Wednesday, February 02, 2011

eBooks on iOS: Apple slits its own throat, shoots self in foot

Yesterday, Sony reported that an eBook reader app that it submitted to Apple for inclusion in the iOS App Store was rejected because it didn't sell eBooks through the app. There was a great deal of discussion and confusion about the situation--some people thought that Sony had simply misinterpreted Apple's existing rules, while others thought that Apple had changed the rules.

Ars Technica is now reporting that Apple has indeed changed the rules, in a way that makes it effectively impossible for anyone except Apple to make any money selling eBooks for the iPhone and iPad. Update: The Wall Street Journal has reported that Apple will enforce the new rules described below effective March 31st. No new eBook or eMagazine apps will be accepted without an in-app purchasing capability, and presumably, any update of an existing app that doesn't include this feature will be rejected.

Here are the new rules as I understand them:
  • If you sell content from outside an iOS app to be used in that app, you must enable purchases from within the app. That means that Apple gets 30% of any sale.
  • If you sell content from your website that you then distribute to an iOS device to be used within an app, that app must also allow in-app purchases.
Let's take Amazon's Kindle Store and app as examples. Today, you can select a title to purchase from within the Kindle app, but the app opens a Safari browser window and takes you to the Amazon website to complete the purchase. That approach would only be allowed if Amazon also allows users to purchase the title directly within the Kindle app. However, Apple would take 30% of the sale price for the in-app purchase. You can also go to the Amazon website on your PC, select a title from the Kindle Store and tell Amazon to send it directly to your iPad or iPhone. Under Apple's new rules, that would be prohibited unless the Kindle iOS app allows in-app purchases.

There are still ways around this; eBook vendors could price titles 30% higher in their iOS apps, and offer a link to their websites that would price them normally. However, many consumers could end up spending 30% more than they should, and every eBook vendor will have to rewrite their iOS apps.

This is an anti-consumer and anti-competitive move by Apple, to say the least. It's equivalent to Microsoft saying that every Windows eCommerce application that downloads content or software has to be processed through Microsoft's own order processing system, and that Microsoft will get 30% of every transaction.

In addition, Apple is killing the viability of its iPhone and iPad as eBook readers at exactly the same time that Android is outselling iOS smartphones and Android 3.0-based tablets are coming to market. If I'm interpreting Apple's move properly, it's a greedy, stupid decision that will once again open the company to antitrust investigation. It won't cause any more eBooks to be sold through Apple's failed iBookstore; instead, it will merely clear the path for Android 3.0 and additional Kindle sales.

If this is an example of Tim Cook's decision-making capabilities, Apple is in much worse shape post-Jobs than I (or many people) thought.
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