App Store (ios)

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The current App Store logo on iPhones

The App Store (ios) is a marketplace that enables users of Apple products to browse, download, and provide feedback on applications. Applications on the App Store are created by 3rd party developers who choose to share their software to the App Store. Apps are offered as free downloads, or purchase to download, and also offer in-app purchases. Apple owns, maintains, and controls every aspect of the App Store and created the product in 2007. As a result Apple manages the infrastructure of uploads, downloads, and payments, collecting a varying percentage of App revenues from purchases and subscription services. The App Store currently contains 1.8 Million apps, with 2.3 million removed apps due to lack of updates or compatibility [1]. Of the apps available, 93.7 are free to download while the remaining 6.3% are paid apps.[2] Many of the free apps include in-app purchases which allow developers to make money after downloading an app.

History of The App Store

In October of 2007, Apple officially announced that they were creating an App Store to allow 3rd party developers to offer a variety of applications to Apple users. This decision came after Apple previously only allowed users to utilize Apple’s web browser, Safari to access web applications. A year later in July 2008 the App store was released with 500 applications available for download. Apps were offered as free downloads or costed money, with 90% of apps costing less than $10[3]. 30% of sales revenue was collected by Apple, which Steve Jobs positioned as more generous than most video game industry, and accounted for Apple handling distribution and marketing of apps which made developer's lives easier. In October 2009 Apple added in app purchases to the App Store, which enabled users to spend money inside Apps they have already downloaded. Purchases were required to go through Apple’s payment processing system, which charged a 30% fee. After Sony disregarded Apple’s rules by routing ebook sales to their own payment services in February 2011, Apple rejected Sony’s new app and restated that Apps are not allowed to redirect in app purchases to payment services that are not Apple’s.[4] Additionally in February Apple began to offer subscription services for publishers, again with their 30% fee included.[5] In January of 2014, Apple reached a settlement with the Federal Trade Commission regarding Apples manipulative in app purchases tactics. As a result Apple offered $32 Million in refunds to consumers and initiated the increase of parental controls to prevent children from unknowingly spending money.[6] By June 2016, Apple expanded their subscription app models. This led to a drop to a 15% fee after the first year of subscriptions and the introduction of “reader apps” which allow accessing content subscriptions, but does not allow users to be redirected to other payment options. Additionally, Apple implemented advertising in the App Store which appears under the search section. In November of 2016 a House committee investigation found that Apple gave Amazon lower fees on the App Store.[7] Apple claimed Amazon's lower fees were a result of a program that was already established, and it was formally announced again in April of 2020.[8] Before that, in April 2019, Apple was banning 3rd party screen time and parental control apps. This received criticism from the public as it was seen as anti competitive because Apple has competing products in the market.[9] Apple eventually reinstated these apps in July. Later that year in September, Apple released the Apple Arcade, which provided a subscription service to exclusive and premium games.[10] In August 2020 Apple banned Fortnite from the App Store after they implemented their own in-app purchasing system.[11] This initiated a long legal battle which concluded that Apple’s App Store is not an illegal monopoly, but Apple is not allowed to prohibit 3rd party in app purchasing services.[12] At the same time Apple started allowing apps such as Netflix and Spotify to have a link to their payment services within each app in September 2021.[13]


Features

The App Store (ios) includes apps for Apple’s iPhone and iPod touch. As of February 2022, the App Store consists of five sections for users to browse apps.[14]

Today

The Today section of the App Store is “a daily destination with original stories from our editors around the world”[15] which includes recommendations and stories about Apps on the App Store and the developers behind them. This includes sections such as “Now Trending” in categories such as games and productivity. It also includes Editors picks for apps of any category, a game of the day and an app of the day. Additionally, the editors provide stories about featured apps regarding their purpose and meaning to provide more insight into Apps and their developers. Features apps are determined by the editors, which are chosen based on categories such as a strong user interface, high quality user experience, innovativeness, accessibility, and more. Apps are able to submit an entry online to get featured, but do not pay to be featured.[16] There are 150 editors globally that choose and curate the content on the Today page. [1]

Games & Apps

Claiming itself to be the “worlds best games store”[14], Apple provides a dedicated page to provide details and recommendations of games to play from classics to brand new games. Similarly, the Apps section provides a similar display of non gaming apps for users to download. For both sections, Apple gives app recommendations that are curated specifically to customers. These recommendations are based off of previous downloads, along with other data Apple has for the users. Games and Apps also includes charts for popular and new games, to help encourage exploration and downloading new apps.

