updated 02:25 pm EST, Wed February 23, 2011
Apple justifies in-app subscriptions at meeting
Apple during its shareholder meeting on Wednesday was put on the defensive and asked to justify its toughened in-app subscription rules. The company insisted it had to maintain the 30 percent cut since the App Store was run at "break even." Google's claimed advantage with One Pass was deceptive as the more favorable 10 percent cut only affected web subscriptions; Android subscriptions and in-app purchases still faced a 30 percent cut, Apple insisted.
The claim was false, as Google in describing One Pass has explicitly said it "offers payments in mobile apps" for platforms in which a subscription was allowed to take place outside of its respective app store. Apple's new rules prevent companies from having a subscription outside of the iTunes App Store without having one inside at similar pricing, but Android has no such restrictions.
Apple did stress that it wasn't requiring a revenue split for existing subscribers, but all new ones would have to abide by the new rules.
The company has drawn criticism for the strategy since the terms in many cases aren't considered economically feasible. Some subscription services don't have room for a 30 percent cut and, due to Apple's no-better-price rule, can't raise the price in the App Store while keeping the same price as before elsewhere. Its rules would also effectively ban free access to a digital edition as a reward for a print subscription. Officials are already in an early investigation of the rules for possible anti-competitive practices.
Apple has previously contended that it was unfair that it didn't get a cut of subscriptions passing through the store. It further argued that the iTunes in-app system would give users an easier solution.