revenue from people buying stuff on their iPhones, iPads, Mac apps downloaded through the app store will get you a great length towards $1.3 trillion. People are not spending $1.3 trillion per year on IAPs, it's not the game whales as the other comment suggests.
walterbell 1y ago
One month ago: "Apple violated antitrust ruling, judge finds", 600 comments, https://news.ycombinator.com/item?id=43852145 https://news.ycombinator.com/item?id=43852145 "Judge rules Apple executive lied under oath, makes criminal contempt referral", 300 comments, https://news.ycombinator.com/item?id=43856795 https://news.ycombinator.com/item?id=43856795 "Apple App Store guidelines remove ban on encouraging external payments in US", 300 comments, https://news.ycombinator.com/item?id=43867692 https://news.ycombinator.com/item?id=43867692
mvdtnz 1y ago
Nobody should be "financing" the app store, it's a ludicrous position that Apple has somehow convinced you people to accept. Apple should optionally provide their payments system for a reasonable price comparable to other payment providers (a low single digit percentage) and that's it. The idea that you pay to have your merchandise in someone else's store and then keep paying a commission for any ongoing revenue beyond the point of sale is ridiculous and I can't believe even a single person agreed to do it.
- shwouchk 1y ago
  thats how b&m food distribution often works: vendors pay for shelf space. that’s how barbers works: they pay for a chair. that’s how many professions works. you pay for access to customers.
m3kw9 1y ago
If you put it that way, yes if you make a couple million, you are using more of the resources and accessing more of the benefits it provides, fair to pay more
conductr 1y ago
Why use the retail analogy? Seems like PC is the exact same comparison. There’s no need for an App Store at all. Any argument otherwise is silly after having such a long history of installing whatever I want whenever I want by developers who can bill me however they want.
daft_pink 1y ago
I think this is zero marginal cost income that they receive from something they created to sell their core product (devices). They essentially need this app infrastructure to support their device sales and the idea that the developers are financing it or that some are free riding is just silly. This is money that apple can get for free and they choose to give up some of it because it benefits them to have more apps and more developers so they can sell more devices. You just don't notice it because they have built their business to a size where they have a network effect advantage and aren't desperate to get every developer they can if they were a smaller player.

39 points by walterbell 1y ago

TL;DR: profit (direct and/or indirect). I don't know if they do, but I do know the universal answer to all of it: because that's what makes the big bucks. While there will always be inefficiencies and weird situations, multinationals that stick around for a long time and make lots of money do so because there are a bunch of people working there who have to figure out how to make money and keep making that money.

jocaal 1y ago
Like most things in life, the profit that companies make follows a decaying exponential, the so called power law. Most of the money is in the big winners.

CrimsonCape 1y ago

In a parallel universe, it seems like the opposite billing policy makes more sense: for paid purchase of apps, Apple should take zero commission. For in-app advertising revenue, Apple should take commission.

nrb 1y ago
In yet another parallel universe, in-app advertising doesn't exist and paid purchases have a flat-fee commission commensurate with the cost of providing that service.

SoftTalker 1y ago

Why do a minority of taxpayers finance the government? Because they are the ones who have the money.

dylan604 1y ago
man does this miss the mark. most of the uber wealthy pay less than middle class. when you have money, you can afford to do things with that money that avoids paying taxes for your full value.
- kgwgk 1y ago
  > The top 1 percent of taxpayers (AGI [Adjusted Gross Income] of $663,164 and above) paid the highest average income tax rate of 26.1 percent—seven times the rate faced by the bottom half of taxpayers. > In all, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $864 billion in income taxes while the bottom 90 percent paid $599 billion. https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025/ https://taxfoundation.org/data/all/federal/latest-federal-in...
  - demosthanos 1y ago
    The first paragraph is the nominal tax rate and the claim that OP is offering is based on the idea that the ultra wealthy find ways to avoid that tax rate and end up paying less than middle class income earners as a percentage of their income. I believe that this is true. The second paragraph is the actually relevant stat, though: for all that they avoid the nominal tax rate, they still pay the majority of all taxes.
    - kgwgk 1y ago
      > The first paragraph is the nominal tax rate No, that's the effective tax rate for the top 1% in aggregate: Adjusted gross income: $3,309,589,000,000 Tax paid: $863,631,000,000
      - demosthanos 1y ago
        Oh, my bad! You're right.
  - jjani 1y ago

bitpush 1y ago

> Apple today announced the global App Store ecosystem facilitated $1.3 trillion in developer billings and sales in 2024, according to a new study by economists Professor Andrey Fradkin from Boston University Questrom School of Business and Dr. Jessica Burley from Analysis Group. That opening reads wrong. Yes, the study was funded by Apple but the conclusions are of the authors. But yet it reads as "Apple today announced that .., according to a study". It will be like Pizza Hut saying "Pizza Hut today announced that their pepperoni pizza is the best ever, according to a review posted by pizzalover123 on Yelp"