Arcade

Apple Arcade, the newest addition to the App store, provides a subscription service which gives users access to more than 200 games. With the membership, which costs $4.99 a month with a family plan available, allows users to play any of the games for free, without any in app purchases. Arcade games are available for any Apple device, including the Apple TV.[17]

Search

The search feature enables users to look up specific apps and browse different app categories. It is the most efficient way to find an app. When a search occurs, the search results contain suggestions on most relevant apps based on the search criteria. Additionally, apps can pay to have their apps placed at the top of specific search results. It is the only place on the App Store where Apple includes paid advertising.

Reviews

When viewing the details of any app, at the bottom of the description are reviews and ratings from app users. Users have the ability to leave a review between 0 and 5 stars and are able to provide comments on their experience with the app, both positive and negative. Additionally, developers can respond to reviews. Overall this helps to create an open dialogue between users and developers which helps hold developers accountable and inspires innovation and improvement for apps.

App Development

In order for third party developers to create and release apps on the App Store Apple provides an iPhone SDK (software development kit) to give developers the necessary tools. The SDK was originally released in June of 2008, available free for developers to download, but it is only available on Macs (Apple’s computers). Once an app is ready for launch if developers wish to release their apps on the App Store, they must pay $99 annually.[18] Every app on the App Store is submitted for review before release. Last year, Apple rejected 215K app submissions because of violations of privacy guidelines or malware found.[1]

Economics of App Store

In 2018, a study was conducted by a Deloitte subsidiary for the FTC on the economics of App Stores.[19] As of 2018, there were 317,673 active companies working on developing new apps which help to facilitate 7,744,418 jobs in the industry including both jobs direct to developing apps and indirect jobs that result from the app economy.[19] Overall, Apps bring in $568.47 billion annually in the United States, broken down into 339.7 billion dollars as direct contributions such as subscriptions, in-app purchases and advertising revenue. [19] The other 228.77 Billion dollars are indirect, resulting from businesses that benefit from users using the applications (ex: purchasing towels through the Amazon app). The app economy previously described would not be possible without app stores, which provide a “tremendously efficient distribution channel.” As a result, the barriers to entry in the app economy are significantly lower as it offers a large market with low marketing expenses, making it extremely easy for anyone to share an app. This infrastructure that app stores provide help to increase competition, and therefore lower prices, in the app economy. This helps to create a more efficient economy, and increase the value users get out of their smartphones. One result of the app economy is the creation and expansion into new types of economies. For example, apps have helped create an online sales economy which has led to increased revenue across retail sales. While the Deloitte study focuses on app stores in general, Apple’s App Store holds a strong share of the market. In 2021 Apple had $85.1 billion dollars in app revenue, nearly doubling Google Play’s $47.9 billion dollars in revenue. Aside from revenue, the App Store lags behind Google Play in downloads of apps and games in 2021.[19] Google Play had 111.3 Billion downloads, while Apple’s App Store only amassed 32.2 Billion downloads.[19] This shows Apple's App Store is extremely strong in driving revenue, and contributing significantly to the App economy.

Ethical Issues

Since the inception of the App Store, there have been many complaints from Developers and Consumers about different policies and practices on Apple’s App Store. Over the years, this has driven new feature development to improve user experience, but has also led to backlash from the public and multiple lawsuits that have challenged some of Apple’s unfair behavior. Below are some examples of ethical controversies about the App Store that Apple has dealt with over the years.

In App Purchases

After Apple introduced in-app purchases on any app, many developers added the feature to their apps, specifically in games. Many game developers started adding purchasing options for imaginary money or objects within games. Since a strong percentage of games, such as Smurfs’ Village, are targeted specifically to a younger audience, it was extremely deceiving for developers to add this feature and offer imaginary goods that cost up to $100, because kids are unaware of the money they spend. In one instance, an 8 year old girl spent $1,400 on a single game over a few weeks.[20] While it was the developers who implemented these features, Apple was still complacent for allowing them to exist, and collecting a 30% profit on every purchase. In 2011 a class action lawsuit settlement was reached where Apple would pay parents back a total of $100 million for the in-app purchases damages.[21] Additionally as a result, Apple has added parental controls to help prevent this issue. Today Apple provides the feature and instructions for parents to disable in-app purchases on their children's devices.[22] Despite this, many parents do not know about these features, and children are still spending money on in-app purchases. For example, in 2020 a child spent $16,000 on in-app purchases. When his parents found out and they contacted Apple, the support staff apparently responded by saying "there's a setting, you should have known."[23] Ultimately as Apple has publicly addressed this issue and created a solution, it is by no means perfect and Apple now does not claim any responsibility as the issue persists.

