Elon vs. Apple: App Store fees are back in the spotlight

11/29/22 7:00PM

Elon Musk is in another fight — this time with Apple.

Earlier this week, Musk tweeted that Apple had “threatened to withhold Twitter from its App Store”, unleashing a tirade of tweets criticizing the company for inconsistent “censorship” and building on previous complaints about Apple’s App Store fees, which he has called “a 30% tax on the internet”.

Screenshots seen by Platformer show that weekly advertising bookings in Twitter’s EMEA region are down 49% — hastening the need for Twitter to shift their revenue towards subscriptions. The problem for Musk is that subscriptions will incur Apple’s App Store fee.

‍Appy families

‍Musk’s comments put Apple’s “in-app purchase” policy, in which it takes a 15-30% cut of digital purchases from App Store apps, back in the spotlight. As the Apple ecosystem has grown, the App Store has been a remarkable marketplace for app developers to reach the 1.2bn+iPhone users — and its earned Apple a fortune in the process.

Figures from Analysis Group, endorsed by Apple, show that some ~$86bn is estimated to have been made by developers in 2021, with Apple’s cut of that likely towards the top end of the $13-26bn range. The iPhone maker claims to use this to cover costs in reviewing apps, in order to protect consumers, but the lack of alternatives for developers has led to calls of anticompetitive practices.

‍Epic, maker of Fortnite, has already done battle with Apple on these grounds. Though the judge ruled largely in favor of Apple, finding that they did protect customers, Apple was required to allow developers to link customers to their own payment systems.

Musk’s plan if this feud escalates — “make an alternative phone”.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.