Apple is facing another anticompetitive complaint, this time filed by Rakuten who owns the Kobo ebook brand. The Financial Times reports that Kobo is filing a formal complaint that it cannot fairly compete against Apple Books in the App Store while it is subjected to sharing 30% of revenue from purchases made in the Kobo app.
Kobo is currently forced to sell all of its content through its website to avoid paying Apple 30% of revenues. This means customers cannot conveniently buy books inside of the app itself.
There has been a significant upswell in pressure on the App Store to change its policies in the last year or so, as many big names speak out against Apple’s domineering control over its platforms, including government bodies.
In Kobo’s case, the argument is that it is unfairly disadvantaged compared to Apple’s first-party Books offering. Kobo must pay a 30% fee on every ebook it sells through its app, which makes it almost impossible to run a profitable ebook store. Meanwhile, the Apple Bookstore does not incur those costs.
In March last year, Spotify led the charge by filing a formal complaint with the European Commission. The case is under review with a ruling expected in the next year or so. Makers of Bluetooth tracker Tile have also filed complaints relating to the App Store’s ‘unfair playground’, such as how restricted its access to Location Services are compared to Apple’s Find My app, as Apple readies an attack on the tracker market with the launch of its own AirTags hardware.
Just yesterday, Apple released a commissioned report that attempted to frame the conversation differently. That report showed that more than 85 percent of commerce through the App Store went to developers, not Apple. This is because Apple does not take a cut of things like merchandise or physical product sales. Apple enforces that all digital transactions must use In-App Purchase, and that means giving 30% of revenue to Apple for the privilege (for a subscription that lasts more than one year, the rate is halved).
It is this same 30% share of App Store sales that has driven the majority of growth in Apple’s Services division over the last five years. Whilst Apple has shown little interest in changing the financial split, the company has made special deals with TV content apps like Amazon Prime Video to allow them to use non-In-App Purchase billing in select circumstances.
At the start of the year, Apple publicly promised Tile that it will add new mechanisms to better support always-on Location Services, but these changes have not yet made their way into an iOS release. There are also rumors that Apple will be adding some new default app settings in iOS 14, which will help third-party apps better compete with Apple’s stock apps.
In a statement released yesterday, Apple CEO Tim Cook said “we’re committed to doing even more to support and nurture the global App Store community — from one-developer shops in nearly every country to businesses that employ thousands of workers”. With WWDC starting next week, we will be on the lookout for any feature or policy changes in this area.
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