Apple executives aren’t idiots, but then again, neither was Napoleon. And my considered view on this is that they are making a mistake — they stumbled onto a revenue stream that they don’t want to give up, but successful companies don’t succeed over the long run by just grabbing every available penny. The refusal to exhibit any sense of grace and magnanimity about this is a huge strategic distraction, and it is now inviting regulatory and legislative crackdowns that are likely to leave everyone, including Apple, worse off than they would be if they just acted a little more high-minded.
Apple doesn’t want to present itself as a company that’s excited about free-to-play games duping whales into pouring unreasonable sums of money into in-app purchases. This, I think, is correct. It really cuts against Apple’s whole corporate identity as “yes our stuff is expensive but it’s the best stuff.”
Apple recently stated they’d paid out $230 billion to developers on the App Store, which implies Apple has earned $70-100 billion assuming they got 15-30% of each of those transactions. That’s a big chunk of change, but the company’s revenue since the App Store debuted is close to $2.5 trillion, which would make the App Store account for at best 4% of their business. It’s always easy to give away other people’s money, but this seems like a small piece of the pie to risk major regulation from governments, not to mention loss of good will from customers and partners.
And as Yglesias points out, Apple seems to really believe their PR narrative:
I can also tell you from personal experience that Apple’s representatives do not have some better argument that they share with journalists off the record. Even worse, they specifically repeat their worst public arguments in private as if they think someone would find them persuasive.
I hope Apple knows what they’re doing.