Apple and Google Want a Chunk of Yak Tack Revenue
Or, how Apple App Store and Google Play policies hurt small businesses like ours.
We’ve been rejected. Twice.
Apple and Google have each rejected the latest update of our mobile app. You see, the update was designed to make it easy for you to unlock unlimited tacks with Google Pay and Apple Pay.
The issue lies in how Google and Apple interpret clauses in their terms of service (Google, Apple), which in a nutshell state if you want to charge for “digital goods,” you have to use their payment processors. We’ve gone back and forth with both Google and Apple arguing we’re not selling a digital good; the Yak Tack subscription alters our algorithm to help people learn more words concurrently. The digital goods (words and their definitions) are always available to everyone, for free.
They see it differently. And they want us to use their payment processors so they can get their cut.
Why this hurts small businesses like ours.
Today, all Yak Tack subscriptions are handled by Stripe (the world’s most valuable private company). Stripe’s transaction fees are reasonable, and we spent a lot of time integrating with them to manage subscriptions securely.
(After Stripe takes its cut, we get ~$4.55 for each annual subscription.)
The beauty of having a single payment processor is that all subscriptions are managed in a single place. And all financial transactions can be reported on from one spot, which is helpful when understanding our P&L.
So when we integrated Apple Pay and Google Pay into the mobile app, we built it in a way that would continue processing all subscriptions through Stripe. We were aware of the battle between Hey and Apple, but we also knew that Google and Apple terms are open for interpretation, and believed our model was different than Hey’s.
But Apple and Google saw it differently, and after messaging with each team individually (Apple engaged with us much more than Google) want us to manage subscriptions through their own payment gateways:
The obvious problem here is that both Google and Apple take a larger cut of the Yak Tack subscription than Stripe does. That eats into our margins.
But the not-so-obvious-and-bigger problem is the added complexity, something we in tech call Total Cost of Ownership (TCO), in maintaining integrations with three payment processors; one for Android (Google In-App Billing), one for the web (Stripe), and one for iOS (Apple In-App Purchases). Each of these systems has its own approach to:
Encrypting payment data.
Communicating with banks to authorize credit cards.
Handling failed subscriptions (e.g. credit card expires).
Maintaining subscribers.
Invoicing.
The TCO, which includes operational overhead and code complexity, really hurts a small business like ours.
So now what?
Well, we’re not sure. One option is to simply leave our web-based subscription option as the only subscription option. But with 90% of our traffic being Android- or iOS-based this really hurts our ability to help people unlock unlimited tacks; most of you aren’t on the web.
Another is to hope lawsuits between Epic and Google/Apple play out in a way that benefits small businesses like ours.
And a third is to bet on Stripe working out a partnership with Apple and Google to allow mobile developers to process in-app-purchases through them, instead of Apple and Google’s gateways.