Remember the Readability controversy of the other day, in which Apple rejected its app over its newly-enforced in-app purchase policy? TechCrunch reports that, in light of Steve Jobs’s laconic email stating that “software as a service” apps would be exempt, Readability has submitted its app for app store consideration again.
Readability falls into a bit of a grey area—it does present its software as a service, but that service involves serving up content. Unlike most content-based apps, this is content that readers have selected themselves; indeed, it’s simply an alternate version of the Instapaper app already available on the store.
Whether Readability gets approved or rejected could lead to interesting consequences for other software-as-service apps. After all, apps like Dropbox and Evernote also involve ways of syncing user-picked content onto the devices, and they both come with subscription fees as well.
Apple doesn’t help matters with their constantly evolving policies, vague terms, erratic enforcement, and terse/evasive public statements. They could help by providing a list of popular apps in this broad content-serving grey area (such as DropBox, Netflix, and Kindle) and telling us whether they’ll always be OK or whether their heads could be placed on Apple’s app chopping block at some future date. Remember, when you get down to it, almost any app that requires an Internet connection to function could be called content-based, even text editors that sync online like Simplenote and WriteRoom.
The closest to a method I can see in Apple’s madness in the money angle. Instapaper is free, although there are ways to make donations. The banned but almost identical Readability is charging a modest sum, most of which was to be passed along to content providers as compensation for stripping out their ads. Because it was a paid app (however small) it alarmed Apple’s executives, who seem to harbor a desire to turn every paying app on iOS into a payment for them (much like the hefty iPhone kickbacks from cellular companies). For consistency sake, they have to pursue the little fish as zealously as they’ll soon be pursuing the as-yet-unnamed big fish. That Readability rejection may have been intended to establish a policy that, in legal terms, could then be used against Kindle apps.
Readability also had a dastardly potential that even its own developers might not have realized. It’s quite possible that Readability would eventually work out a way to allow their subscribers to get behind the pay firewalls at some publications. Probably two or three time a week I follow links to Wall Street Journal articles that end after one paragraph. I can go no further without a paid subscription. But suppose, if I clicked on a Readability icon in my browser, that article would appear in my reading list there? The WSJ gets money and I get to read their articles without a pricey subscription. Everyone is happy, except of course Apple, who entertains the utterly vain hope that I might buy that WSJ subscription from them.
The money angle also explains Apple’s muddled actions and statements. Their policies are based not just on what others are doing but on what Apple can currently do. Apple-based periodical subscriptions, with a 30% slice going to Apple, are beginning to happen, so a ban on others doing the same must now be enforced (that’s Readability). The iBookstore still has a limited collection and a barely adequate reader, so Amazon’s Kindle app is safe for now (but not the much smaller Sony). Effective file serving and large scale music/movie subscriptions won’t come online until after Apple’s NC servers fire up, so DropBox and Netflix are not yet threatened. In short, when Apple can begin to make money in an area, that area may fall under its no-content-based subscriptions without a big-slice-for-Apple option. Apple’s policies have to remain vague because they can’t yet be fully applied. In wartime, this is called the “fog of war.”
Apple’s really playing two war games. One is that often used by those who dominate a market. Rather than compete on the quality of their product and its price, they attempt to block competition, in this case banning apps that don’t give Apple a 30% cut. That is, not accidentally, is the entire costs-plus-profit markup of many content providers. “You can compete with us,” Apple is saying, “but only if you lose money doing so.”
That’s the area in which Apple is risking government intervention, not just for anti-trust, but even more important for false advertising, an area where the law is easier to apply. To the public, Apple claims in their ads that their platform is wonderfully open. In practice, it isn’t and these evolving restrictions have more to do with Apple’s profit margin than with keeping bugging and insecure apps off iDevices.
The second war-like game Apple is playing, FUD (Fear, Uncertainty, and Doubt), has the potential to backfire because of the unusual relationship hardware/OS companies have with developers. A raw OS is worthless. They need developers to make their products appealing. But when a company like Apple moves into applications and services, those same developers become competitors. Twenty years ago, people bought PCs to run WordPerfect, but WordPerfect competed with Microsoft’s Word. Today, Amazon’s Kindle app is competing very effectively with Apple’s iBookstore. People buy iPads to read Kindle books and then don’t buy books from the iBookstore. That can’t be making Apple execs happy.
It’s that mixing of friend and foe that makes Apple’s FUDish behavior toward app approval a mixed benefit. I’ve got friends who develop business apps for iPhones here in Seattle. If Apple’s behavior gets too out of line or unpredictable, they could, within a matter of weeks, shift their emphasis to developing products for Droid phones. Apple shouldn’t forget that software development isn’t like a factory floor. It’d be very hard for Boeing to shift to auto production. It’s quite easy for software developers to move to other mobile OSs or, perhaps even worse, shift their emphasis so the Droid version is always more up-to-date and feature-rich. Apple’s erratic app approval policies have made developing for iOS more risky and developers will respond accordingly.
Every action provokes a reaction. Whatever Apple is doing, it’s not being as clever as it may think.
–Michael W. Perry, editor of Chesterton on War and Peace.