With their Operating systems virtually on every smartphone, Google Play store and Apple’s app store have dominated the world of mobile apps. For over a decade now, they have watched their monopolistic hold grow exponentially. However, this may soon change. More and more developers and publishers are growing uneasy of the oppressive “taxes” charged by these companies on app revenues; they are calling an end to that.
Where it all started
In August of this year, Epic Games; the maker of Fortnite, a hit multi-platform video game sued apple for anti-competitive behaviour. Epic Games accused the 2 trillion dollar company of taking advantage of its app store to impose exorbitant “taxes” on app developers. The company further explained in its Lawsuit that Apple asserted unlawful and unreasonable monopolistic barriers which prevented software developers from reaching the 1 billion user mark on their devices if they didn’t go through apple’s App store which charges whooping 30% of app revenues.
What is Apple and Google’s take?
Although Apple swiftly responded by blocking updates and new apps from fortnite, the lawsuit resonated with developers across these platforms. Many have long questioned Google and Apple’s basis for charging such fees calling them prohibitive and restraining. Apps with thin margins due to high royalty fees such as Netflix, Spotify and Disney find it hard to make a profit on these stores. Furthermore, new details about google and apple secretly making special deals with companies to waive charges recently emerged; Sparking outcry from other developers who largely view this as unfair.
In their defense, Google and Apple insist that obtaining apps through their stores protects users from viruses, malware, scams and most importantly; Keep their payments safe. However critics have pointed out that just because one is uses their operating systems should confine them to using their app stores; There should be a degree of freedom to choose from other app vendors. Google and Apple through their systems make it hard for this to happen.
Bottom Line
Google and Apple generate billions of dollars worth of revenue every year from their app stores. In 2019 alone, Apple’s app store ecosystem generated $519 billion in revenue; 20% of that was from digital apps and services. Therefore, allowing developers to directly sell their apps without having to go through their stores could severely dwindle their revenues. However, in the face of backlash from developers and Antitrust concerns from Authorities, Apple and Google will soon have to address the issue. Whether this is done by restructuring app store charges and revenues or smoothing the process of buying apps from other vendors; Google and Apple are in for a big bite of their revenues!