MangoToupe 1y ago

This is such odd framing. Apple fully owns the App Store; it isn't financed at all. People pay into Apple for access to their market. Finance doesn't even enter the equation.

bitpush 1y ago
That's a gross characterization of what's going on. When I download Uber on App Store, the business relationship is between me and Uber (and Apple doesnt and shouldnt come into the picture). Do you think Ford needs to get a cut if a user buys Michelin tyres of their Ford Car? Will you argue that Michelin needs to "pay into Ford for access to their market"?
- lesuorac 1y ago
  If you walk into a Krogers and buy a pint of Bryer's ice cream I can definitely understand Kroger getting a cut.
  - einszwei 1y ago
    But we also understand that Krogers can’t expect a cut of every transaction on Xbox just because the Xbox was purchased from Krogers.
    - oneplane 1y ago
      Unless Krogers maintains the Xbox software and Xbox servers and Xbox business processes so it can keep functioning.
      - echaozh 1y ago
        Um, does a mall normally gets a cut in all the sales which happen in the stores on its ground? The mall surely keeps the stores running by providing services like security, parking, advertising to attract people, etc.

citizenpaul 1y ago

Because they like their monopoly? More players in the game means less control. It's the dictator playbook. Minimize your key supporters.

cyberax 1y ago

> A full 84 percent of the apps in the App Store pay nothing to Apple when you download or use the app. That’s not discrimination, as Spotify claims; it’s by design This is a bald-faced lie. To develop an app for the App Store, you need to spend: 1. $100 a year on the certificate. 2. Around $500 a year on Apple hardware (amortized). This is way more than you need to develop for Microsoft, even with their official tools.

bilbo0s 1y ago
I'm thinking Spotify would shout even louder indignations if smaller App Store developers don't even have to pay the $100. But look, everyone is not gonna be happy with whatever structure Apple or the courts come up with. The courts might come up with a structure where people pay nothing unless the users use Apple payment systems to buy in-app. Guess what Spotify, you're still gonna be financing all the developers who'd rather choose to pay nothing and instead put up with the headaches and chargebacks of using payment systems outside of Apple. Spotify doesn't want to finance the rest of us? Fine, when the time comes, make that choice not to use Apple payment systems. Now you're not financing the rest of us. But you can't say, "I want to use Apple payment systems because the chargebacks are lower and people trust them more", on the one hand; and say, "but Apple should not use any of the money I generate to float infrastructure for other developers to also use their payment systems", on the other.
- cyberax 1y ago
  There's a novel way: charge app developers the costs of running the AppStore, with a reasonable profit margin on top. To make it fair, have it as a separate unit, that Apple itself has to use for internal apps.
GeekyBear 1y ago
> This is way more than you need to develop for Microsoft Windows, by default, will block apps from lesser known developers unless they shell out quite a bit more than $99 a year for an Extended Validation (EV) Code-Signing Certificate from a certificate authority that Microsoft finds acceptable. https://stackoverflow.com/questions/48946680/how-to-avoid-the-windows-defender-smartscreen-prevented-an-unrecognized-app-fro https://stackoverflow.com/questions/48946680/how-to-avoid-th... Also, Mac Minis are a one time $500 purchase, and will be good enough to use for more than one year.

os2warpman 1y ago

One of my favorite things about Hacker News is how much we like to bitch about Apple.

nullwarp 1y ago
To be fair it's not hard, there is no shortage of things to complain about.
- deleted 1y ago
  [deleted]
surgical_fire 1y ago
As opposed to the countless sycophants in every Apple thread making excuses for the company?
- kmeisthax 1y ago
  [dead]

jonathanstrange 1y ago

I don't think the author uses the term "free rider" correctly. Apple chooses who has to pay based on whatever criteria they like. To me, those listed criteria make sense, for example it would make no sense to charge developers who make their apps available for free, since they would then stop publishing them in the app store and that would concern a lot of useful software.

