Why Apple let WordPress walk but continues to fight Fortnite’s Epic Games
Apple’s tussles with app developers are getting more frequent.
A scuffle with WordPress, the website-building service, erupted last week after Apple booted the developer from the App Store, preventing WordPress from issuing updates, such as bug fixes, to its iOS app.
The dust-up became public after Matt Mullenweg, a founding developer of WordPress, the open source project and nonprofit foundation, tweeted Friday that Apple had “locked” his team out of the app marketplace. Mullenweg is also the CEO of Automattic, a company that offers commercial versions of the WordPress software outside of the flagship app.
At issue: A disagreement over “in-app purchases,” an increasingly vital part of Apple’s business. The confrontation, resolved over the weekend, is the latest in a string of clashes centering on the software sales-related growth engine of America’s most valuable company.
The biggest blowup so far spurred Epic Games, maker of the blockbuster video game Fortnite, to sue Apple for allegedly monopolistic, anticompetitive behavior. In the case’s first court hearing Monday, the presiding judge said the decision wasn’t a “slam dunk” for either side.
While Epic is living up to its name, putting up an epic fight, WordPress reached a more amicable conclusion.
Paying the piper
Whenever people buy digital goods, like Netflix subscriptions or video game items, through the App Store, Apple demands a cut. Typically, Apple takes 30% out of any digital transaction. (In some cases, such as recurring subscriptions, Apple’s share is 15%.)
Developers despise the toll since it eats into their revenues. Yet if a developer offers people alternate payment options outside the App Store—or even points people to alternatives, however obliquely—they could find themselves in breach of Apple’s “terms of service.”
This is what appears to have happened in the case of WordPress. Though WordPress’ iOS app just enables people to manage free websites—no in-app purchases are possible—an earlier version of the app apparently included a section on “plans” and how to upgrade to “premium” or paid versions of the software without paying the usual tribute to Apple.
In WordPress’s world such information is useful to provide prospective customers. In Apple’s universe, however, this is effectively lèse-majesté.
The phantom tollbooth
It’s easy to understand why Apple cares so much about the issue.
CEO Tim Cook has been doubling down on Apple’s so-called services business, which encompasses the App Store, to offset slowing growth in iPhone sales. What began as a small initiative continues to factor significantly into the company’s future prospects; the newer services unit raked in more than $13 billion during the company’s most recent quarter ended June 27, up from $5 billion during the same period in 2015.
That shifting strategic emphasis led Apple to crack down any companies attempting to circumvent its toll. When Epic started offering alternate Fortnite payment methods that avoided Apple’s fee-taking, for instance, Apple blocked the app. The two are now embroiled in a legal face-off.
After multiple skirmishes between Apple and developers, regulators have started playing closer attention. Legislators questioned whether Apple is abusing its status as gatekeeper to the App Store and harming consumers at a recent Congressional hearing.
In his testimony, Cook contended that Apple’s fees “are comparable or lower than commissions charged by the majority of our competitors.” Many app developers, including music-streaming service Spotify, Microsoft, various news publishers, and, of course, Epic Games, have rejected that defense, arguing that Apple’s approach to the App Store unfairly harms businesses.
Wall Street, on the other hand, is celebrating Apple’s toll-taking tactics. Investors recently bid up the company’s shares, making it the first U.S.-based company ever to reach a valuation of $2 trillion.
Unlike the battle royale with Epic, Apple’s dispute with WordPress was settled almost as quickly as it arose.
By Saturday, Mullenweg tweeted he was “very grateful that folks at Apple re-reviewed” the WordPress app. He added that the WordPress team would work to close “any webview loopholes that pop up,” ridding the app of any leads to alternate payment options, and thereby assuring compliance with Apple’s terms of service. (Mullenweg did not immediately reply to Fortune’s requests for comment.)
Apple said in a statement that it considered the issue “resolved” after WordPress eliminated alternate payment options from the app, rendering it just another free app with no in-app purchases. Apple “apologize[d] for any confusion that we have caused.”
As long as Automattic keeps its paid plans separate from the App Store version of the WordPress app—including stripping out mentions of paid upgrades that evade Apple—then it should be in the clear. But for a company like Epic that makes so much of its money on in-game purchases, it will have to play by Apple’s rules—and pay the App Store rent—if it wants back in; that is, unless the courts rule otherwise.
Despite the brisk resolution, the Apple quarrel left an impression on Mullenweg. “This also made me appreciate the freedom of the open and independent web,” he said.