App gouging needs to stop, say investors and developers
By Lewis Panther
Senior writer, FINSIA
Published Thu 26 Nov
2 mins read
Investors and app developers want the ACCC to take action against Apple and Google over 30% commission on in-house purchases.
<p>Investors are backing app developers asking the Australian Competition and Consumer Commission to take action against Apple and Google over 30% commission on in-house purchases.</p> <p>Submissions to the the ACCC’s Digital Platform Services Inquiry - examining apps and Big Tech and due to be published in March 2021 - show an anger towards “inequitable” fees.</p> <p>While Apple and Google say they allow wider competition that means consumers are better off, it’s not a view shared by one of Australia’s leading app developers.</p> <p>Elegant Media co-founder Anushka Bandara, whose firm has built 1,000s of apps over the past decade, says developers are fed and wants the Australian government to act on the “gouging”. </p> <p>Even charity apps where there is a payment gateway are not immune to having to pay the large commission, says Anushka, whose clients include government departments as well as small and large businesses.</p> <p>“Many people may not be aware, but when they buy digital content through an app such as streaming services, games or digital subscriptions, a whopping 30 percent goes to Apple or Google,” he says.</p> <p>“The feeling among many businesses is that the matter now needs to be dealt with by regulators.</p> <p>“Many businesses and app developers want the government to address the issue by either requiring Apple and Google to come to the table to re-negotiate the fee or provide alternative options for apps to sell services.</p> <p>"The problem is very few businesses have the power to take on Apple or Google in this way.</p> <p>“They already charge hefty fees for publishing apps, force apps to use their payment gateways and don't allow apps to bypass the platform gateways.</p> <p>“This isn't just a business issue, this is a consumer issue. Consumers are being forced to pay more because of the gouging.”</p> <p>While Apple has announced it is dropping its commission to 15% from next year.</p> <p>But Anushka does not think this is enough.</p> <p>“It should be less than 10%. What other businesses would get away with charging 15 or 30%, especially when they do not provide an after market service either,” he said.</p> <p>That nearly $1.5 billion is spent in the Apple App Store every week shows the scale of the issue. Google takes around $40 billion a year.</p> <p>“There’s no wonder Apple has such a good cashflow from its App store,” says Anushka.</p> <p>Australian Investment Council CEO Yasser El-Ansary highlighted the organisation’s concerns in a submission to the ACCC.</p> <p>He said: “At this critical juncture in our national response to COVID-19, it’s vitally important for our economic recovery and Australian jobs that businesses are able to effectively and confidently develop and invest in new ideas and processes.</p> <p>“This includes mobile Apps which play an important role."</p> <p>AIC key concerns, he noted, included “inequitable commission structures”.</p> <p>Australian Business Software Industry Association President Chris Howard said: “The largest barrier to entry for the App Store and Play Store is the 30% commission that Apple and Google take from in-app purchases.</p> <p>“We are aware of multiple software providers that have opted not to provide mobile versions of their apps because providing them through Apple and Google are not viable options for them.”</p> <p> </p> <p> </p> <p> </p> <p> </p> <p> </p>