Basecamp CTO David Heinemeier Hansson launched a firestorm of public criticism of Apple after Apple rejected an update to Basecamp’s new email app. Hansson’s tweet thread and the ensuing controversy surfaced days before Apple’s annual developer conference, and amidst news that the European Commission has opened an antitrust probe of Apple and the App Store.
The app in question is Hey, an email tool that eschews tradition to offer a better experience for a certain type of user. It requires users to pay a $ 99 annual subscription fee to access its features and services but offers a free trial period.
Hey’s 1.0 version was approved for launch on the App Store just this week, but it came under scrutiny at Apple when Basecamp attempted to deliver a 1.0.1 update with bug fixes. As events unfolded, a call and email came from Apple that indicated Hey would have to take steps toward making its subscription available through Apple’s own billing system and in-app-payments platform. Otherwise, the app would be delisted from the store.
According to Hansson, Apple told Basecamp that Hey violated rule 3.1.1 in the App Store’s review guidelines. Here’s the language Apple uses in those guidelines:
If you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase. Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, etc. Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.
But at first glance, Hey doesn’t break that rule. It does not allow users to subscribe within the app. Instead, users must go to Hey’s website to sign up through Basecamp’s own billing—as is the case for many other popular apps like Spotify or Netflix. As per Apple’s guidelines, Hey does not have a link or call-to-action directing users to said website.
This was understandably a source of confusion for the Hey team. Also confusing: the fact that the 1.0.1 update was rejected but not the 1.0 version, even though the update did not change anything related to this issue.
Though the tweet started the conversation, much of the meat is in a follow-up article by David Pierce in Protocol, which contains or references statements from both Hansson and Apple. That report fleshes out the details; it appears Apple is also holding Hey to a set of rules that are not included in the public guidelines.
Here’s one of Pierce’s key points:
Apple told me that its actual mistake was approving the app in the first place, when it didn’t conform to its guidelines. Apple allows these kinds of client apps—where you can’t sign up, only sign in—for business services but not consumer products. That’s why Basecamp, which companies typically pay for, is allowed on the App Store when Hey, which users pay for, isn’t.
Pierce added on Twitter later:
One other distinction: Apple allows “Reader” apps — things like Netflix and Kindle and Dropbox, where you’re using the app to access existing subscriptions — as long as they don’t offer a way to sign up. But email, messaging, etc. don’t count as Reader apps.
Many members of the development community have responded to these revelations with outrage, because these distinctions are not stated or clarified in Apple’s App Store review guidelines. Plus, there are numerous examples of apps that defy classification or simply don’t seem to follow these rules, leaving commentators to ask what the difference really is between say, Dropbox (which doesn’t appear to have this problem) and Hey (which does).
The outrage also stems from a strongly held and often voiced belief that Apple’s 15 to 30 percent cut of subscriptions revenue gained through its payment system is not justified. For his part, Hansson made it clear Basecamp doesn’t intend to just make the changes Apple has requested. Quoted in The Protocol, he says:
There is never in a million years a way that I am paying Apple a third of our revenues. That is obscene, and it’s criminal, and I will spend every dollar that we have or ever make to burn this down until we get to somewhere better.
Apple has not yet released any additional statements, but it seems this conflict is not yet over.
Opinion: Is the “Apple tax” justified?
In his tweet thread, Hansson repeatedly compared Apple to the mob and gangsters, even though Apple has not yet been found to be breaking the law. While various players like Spotify have opened complaints, those complaints haven’t been resolved, and there have been no decisive conclusions that what Apple is doing is, in fact, illegal in Europe, the United States, or most other regions.
It’s difficult to make the case that Apple is a monopoly, because it does have competition, and it holds a minority market share—by an enormous margin—against its main competitor. But the winds of the legality question could shift, pending the results of the EU complaints and investigation.
Developers have long complained about the “Apple tax”—that revenue cut the company takes from apps in its App Store. To that point, Hansson is quoted in The Verge comparing Apple’s cut unfavorably with those of credit card companies that handle billing for transactions like this:
Why is it that credit card processing fees hover in the 1.8-2.8% range, while Apple’s App Store have sat steady at 30% on the high end? Because there’s no competition! And they have a monopoly grip!
Credit cards, he argues, offer such low fees because they live in a world of fierce competition—never mind the fact that credit cards are largely fungible. And there are more reasons for this difference besides competition. Credit card companies do not offer nearly the breadth of services and support to businesses that Apple does. It’s not just about payment infrastructure.
Apple provides resources and support to developers, including a wide range of APIs and software tools, that are critical to developing iOS and iPadOS apps. It is not possible to create the apps without them. Apple operates a vast editorial operation to curate and highlight apps, which many developers I have spoken with say is vital for discoverability and success on the platform. Apple spends a fortune on the research and development of hardware that developers use, like cameras, CPUs, machine-learning processors, GPUs, and more. And yes, it operates a payments system.
