Benchmark’s Bill Gurley said Tuesday that Apple set itself up for trouble years ago when it implemented its 30% take of in-app purchases, a figure that’s been under increased scrutiny.
“I’d always rather see a company have a lower rake and have a very long sustainable future, and I felt the 30% number was so high and so egregious that you were going to set yourself up for the exact type difficulty you’re having right now,” Gurley, who led the firm’s investments in companies such as GrubHub and Zillow, said in an interview on CNBC’s TechCheck.
Apple has for years taken 30% from purchases of software or digital goods from apps distributed through the App Store. But developers have alleged that Apple’s App Store platform is unfair to smaller companies, and last year Apple lowered the commission to 15% for apps with less than $1 million in annual net sales on its platform. Most recently, Epic Games sued Apple and argued in court that the company’s App Store is anti-competitive.
Apple has denied the allegations and has said it “does not have a dominant market share in any category where we do business.” In response to the suit, Apple is arguing that it built the App Store and gets to set the rules, which are designed to ensure that apps are high-quality and secure.
“I think it was a bad decision back then and hard to recover from. I think they’d probably be best off just picking something like 10[%] and taking it down for everybody,” Gurley said.
Still, it’s an issue that could have been avoided, Gurley said.
“If you had started with a lower rake and being kind of fair across the board, you don’t end up in this mess,” Gurley said.
The tech investor has long said that Apple has taken too much, criticizing the company in a 2013 blog post called “A Rake Too Far: Optimal Platform Pricing Strategy.”
“Most venture capitalists encourage entrepreneurs to price-maximize, to extract as much rent as they possibly can from their ecosystem on each transaction. This is likely short-sighted. There is a big difference between what you can extract versus what you should extract. Water runs downhill,” Gurley wrote in 2013.
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