Apple and Google's mobile platform tax

Techcrunch recently reported that Netflix is bypassing its in app payment mechanism to counteract the 30% platform tax that Google and Apple charge its developers.

I’ve seen this happen in a larger number of mobile applications over the years, but the pullback from one of the biggest top grossing developers in the app store is a clear sign that this trend is going to affect the biggest revenue generating apps. It’s a sign that the largest developers hate paying for very simple payment processing services that Apple and Google “make easy”.

There are a couple of options that Apple and Google can do:

• get rid of the platform fees – this is the “friendliest” thing that the platforms can do and probably has a long term benefit of attracting the best developers. It will obviously ruin short term financial performance of the platforms, but ultimately developers will remain loyal.
• adjust the pricing – insert a cap or lower the tax (or some combination) can keep the customer wanting to use the in app payment system.
• ban customers who don’t pay the tax – this is definitely the “unfriendly” route but can be strong enough to force developers who need distribution that they need to abide by the rules.

Google’s mantra “don’t be evil” should push platforms to move in the direction of getting rid of the platform fees and finding other ways of making money. If Google does that, it’s almost certain that Apple will need to do something similar.

In my opinion, any pricing model that looks like a “tax” eventually shuts down. Nobody likes taxes. It’ll be interesting to see how Apple and Google respond to this kind of boycott.