Apple Learns The Perils of Gatekeeping

With Great Power Comes Great Responsibility, and an Administrative Headache

By James Turner
May 4, 2009 | Comments: 15

It hasn't been a good year for Apple's iPhone App Store. Child welfare advocates threw a fit over the notorious Baby Shaker application. App Store developers started to complain about slow payment of royalties from Apple. The ubiquity of iPhone flatulence applications became a running joke. And now comes word that popular industial rockers Nine Inch Nails have had their iPhone app turned down, because of naughty language.

iphone-nin.pngWhich all leads to the question: Why is Apple in the business of selling iPhone applications anyway? Although best known as an operating system and hardware vendor, Apple does sell a few applications such as iLife, Final Cut, and Aperture. But by and large, they have let Mac developers do as they will as far as delivering applications. You don't need Apple's permission to run Illustrator on your Mac, or Halo for that matter, a product of the dreaded Microsoft. Nor do they ask for a cut of the action from the sale of Mac software. So, what's different about the iPhone?

One possible answer is that Apple needs to gate-keep iPhone applications because otherwise they could screw up their deal with AT&T. Notably, if anyone could produce iPhone apps without review by Apple, there would immediately be "tethering" applications for the iPhone, that let you use your iPhone as a 3G gateway for your laptop. This is something AT&T definitely doesn't want, because they'd much prefer you to purchase a USB 3G dongle with the accompanying data plan, and pocket another $40-60 of your cash a month.

Unfortunately, this deal with the devil comes with a lot of baggage. For example, because Apple needs to have total control over what applications are installed on the iPhone, they can't permit Adobe Flash to run on the phone, since once you can run Flash, you can run any program written in Flash. But, more insidiously, it means that Apple becomes "responsible" for all the applications in the store. This is the old trap that common carriers and forum operators ran up against. As long as you don't look at anything that anyone posts or transmits through your system, you can make the argument that you're not responsible for the content. But if you start to pick and choose, you have to answer for all of it.

And that's Apple's headache in a nutshell. Once you start gatekeeping to keep out one type of application, you become responsible for the entire shebang. And with the volume of iPhone apps being churned out, there's probably not enough resources to do it properly. As a result, things are slipping through (like shaking babies), and things are being arbitrarily banned (note to Apple, the NiN songs you're banning from the App Store are purchasable via iTunes, so make up your mind!)

Google's Android avoids this problem because they have not tied themselves exclusively to one carrier. In fact, they haven't even tied themselves to a specific hardware platform. As a result, they can be a pure cell phone operating system player, rather than having to do the bidding of their carrier masters.

And if you're thinking that a rumored deal between Apple and Verizon would improve the situation, think again. Verizon is as jealously protective of their revenue as AT&T, as previous debacles with disabled Bluetooth profiles in Palm smart-phones can attest.


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15 Comments

Apple's in the business of being a middleman for iPhone (and iPod Touch) software because it's a good business to be in -- for them, their vendors, and their customers.

The vast number of low-cost applications enhances the value of the iPhone and the iPod; Apple is currently noting that value proposition in their storefronts. Given the diversity of applications, it's inevitable that some apps will be released that shouldn't be; it's also inevitable that some apps will be banned that should be released. All of this will sort itself out over time. The problems that are mentioned are rather trivial; I'd rate the App Store at least a B+. For something that has grown from nothing to over a billion downloads in only 9 months, it's pretty darn impressive.

Apple does have contractual agreements with AT&T and other carriers; they will limit the availability of unmetered "tether" applications. The far more important reason for having a gatekeeper on the software is to control "bad" software from creeping onto the platform. Apple has both firewalls between applications and functionality to remotely deactivate any application that goes "rogue" in the field. Anyone who has struggled with crashing Treos from 3rd party apps can appreciate that effort. Finally, any iPhone user can "jailbreak" their phone and download any apps they wish.

Ultimately, the marketplace will decide which of these phones/stores are the best one. I think it's pretty neat that customers have a variety of options to choose from.

It hasn't been a good year for Apple's iPhone App Store. Child welfare advocates threw a fit over the notorious Baby Shaker application. App Store developers started to complain about slow payment of royalties from Apple. The ubiquity of iPhone flatulence applications became a running joke. And now comes word that popular industial rockers Nine Inch Nails have had their iPhone app turned down, because of naughty language.

One billion apps sold. A runway success.

And it hasn't been a good year because the "fart apps became a running joke"?

I have a bridge in Brooklyn yo might be interested in.

Hmm... I would agree that because of the carrier's (some would say unfair) terms, Apple does need to regulate the App store to some extent. However, the extent of regulation currently is a little much. Banning explicit language in apps seems a little ridiculous. Maybe Apple should have required AT&T to sell the iPhone with a data plan of some worth so that tethering would not have been quite an issue. Solutions like that would probably be much more appreciated.

While it has a cost, "responsibility" for the content of the store has proven highly profitable. They have managed to get thousands of developers to work on spec and share revenue while maintaining a perception that the iTunes store is "safe" for those customers who are worried about what might be seen, heard or read there. As an early adopter-facing business, Apple has beaten everyone in several industries by focusing on standardization of format, functionality and content sold. Sure, the strategy has some shortcomings, including their getting blamed for the vapid stuff on the site and the occasional prudishness over risque content.

