We’ve said it before and we’ll say it again. The easiest anti-trust case in the tech world right now is Apple’s App Store and how it insists that developers hand over 30% of revenues.
Soon after the launch of Basecamp’s new email service Hey, Apple rejected it from the App Store. The issue is the method of payment for subscription, and neither company is ready to compromise.
The initial version of the app, 1.0, had already been accepted. However, version 1.0.1, with a few bug fixes, was rejected. Apple sent Basecamp’s lead developer Zach Waugh an email saying the app would not be approved because it did not follow rule 3.1.1 in the company’s guidelines for developers. This rule requires apps to utilize Apple’s payments system for in-app purchases.
However, Basecamp’s Hey service is a $99 per year subscription service which uses a third-party service for payments, just like many other apps, including Slack and Netflix.
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“So. we were like, OK, maybe we just got the Monday morning reviewer,” Basecamp co-founder David Heinemeier said. Since it sometimes depends on the reviewer you get and the mood he’s in, the company decided to apply more bug fixes and submit another version, 1.0.2.
Version 1.0.2 was rejected too. Apple called Waugh and told him not only was it compulsory to implement rule 3.1.1, but it also required a commitment and timeline, or the app gets removed totally. The situation did not change even after Basecamp pointed out that users of other apps, including email services such as Edison and Spark, have the option of not using Apple’s payment services.
Apple is saying that “Reader” apps like Netflix are allowed to not use Apple’s payment system as long as Netflix doesn’t offer a way to sign up in the app. But that allowance isn’t applied to email apps apparently.
Not only are Apple’s tyrannical rules frustrating for many app developers, they also don’t apply them fairly and evenly – and this recent incident comes at a bad time for Apple as it’s being investigated for anti-trust violations in Europe and will have to testify on similar issues in the US soon.
Basecamp is insisting on not using Apple’s payments system to avoid the commission of up to 30%.
Apple has said that if Hey does not implement the in-app payment system, the app could be removed from the App Store entirely.
The Apple reviewer said he was calling because the new app hadn’t resolved the issue with rule 3.1.1. The issue had been escalated internally, and Apple had determined it was a valid rejection — the only way to move forward would be to implement Apple’s payments system. And not only that: Waugh was told that Apple would like a commitment and a timeline for implementing the payment system, or Apple might be forced to remove Hey from the App Store entirely.
The same day Apple rejected Hey, it announced, “Apple’s App Store ecosystem facilitated over half a trillion dollars in commerce in 2019.” The exact figure was $519 billion, and Apple earned a commission of 15%. If the company strictly enforces rule 3.1.1, that figure will significantly increase in the coming years. Besides, the company has been keen on service, meaning it is looking for ways to get a larger share of the money flowing through the App Store.
“There is never in a million years a way that I am paying Apple a third of our revenues,” DHH said to Protocol.
The strict position on enforcing rule 3.1.1 at this time is more like a bold statement considering the EU opened two ant-trust investigations into Apple’s anti-competitive conduct in the App Store.
Some of the companies that have openly complained about the App Store are Spotify and Kobo, who accuse the tech giant of policies designed to devastate competitors.
Heinemeier Hansson has been publicly criticizing Apple and other tech giants for some time. In early 2020, he testified in a congress hearing about big tech companies’ anti-competitive policies.
Basecamp has no intention of backing down.
“There is never in a million years a way that I am paying Apple a third of our revenues,” Heinemeier Hansson explained. “That is obscene, and it’s criminal, and I will spend every dollar that we have or ever make to burn this down until we get to somewhere better.