July 10th, 2008 was a ground-breaking day in smartphone history. That was the date when Apple launched the App Store. Three months later, the doors opened on the Android Market. The App Store was always one step ahead of the Android Market (later renamed the Google Play Store) in terms of the number of apps it offered and the amount of money it paid out to app developers. Yesterday Alphabet and Google CEO Sundar Pichai announced that Google has paid developers more than $80 billion since day one (not including China). This was announced via a tweet sent by Google Senior Vice President Hiroshi Lockheimer.
Apple still is far ahead of Android as it announced back at WWDC in 2018 that it had already paid out $100 billion to developers. Even though Android makes up 85% of the global smartphone market, iPhone users on average spend many times the amount that Android users do for paid apps. And that figure is growing rapidly. Consider that in 2017, Apple announced that it had paid developers $70 billion and just one-year later it reached the $100 billion mark.
Justice Department is speaking to app developers as it investigates Apple and the App Store
Let's return to 2017's figures for a moment just to point out that in that year alone, App Store developers took in $26.5 billion. That was more than the 2016 gross revenue for McDonald's! If the App Store were spun off by Apple as a separate company, it would be a Fortune 100 firm. And the Google Play Store currently takes in more revenue than Pepsico, a company with a lot of moving parts.
Also, keep in mind that the actual amount of money flowing into Apple and Google was actually higher than the amount paid to the developers. That's because both tech giants take a 30% cut of the revenue generated by paid apps. Apple's cut, also known as the "Apple Tax," has led the Justice Department to launch an anti-trust investigation into Apple and the App Store. Google allows users to sideload apps on Android, something Apple doesn't allow and explains why it is Apple's app storefront that is being looked at for possible antitrust violations.
Reuters is reporting today that some iOS app developers have been brought in for questioning by DOJ officials. The CEO of app developer Mobicip, Suren Ramasubbu, told Reuters that he spoke with the Justice Department about Apple back in November. The company's app, which allows parents to control what their kid can see on an iPhone, was temporarily removed from the App Store last November because Apple said that it didn't meet its requirements. The app currently has over 1 million users. While Apple didn't comment, it referenced a statement on its website that says that apps in the App Store "are held to a high standard for privacy, security, and content."
However, privacy and security are only part of the issue. Music streamer Spotify says that the 30% Apple Tax gives Apple's own Apple Music app an unfair advantage. Spotify has filed a complaint with the European Commission against Apple. And Last year the U.S. Supreme Court ruled 5-4 that a class action suit could proceed against Apple. The plaintiffs allege that Apple's 30% cut forces them to pay more for apps than they would be paying otherwise.
The investigation by the DOJ into Apple is one of four being conducted against four big tech firms including Google, Amazon, and Facebook. Each of the investigations focuses on something different. For example, Google is being looked at for becoming too large and unwieldy while some Republicans have accused it of suppressing conservatives online. Attorney General William Barr has previously said that he would have all of the investigations wrapped up by the end of this year.