Epic Games, Spotify, and other app developers partnered to launch the Coalition for App Fairness (CAF) against Apple’s monopolistic practices. Can this non-profit organization be the ray of hope for the developer community?
The boom of smartphones has made mobile app development a fast-growing industry. Businesses and app makers are now developing innovative mobile apps to draw the attention of consumers. With the onset of COVID-19, monthly mobile app usage has surged to 40%Opens a new window year on year in Q2 2020. Smartphones are now a common platform for both professional and personal use.Â
The mobile app industry has seen significant growth in every vertical, from business and education apps to gaming and entertainment apps. But despite a promising growth, app developers face a constant challenge from digital platforms or app stores because of the 70/30 revenue share model. Apple’s App Store and Google’s Play Store charge 30% commission for in-app purchases from app makers, which has raised antitrust and anti-competitive concerns for the developer community.Â
Last week, Epic Games, Match Group, and Spotify Technology joined forces with ten other app makers to form the Coalition for App Fairness (CAF), an independent non-profit organization to advocate fair competition and regulatory changes across the app ecosystem. CAF is a united fight by developers against Apple’s App Store rules and Google’s Play Store. The coalition focuses on three major issues:Â
- Apple’s 30% commission structureOpens a new window . Â Opens a new window
- Lack of consumer freedomOpens a new window .Â
- Apple’s anti-competitive policiesOpens a new window to favor its own products and services.
Tim Sweeney, CEO, and founder of Epic Games, saidOpens a new window , â€œThe basic freedoms of developers are under attack. We are joining the Coalition for App Fairness to defend the fundamental rights of creators to build apps and to do business directly with their customers. We are an advocate for any company that’s ready to reclaim its rights and challenge the anticompetitive behaviors that exist on app stores today.â€
What Is the Coalition for App Fairness (CAF)?
Based in Washington D.C. and Brussels, CAF is a non-profit organization created by 13 app publishers, including Epic Games, Match Group, Spotify, Basecamp, Blix, Deezer, Tile, and others to address the rising monopoly practices of the app ecosystem by Apple. CAF is committed to protect consumer choice and enhance competition and innovation for all app and game developers globally. The organization has published ten app store principles for online platforms and app stores to follow.Â
CAF saysOpens a new window , â€œWhile they (app stores) can be beneficial when fairly operated, they can also be used by platform owners to hurt developers and consumers. As enforcers, regulators, and legislators around the world seek to address these important issues, we, the Coalition for App Fairness, urge them to recognize that every app developer, regardless of size or the nature of the developer’s business, is entitled to fair treatment by these app stores and the platform owners who operate them.â€
Why Was the CAF Formed?
In 2011, Apple introduced a new app tax policy on its App Store, which entitled the company to take a 15 to 30% commission on in-app purchases and subscriptions. The CAF claims that Apple generates $15 billionOpens a new window in revenue due to this policy. However, this revenue model has faced criticism from developers on stifling competition and innovation.Â
Also, Apple’s 30% app tax policy has also come under the radar of the U.S and EU regulators. Amidst this, in July 2020, Apple released a studyOpens a new window that revealed that most app stores and digital platforms, including Google Play Store, Samsung Galaxy Store, and Microsoft Store, charge 30% or more. However, other platforms support alternative distribution methods that Apple doesn’t, which has troubled the developers’ community for long.Â
Along with Apple, the CAF even targets Google’s Play Store on Android but to a lesser extent because Google allows users to download apps from other online channels.
Some app makers in the coalition are already involved in various legal tussles with Apple over its anti-competitive practices. On August 13, 2020, Epic Games, the maker of Fortnite, filed a lawsuit against Apple for antitrust and anti-competitive behavior when Apple terminated Fortnite for breaching its App Store rules. Apple filed a countersuit against Epic Games for breach of contract and sought monetary damages. Likewise, Spotify filed an antitrust complaintOpens a new window with the European Commission over Apple’s 30% app tax on March 13, 2019.Â
Even Basecamp and Apple clashed in June 2020 when Apple rejected updates for Basecamp’s Hey and demanded that the company begin in-app subscription and share a commission of its revenue. Other companies that have filed lawsuits against Apple are Tile, Rakuten, and Blix.
The CAF aims to blunt Apple’s market dominance and its exorbitant commission rates that affect consumer purchasing power and stifles developer revenue. With its ten principles and joined efforts, the organization believes that it might push Apple to create a fair and balanced marketplace for every app developer.Â
Horacio Gutierrez, head of global affairs and chief legal officer at Spotify, saidOpens a new window , â€œAs enforcers, regulators, and legislators around the world investigate Apple for its anticompetitive behavior, The Coalition for App Fairness will be the voice of app and game developers in the effort to protect consumer choice and create a level playing field for all.â€
Douglas G. Vetter, associate general counsel at Apple, wroteOpens a new window , â€œBecause of Apple’s rules and efforts, iOS and the App Store are widely recognized as providing the most secure consumer technology on the planet. And as a result, consumers can download and pay for an app and in-app content without worrying that it might break their device, steal their information, or rip them off. This level of security benefits developers by providing them with an active and engaged marketplace for their apps.â€
Smaller firms have avoided clashing with big tech companies for several years. But with the launch of the CAF, there is a possibility that more companies would voice their concerns about big tech’s market dominance. On the flip side, despite the protests, several app companies continue to use the App Store and Play Store and pay the 30% app tax. So, it could be a while before Apple agrees to meet the demands of app developers.