Much to the surprise of Apple pundits, it seems that Apple really does treat all developers the same. As I’ve stated before, all developers have equality of opportunity, not equality of outcome. If you have enough leverage, you too can get AppStore waivers.
Only a month ago it was all the rage for Apple developers and pundits to chant the mantra that Apple gives special treatment to large developers. But since the congressional testimonies, Apple has given the thumbs down to Microsoft, Google, and Epic Games. These are either some of the largest companies or user bases in the world. And yet, Apple treated them no different than a one-man indie shop. Why? Lack of leverage.
Apple demonstrated that they don’t care how big you are, they make the rules. And yet, the pundits and developers are still angry. Apple can’t win.
Jason Snell Is Wrong About Apple’s Culture of Hubris
Jason likes to attribute Apple’s desire to treat their AppStore as a business as some kind of “culture of hubris”. Jason posits that Apple sees anyone profiting on their AppStore as some kind of parasite riding Apple’s coat tails. However, I see Apple acting no different than any other company I’ve worked with. Leverage is the currency of business. And Apple has lots of it.
When I was working with Gateway computers, I helped analyze the outsourcing of our service and support operations. I helped evaluate bids from companies which wanted to take over our product return processes. Gateway already had a customer return center which processed returned computers, MP3 players, cameras etc. However, they liked the idea of maybe saving 10% over what it costed them to do it themselves.
But to the companies submitting bids, Gateway would’ve been a huge cornerstone customer. They wanted the contract way more than Gateway did. And Gateway took advantage of the situation to get the best possible price.
All business negotiations are broached from the angle of who wants the deal the most? Are you willing to walk from the deal first? This is how China gets away with so much. They have a huge customer base that companies want very badly. With the AppStore, Apple plays the role of China. If Apple has, as Jason calls it, a culture of hubris. Than all companies do. Because all companies use what leverage they have to their advantage. You learn this lesson in the grade school cafeteria. If you have an awesome piece of birthday cake baked from scratch, you have leverage if someone comes up to offer you a trade.
Apple Has the Upper Hand
Microsoft very much wants to get their streaming game platform on iOS. I guarantee that they’re making alternate plans to pass AppStore review if Apple doesn’t relent. And Epic Games will be back. Why? Because, like China, that’s where a huge group of customers are. Losing the iOS market is losing revenue.
Who can afford to hold out the longest? Can Epic stand to lose a huge amount of revenue for even 3 months before they need to start laying off developers? How many iPhone customers would Apple lose in 3 months? The program manager for Microsoft xCloud wants more than anything, for customers to try out the system. Losing out on 50% of the US Market is unthinkable for them. I’d think that regardless of what they say in public, xCloud management is in full panic mode. They want xCloud to make money and that means as many distribution points as possible.
The downside for Apple here is minimal. Even if Fortnite or xCloud enthusiasts are upset, how long will it take for them to switch platforms? If it’s more than 90 days, it’s too long for Epic or Microsoft. They will cave. If tens of millions of iPhone users switch to Android within 30 days (they won’t), then Apple will cave. It’s not enough for millions of iPhone users to only think about switching. They need to do it, and do it fast. Because if they tarry, Epic starts to hemmorhage cash immediately. Apple will get emboldened by the fact that they're seeing few defectors. They'll know that that Epic is losing far more customers than they are.
If Apple is wrong, they just have to flip a switch and they’ve rectified their mistake. If Microsoft or Epic has miscalculated, they run the risk of destroying their program/business. At the very least, what good does it do for Microsoft or Epic to walk away from iOS? They’d earn more profit from their own sales but the sales volume would be so much lower. They make less money overall.
Apple wants streaming video in their stores. There are ways to accommodate the parties involved without giving developers a free ride and allowing unvetted games into the AppStore. But as usual in business, there needs to be a negotiation of leverage before anyone makes concessions.
So why is Epic pushing this battle? The Press. They know that in a private battle of attrition, Apple wins. Epic will lose more customers than Apple will lose iPhone users. But, like North Korea can sense when the United States may be distracted by China and Russia, Epic makes their move when Apple is besieged in the press and tries to keep the pressure on. All iOS developers stand to gain a great deal if Apple changes their ways.
Myke Hurley Is Wrong Regarding Apple’s Need to Review Microsoft Streaming Games
Myke Hurley rejects the argument that Apple wants to review all games streamed on iOS because Microsoft already does, and arguably does a better job. This is not relevant to the argument because once Apple sets the precedent, the floodgates of others wanting to stream apps will be opened. Once that door is opened, it’s very hard to close.
And just because Microsoft does a good job of reviewing apps today, doesn’t mean that they will tomorrow. This is about control. Apple doesn’t like ceding control of app review, streaming or otherwise, to others.
In an ironic twist, Microsoft doesn’t allow Google Stadia on it’s platform. Why? Control. Microsoft wants to control what kind of games are offered on it’s platform. Same as Apple.
Conclusion
The Nervous Nellies are wringing their hands at the very public negotiations happening right now with Apple’s AppStore. But I see this as a normal testing of leverage. Who will blink first. The only difference between what is happening with Apple and what happens with your average auto manufacturer or oil distributor is that Apple gets much more press coverage. By journalists who don’t understand the business world.
