The Art of the Possible

Ever since the story broke, I’ve had one overriding thought about the Hey.com App Store rejection controversy. It’s a point I’ve already tried to make on a recent episode of ATP and on Twitter. Before WWDC arrives with its own wave of Apple-related news, I’d like to take one more run at it. Here goes.

Everyone wants apps that are feature-rich, easy-to-use, secure, and have good customer support. Apple, developers, and customers all agree on this. Incentives diverge slightly from here. Both Apple and developers want to make money. Customers want app prices to be low, but also want apps that are well-supported and maintained.

Apple, through its control of the App Store, dictates the terms that developers must agree to in order to distribute iOS apps to customers. Apple’s rules determine how the interests of all parties are balanced.

For many years now, Apple has been aiming for an ambitious goal state: an App Store filled with feature-rich, easy-to-use, secure apps, sold at prices customers find attractive, and monetized in a way that keeps developers happy and profitable while also giving Apple a significant percentage of all app-related revenue: 30% for most things, 15% after the first year of subscriptions, and some other, usually non-public number that’s less than 30% if you happen to be a fellow tech giant like Netflix or Amazon.

The App Store rules are the most powerful tool Apple can use to achieve its goal. To this end, the rules have been adjusted many times over the years. But throughout all these changes, Apple has never given up on its dream of an App Store filled with great apps that make everyone happy and make lots of money for both Apple and developers.

Today, Apple’s stance seems to be that if they just hold the line on a few key provisions of the App Store rules, companies will build their business models around Apple’s revenue cut in the same way companies built their business models around the costs of brick-and-mortar retail in the pre-Internet days. Apple seems to firmly believe that its ambitious goal state can be achieved with something close to the current set of App Store rules.

This belief is not supported by the evidence. Years of history has shown that Apple is getting further away from its goal, not closer. Witness Netflix abandoning in-app purchase, Apple having to strike a special deal with Amazon, and all the apps skirting the existing rules as best they can, to the detriment of the user experience and both Apple’s and developers’ revenue. And this is before even considering the customer support situation, which has always been dire, or the existence of businesses like ebook sales that will never have an extra 30% handy to give to Apple.

Apple’s App Store rules need to change not (just) because developers don’t like them. They need to change because time and experience have shown that there is no viable path to Apple’s goal state given the existing rules. The details of any particular App Store controversy can often distract from this larger reality. A hardline stance will not sway hearts and minds, and it has proven unable to change developers’ business models without sacrificing the user experience. Apple needs to decide if it wants to be “right,” or if it wants to be happy.