Apple’s Latest App Store Rejection Proves Why Antitrust Regulators May Be Right After All

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In the latest capricious move on the part of Apple’s App Store review team, another developer has seen their app rejected for not playing by the often arbitrary in-app purchase and revenue sharing rules that Apple has put up around the App Store.

This week we’ve been hearing about a really interesting new upstart service, Hey.com, which aims to redefine the way that people handle email, and while we’ve heard that song before, this one comes from the same team behind the very popular and successful Basecamp collaboration and project management platform, and it has some very interesting and unique ideas.

It seems that there’s only one problem with their strategy, however, and that’s the fact that Apple wants its cut. Naturally as an email platform, Hey needs to have an iPhone and iPad app, but as a paid service, Apple has begun blocking the app’s updates — and threatening to remove the original version — because it doesn’t use Apple’s own in-app purchasing system.

The thing is, however, that Hey on iOS doesn’t use any in-app purchasing system. Much like hundreds of other apps such as Netflix, Kindle, and Dropbox, users are required to sign up and pay on the service’s website. Further, in accordance with Apple’s normal policy for other apps in this category, Hey doesn’t make any reference that users need to visit the website to purchase a subscription, although of course it does say that those who aren’t signed up already will need to register on the website, since Hey is exclusively a service for paying customers.

Despite this, however, the latest iOS app updates have fallen afoul of Apple’s App Store Review policies, and while the developers originally thought that this was a simple misunderstanding, Appel has not only reiterated that Hey violates its policies on in-app purchases, but said that if the developers don’t change their approach, the original v1.0 app will be removed from the App Store.

Acting Like ‘Gangsters’

Basecamp’s CTO, David Heinemeier Hansson, has publicly voiced his displeasure with Apple’s approach, going so far as to suggest that the company is acting like a bunch of “gangsters” charging ransom.

However, it’s also not the first time Hansson has voiced his opinion of Apple’s App Store policies; he appeared before the U.S. congress earlier this year as part of a series of antitrust hearings, and while tracking tag maker Tile made most of the noise, Hansson did raise his own concerns about what Apple might do to developers that are in direct competition with them.

While we’d certainly prefer to think that Apple is above this sort of thing, the nature of this latest rejection can’t help but make us wonder if it may have been at least partially influenced by Hansson’s prior vocal opposition to Apple’s App Store policies, but even if that’s the case, it paints this situation in an even worse light, and when we consider that Apple could be facing billions of dollars in antitrust fines in the EU, moves like this are either extremely foolish or show a level of hubris that’s unusual even for Apple.

The fact is that Hey doesn’t seem to be doing anything significantly different than hundreds of other apps that have come before it, so why is Apple picking on this one, specifically?

Apple’s Position

Technically speaking, Apple has some justification for its stance, but it seems like a shaky one at best.

Specifically, the App Store review guidelines have always stated that apps that require payment to “unlock features or functionality” must use Apple’s in-app purchase mechanism, giving up a 30% cut to Apple in the process. This is covered in section 3.1.1:

“If you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase. Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, etc. Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.”

The same section restricts apps from using other methods that could direct users to purchase subscriptions in other ways, even prohibiting links to web pages.

So based on this, you may wonder how so many popular apps like Netflix, Kindle, and even Dropbox get away with offering their apps on the App Store. The answer is found in section 3.1.1(a), which makes some specific exclusions for “reader” apps.

“Apps may allow a user to access previously purchased content or content subscriptions (specifically: magazines, newspapers, books, audio, music, video, access to professional databases, VoIP, cloud storage, and approved services such as classroom management apps), provided that you agree not to directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods are not designed to discourage use of in-app purchase.”

What you may note from the above, however, is that there’s no provision made for “email” apps, which is the category that Hey falls into. However, it’s also unclear where Basecamp’s other app — namely, Basecamp — would actually fall into that list either, and yet Apple has never had a problem approving that on the App Store, despite the fact that it’s also an app that front-ends a paid service.

Of course, Basecamp has been around for a long time — it almost predates the App Store — whereas Hey was simultaneously launched on multiple platforms at the same time. However, that’s not Apple’s reasoning behind why Basecamp is allowed and Hey is not.

Rather, Apple claims the distinction is that Basecamp is for businesses, while Hey is for consumers, drawing a line between the two apps that seems to exist only in the mind of App Store reviewers.

After all, Hey is a $99/year email app. It’s hard to believe any professional would ever want to pay for a good email service, but of course we’re sure lots of consumers will be lining up to pay $99/year for email. However, compare this to Gmail, which of course front-ends both consumer (Gmail.com) and business (G Suite) accounts, and yet has never seemed to have any problems with App Store approvals.

Further, nowhere in the actual App Store Review guidelines is this distinction made between business and consumer apps, making it sound like reasoning that Apple’s App Store review team came up with on the fly. While “email” apps aren’t exempted from the guidelines, this is the first we’ve heard of one getting blocked in this way, and it’s also pretty hard to argue that email apps — especially those that have their own unique mail services behind them — are fundamentally different tools than a cloud app like Dropbox or Google Drive.

That said, one distinction that might have drawn the ire of Apple is the fact that Hey.com is solely a paid service, with no free tier available. By contrast, services like Basecamp and Dropbox offer free entry-level tiers, which means that the apps in question are useful even for those users who don’t choose to pay.

Hey on the other hand is completely non-functional until a user signs up for the paid service (which is also by invitation only right now). Of course, this isn’t much different from Netflix, Hulu, or Amazon Prime, but those are also in a category that’s clearly a more obvious exclusion to Apple’s policies. While some of these, such as YouTube Premium, have chosen to make use of in-app purchases, they also pass the 30% premium onto the customer, which in our opinion is even worse, since it makes App Store customers feel like they’re being gouged; this is not the warm and fuzzy feeling that we’d think Apple wants to promote among its customers.

Still, at the end of the day, this is just the latest example of an inconsistent application of App Store policies by Apple, and another indication that if the company had its way, everything would go through the App Store purchasing system. In fact, section 3.1.3(a) only exists because of the hue and cry that was raised by users and companies like Amazon, since Apple’s original App Store policies would have forced users to buy all of their Kindle books through the App Store — an idea that’s ridiculous on the face of it.

Apple eventually backed down on that fight, resulting in the 3.1.3(a) exceptions, although it’s clear that it did so grudgingly; this latest struggle with Hey shows that Apple hasn’t truly abandoned its old way of thinking so much as it’s merely capitulated in the face of those tech companies that are too big to fight against. While we strongly suspect that the negative PR and public backlash will eventually see Apple backing down on this one, especially in the light of ongoing antitrust investigations, this is an example of something that never should have happened in the first place. Apple needs to be better than this.

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