Apple and Google’s App Stores are being blamed for their rates and policies

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The two tech giants have a stranglehold on the app economy, according to Jared Sine, Match Group’s chief business affairs and legal officer. And their grip has become as damaging to the American economy as those of the oil barons, railroad tycoons and Ma Bell of years past, he testified at a Senate Judiciary Committee hearing in April. “Apple and Google,” Sine asserted, “are using their monopoly power to dictate how apps operate, how much they will be forced to pay and, in many cases, if they will even survive.”

Last year, Match Group, the online dating firm split out from Barry Diller’s IAC, made $2.4 billion in revenue. What is the company’s largest single expense? Apple’s 30 percent app store “tax” on sales in Match’s applications, which include Tinder, Hinge, and OkCupid – costs the business believes are worth $500 million every year. Google will require Match to pay the same commission rate on programmes sold through the Google Play store beginning in September.

Highlights

  • Epic Games, maker of the blockbuster battle game “Fortnite,” last year sued both Apple and Google, alleging they operate illegal monopolies that force app makers to use the companies’ in-app payment systems and extract exorbitant fees. A judge’s ruling in the Epic Games v. Apple trial is expected this fall.

  • After years of simmering spats, the industry’s big two app stores are now the targets of attacks on multiple fronts. Getting Apple and Google to change the way they operate their digital storefronts — which together raked in a whopping $111 billion in fees last year, per research firm Sensor Tower — is among the most urgent issues in regulatory and legal circles amid a broad and growing backlash against Big Tech.

“The long-term evolution of ‘Fortnite’ will be opening up ‘Fortnite’ as a platform for creators to distribute their work to users, and creators will make the majority of profits,” Sweeney testified in the trial in May. “With Apple taking 30% off of the top, it makes it very hard for Epic and creators to exist in this future world.” Tech billionaire Elon Musk has also chimed in on the fracas, saying in a July 30 tweet, “Apple app store fees are a de facto global tax on the internet. Epic is right.”

For Epic CEO Tim Sweeney, it’s an existential fight that will determine access to the next generation of mobile computing. Epic has not asked for any monetary damages in the Apple or Google lawsuits — underscoring its long-game strategy — and mainly seeks for its apps to be able to use alternate payment mechanisms. The company, valued at nearly $29 billion after a new round of investments this year from Sony and others, is taking an economic hit in the crusade: “Fortnite” is still banned from the Apple App Store and Google Play, after Epic defied their in-app payment rules.

Meanwhile, Google is facing a new legal challenge from 36 U.S. state attorneys general, who are similarly charging that the internet giant’s app store abuses its powerful position in the Android market, and specifically that it, like Apple, unfairly takes a 30% cut. “Google has served as the gatekeeper of the internet for many years, but more recently, it has also become the gatekeeper of our digital devices — resulting in all of us paying more for the software we use every day,” New York Attorney General Letitia James said in announcing the legal action in July.

 

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