Apple may very well change their AppStore policies. Not because of the press, but because of political pressure. And this won’t be without negative repercussions for iPhone users. A company doesn’t lose billions of dollars and decide “Oh well, it was nice while it lasted”. The fundamental model for Apple will change. That bottom line is that hardware will get more expensive. iOS developers want iphone customers to subsidize them. That’s too bad.
Apple demonstrated that they don’t care how big you are, they make the rules. And yet, the pundits and developers are still angry. Apple can’t win.
Jason Snell Is Wrong About Apple’s Culture of Hubris
Jason likes to attribute Apple’s desire to treat their AppStore as a business as some kind of “culture of hubris”. Jason posits that Apple sees anyone profiting on their AppStore as some kind of parasite riding Apple’s coat tails. However, I see Apple acting no different than any other company I’ve worked with. Leverage is the currency of business. And Apple has lots of it.
When I was working with Gateway computers, I helped analyze the outsourcing of our service and support operations. I helped evaluate bids from companies which wanted to take over our product return processes. Gateway already had a customer return center which processed returned computers, MP3 players, cameras etc. However, they liked the idea of maybe saving 10% over what it costed them to do it themselves.
But to the companies submitting bids, Gateway would’ve been a huge cornerstone customer. They wanted the contract way more than Gateway did. And Gateway took advantage of the situation to get the best possible price.
All business negotiations are broached from the angle of who wants the deal the most? Are you willing to walk from the deal first? This is how China gets away with so much. They have a huge customer base that companies want very badly. With the AppStore, Apple plays the role of China. If Apple has, as Jason calls it, a culture of hubris. Than all companies do. Because all companies use what leverage they have to their advantage. You learn this lesson in the grade school cafeteria. If you have an awesome piece of birthday cake baked from scratch, you have leverage if someone comes up to offer you a trade.
Apple Has the Upper Hand
Microsoft very much wants to get their streaming game platform on iOS. I guarantee that they’re making alternate plans to pass AppStore review if Apple doesn’t relent. And Epic Games will be back. Why? Because, like China, that’s where a huge group of customers are. Losing the iOS market is losing revenue.
Who can afford to hold out the longest? Can Epic stand to lose a huge amount of revenue for even 3 months before they need to start laying off developers? How many iPhone customers would Apple lose in 3 months? The program manager for Microsoft xCloud wants more than anything, for customers to try out the system. Losing out on 50% of the US Market is unthinkable for them. I’d think that regardless of what they say in public, xCloud management is in full panic mode. They want xCloud to make money and that means as many distribution points as possible.
The downside for Apple here is minimal. Even if Fortnite or xCloud enthusiasts are upset, how long will it take for them to switch platforms? If it’s more than 90 days, it’s too long for Epic or Microsoft. They will cave. If tens of millions of iPhone users switch to Android within 30 days (they won’t), then Apple will cave. It’s not enough for millions of iPhone users to only think about switching. They need to do it, and do it fast. Because if they tarry, Epic starts to hemmorhage cash immediately. Apple will get emboldened by the fact that they're seeing few defectors. They'll know that that Epic is losing far more customers than they are.
If Apple is wrong, they just have to flip a switch and they’ve rectified their mistake. If Microsoft or Epic has miscalculated, they run the risk of destroying their program/business. At the very least, what good does it do for Microsoft or Epic to walk away from iOS? They’d earn more profit from their own sales but the sales volume would be so much lower. They make less money overall.
Apple wants streaming video in their stores. There are ways to accommodate the parties involved without giving developers a free ride and allowing unvetted games into the AppStore. But as usual in business, there needs to be a negotiation of leverage before anyone makes concessions.
So why is Epic pushing this battle? The Press. They know that in a private battle of attrition, Apple wins. Epic will lose more customers than Apple will lose iPhone users. But, like North Korea can sense when the United States may be distracted by China and Russia, Epic makes their move when Apple is besieged in the press and tries to keep the pressure on. All iOS developers stand to gain a great deal if Apple changes their ways.
Myke Hurley Is Wrong Regarding Apple’s Need to Review Microsoft Streaming Games
Myke Hurley rejects the argument that Apple wants to review all games streamed on iOS because Microsoft already does, and arguably does a better job. This is not relevant to the argument because once Apple sets the precedent, the floodgates of others wanting to stream apps will be opened. Once that door is opened, it’s very hard to close.
And just because Microsoft does a good job of reviewing apps today, doesn’t mean that they will tomorrow. This is about control. Apple doesn’t like ceding control of app review, streaming or otherwise, to others.
In an ironic twist, Microsoft doesn’t allow Google Stadia on it’s platform. Why? Control. Microsoft wants to control what kind of games are offered on it’s platform. Same as Apple.
Conclusion
The Nervous Nellies are wringing their hands at the very public negotiations happening right now with Apple’s AppStore. But I see this as a normal testing of leverage. Who will blink first. The only difference between what is happening with Apple and what happens with your average auto manufacturer or oil distributor is that Apple gets much more press coverage. By journalists who don’t understand the business world.
Apple may very well change their AppStore policies. Not because of the press, but because of political pressure. And this won’t be without negative repercussions for iPhone users. A company doesn’t lose billions of dollars and decide “Oh well, it was nice while it lasted”. The fundamental model for Apple will change. That bottom line is that hardware will get more expensive. iOS developers want iphone customers to subsidize them. That’s too bad.
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