Rick VanMeter, Coalition for App Fairness Executive Director
Personal finances are getting hammered by double digit inflation and increased costs of living. Tomorrow, Apple will make things worse by increasing prices on consumers for apps and in-app purchases made on mobile devices in 28 countries, including the Eurozone. Apple’s actions are simply a unilateral money grab made possible by its unchecked power.
Last month, Apple announced that starting October 5th it would raise the various price tiers for apps and in-app purchases in its App Store for users in Chile, Egypt, Japan, Malaysia, Pakistan, Poland, South Korea, Sweden, Vietnam, and all countries and territories that use the Euro currency. In Europe this change amounts to a 20 percent increase in prices for consumers. For example, an app that is currently sold for €0.99 will be sold for €1.19, and apps that cost €1.99 will be sold for €2.49. Japan and South Korea will be particularly hard hit with up to 35 percent increases in app costs.
Apple’s actions will also raise the prices of purchases made within apps, such as payments for games, as well as subscriptions for new subscriber prices for dating, news, music, and video streaming services.
These increases were made without the input or consent of app developers, which highlights the extent of Apple’s market power. In no other industry can a business single-handedly increase the prices of another business’s products. Further, this move is likely to negatively impact sales for app developers who should always have the freedom to price their products and services as they see fit.
Apple maintains such incredible market power through its top-down control of the mobile app ecosystem. The only way to get apps onto iPhones or iPads is through the official App Store, which imposes terms and conditions to benefit Apple at the expense of app developers and their customers. With no alternatives to reach the more than one billion iOS users, app developers are forced to live with Apple as regulator and, as these actions make clear, as a price setter – even as it is often a competitor.
It is no wonder that Apple felt no need to explain its price increases, other than obliquely referencing a new 5 percent tax in Vietnam. The increases certainly cannot be explained by market forces. Apple reported a record $19.6 billion in service revenue (including App Store earnings) during the second quarter of this year, a 12 percent year-to-year increase. This is just another money grab.
Without real competition in the app marketplace, Apple will continue to have no accountability for actions such as today’s price increases that hurt consumers and inhibit the success of smaller companies to innovate and bring new products to market. Thankfully, lawmakers and regulators around the world have taken notice and are working to stop the anti-competitive practices of tech gatekeepers.
The European Union has passed the Digital Markets Act, and the Open App Markets Act in the United States has bipartisan support. In the U.K., legislators are also actively looking into setting up a Digital Markets Unit regulatory regime, which could be considered during this parliamentary session.
Competition benefits consumers through new innovations, improved quality, and lower costs. It is imperative that governments act now to pass and enforce pro-competition laws on app store gatekeepers to bring the advantages of a functioning digital marketplace to both developers and consumers. As these price hikes around the world demonstrate, a monopolist will always act in its own interests, even when it hurts those already suffering.
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About the Coalition for App Fairness
The Coalition for App Fairness is an independent nonprofit organization formed to protect consumer choice, foster competition, and create a level playing field for all app and game developers globally. Originally formed by Basecamp, Blix, Blockchain.com, Deezer, Epic Games, the European Publishers Council, Match Group, News Media Europe, Prepear, Proton, Skydemon, Spotify, and Tile, CAF has rapidly grown from 13 to over 70 members since launching in September 2020. CAF offers membership to companies of any size — join today at appfairness.org.
CAF Contact
October 5, 2022