Apple Will Not Back Down on ‘Hey’ App Store Rejection, Says Schiller

Phil Schiller Credit: Apple
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This week another major App Store kerfuffle surfaced as a prominent developer found its iOS app summarily rejected due to its failure to use Apple’s in-app purchasing system.

The app in question, Hey, was simply the iPhone and iPad client for a new cross-platform email service, created by Basecamp, the developers of the very popular project management service of the same name. The problem, however — from Apple’s point of view at least — was that Hey is a paid service, and the Hey app for iOS didn’t make use of Apple’s in-app purchasing system.

In reality, however, the Hey app doesn’t make use of any in-app purchasing system at all. Instead, users are required to subscribe to the service through the main website. Downloading the Hey app on the iPhone or iPad simply asks the user to sign in, and advises them that if they don’t already have an account, they should visit the service’s website to sign up.

On the surface this isn’t any different from what a great many other apps have been doing for years, including not only the big players like Netflix and Amazon, but also Basecamp’s own flagship app. Unfortunately, however, it seems that Apple doesn’t see it this way, and it’s not an oversight either.

No Changes to the Rules

In an interview with TechCrunch, Phil Schiller, Apple’s Senior VP of Worldwide Marketing and the man who is effectively the highest authority for the App Store, made it abundantly clear that this was a deliberate decision on Apple’s part, and not simply an App Store reviewer who made a bad call.

In a brief phone call, Schiller told TechCrunch editor-in-chief Matthew Panzarino that there will be no changes to Apple’s rules to accommodate Hey; the developer will either have to play by the rules, or their app simply won’t be welcome in the App Store.

Sitting here today, there’s not any changes to the rules that we are considering. There are many things that they could do to make the app work within the rules that we have. We would love for them to do that.

Phil Schiller, Apple Senior VP of Worldwide Marketing

Schiller did clarify Apple’s reasoning a bit further, though, suggesting that the real concern is that Hey is an app that requires that users subscribe to the service before it can do anything, and there’s no way of doing this within the app.

You download the app and it doesn’t work, that’s not what we want on the store.

Phil Schiller, Apple Senior VP of Worldwide Marketing

Of course, that’s arguably a somewhat hypocritical stance on Apple’s part, since it’s Apple itself that prevents Hey from even telling users that they can sign up on the website, since it wants developers to use the in-app purchase system so it can get its 30% cut of the subscription fees.

This may explain part of the reason why apps like Basecamp are more acceptable to Apple, however, even though they don’t leverage Apple’s in-app purchasing system either. Basecamp offers a free tier for personal use, which means that users downloading the app from the App Store can get in and use it without the need to pay any money at all. By contrast, Hey is exclusively a paid service.

However, there are a lot of apps on the App Store already that aren’t usable unless the user actually pays up to subscribe to the service. Chief among these is Netflix, the extremely popular streaming app. Although Netflix did use Apple’s in-app purchasing system at one time, it eliminated it a couple of years ago to avoid the extra fees.

In fact, not only does Netflix not allow users to pay within the app, but new users can’t even sign up for a free trial, and Netflix even goes so far to poke Apple in the eye by pointing out to users that they can’t sign up in the app and adding the text “We know it’s a hassle.”

According to Schiller, however, that’s okay because Netflix is a “reader” app — one that’s specifically exempted from Apple’s rules. While the word “reader” doesn’t fully convey this, Apple has made specific exclusions for apps that display external content like music, books, and movies, as well as cloud storage providers and apps for corporate services that only allow for bulk pricing options and not individual subscriptions paid for by end users.

Email is not and has never been an exception included in this rule.

Phil Schiller, Apple Senior VP of Worldwide Marketing

However, as Schiller points out, this does not include email apps, which is where Hey comes in, although arguably there’s a bit more to it than that, as many email apps and services do offer subscription options that aren’t part of Apple’s in-app purchase system.