Monopoly

Since Apple owns their App Store they dictate the rules of the marketplace, which many companies have found to include anticompetitive practices which give Apple an unfair advantage in the app market. One notable example is when Spotify submitted an antitrust complaint against Apple on March 13th of 2019. In this complaint and public letter, Spotify asserted that Apple continues “to give themselves an unfair advantage at every turn.” Specifically Spotify disagreed with Apple's ultimatum policies regarding payment systems. For in-app purchases, companies are required to use Apple’s payment system which includes a 30% fee for using the system. This leads Spotify and other companies, asserts the complaint, to raise their prices for the consumer in order to cope with the “Apple tax” and remain competitive in the marketplace. The other option given to Spotify is to not use Apple’s payment system, which results in Apple prohibiting many features of user experience between Spotify and an iPhones home screen. For example, “Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch.”[24] As a result of these issues, Spotify insisted that apps should be allowed to compete with each other fairly, not based on who owns the App Store. Spotify and Apple’s own Apple Music are not subject to the same set of rules, regulations, and restrictions, which is inherently unfair for Spotify. Additionally, Spotify believes that customers deserve the ability to choose their payment providers and not be stuck with Apples. Lastly Spotify insisted that the App Store should not be able to dictate communication between apps and their end users.[24] In April 2021 the EU released their ruling regarding this complaint, determining that Apple has “dominant position in the market for the distribution of music streaming apps through its App Store.” Supporting Spotify’s complaints, the EU ruled that the requirement to use Apple’s in-app purchasing system with the 30% fee and their “Anti-steering provisions”, which do not allow apps to offer alternative payment system options, provide an unfair market in the music streaming industry.[25] In a similar case in 2021, Apple vs. Epic became a major lawsuit after one of Epic’s games, Fortnite, was removed from the App Store because it broke Apple’s policies by offering their own payment methods through their app. After a long lawsuit in California, a judge ruled that Apple “does violate California’s Unfair Competition Law (UCL) through its anti-steering rules”[26], meaning Apple can not prevent apps from showing alternative in app purchasing options, which is similar to the conclusion that the EU made.[27] Since then Apple has appealed the ruling, and a judge has put the decision on hold, meaning Apple does not have to change their anti-steering policies yet. [28] As a result of these lawsuits, we can conclude that Apple does have some sort of monopoly over certain aspects of the App Store. While the grounds of this monopolistic competition are being drawn out in court, many apps have made it clear that they have issues with how Apple treats them and bills them. In 2020, Apple announced an App Store small business program. This program reduced the fees Apple charged to 15% for any developer making less than $1,000,000 annually on app store purchases. While this change does not impact large businesses such as Spotify, it is a clear effort by Apple to work to make the App Store more fair and competitive for all developers.[29]

Banned Apps

Throughout the history of the App Store, Apple has banned thousands of apps that have broken Apple’s policies, but some bannings have been controversial and questioned by developers. One example is in 2012, a man named Josh Begley created an app called Drone+ to track US drone strikes in the Middle East.[30] To create the app Josh used the same data that multiple news sources used for their articls. When Josh submitted the app for review, Apple rejected the app, stating that it broke Apple’s policies by showing “excessively objectionable or crude content.”[30] This rejection was confusing as there was no explicitly objectionable content in the app, only GPS marks on a map. Another time in 2011 Apple banned a game called Phone Story which depicted the process of making an iPhone, exposing the “dark side of your favorite smartphone.”[31] After initially releasing the app, Apple removed it 4 days later for violating App store rules including child abuse and crude content.[31] Although the app did break App Store rules, it became a controversial removal because there was truth behind the app, and the app was never reinstated to the App Store. More recently in January of 2021 in wake of the January 6th attacks on the US Capitol Apple banned Parler, a social media app that claimed to promote free speech, after giving them a 24 hour warning to fix their issues since “Parler has not taken adequate measures to address the proliferation of these threats to people's safety".[32] The removal of Parler was defended by Timothy Powderly, Apple’s Director of Government Affairs, stating that Parler allowed “posts that encouraged violence, denigrated various ethnic groups, races and religions, glorified Nazism, and called for violence against specific people.”[33] Parler’s removal sparked outrage from its founders and the far right wing of American politics, who believed that banning Parler was unfair and a product of cancel culture and a result of the January 6th attacks.[34] On April 14th 2021, Apple officially reinstated Parler after many conversations with Parler’s team to comply with Apple’s guidelines.[35]

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