News Publishers Push Apple For App Store Fee Clarification

Apple is facing growing pressure over the fees it charges on its App Store, with a trade body of news publishers writing an open letter to CEO Tim Cook.

The news publishers are seeking the more favourable terms on the commission Apple collects from them for online payments.

Apple it should be remembered is currently embroiled in a lawsuit with Epic Games, which sued it after the iPad maker (and Google) removed Fornite from their respective App Stores, after it allowed players to purchase in-game currency directly from Epic, bypassing Apple and Google’s payment systems and the 30 percent commission they charge.

Open letter

Into this mix comes the news that the trade body Digital Content Next (DCN), which represents New York Times, the Washington Post, the Wall Street Journal, among other publishers, sent Tim Cook an open letter about the matter.

Apple usually takes a cut that ranges between 15 and 30 percent from news publishers for first-time subscriptions made through apps on the store, but it has a reduced 15 percent rate for Amazon and its Prime Video app.

In a House Judiciary Committee hearing last month, Cook said the reduced rate was available to any developer who met certain conditions.

The publishers now want to know what these conditions are.

“On behalf of Digital Content Next (DCN), I am reaching out to you to better understand the ‘conditions’ you mentioned in your July 29 remarks before the House Judiciary Committee,” said the letter. “We would like to know what conditions our members – high quality digital content companies – would need to meet in order to qualify for the arrangement Amazon is receiving for its Amazon Prime Video app in the Apple App Store.”

“In response to Rep. Hank Johnson’s question on whether the arrangement afforded Amazon is ‘available to any app developers,’ you responded affirmatively that they are available to ‘anyone meeting the conditions,’” the letter states.

“In evidence released by the Committee after the hearing, it appears the terms provided to Amazon include a significantly increased net revenue structure,” the letter states. “Nearly all of DCN’s members offer apps in the Apple App Store and, as noted above, many offer subscription-based access to a wide variety of content.”

“The terms of Apple’s unique marketplace greatly impact the ability to continue to invest in high-quality, trusted news and entertainment particularly in competition with other larger firms,” the letter states.

“In keeping with your statement to the Committee, I ask that you clearly define the conditions that Amazon satisfied for its arrangement so that DCN’s member companies meeting those conditions can be offered the same agreement,” the letter concluded. “I look forward to discussing this with you.”

Fee pressure

Apple is coming under increasing pressure for the 15 to 30 percent commission it takes for most app subscriptions and payments made inside apps.

Apple reportedly makes $46.3 billion-per-year as part of its services segment, and analysts believe games are the biggest contributor to spending inside the App Store.

In July secure messaging app Telegram filed an official complaint with European antitrust officials against Apple and its App Store.

Apple meanwhile had recently commissioned a report that defended its fees, stating that the 30 percent commission was about average.

Antitrust investigations

But that did not stop Apple being hit with a double whammy in June, when the European Commission, after a year of debating, officially opened two formal antitrust investigations over its App Store and Apple Pay.

And the lawsuit by Epic is getting a lot of support from music streaming service Spotify.

In March 2019 Spotify had filed an official complaint and accused Apple of unfairly using the dominance of its App Store to give the Apple Music service a competitive advantage.

Spotify had also previously complained to the EU that the app store represents a monopoly power.

Apple at the time strongly defended itself against Spotify’s complaints, and slammed the firm for using its App Store to dramatically grow its business, and then allegedly seeking to keep all the benefits of the App Store ecosystem (including hefty revenues), without making any contributions to that marketplace.

But it is not just Spotify and Epic suing Apple over its App Store.

In June 2019 two app developers filed lawsuits against Apple, alleging the App Store gives the iPad maker a monopoly on the sale and distribution of iOS apps.

Apple this week became the first US company to be valued at $2 trillion (£1.52 trillion), exactly two years after it became the first publicly listed US company worth $1 trillion (£770bn).

Quiz: How well do you know Apple?