Apple's App Rules Prompt Charges Of 'Greed' - InformationWeek

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2/22/2011
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Apple's App Rules Prompt Charges Of 'Greed'

But an email attributed to CEO Steve Jobs suggests it's only publishers who need to comply with new subscription selling requirements.

Apple's new subscription rules and its decision to begin enforcing its longstanding iOS application requirement that apps use the company's In-App Purchase (IAP) system to sell content have again stirred up developer discontent.

Readability, a company that makes the popular iOS reading app of the same name, on Monday posted a complaint charging that Apple's rules will ruin its business model. Readability strips the ads and graphics out of published content and republishes the text in a more reader-friendly format. To mitigate the ire of publishers who might not appreciate the removal of ads from their text, Readability hands 70% of its subscription-based revenue back to publishers.

But under Apple's recently revised terms, subscriptions in iOS apps have to use Apple's purchasing system, which costs 30% of subscription revenue for the duration of the subscription.

"Readability's model is unique in that 70% of our service fees go directly to writers and publishers," wrote Richard Ziade, founding partner of design firm Arc90 and creator of Readability, in an open letter to Apple. "If we implemented In App Purchasing, your 30% cut drastically undermines a key premise of how Readability works. …[W]e believe that your new policy smacks of greed."

Social screenshot sharing service TinyGrab on Monday posted a similar complaint. Its business model involves selling subscriptions for its free app through its Web site. What the customer is buying is really an account that provides access to a screenshot sharing service rather than an app.

TinyGrab sells accounts through PayPal because Apple doesn't provide the customer data necessary to open accounts, such as the app buyer's email address. The company also violates other Apple rules against unlocking functionality through mechanisms other than IAP, against subscriptions that expire, and against directing users to external purchase mechanisms on the Web.

"I’m sad to say that as of today we can no longer provide development support to iOS, officially, through the App Store," wrote TinyGrab project manager Chris Leydon in a blog post. "Until Apple loosens up on [its] restrictions we're ceasing all active development on TinyGrab for iPhone."

Such dissatisfaction echoes objections raised by Sony earlier this month when the company said Apple won't allow Sony's Reader for iPhone app to be distributed through the iTunes App Store.

The unhappiness with Apple's policies echoes complaints heard last year, when CEO Steve Jobs declared Flash and other third-party developer tools unfit for the iPhone. The outcry from companies like Adobe and individual developers, which found receptive ears in Washington, eventually prompted Apple to relax its restrictions.

Regulators are again paying attention. The Federal Trade Commission and Department of Justice are said to be conducting preliminary inquires into Apple's subscription requirements. But the growing strength of Apple's rivals, particularly Google's Android platform, may make it harder for regulators to act.

Apple's rules have prompted Marco Arment, who developed Tumblr and Instapaper, to also suggest the company is being too greedy and to worry that various business models in iOS apps will be made untenable through the vagueness of Apple's requirements.

Apple CEO Steve Jobs appears to be paying attention. An email said to be from Jobs, sent in reply to a developer's concerns suggests Apple is trying to apply its rules narrowly.

"We created subscriptions for publishing apps, not SaaS apps," the e-mail states. Apple did not immediately respond to a request to confirm the authenticity of the e-mail.

Nonetheless, SaaS apps that violate App Store guidelines unrelated to subscription selling rules shouldn't expect Apple's approval.

In the end, Apple may be within its rights to apply its rules as it sees fit. But Arment suggests Apple is hurting itself by pressing its rights as far as they can go.

"The discussion shouldn't be whether Apple can enforce this policy, but whether they should," he wrote. "And if you look at what this does to developer relations, big and small, it’s easier to argue that this is likely to result in more harm than good to the iOS platform."

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