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What Tim Cook Left Out Of His Version Of App Store History

This article is more than 3 years old.

The opening statements that the CEOs of Apple AAPL , Amazon AMZN , Facebook FB and Google GOOGL provided for Wednesday afternoon’s House Judiciary Committee hearings on online platforms and market power could all use a bug-fix release to address their oversights.

Amazon CEO Jeff Bezos tells a heartwarming American Dream story but doesn’t mention health and safety concerns about the retail leviathan’s logistical chain. 

Facebook CEO Mark Zuckerberg’s testimony ignores the company’s role in aiding the Cambridge Analytica data heist and its continued tolerance of such disinformation factories as Breitbart News. 

Google CEO Sundar Pichai doesn’t cover complaints from news publishers about how it has neglected long-festering problems in the display-ad business on which they rely.

But Apple CEO Tim Cook comes closest to offering outright alternative facts to Congress in a defense of the company’s App Store that essentially erases the history of online distribution before the 2008 debut of the App Store

“When the App Store was created, the prevailing distribution options available to software developers at the time did not work well,” Cook says. “Brick-and-mortar stores charged high fees and had limited reach. Physical media like CDs had to be shipped and were hard to update.”

It’s true that the consumer software market delivered programs as physical bits, not digital atoms, NPD Group analyst Stephen Baker confirmed in email: “The majority of the distribution to consumers was controlled by physical retail.”

But commercial software was not just the wasteland of in-store rip-offs and mailed physical media Cook describes. Then as now, you could download apps from developer’s sites and pay for them, often by buying a license at a third-party site and then entering a code sent via email into that app. 

I literally have receipts for that, going back to the $5 I spent in 1996 on an excellent File Transfer Protocol download manager for the Mac called Anarchie.

“Tim Cook is misleading: when the App Store was created, developers were selling and distributing apps over the web, and it worked wonderfully,” emailed Brent Simmons, a longtime Mac and iOS developer of such apps as NetNewsWire. “We started selling over the web in the mid ’90s.”

Those third-party payment processors took much less then the 30% Apple keeps from every App Store purchase, including all in-app purchases and the first year of content subscriptions.

“We typically paid about 5%—not 30%—to a payment processor,” said Simmons. “This worked just as well for small developers as for large.”

Another developer cited slightly higher fees that still fell short of Apple’s current take. 

“That service charge is only around 10 to 15%,” said Thorsten Lemke, developer of the GraphicConverter image editor, of the Kagi and FastSpring sites he’s employed to sell the app I’ve been using (and paying for updates to) since the early 2000s. 

Lemke began selling in the Mac App Store when that option arrived, with the same 30% Apple share, but he still does some 60% of his business outside the Store. 

Apple did not answer a query sent Wednesday morning about how much of the Mac software market now takes place on the Mac App Store. 

Cook has a stronger case with mobile apps. Installing apps on early handheld organizers was not so easy, requiring a download to a computer and then a transfer to the gadget. But by the mid 2000s, Palm OS handhelds and smartphones hosted a thriving market for third-party software. 

Apple first ignored that precedent: A year before the iOS App Store’s debut, Steve Jobs told developers to content themselves with shipping web apps for the iPhone.

“The App Store certainly added efficiency and greater breadth, which I wouldn’t argue with—but that’s a function of improving technology,” emailed Mark Vena, an analyst with Moor Insights & Strategy (his firm also posts on Forbes). 

John Bergmayer, legal director of the Washington tech-policy nonprofit Public Knowledge, wrote in email that the App Store didn’t serve some independent developers as well as the old system

“They don’t have subscriptions, in-app upgrades, and so forth—just straightforward apps, and for them, the basic way the App Store works is a signifiant constraint,” he said.

Cook’s statement justifies Apple’s 30% rate as “comparable to or lower than commissions charged by the majority of our competitors.” 

Apple commissioned a report from the Analysis Group to back up that claim. But this comparison of competing platforms glosses over how Google’s Android doesn’t require developers to use its store and lets them use their own payment mechanisms for many subscriptions—differences that iOS developers have noticed

Even without those distinctions, Apple saying it’s no worse than many rivals does not make for the most compelling sales pitch to either Congress or developers.

As Apple blogger and developer John Gruber phrased things when he flicked aside the Analysis Group report: “You know you’re in trouble when part of your argument is ‘Hey, at least we’re better than Ticketmaster’.”

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