During the congressional hearings, Apple came under fire yet again for its 30% app tax, and received further backlash from companies like Telegram.
During the most recent congressional hearing involving major tech companies, Apple’s ‘app tax’ issue reentered the spotlight. Apple, along with the other tech companies, were grilled on everything including censorship and privacy, but most specifically antitrust, which coincides with the central question of whether or not tech companies have too much power. On that note, the app tax has been used as a primary example of Apple’s strong-arm tactics against app developers.
Apple’s ‘app tax’ refers to the company receiving a percentage of the profits an app makes through in-app purchases. To be exact, 30 percent of every transaction, although in other circumstances, such as subscriptions, the tax tends to be 15 percent or lower. During the hearings, Apple’s CEO, Tim Cook, claimed that with the majority of apps on the App Store, developers keep 100 percent of the money they make, and Apple only makes money when the app gains a customer on an Apple device. Furthermore, Apple commissioned a study by Analysis Group ahead of the hearings, which concluded that Apple’s app tax is similar to other app stores, including Amazon, and video game digital marketplaces. However, even Epic Games CEO Tim Sweeney recently criticized both Apple and Google over app taxes.
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Like other tech companies with app stores, Apple charges the tax in order to promote growth within the company, which could lead to better products, and other technologies. However, Telegram, a free instant messaging app for smartphones has now followed Spotify by calling out Apple and its app tax. As per a post on Telegram, its founder Pavel Durov refutes the fairness of Apple’s app tax and lists seven reasons (or ‘myths’) why Apple has been deceiving the public with its tax.
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Durov attacks Apple’s app tax by specifically focusing on the congressional hearings and the false assumptions that he believes arose, even scrutinizing the Analysis Group study. In regards to the study, Durov calls the 30 percent commission comparison between Google Play Store and Apple App Store “irrelevant, because Android allows its users to install apps from sources other than Google Play.” In comparison, Apple doesn’t allow third-party apps to be installed other than through the App Store.
Furthermore, Durov focuses on antitrust and the anti-competitiveness that Apple’s all-encompassing power has on other, smaller companies, especially app developers like Telegram. According to Durov, the ‘vicious circle’ of competition highlights the inability to develop an alternative, competitive OS; developers won’t build apps for an unpopular OS and users won’t buy phones that don’t support enough apps. For Apple, iOS is among the top operating systems in the world, and the best apps will always flock toward that popularity for their own economic sake, regardless of tax. Durov brings up the example of Microsoft’s OS succumbing to its inability to attract and make popular apps, such as Instagram, compatible with its phones. Avoiding Apple is impossible for app developers and above all else, Durov seeks fairness, and accountability when it comes to Apple’s advantageous–and perhaps illegal–behavior.
Durov claims that even in a free market there isn’t really competition, just a few big players snuffing out everyone else. In addition, Durov even proposes the question of whether or not Apple needs the money, referring to the millions of dollars the company doesn’t know what to do with. As to be expected with an impending EU antitrust investigation, more information will come through in due course, and perhaps some that could expose wrongdoings and support Durov’s analysis — or support Cook’s testimony, excusing Apple of any responsibility.
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