This week we’ve seen some serious tension build in the developer community with Apple as the makers of Basecamp tried to release its Hey email service iOS app, but was rejected in the App Store Review process as well as by the App Review Board and VP Phil Schiller. Now Basecamp/Hey’s CEO has written an open letter to Apple sharing the belief that this is more than just about the 30% cut that Apple takes from App Store purchases and the core issue comes down to a “lack of choice” that Apple “forcibly inserts themselves” between app developers and their customers.

Yesterday, Apple VP Phil Schiller confirmed to TechCrunch that the company had no plans to change its decision on blocking Hey from the iOS App Store as it is currently designed (subscription paid outside of the App Store).

From Apple’s perspective, the Hey app doesn’t meet its developer guidelines and from Hey’s stance, Apple is inconsistently applying its rules and using anticompetitive practices.

Basecamp/Hey CEO Jason Fried wrote a detailed response to Apple this evening titled “Our CEO’s take on Apple’s App Store payment policies, and their impact on our relationship with our customers.”

Fried says that money is certainly a big part of all of this but that it’s really about “the absence of choice” and that “Apple forcibly inserts themselves between your company and your customer.”

And some people say “Why not just have a special price in-app that’s 30% more than your usual price? Just pass the Apple tax on to customers?” Because that’s not the point.

I won’t deny that money, or the vig, in this case, is a large part of the story.

But personally, as the owner of a business, this isn’t just about money. Money grabs the headlines, but there’s a far more elemental story here. It’s about the absence of choice, and how Apple forcibly inserts themselves between your company and your customer.

Fried details how he believes Apple negatively impacts customer experiences:

When Apple forces companies to offer In App Purchases in order to be on their platform, they also dictate the limits to which you can help your customer. This has a detrimental impact on the customer experience, and your relationship with your customer. It can flat out ruin an interaction, damage your reputation, and it can literally cost you customers. It prevents us from providing exceptional customer service when someone who uses our product needs help.

He lists two major changes when customers use In-App Purchases:

Most people don’t know what happens to your customer relationship when you’re forced to accept In App Payments or offer subscriptions in Apple’s App Store.

  1. When someone signs up for your product in the App Store, they aren’t technically your customer anymore – they are essentially Apple’s customer. They pay Apple, and Apple then pays you. So that customer you’ve spent years of time, treasure, and reputation earning, is handed over to Apple. And you have to pay Apple 30% for the privilege of doing so!
  2. You can no longer help the customer who’s buying your product with the following requests: Refunds, credit card changes, discounts, trial extensions, hardship exceptions, comps, partial payments, non-profit discounts, educational discounts, downtime credits, tax exceptions, etc. You can’t control any of this when you charge your customers through Apple’s platform. So now you’re forced to sell a product – with your name and reputation on it – to your customers, yet you are helpless and unable to help them if they need a hand with any of the above.

Going further, Fried says “Apple’s payment policies create two classes of customers”:

This is why we have a universal, non-platform-specific centralized billing system. We make a multi-platform product. Web, Mac, Windows, Linux, Android, and iOS. Pay us anywhere, we can help you anywhere. Except Apple won’t permit that – you can’t pay us our way if you’re using the iOS App. You have to pay Apple’s way, and messes everything up for everyone other than, you guessed it, Apple.

Apple’s payment policies create two classes of customers for us: “The can-helps” and “The can’t helps”. Apple has no right to force this on us, on our customers, or on any business – big, small, freelance, independent, whatever.

He says that he doesn’t expect Apple to abandon taking a cut of In-App Purchases and there isn’t a one-size-fits-all solution but that Apple should allow developers to handle billing how they feel is best.

In closing, Fried appeals to Apple again asking for “choice!”

So what do we want? I’m not saying IAP shouldn’t exist, or shouldn’t be an option. For some businesses, it might make sense. If Apple is sending you all your customers, it probably does make sense. The 30% rate is still highway robbery, as Congressman Cicilline recently said in an interview, but the fundamental problem for us is the lack of choice.

Apple, please just give your developers the choice! Let us bill our own customers through our own systems, so we can help them with extensions, refunds, discounts, or whatever else our own way. It’s our business, not your business. And Phil Schiller’s suggestion that we should raise prices on iOS customers to make up for Apple’s added margin is antitrust gold.

You can read the open letter to Apple from Jason Fried in full here.

This is certainly a tough situation and Apple’s antitrust concerns are building ahead of WWDC kicking off Monday. What do you think about all of this? Share your thoughts in the comments below!

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