Even Google does this with Gmail, although arguably the paid G Suite service would fall under the “corporate” exception. Most significantly, though, most of these other email apps that do offer a paid tier of service treat it as an option rather than a core requirement. For example, popular email app Spark offers a “teams” feature, but it’s definitely an add-on targeted toward small businesses rather than something that users would need to pay for in order to access the basic functionality of the app.

Schiller also added that the Hey iOS app never should have been approved in the first place, noting that the Mac app was blocked for the exact same reasons, but the iOS app initially slipped through the App Store review process. Of course, in the case of the Mac app, there are plenty of other options as the Mac App Store isn’t the only game in town. On the iPhone and iPad, however, if the app isn’t on the App Store, it can’t realistically be installed in any other way.

It’s Not About the Money

According to Schiller, the main issue here isn’t about the money. When asked by Panzarino whether this policy meant that Apple “felt entitled to a portion of the revenue of every business that had an app” even if that business was driven by other platforms, Schiller responded that while he understands what that question is being asked, he emphasized “That’s not what we’re doing.”

Schiller offered several approaches that Basecamp could have taken to make its app more acceptable to Apple, including offering a free version with additional functions, much like it does with Basecamp, which once again suggests that the real issue was deploying a non-functional “paywalled” app rather than simply failing to funnel the subscriptions through Apple.

Schiller also added that Basecamp would be free to charge a different price in the app from what it charges on the web — something that other developers like Google are already doing for YouTube Premium — but of course the developer would have no way of letting their users know that they’re paying a premium within the app, and it’s completely understandable why they’d be reluctant to do this, as it’s a somewhat customer-unfriendly approach.

According to Schiller, however, it’s ultimately about ensuring that customers have a “good experience” in the app and that the payment system is secure. Some of this of course a bit disingenuous on Schiller’s part, but his point about the app actually providing functionally “out of the box” is understandable — or at least it would be if Apple didn’t already allow so many “reader” apps that are effectively just as useless unless the user has already subscribed online before downloading and opening them.

Conflicting Perspectives

In the final analysis of his conversation with Schiller, Panzarino makes some interesting points about the fact that the real question needs to be whether Apple should relax its rules or not, rather than contorting the rules to justify exceptions.

As far as to why Apple would look at a situation like this and not see an obvious minefield, I believe that it internally thinks that it is doing the right and just thing. It built the platform, it deserves to profit from that platform.

Matthew Panzarino, TechCrunch

It’s also worth noting that Basecamp’s CTO, David Heinemeier Hansson, is much more willing to go to the mattresses with Apple on this one than most iOS developers. Hansson has called Apple “gangsters” and suggested that he will “burn this house down myself” before giving up a 30% cut of his revenue to Apple. So this is a case where we’re dealing with an immovable object and an unstoppable force (we’ll leave it as an exercise for the reader to determine which is which).

On the flip side, however, while Spotify has also made vociferous complaints about the 30% revenue that it gives up to the App Store for its subscribers, Apple has come back by pointing out that less than 1% of Spotify’s subscribers actually pay through the App Store.

That’s an important distinction, since it means that many companies that run multi-platform services may not be giving up as much revenue as they fear simply by using Apple’s in-app subscription system, although of course Spotify is a considerably more popular service than newcomers like Hey, which could see many users discovering and signing up for the service for the very first time through the iPhone or iPad app, and that’s likely a big part of how Apple sees it — if they’re bringing in the customers, they deserve a cut of the revenue. Whether that cut should be 30% or not is an entirely separate debate — although at least one U.S. lawmaker has called it “highway robbery.”

Ultimately there’s a valid argument to be made that Apple has to draw the line somewhere, since it naturally doesn’t feel that developers should be able to get a free ride by gaining the benefits of the exposure that the App Store offers while finding ways to avoid paying their fair share. On the other hand, however, it seems patently unfair when multi-billion dollar companies like Netflix and Amazon can easily bypass the whole thing while smaller startups with considerably smaller margins get held hostage to giving up a 30% cut of their revenue to Apple just because they don’t fit into a specific and somewhat aribtrary category system.

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