eviks 1y ago
Or they wouldn't since they would still like to generate those $1.3T, not everything distributed for free is completely free. Moreover, they currently *are* charged to distribute, the apple developer program isn't free.
- jonathanstrange 1y ago
  So the "free rider" claim was even more misleading, I suspected that but didn't want to base my criticism on a hunch. Thanks for clarifying that!
  - lapcat 1y ago
    > So the "free rider" claim was even more misleading The Apple Developer Program is $99. Note that this is not just for the App Store but also for distribution on the Mac outside the App Store, as well as access to other developer resources. I didn't mention it because it's a drop in the bucket, totally negligible compared to the billions of dollars per year in App Store commissions that Apple collects from developers. If $99 were the only fee, then hardly any developers would complain, except perhaps hobbyists. For professional developers, and for Apple's overall revenue, $99 is practically nothing.

mrweasel 1y ago

How on earth is Apple doing $1.3 trillion in billings on the App Store? My kid asked if we could buy an iPad game last week, that was like $12. I can't remember when I last bought something in the App Store (iPhone or macOS) beyond that. Some people would have to buy insane amounts of stuff. Are they counting their own subscription products as well, like AppleTV og iCloud?

Discordian93 1y ago
I believe it's game "whales" who spend thousands on in game purchases.
- WindyCityBrew 1y ago
  Also a steady stream of people that unknowingly have subscriptions. If you have older parents or grand parents, show them the subscriptions screen in the app store from time to time.
fragmede 1y ago
People spend a truely stupendous amount on in-app purchases a dollar or two (or fifty) at a time. A friend's easily spent a couple hundred on Monopoly over the course of a year.
jjani 1y ago
They're talking about "facilitated by the App Store ecosystem" so it includes everything from online shopping to advertising. 1 billion iPhone users spending/generating on average $1000 on their phones per year? Seems reasonable. I think even if you just consider Amazon, the Amazons of elsewhere, supermarkets etc, Ali, it goes on and on. Their combined revenue from people buying stuff on their iPhones, iPads, Mac apps downloaded through the app store will get you a great length towards $1.3 trillion. People are not spending $1.3 trillion per year on IAPs, it's not the game whales as the other comment suggests.

walterbell 1y ago

One month ago: "Apple violated antitrust ruling, judge finds", 600 comments, https://news.ycombinator.com/item?id=43852145 https://news.ycombinator.com/item?id=43852145 "Judge rules Apple executive lied under oath, makes criminal contempt referral", 300 comments, https://news.ycombinator.com/item?id=43856795 https://news.ycombinator.com/item?id=43856795 "Apple App Store guidelines remove ban on encouraging external payments in US", 300 comments, https://news.ycombinator.com/item?id=43867692 https://news.ycombinator.com/item?id=43867692

mvdtnz 1y ago

Nobody should be "financing" the app store, it's a ludicrous position that Apple has somehow convinced you people to accept. Apple should optionally provide their payments system for a reasonable price comparable to other payment providers (a low single digit percentage) and that's it. The idea that you pay to have your merchandise in someone else's store and then keep paying a commission for any ongoing revenue beyond the point of sale is ridiculous and I can't believe even a single person agreed to do it.

shwouchk 1y ago
thats how b&m food distribution often works: vendors pay for shelf space. that’s how barbers works: they pay for a chair. that’s how many professions works. you pay for access to customers.

m3kw9 1y ago

If you put it that way, yes if you make a couple million, you are using more of the resources and accessing more of the benefits it provides, fair to pay more

conductr 1y ago

Why use the retail analogy? Seems like PC is the exact same comparison. There’s no need for an App Store at all. Any argument otherwise is silly after having such a long history of installing whatever I want whenever I want by developers who can bill me however they want.

daft_pink 1y ago

I think this is zero marginal cost income that they receive from something they created to sell their core product (devices). They essentially need this app infrastructure to support their device sales and the idea that the developers are financing it or that some are free riding is just silly. This is money that apple can get for free and they choose to give up some of it because it benefits them to have more apps and more developers so they can sell more devices. You just don't notice it because they have built their business to a size where they have a network effect advantage and aren't desperate to get every developer they can if they were a smaller player.