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 give it unfair power over independent software developers.
Apple controls the App Store which is at the center of its $46.3 billion-per year services business. Developers have criticized Apple's commissions ranging from 15 30 and 15% on many App Store purchases, its prohibitions on pursuing customers for outside signing-ups, as well as what some developers see as an insecure and unreliable app-vetting process.
In an interview with Reuters, Philip W. Schiller Apple's senior Vice President of Worldwide Marketing and the top executive of the App store, said that when the App Store launched in 2008, there were 500 apps included. However, Apple executives viewed it as a test in offering a low commission rate to lure developers.
"One of our concepts was to treat all apps in App Store the same. A set of rules applies to all users, there are no special deals or terms and everything is applicable to all developers. This was not true for PC software. Nobody could have imagined that. It was a complete flip around of how the entire system was going to work," Schiller said.
Software that was sold in physical stores meant that the software was required to be purchased for shelf space and prominence. Minecraft These costs could consume up to 50% of the retail cost. Small developers were unable to break into.
Bajarin said the App Store's predecessor was Handango, an application that, around 2005, allowed developers to deliver apps via cellular connections to users' Palm and other devices for 40% of the commission.
With the App Store, "Apple took that to another level. Bajarin said that they were an excellent value at 30% less than the regular price.
The App Store had rules. Apple reviewed each app and required that Apple's billing system be employed. Schiller stated that Apple executives believed that customers would feel more confident buying apps if their credit card information was safe.
"We believe that our customers' privacy should be protected that way. He added that if you had to enter credit card numbers and pay to every app that you have used, it could be an absolute nightmare.
Apple's rules were initially an internal list, however they were released in the year 2010.
Over time, developers complained to Apple about commissions. Apple has since widened the areas in which developers are able to apply. In 2018, it allowed gaming companies like Microsoft Corp , maker of Minecraft to let players access their accounts as long as their games provided Apple's in-app payment as an alternative.
"As we spoke with some of the most prominent game developers, such as Minecraft they stated that they understood the reason why users should be able purchase the subscription on their device. However, we've got lots of players from other places, who bought their subscriptions or accounts elsewhere - on an Xbox or an PC or even on the internet. This is a huge obstacle to accessing your store,'" Schiller said. "So we have made an exception to our own rules."
Schiller said that Apple's cut helps finance the vast system of developers: Thousands maintain secure servers to deliver apps, and also to develop the tools needed to create them.
Marc Fischer, chief executive of Dogtown Studios mobile technology firm, stated that Apple's 30 percent commission was justifiable in the beginning. It was the cost of global distribution to an unassuming company like his. However, now that Apple and Alphabet Inc's Google have a "duopoly" on mobile app stores, Fischer said, fees are likely to be lower, possibly the same as the single-digit fees payment processors charge.
"As a developer you are forced to accept that cost," Fischer said.