About two weeks ago, Apple rejected Google’s app for the Google Voice service and ousted from the app store 2 applications, that had been previously approved, from independent developers (link). As is only natural, this has caused quite the scandal across the Internet. Thankfully, in my opinion, the FCC has stepped in to ask for clarification about what happened to lead up to these events (link).
In all of the conversations I have read and listened to, there seems to be a certain agreement that Apple has no “personal” interest in rejecting these apps. And indeed, it makes more sense to think that AT&T is behind this. However, after reflecting about the situation, there is something that bothers me about Apple’s position.
Apple’s relationship with the operator is more intense and sensitive than usual. I would say this is mostly due to the monthly revenue sharing deal they manage to get with the operators. As a result of this, they need to be particularly understanding of the operator’s needs.
Normally, a manufacturer, say Samsung, talks to an operator, e.g. Vodafone, to get them to subsidise and offer their handsets. They agree on an order size and the price. The operator, in return of subsidising the phones, wants to have a little bit of control over what’s on the phone in terms of software and operator branding and, as such, there can be specific (operator) firmware versions that ensure that all is as desired. Once they come to an agreement, that is the end of the transaction.
With Apple, things are different. It has quite a few wishes that need to be met. In the first place, Apple wants the iPhone to be subsidised by the operator; it needs to be sold with a data plan; Apple maintains absolute control over the device and its ecosystem (there is only one version of the firmware); and, lastly, it wants to have a part of the monthly revenue. This is a rather long list. Operators agree to this, because the iPhone:
- manages to persuade people to switch operators like no other handset (very welcome in a mature market);
- it creates an incredible amount of loyalty (reduces churn) to the handset (and indirectly the operator);
- and last, but no least, the iPhone can only be obtained through the operator (it is not available unlocked).
Of course, the iPhone benefits the operator – otherwise they wouldn’t agree to this – but unlike a “normal” manufacturer-operator relationship, the power that Apple has in the relationship is great. They decide what goes on the iPhone and receive income throughout the contract duration for every iPhone sold. This is rather unusual. As a consequence, and in order guarantee the influx on money – Apple is in the money making business – it will have to be somewhat sensitive to the operator’s situation, which may mean blocking access to the app store of applications that may hurt the operators.
Consequently, I don’t think we can just blame AT&T for rejecting the Google Voice app. Apple is making a lot of money through them, but money does not come cheap. Sometimes it may need to harm the end user. I think Apple has gone too far.