In-App Purchase Rules Generally Make Sense but Apple Should Modify Its Policies Somewhat

In light of the Comixology controversy I thought I should set down my thoughts on that perennial topic of nerd controversy, in-app purchases. Not on whether they are destroying gaming or software business models but whether at a very high level it is fair that Apple and Google require that most in-app purchases use their payment processing and fork over 30% to the store.

In general I think the in-app purchase rules for application features, which are the same for Apple and Google, make sense. By requiring that payments to unlock features or expand the functionality of the app (or to unlock game levels, get hints, magic swords, etc) go through the App Store or Play Store, the stores avoid what would otherwise be a common scenario: “trial” versions of applications where to unlock them, you must enter your credit card. While there’s nothing wrong with this shareware approach at a very high level there’s no reason for a commercial app store to allow itself to be used as someone else’s marketing channel in a way that subverts the entire purpose of the store. If your position is that all in-app purchases ought to be done with whatever payment system the app developer wants to use, then your position amounts to “there should not be commercial app stores,” which is a fine position to take, but not one I share. ( As I discuss below, although app stores continue to be controversial the fundamental issue is not stores themselves but whether they are the only means for users to get software for their devices.)

Remember, the 30% that the App Store and the Play Store charge is significantly less than the traditional retail percentage (e.g. selling an ebook through Amazon might yield the author only 35% percent of the sale) –and both Google and Apple allow people to distribute free apps for free, including those monetized with ads, on the theory that this helps their respective mobile platforms. Software developers get a much better deal from app stores than through selling software in boxes in traditional stores (though the downward pricing pressure is a countervailing force).

Both stores likewise have an exception for physical goods: obviously if you’re buying a bag of cat food or a can of shoe polish from Amazon there’s no reason for Apple or Google to take a cut, as these sales are not subverting the purpose of the store, no one would ever make an app where a percentage of physical good sales went to the platform owner, and, like free apps, these sort of apps help the platform.

However, Google makes two further exceptions that are fair and that Apple should emulate. First, there is no need to use the Play Store to put software on an Android device. Users can install software manually, including installing third-party stores. This ability to “sideload” provides an important escape valve even if relatively few users take advantage of it. Second, the Play Store does not require developers to use its in app purchase platform for “digital content or goods that may be consumed outside of the app itself (e.g., buying songs that can be played on other music players).” This means that Amazon can use its own payment system for selling ebooks and comics. By contrast software can only be installed on iOS devices through the App Store and in-app purchases of digital media (as well as magazine or streaming media subscriptions, etc) must be handled by Apple.

As an aside, I would be okay with a slightly stricter version of those two policies: for example, encouraging sideloaded apps to be signed with revokable keys (similar to the way that OS X’s Gatekeeper works in its default setting, where users can install apps from the web but only if they’re signed by Apple-registered developers, provided that, as with Gatekeeper, a user can still bypass this extra security on a case-by-case basis), and limiting the “can be consumed outside the app” exception to DRM-free media. After all, Kindle books can be read only in Amazon apps or on Amazon devices and allowing developers to potentially subvert the rule by just developing a companion app seems to go against the spirit of the exception. DRM-protected comics or books or music are just as limited and useless outside a single app or set of apps as a game level or a bag of magic gems in a game, and drawing this line would be further encouragement for publishers and developers to give up user-hostile DRM practices. Thus, if Apple allowed DRM-free comics and ebooks to be sold outside its in-app purchase system this wouldn’t change things for Amazon but I would care much less.

One further problem with stores handling purchases for “media” is that it provides an opportunity for censorship. While I might be okay with Apple not allowing R-Rated games in its store (subject to sideloading etc) it’s a different matter for adult-themed books or other content. While allowing sideloading would also fix this it would be much better if Apple simply did not have the ability to exercise control over this content. Directing people to sideload to install the occasional app is a much lower burden than having to clear the contents of literature, music, and comics with a technology company.

But forgetting the stricter version of the exceptions for a moment, thinking through the Comixology situation shows that the problem is not the in app purchase system itself, but rather its application to media, as opposed to software features. In general, the IAP system is a fair one that (scammy games and apps that are designed to be addictive or misleading aside) protects users and ensures the viability of the stores. But when applied to pure content as opposed to software features it harms users, in just the same way as if it were applied to physical goods: by reducing user choice in a way that is not a necessary tradeoff to ensure that app stores can continue to exist.