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A24 TECHNOLOGY
Thursday 7 March 2019

iPhone sales are falling, and Apple’s app fees might be next

By MICHAEL LIEDTKE “life preserver in the chop- ple’s iPhone revenue this may have triggered Netflix but of Apple Music, which
AP Technology Writer py seas” just as it’s about year is expected to drop by decision’s to bar custom- obviously doesn’t have to
SAN FRANCISCO (AP) to float away, Macquarie 15 percent from last year ers from paying for new pay any commissions.
— Last year, every time Securities analyst Benjamin $141 billion, according to video subscriptions through “They’re trying to have their
someone paid $11 for Net- cake and eat ours, too,”
flix through an iPhone app, Spotify spokesman Jona-
Apple pocketed as much than Prince told The Asso-
as $3.30. Multiply that ciated Press in 2016. “We
by every charge made find it bad for consumers,
through iPhone apps and unfair to consumers and
you can see why Netflix ultimately something that
and other companies are could stifle music stream-
fed up about what they ing subscriptions across the
consider Apple’s unfair board.”
market power. Spotify regularly harps on
Late last year, Netflix re- the unfairness of Apple’s
belled against Apple’s app-fee system in its secu-
fees, which can range from rities filings. The company
15 percent to 30 percent. didn’t respond to interview
Analysts fear other compa- requests for this story.
nies may follow. And attor- Few other apps reach as
neys representing consum- many customers as Netf-
ers in a pending Supreme lix and Spotify, making it
Court case charge that unlikely that the rebellion
Apple is an unfair monopo- against Apple’s app store
list in the market for iPhone commissions will greatly
apps. An adverse decision swell, said Amir Ghodrati,
in that case could open a director of market insights
legal door that might even- This March 19, 2018, file photo shows Apple’s App Store app in Baltimore. As its iPhone sales slip, for App Annie.
tually force Apple to cut its Apple has been touting its growing digital-services business as the engine that will keep profits up. Apple doesn’t seem to
Associated Press
generous commissions. be worried. In fact, it’s re-
That could spell more bad Schachter concluded after analysts surveyed by Fact- its iPhone app. Instead, it portedly demanding an
news for Apple, which is al- the Netflix move. Set. Services, by contrast, directs users to its website, even higher commission —
ready reeling from a slump These app-store fees most- are expected to generate thus avoiding the extra roughly 50 percent — for
in iPhone sales that has ly hit app developers them- about $46 billion in revenue fees. (Netflix did likewise a Netflix-like news service
knocked down its shares selves, although some pass this year, according to the with Google’s app store that it is trying to create
by 25 percent. The com- along the costs to users same survey. Schachter es- last year.) with a variety of publishers,
pany has been positioning of their iPhone apps. Spo- timates the app store will Netflix alone won’t put a according to a recent Wall
its booming digital-services tify, for instance, used to account for $16 billion of significant dent in Apple’s Street Journal report based
business as its new profit tack $3 onto the cost of its the services revenue. By finances, even though it on unidentified people fa-
engine. That plan could $10-a-month paid service those estimates, both ser- paid Apple more money miliar with the negotiations.
hit a snag if the app store — but only for users who vices and app store rev- last year than any other That proposal faces resis-
takes a hit, since it currently signed up via its iPhone or enue will have doubled in non-gaming app, accord- tance from The New York
generates about a third iPad app. just three years. ing to App Annie, a firm Times, The Washington Post
of the company’s services Apple has doubled down Apple didn’t respond to that tracks the app market. and other publishers who
revenue. on digital services as con- the AP’s inquiries about its That sum came to about believe Apple is trying to
Investors are now hanging sumers cling to older iPhone app fees. It has previously $110 million, accounting exploit its market power to
onto Apple services as a models, hurting sales. Ap- defended the system as for just 0.3 percent of the extract excessive fees.
reasonable compensation services division revenue, Most app makers, howev-
for reviewing all apps and based on disclosures made er, are too worried about
ensuring its store remains in Apple’s earnings calls losing access to the app
a safe and secure place last year. More than 30,000 stores to speak out against
for e-commerce. Google third-party apps now ac- the fees. Epic Games, mak-
charges similar fees in its cept subscriptions through er of the popular Fortnite
own app store, although its Apple’s store. video game, has been a
overall business isn’t as de- Netflix declined to discuss notable exception.
pendent on them. its reasons for ending new Epic CEO Tim Sweeney
Besides the app fees, Ap- subscriptions through the lashed out at app fees
ple’s services division in- app store. But its move as a “parasitic loss “ at a
cludes revenue from its drew more attention to an video game conference
Apple Music streaming ser- app store tax that other 18 months ago, according
vice, iCloud storage, Apple technology companies to the trade publication
Care, Apple Pay and ad have already attacked as GamesIndustry.biz. “We
commissions that Google an abuse of the power that should be angry about this,
pays to be the iPhone’s Apple has amassed since and we should constantly
built-in search engine. Ap- opening its app store years be on the lookout for other
ple is also expected to roll ago. solutions, and new ways
out its own streaming-video Almost three years ago, to reach gamers,” Swee-
service this spring, although Spotify also stopped ac- ney said at the time. The
few details are available. cepting new subscriptions North Carolina company
The potential streaming through Apple’s app store. didn’t respond to interview
competition from Apple Its move followed the de- requests.q