Earlier this week, Apple’s new App Store subscription service was officially announced. However, a few publishers were less than happy about the new subscription model.
What the new model means is that if a publisher offers a subscription through their applications, whether it be from an external link, they must also offer the same thing to customers through Apple’s App Store. This means that Apple would get a 30 percent cut of any subscriptions purchased through the App Store.
Now it looks like the Federal Trade Commission and the US Department of Justice are looking into Apple’s new subscription service for iOS apps.
Implications for Publishers
At the moment, it is just a preliminary investigation, and we suspect that it won’t come to much as Apple isn’t stopping publishers from offering external subscriptions. They are just making them give consumers a choice between purchasing the subscription externally and also through Apple’s App Store. This dual-option requirement has raised concerns among publishers who feel that the 30 percent cut Apple takes is too steep, potentially eating into their profit margins significantly.
For instance, if a publisher sells a subscription for $10 a month, Apple would take $3 from each subscription sold through the App Store. While this might seem reasonable for smaller transactions, for larger subscription services, this can add up to a substantial amount. Publishers argue that this fee could force them to increase prices, which might deter potential subscribers.
Consumer Perspective
From a consumer standpoint, the new model could offer more convenience. Having the option to purchase subscriptions directly through the App Store means that users can manage all their subscriptions in one place, using a single payment method. This could simplify the process for users who subscribe to multiple services, making it easier to track and manage their subscriptions.
However, there are potential downsides for consumers as well. If publishers decide to increase their prices to offset the 30 percent fee, consumers might end up paying more for the same service. Additionally, some consumers might prefer to subscribe directly through the publisher’s website to avoid any potential price hikes.
Regulatory Scrutiny
The involvement of the Federal Trade Commission and the US Department of Justice indicates that there are concerns about whether Apple’s new subscription model could be seen as anti-competitive. The preliminary investigation will likely examine whether Apple’s policy unfairly disadvantages publishers or limits consumer choice.
It’s worth noting that Apple has faced similar scrutiny in the past regarding its App Store policies. For example, the company has been criticized for its strict control over app distribution and the fees it charges developers. This new investigation could potentially lead to changes in how Apple manages its subscription services, depending on the findings.
In conclusion, while Apple’s new App Store subscription service aims to provide a streamlined experience for consumers, it has raised significant concerns among publishers and regulators. The outcome of the investigation by the Federal Trade Commission and the US Department of Justice will be crucial in determining the future of this subscription model. As the situation develops, it will be interesting to see how Apple addresses these concerns and whether any adjustments will be made to their policies.
via Gizmodo
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