Today’s consumers now spend more time in apps than ever before — even topping the time they spend watching TV, in some cases. The average American watches 3.1 hours of TV per day, for example, but in 2021, they spent 4.1 hours on their mobile device. And they’re not even the world’s heaviest mobile users. In markets like Brazil, Indonesia and South Korea, users surpassed five hours per day in mobile apps in 2021.
This Week in Apps is a weekly TechCrunch series that recaps the latest in mobile OS news, mobile apps, and the overall app economy. According to the most recent year-end reports, the app industry will continue to grow, with a record number of downloads and consumer spending across both the iOS and Google Play stores combined in 2021. In 2021, global spending on iOS, Google Play, and third-party Android app stores in China is expected to increase 19% to $170 billion. App downloads increased by 5% to 230 billion in 2021, while mobile ad spend increased by 23% year on year to $295 billion.
Apps aren’t just a way to pass idle hours, either. They can grow to become huge businesses. In 2021, 233 apps and games generated over $100 million in consumer spend, and 13 topped $1 billion in revenue. This was up 20% from 2020, when 193 apps and games topped $100 million in annual consumer spend, and just eight apps topped $1 billion. This Week in Apps offers a way to keep up with this fast-moving industry in one place, with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps to try, too.
One, is that this isn’t a way for developers to avoid Google’s commission. Instead, Spotify and Google negotiated a deal that Spotify has deemed “fair” — but neither party will share the terms. For context, Google Play’s commissions today range from 15% to 30%. And when Google opened up to third-party billing in South Korea, it only dropped commissions by 4%, arguing that it was still providing a host of other platform services that it needs to charge for. Presumably, Spotify has managed to get itself a steeper cut. But the lack of transparency around these deals is unfair to the wider app developer community, which has a right to know where the boundaries are and how they’re being determined. For what it’s worth, Epic Games is not on board with this strategy.
Do you want This Week in Apps in your inbox every Saturday? Sign up here: techcrunch.com/newsletters. There is no bigger news in the world of apps this week than that of Google’s announcement that it would begin to pilot a third-party billing system in various markets. To be clear, this is only a pilot program for the time being. And Google so far has only announced one partner: app store agitator and noted critic, Spotify. But ultimately, Spotify says it aims to roll out this third-party billing option in all markets where it sells Spotify Premium, which is 184 worldwide markets.
Another thing to note is this new system isn’t yet finalized. It’s still to be determined how this will appear in the Spotify app’s user interface or how users will go about tracking, managing and canceling subscriptions billed outside the Play Store. Will they have to go to the website through an in-app browser? Can they toggle them on and off right inside the native app? Will Spotify be able to market lower-cost subscriptions to those currently paying through Google Play billing inside the app? We’ll have to wait and see.
And while Spotify was touting the worldwide rollout of third-party billing on its app after the tests complete, Google took issue with any dubbing of this system as “global” from the get-go. (No really, we got emails.) Google said it’s starting with “select markets” and those exact regions haven’t been determined at this point. While that may be, it’s definitely worth noting this is not a U.S.-only project, in either of the companies’ opinions.
News of the pilot, which signals Google will begin a process to reduce its commissions further, could also increase the pressure on Apple to do the same. With this launch, Apple can no longer point to the other major global mobile app store and argue that the two are basically in line with regard to their commission structure. It’s a wonder Apple has let this battle go on for so long. The fight over commissions has painted Apple in a bad light, soured developer relations and hurt consumers who have to pay higher prices when developers up the cost of in-app purchases to cover Apple’s cut. Apple makes billions from its App Store, but it’s fighting this battle as if reducing commissions or allowing alternative payments would be the end of its business. (Can someone remind Apple it’s like, super rich?)
Besides, not all consumers would even opt for the alternative billing option, even if it were to be permitted, because it’s simply more convenient to use Apple Pay and manage subscriptions in one place inside the App Store. Plus, why can’t Apple find other ways to increase revenues to help make up for lost commission across its App Store operation? Maybe by expanding its enterprise program? Or by offering different service tiers to developers — like those that provided developers with a more direct relationship or better support from the App Store Review team? Or perhaps by giving them options to pay for more frequent expedited reviews throughout the year? After all, these are problems developers already complain about — the randomness and arbitrary nature of App Store rejections and the sometimes prolonged app review process that results.
Apple is very secretive about its App Store revenue — it doesn’t break it out in earnings from other services. And Phil Schiller, who runs the App Store, pretended not to know if Apple’s app marketplace was profitable when questioned in the Epic antitrust trial. (“It doesn’t come up,” he said!) But court testimony indicated Apple’s App Store profit margin was 78% in 2019. And the multibillion-dollar operation had a record year in 2021, paying out $60 billion to developers after it took its commissions. There had been room for Apple to give a little — or even a lot — to build a better App Store and get ahead of the coming regulations without all this drama. Instead, it’s fought so hard against the tidal wave of changes, it may now have to introduce sideloading, alternative billing and third-party app stores if EU regulators get their way.