In June, Apple announced at its WWDC that it is moving the Mac lineup of PCs to its own home-grown mobile SoCs. The company says it will manage a multi-year transition from Intel-based systems, and it will leverage its Bionic line of IP and smartphone processors for its new designs.
Unrelated to this, early this month, a House Judiciary subcommittee on antitrust said Apple exerts illegal monopoly power over iPhone software distribution allowing it to generate unreasonable profits and charge developers fees. As you would expect, Apple said, "We have always said that scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions reached in this staff report with respect to Apple." So why am I am mixing Apple alleged illegal monopoly power and the new Macs? Read on.
Related to the upcoming Macs, I hope the company will fill in the blanks that better outline why this move is better for consumers and developers, not just to improve profits through cost reductions and app store taxes. There is nothing wrong with the world’s richest company to make even more money, but I am hopeful developers and consumers won’t be paying too high a price, whether literal money or figurative consumer freedom. I believe performance issues on many x86-based applications will likely hobble the first generation of custom processor Macs, but I cannot be sure until I get one in my hands. What few industry experts have talked about are the potential risks macOS developers are taking, and I’d like to double click into this.
Previously two different worlds
For about a decade, Apple Mac and iPhone developers have lived in two different worlds. iOS apps had its tools, OS, and iPhone hardware platforms, and Mac had its own unique set too. The Mac was different in that you could buy and install an app outside an app store, finding new and interesting tools on the web. iPhone users cannot do this or “sideload” iOS applications. There can be some security and privacy benefits to loading exclusively from a store, but it is not an infallible system and can and has been exploited.
Only recently have these two separate worlds started coming together through iOS apps running on Macs and some shared development tools. Let’s jump into potential developer risks.
“Supra-normal” 30% Apple Store “tax”
The most significant risk I see for macOS developers with the new Macs is that its new apps and services could be taxed at the 30% rate that the iOS App Store taxes. According to AppFairness.org, citing CNBC that estimates from $50B annual app store revenue, Apple has profited annually from developers more than $15B to use its app store. Developers pay Apple 30% for all app, service, and service add-on revenues. The House report called this “supra-normal” profits. Note, there have been rumors of special percentage deals struck with specific apps and services like Netflix, but will developers get that special deal?
As I said above, there is nothing wrong with making money and I’m a capitalist, even for the wealthiest company in modern history. Apple has come under scrutiny by the House anti-competitive sub-committee on its alleged monopoly abuse of its app store and how it treats developers and direct competitors. Some developers got so sick of it and created a group called Coalition for App Fairness to educate the public on what Apple is allegedly doing. The names you would likely recognize are Spotify, Epic Games, and Proton Mail. Microsoft doesn’t claim to be part of the group but recently adopted ten rules for its own Windows 10 app store and the coalition “approved” of the list.
I want to be clear that Apple has not officially said that every future new Mac app mustbe in its new store, but I believe this is where it is headed. You would have to be a fool, in my opinion, not to see that. Don’t forget; Apple previously said Mac apps didn’t need to be signed, and now with Big Sur, it does.
Apple deserves credit for popularizing the app store twelve years ago, but as with everything in life and technology, it should change with the ecosystem and times. What does Apple do for its 30%? Is it investing in app store improvements, improving it enough to warrant a huge fee? I’m certainly not seeing any of this. Are its operating expenses so incredibly high that it needs that 30%? I think that answer lies in that Apple does not disclose any profit metrics about its app store. I would posit it is the most highly profitable service it has with a lot of revenue and control, but not a lot of expenses.
Please try not to confuse this with licensing IP that is improved year after year like 5G. If Qualcomm took the Apple tactic, it would just maintain the license fee without improving or developing new technology year after year, which it isn’t. We know that Qualcomm invests billions in R&D in improving this IP and keeps pricing flat over the long haul.
Pulled off the app store
If/when Apple forces all Mac apps to be distributed through its app store, I believe there is also the risk of the developer’s app getting wholly pulled off the store. We only need to look at Apple pulling off a top app store game, Fortnite, to know that if you try and sidestep the 30% tax, or potentially have a disagreement with Apple, then you are could get pulled, impacting your ability to sell your software, pay yourself, pay your employees, and keep your company afloat. Apple went so far as to want to remove the entire Unreal Engine that would have severely damaged its more significant business. Is this some isolated thing Apple does? Not at all. An easy Google search will uncover all the popular apps Apple has pulled.
Apple has pulled apps due to security and privacy issues, which I applaud. But what about Amazon’s Prime Video, Google Stadia, and Microsoft xCloud? Maybe, just maybe, this has more to do about Apple’s competing services or providing consumers a convenient link off the iOS app to buy content.
Competing with developers
The final thing Mac developers should consider is Apple’s competitive stance with its developers related to competing products. I am a big pro-competitive person as I believe more competition is better for consumers and the industry. But I’m not a fan of large companies bullying others around, using its weight to compete unfairly. Many in the Coalition for App Fairness (CAF) and the House Judiciary anti-competitive sub-committee are concerned with this.
Tile accuses Apple of disabling features that it thinks it puts it in a disadvantaged position versus the future AirTags. The AFC also outlines the Amazon Kindle example of where you cannot buy books on the iOS app and go into a browser to buy them. From my personal point of view, Apple adds zero value to this and needs to change its stance. Spotify is talking about unfairness in promoting its app and advertising, given Apple’s competing product, Music. The House report talked about this issue in detail.
In that same report, there was talk of an Apple employee saying the company gives extra app store scrutiny for competing products to Apple services. Excluding Screen Time competitors was used as the example. The House report also talked about “Sherlocking” where Apple allegedly steals the best developer ideas by copying them to incorporate into iOS or create its own apps. Again, there’s nothing wrong with competition, the issue is when micronically smaller companies are allegedly put at a competitive disadvantage.
What to do
If you are a Mac developer today, I think you need to be considering all of this above as you are mapping out your platform support strategy for the new Macs. While Apple hasn’t yet mandated that all new Mac apps must install from the app store, I believe they will. If it does, then I am hoping you realize what you are getting yourself into. The House Judiciary subcommittee says Apple has monopoly power over software distribution on its iPhones, so it’s not like I’m making things up. The EU is also raking Apple over the coals for similar things. I asked Apple analyst relations if it was going to force new Mac apps into the app store and have not received a response. I will update this article if I do.
First off, I would provide your support to the Coalition for App Fairness and add your name to its list. It has a very simple form to fill out. Secondly, I would email your congressperson and senator that you support an Apple investigation into anti-competitive practices. Thirdly, I would write an email to Apple talking about your concerns and copying your senator and congressperson. Finally, if you’re fearful about your Mac app forcefully mandated to the app store, consider not doing any work on your current app. Apple has talked about its amazing backward compatibility on its x86 to Arm and Intel GPU to Apple GPU translation, so, why make any changes? Maybe consider Apple has a whopping 8 (per IDC) to 7 (per Gartner) percent PC market share compared to Windows or Chrome. Maybe in this time of transition, it’s time to decommit or make the switch to the larger platform where I believe the conditions of success are higher.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.