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Apple Chief of App Store Says It Would Like to Level the Playing Field For Developers

By Stephen Nellis



July 28 (Reuters) - On Wednesday, Apple Inc Chief Executive Tim Cook will face questions from U.S. lawmakers about whether the iPhone maker's App Store practices grant it an unfair advantage over independent software developers.



Apple tightly controls the App Store, which is the foundation of its $46.3 billion annual service business. Developers have complained about Apple's commissions of between 15 percent and 30 percent on a variety of App Store purchases, its ban on contacting customers to solicit signs-ups, and what some developers perceive as an opaque and unpredictable application-vetting procedure.
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However, when the App Store was launched in 2008 with 500 apps Apple executives saw it as an experiment in offering an attractively low commission rate to lure developers, Philip W. Schiller the Apple's senior vice-president of global marketing and the top executive of the App Store spoke to Reuters in an interview.



"One of our ideas was to treat all apps in the App Store the same. A set of rules apply to everyone, no special agreements or terms, and all code applies to all developers. This wasn't the case with PC software. No one could have imagined that. It was a complete reversal of the way the whole system was supposed to function," Schiller stated.



Software sold in physical stores meant that it had to be paid for shelf space and prominentness. These costs could eat up to 50% of the retail cost. Small developers couldn't break in.



Bajarin said that the App Store's predecessor was Handango, a service that around 2005 allowed developers to distribute apps via wireless connections to users' Palm and other devices for 40% commission.



With the App Store, "Apple took that to a whole other level. Bajarin declared that they offered an excellent value at 30% than the usual price.



However, the App Store had rules: Apple reviewed each app and required the use of its own billing system. Schiller stated that Apple executives believed that customers are more confident in purchasing apps if their payment information was secured.



"We believe our customers' privacy is secured this way. He added that he can imagine if you had credit cards and payments for every app you used.



Apple's rules were initially an internal list, but they were published in 2010.



Developers have complained to Apple regarding commissions throughout the years. Apple has since reduced the areas in which developers can apply. In 2018, it allowed gaming companies such as Microsoft Corp , maker of Minecraft and Minecraft, to let players login to their accounts so they included in-app payments from Apple as an alternative.



"As we spoke to some of the most popular game developers, like, Minecraft, they said"I totally understand why you want users to be capable of paying for it on their device. We have a lot of users who purchased their subscriptions or accounts elsewhere - on an Xbox or a PC, or on the internet. This is a huge obstacle to getting into your store"" Schiller explained. "So we created this exception to our own policy."



Schiller stated that the Apple cut helps fund the vast system of developers: Thousands of them maintain secure servers to distribute applications, and to create the tools necessary to create them.



Marc Fischer, chief executive of Dogtown Studios mobile technology firm said that Apple's 30 percent commission was justifiable in the early days. It was the cost of global distribution for a small company like his. However, now that Alphabet Inc's Google have a "duopoly" on mobile app stores, Fischer said, fees should be much lower - maybe the same as single-digit fees payment processors charge.



Fischer stated, "As a developer, you're forced to accept that charge." (Reporting by Stephen Nellis, San Francisco; Editing done by Greg Mithcell & Steve Orlofsky


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