Apple’s defense of its revenue share, when it has offered one, is similar to the defense of corporate taxes by a national government, which most people support: the earnings of a business are only possible because of the government’s support and diligence in providing security, regulations, multiple forms of basic infrastructure, and so on, so it is reasonable for that business to pay a significant sum in taxes.
That’s what Apple offers to developers. It’s also worth considering the investment that went into the platform to begin with.
Apple has built a platform primarily patronized by high-income individuals. Apple spends sums of money that are unfathomable to most app developers to market its devices to get them into those desirable users’ hands. That’s cash that developers didn’t have to spend.
The company also offers a number of promises to its users, including a commitment to privacy, an App Store that purports to maintain a minimum level of quality for apps, curation to remove offensive apps and ensure the store is family friendly and culturally appropriate for each region, and ease of use thanks to services like Apple Pay, Sign In with Apple, and easy in-app purchases.
It has made these promises central in those expensive marketing campaigns. Many users pick the iOS platform because of one or more of these promises, and developers know that when they seek to address the specific audience Apple has developed.
As I’ve argued at length before, the main differentiator between iOS and Android is not hardware, features, or design. It’s these very policies, and most iPhone buyers know what they’re getting into when they make the purchase.
Hansson argues that Apple should give his team’s app access to the users who have chosen Apple products and whom Apple has spent a fortune to acquire—but he also argues that Apple should not require the app to pay up for Apple’s contribution or to follow the rules that may have attracted users to the platform to begin with. Whether or not those rules are arbitrary or capricious doesn’t really figure into this part of the equation. This is the price of entry.
Contrary to popular mythology, the underdog isn’t always the hero; sometimes the underdog is just wrong. Apple is within its rights to define the cost of joining the lucrative platform that it built with its blood, sweat, tears, ingenuity, and dollars—especially as it offers powerful tools and services to developers to help them leverage those things.
But this is not simply a defense of Apple at Basecamp’s expense. The severity of this situation could have been avoided had Apple been clearer and more consistent with its rules.
Once again, Apple has failed at transparency
The chief problem here is lack of transparency. Apple is technically also within its rights to be opaque about the rules, but that opacity is not good for anyone. It causes confusion for consumers, bad press for Apple, and so much uncertainty for developers that it could disincentivize making apps for the platform.
In this case, Apple seems to indicate that it treats apps differently depending on categories that developers are largely unaware of—business versus personal, reader versus… whatever else. But cutting a clear line between business- and personal-use apps is a fool’s errand, as far too many apps walk or cross that line with regularity.
Even the “reader” category is not easy to define. It seems to apply to apps that are used purely for consumption. For example, though, Spotify might primarily be a consumption app, but it is also used to create and share playlists that may be consumed by millions of people. There are numerous other confusing examples like this in the App Store.
Developers take on considerable risk when they choose to make an app. As much as is possible in a changing market, it’s critical that they know the app will be acceptable and viable when it is completed. Apple needs to be absolutely crystal clear about what its rules are, and that’s not what we’re seeing in this case.
Here’s one of Hansson’s tweets:
Yesterday was such a happy day. We’ve worked so diligently for over two years to make HEY. The press and customer reactions were making me euphoric. To have Apple, of all companies, be the ones to piss in our puree, and ruin that moment, is just personally heartbreaking.
That sentiment summarizes why Apple’s inconsistency and lack of transparency make for an unacceptable level of risk for app developers. The “take it or leave it” or “just develop an Android app” arguments don’t work as well when the rules are unpredictable or invisible. Developers work for years on a project; it simply can’t be a reasonably likely possibility that their work will be summarily rejected at their moment of triumph.
In this case, Basecamp has the option to avert that catastrophe by bowing to Apple’s revenue and in-app purchase demands—though by all declarations so far, it won’t. But if there are inconsistencies like this in Apple’s review process, there might be other situations based on more fundamental problems where developers have no recourse but to walk away with nothing but crushing disappointment and financial loss.
It’s important to recognize that Hey’s dilemma is getting so much attention in part because it comes from a storied and fairly sizable developer, with prominent executives who have deep contacts in the tech press and the ability to make their voices heard.
It’s likely, though not provable, that for every Basecamp/Hey, there are dozens of smaller developers who were rejected for similar reasons but couldn’t stir the same media outrage—or just as likely, those developers chose not to even try for fear of losing access to Apple’s platform. Only Apple knows the true number, in any of these cases.
This is not the first time that Apple has been in a defensible position but made itself appear indefensible because of its lack of transparency or consistency. Take, for example, the throttling of iPhones to save long-term battery life. It was a reasonable design decision but hiding it from consumers at first turned it into a firestorm.
Apple has long upheld a culture of secrecy. Some of that veil has been lifted in recent years, and that’s a good thing—especially when so many other companies’ fortunes are tied to Apple’s. But Apple must work more to improve the consistency and transparency of its app review progress. Developers and watchdogs have been calling for this for years.
Apple may have improved of late, but Hey’s predicament shows that the tech giant still has a very long way to go.