They could create an "adults-only" rating, just as the video games industry has, to allow a broader range of content, which would merely be window-dressing the fact that the company has no interest in freedom of expression, only in a profit.

The real problem is that this is another example of a channel that serves its owner's needs before that of the users. Same old media, new owner.

I think the main reason Apple is pushing the appstore is because it makes it hard for end users to switch to another cell phone provider.

If a user has bought 50$ worth of apps for their iPhone, they can't switch to another cell phone provider, since their apps won't work on any other phone.

It's the same thing that's made it hard for iPod users to switch to any other device, since all the music they purchased in iTunes couldn't be taken to another MP3 player.

Apple learned from Microsoft that users don't like change, and the more invested they get in a platform, either in applications or content (ie mp3s), the more likely they are to never switch, ever. No matter what the cost!

That's also why they're driving the price of all appstore apps down to a dollar, since it makes it easier for end users to get more apps on their device, thereby increasing the emotional investment they have for their apps, and ultimately their iPhone.

@ Brad Parks-Sure that is true,but its also very sensible from a business point of view. inkasso

"It hasn't been a good year for Apple's iPhone App Store."


Which planet do you live on?

You are talking way to positive about Android here. After all you need a signature to install them on non-SDK Android phones just like iPhones.

Besides that, I cant imagine my iPhone beeing as usefull as it is for me without a Jailbreak. And I somewhat suspect Apple is quite aware of that.

Bernd

Uh, let's see...1 billion apps sold in the App Store. Yeah, I would say that TOTALLY equates to a bad year for Apple.

Seriously? SERIOUSLY? Like Dick Applebaum said, what planet do you live on?

Is there an echo in here?

Yes, Apple has sold a lot of apps in the App store. Although with a good many free, "selling" a billion apps may not be such a big deal. I'd like to see a breakdown of how many actually involved money changing hands.

But I was referring to the public relations side of things. It has not been a good year for Apple on that front.

James

http://www.geek.com/articles/mobile/analysis-app-store-now-1-million-a-day-business-cloud-mobile-apps-the-next-big-thing-20090424/ is a good commentary about the financial dynamics of the app store. The points there are noteworthy:

1. There are currently ~37M iPhone + iPod Touch devices.
2. The app store is getting approximately $M/day in revenue.
3. Expenses of hosting the app store are high, but economies of scale will continue to drive those down as a percentage of revenue over time.
4. The success of the app store -- 1B downloads -- helps market the iPhone and iPod Touch.
5. There are new opportunities for revenue that will be coming online this year.

You have ignored the upside of the free apps in the store: Apple will allow developers to distribute their apps for free, and they charge neither the developers nor the customers a penny for distributing those apps. What a tremendous PR move for developers! Among other things, it allows them to distribute "trial" versions of their paid software and get the word out. What a tremendous PR move for customers! Many of those apps are tremendously useful. If you want to be "fair and balanced" in your opinion, you should report on those positive aspects of free apps.

You missed the one app rejection that I thought was the real black eye: Apple's failure to approve the app "Podcaster" for the iTunes Store. That seemed to be a mistake; Apple seemed to be rejecting because it was competition for iTunes. Apple has fixed that; Podcaster (now called RSS Player) is now available on the App Store.

Apple is apparently putting in an infrastructure to deal with obscene lyrics. IMHO, it's unrealistic to expect that all of this would have been in place on Day One of the app store.

Despite what several people have said here, you insist that this has not been a good year for Apple on the public relations side of things. What is your standard for a good year? Do you think they should be getting no complaints over what apps they accept or reject? Do you have any tolerance for them making mistakes in growing the App Store from nothing to 1B apps in nine months?

What numbers do you have to back up your position?

Oops. That was $1M/day in revenue for the App Store.

Apple's is a gatekeeper because there is yet not a consensus as to whether cell phones should have application freedom or not. If your computer crashes, you can curse it all you want and then lose some hours of computer-related work. If you installed a bad app on your cell phone, you could lose its functionality when you need it the most or simply wind up with a brick in your hands. Then, you would have to go to customer service and flood the Genius Bar or the AT&T offices because your phone is dead and you have no idea what's going on.

So the tradeoff between getting some heat for their unpopular app filtering and having pretty stable phones is helping Apple sell more of them. Down the road, they will finally decide to keep the restrictions or loosen them.

"rather than having to do the bidding of their carrier masters..."

are you kidding? you seem to imply that AT&T is the master and Apple is at AT&T's mercy. i'm surprised you can't tell who the boss is in that relationship.

when Apple embarked on a retail strategy, all magazine pundits are predicting dooms-day for Apple. now, someone is suggesting that Apple's App Store is not a good idea (or off to a shaky start at best). hmm...

Why a group like NIN doesn't start removing their catalog to the iTunes Store. A war is a war.

And i don't believe that Apple have to manage the application they sell to the AppStore. It is againt liberty of expression. Yes a software is kind of expression. And if Apple didn't approve the software the blame for an application like the Baby Shaker weren't to Apple but to the sole of the creator of that app. Like any market in the world. I believe the problem is with AT&T. Apple need a parter to start making that phone. This is were the problem come , i believe. Hope the pressure and government inspection about those new market rectify that problem.

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