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Trying to squeeze more profit out of the App Store is a bad idea

Trying to squeeze more profit out of the App Store is a bad idea

A new report says that Phil Schiller left the App Store because Apple aims to make more money from it. Read the room, Apple.

Phil Schiller remains with the company as an Apple Fellow, but he recently left his roles as head of events and the App Store. Now according to Bloomberg, a reason for his leaving the App Store was that he doesn't want any part in what's coming to it.

It's said that John Ternus and Eddy Cue intend to increase App Store revenues. But there are only practical two ways to do that, and neither can end well for the company, or for its users.

Conceivably Apple could somehow make the App Store suddenly more popular, and maybe launching a Home Hub would help that. Maybe Apple could introduce more ads, as it now has with Apple Maps.

But in practice Apple either raises its commission fees, or it cuts the costs of the App Store.

Raising prices is off the table

Never the calmest of Apple critics, Epic Games CEO Tim Sweeney might burst a blood vessel if Apple raised any App Store fees. That would be his problem, of course, except that governments do seem to listen to him.

This is especially so in the European Union, where Apple is continually proposing new and lower App Store fees, but Sweeney wants everything to be free. There is a problem that the EU's Digital Markets Act (DMA) is vague enough on these issues that lawyers are being kept well employed, but it will be resolved at some point.

It just cannot be resolved in the EU in any way that sees Apple raising prices. And increasing fees isn't going to cut it in the US, either.

Apple is currently appealing to the Supreme Court about a Ninth Circuit court denied a rehearing over App Store fees. That original Ninth Circuit court ruling in theory allows Apple to collect commissions on outside payments, but in practice the sum requires agreement from Epic Games for some reason.

Apple can of course try raising its App Store prices, but it would be reneging on international agreements. Whatever added revenue it managed to get would probably be short-lived as regulators stepped back in.

Cutting costs is not an option

The problem with cost-cutting is that Apple's not going to suddenly get a better deal on its servers. Instead, cutting App Store costs has to mean cutting jobs.

It's got to be costly employing the App Review team that Apple currently has, but that team already seems unfit for purpose. It needs more people and so more money, not less.

Perhaps Apple is just throwing up its hands and acknowledging that App Review isn't working. Maybe Apple has decided it's lost the fight and that third-party app stores are coming.

Maybe Apple is right. But as long as it continues harping on about being the only line of defense against malware and bad actors for app users, it should at least keep trying.

Where Phil Schiller fits in

Neither Schiller nor Apple have commented, of course, but the account of him leaving over this issue fits with earlier reports over his insistence on human curation. Back in September 2022, he was reported to resisted moves to change the store.

Specifically, he is said to have mandated that apps were chosen to be highlighted by the editorial team, not by letting developers pay.

So with him gone, perhaps this is where Apple thinks it can get some more cash out of developers, by charging them to be promoted.

That wouldn't be increasing fees and it shouldn't have any impact on App Review. But it would immediately stop the App Store's highlights being of any use at all.

If developers can pay to be featured in the App Store's highlights pages, those pages are no longer highlights. They are a list of which developers have the greatest budgets.

Apple talks up how the App Store is for users, but all of its possible moves to increase revenue will be damaging.