App stores are experiencing a "race to the bottom"
Yesterday, Google announced that developers will be able to add alternative in-app billing systems for users in South Korea.
A few days ago, Google also announced that they will reduce in-app subscription fees from 30% to 15%.
On the same day, Apple revised their App Store review guidelines to allow developers to contact app users for alternative payment methods (for eg: "sending an individual user an email about other purchasing methods after that individual signs up for an account within the app").
What's going on? Why are these large corporations suddenly being so generous, slashing their fees and even allowing us to avoid them entirely?
One word: Lawsuits.
Lawsuits. Lawsuits everywhere
Every single decision listed above can be traced back to one or more lawsuits.
Google's decision on South Korea -> On August 31, the South Korean government passed a bill requiring Google and Apple to allow developers to offer alternative payment methods for their apps.
Google's feed reduction to 15% -> 37 US states filed a lawsuit against Google in July for its unfair Play Store practices. The EU has also fined Google $5 billion for its dominance in Android, a decision Google is currently appealing (this fee reduction could be one of the concessions made to reduce the fine).
Apple's decision to allow alternative payment methods -> You've probably heard of the Apple v. Epic lawsuit. In September, a judge issued an injunction ordering Apple to "open up" App Store payments (which Apple did).
There's more (regulation) to come
A bipartisan bill being drafted by a number of US senators would require, among other things, for Google to allow alternative billing systems and Apple to allow alternative App Stores.
The bill was introduced on August 11th, and I haven't seen any updates since, indicating that heavy lobbying is taking place.
Competition has already begun to emerge
Just days after Apple's announcement to allow alternative payment methods, Paddle, a popular payment provider in the SaaS space, has announced an "in app" purchase product, allowing you to avoid Apple's "hefty" 15% fee while also getting access to customers' emails for support.
Facebook also announced two days ago that you can create recurring subscription links using Facebook Pay for 0% fees until at least 2023.
Facebook was quite blunt about why they're doing this, mentioning Apple in the release and stating that creators "must still forfeit 15-30% of their earnings to companies such as Apple." Until the end of the year, Facebook will let you "keep what you earn" and even give you $5-20 bonuses on each subscription.
What does all of this mean for you?
More money in your pocket. However, there is a delicate balance to be struck; adding new payment options to your app may reduce conversion rates. Some have argued that you can get around this by offering a 15-30% discount (the percentage Apple used to take from you) if users pay with Paddle, for example.
In any case, the future will be interesting to watch.
Pretty interesting. Wonder if other Asian countries (Japan, China, etc.) will join South Korea on this legislation.
That's how it usually goes, one country does it and then surrounding countries take notice.
I don't think Apple and Google will go below 15%. The only other news might be Google also allowing alternative payment methods everywhere and Apple opening up other app stores (although I think their main App Store will still take the lion's share).
Not sure about the 15% part, there are multiple circumstances at play here. It will be very hard for Apple to "open up" to other app stores as well, I think they'll fight till the end.
I think AppSumo will be the biggest when all this settles down! They're well-positioned to allow builders to offer deals as an initial growth strategy and that would work really well once Google/Apple allows third party payment merchants
Why does the article is talking of paddle? What value proposition of paddle differs from Stripe? I don't understand. Paddle looks like a standard saas subscription tool but much more expensive (10% or 5%) than Stripe (0,5%). Did I miss something?
They've released a solution that "plugs-in" a permission Apple just created for developers to use third-party payment systems. Stripe will prob wait for this to stabilize before offering something like this.
What's the problem with just have it architected in a way where you pay to list your app (yearly)....like Apple does it.
but then whatever money you make from the app, you pocket it!