Shortly after Basecamp debuted its email service, HEY, it says its next iOS app update was rejected because Apple wasn't getting its cut of subscription revenue

Right around the time the team at Basecamp was launching their Hey email service to the public on Monday, Zach Waugh …

Protocol 2020-06-17 David Pierce

Context & Ripple Effects

Basecamp launched HEY as a $99/year email service on Monday; by the time its first iOS update came up for review, Apple had rejected it because the subscription was sold outside the App Store, cutting Apple out of its revenue share. The standoff escalated fast: Apple also rejected Basecamp's appeal, insisting an email app must work without a paid subscription and suggesting HEY either add in-app purchases or reconfigure itself as a plain IMAP/POP client.

The fight matters because it is the clearest early test of whether Apple will enforce its 30% take on services whose real product lives on the web, not in the store — and because the resolution pattern (a temporary approval buying time, then a negotiated update) shows both sides searching for a face-saving middle rather than a rule change.

First-order effects

Basecamp's iOS launch is held hostage mid-launch: without the approved update, new subscribers who signed up on the web can't get a functioning iPhone app at the moment of maximum attention.
Apple's review team forces a binary on Basecamp — pay the IAP cut or demote HEY to a free IMAP client — turning a product decision into a distribution-fee negotiation.

Second-order effects

Other subscription-first developers watching this dispute now know Apple will enforce the cut even on apps whose signup happens entirely off-device, raising the effective cost of web-funnel pricing for every App Store publisher.
Apple's demand that email apps function free pushes Basecamp toward a freemium tier it never planned, changing HEY's unit economics and positioning against incumbent free mail clients.

Third-order effects

If enforcement of the subscription rule becomes routine, services priced and sold on the web face a structural choice between paying the platform tax and building degraded store clients — pressure that feeds directly into the developer backlash and regulatory scrutiny of App Store fees.

The trend: App platforms are colliding with web-native subscription businesses over who collects revenue, making app-store fee rules the next front in platform regulation.

Discussion

@dhh @dhh on x
Wow. I'm literally stunned. Apple just doubled down on their rejection of HEY's ability to provide bug fixes and new features, unless we submit to their outrageous demand of 15-30% of our revenue. Even worse: We're told that unless we comply, they'll REMOVE THE APP.
@dhh @dhh on x
There is no chance in bloody hell that we're going to pay Apple's ransom. I will burn this house down myself, before I let gangsters like that spin it for spoils. This is profoundly, perversely abusive and unfair.
@dhh @dhh on x
But this is preposterously false and inconsistent. The Basecamp app has been in the App Store for YEARS offering access to a subscription bought elsewhere. The store is FULL of apps doing just that. Even other email apps! A few examples we compiled: https://twitter.com/...
@pierce David Pierce on x
I just updated my story with comment from Apple, which said it shouldn't have allowed Hey into the App Store in the first place https://www.protocol.com/... https://twitter.com/...
@dhh @dhh on x
Like any good mafioso, they paid us a visit by phone. Stating that, firstly, that smashing our windows (by denying us the ability to fix bugs) was not a mistake. Then, without even as much of a curtesy euphemism, said they'd burn down our store (remove our app!), lest we paid up.
@timsweeneyepic Tim Sweeney on x
Here Apple speaks of a level playing field. To me, this means: All iOS developers are free to process payments directly, all users are free to install software from any source. In this endeavor, Epic won't seek nor accept a special deal just for ourselves. https://www.washingtonp…
@mgsiegler M.G. Siegler on x
Between the new GIGANTIC Meet Bar in mobile Gmail and Apple's ridiculous shakedown of the new Hey email service, it's enough to make anyone want to quit email :)
@maxlynch Max Lynch on x
So maybe Apple fanboys are now realizing why we consider PWAs so damn important? It's about so much more than technology.
@stroughtonsmith Steve Troughton-Smith on x
Narrator: it wasn't an accident. Apple has a position of power it can't help but push to and beyond its limits, because they think it's their platform, their store. Thus far, nobody has given them real reason to think otherwise. Without threat of consequences, they abuse https://…
@benthompson Ben Thompson on x
I have now heard from multiple developers, both big and small, that over the last few months Apple has been refusing to update their app unless their SaaS service adds in-app purchase. If this has happened to you please email me blog @ my site domain. 100% off the record.
@futurepaul Paul Miller on x
Apple would rather have control than solve messaging between iOS / Android. Apple would rather have control than let you run whatever software you choose. Apple would rather have control than let you run its software on whatever hardware you choose.
@futurepaul Paul Miller on x
Apple doesn't want my money and I love not giving it to them. I can't believe how many stupid years I spent buying Audible books in a mobile browser like a peasant because Apple would rather have control than offer a good user experience.
@dhh @dhh on x
We keep trying to find logic, consistency in Apple's App Store decisions. What's different about Fastmail? Why not Gmail? Outlook? But it's looking at the question the wrong way. The answer is much more basic: power. Apple can do what they want, when they want, so they do.
@dhh @dhh on x
This is how we plan to pay down the mortgage required to acquire https://hey.com/ 🤑😂 https://twitter.com/...
@mattyglesias Matthew Yglesias on x
This seems both really bad and also very possibly something there isn't an antitrust remedy for under existing law (in America ... Europe is different). https://twitter.com/...
@willoremus Will Oremus on x
The makers of the new HEY email app say Apple is shaking them down for a cut of subscription revenue: https://www.protocol.com/... I recently wrote in depth about how Apple acts like a monopoly, and why there's a strong case for antitrust action against it: https://onezero.medium…
@dhh @dhh on x
Here's the rejection letter. I love how they frame their shakedown as “offer customers the option”. Not a single mention of the fact that Apple will take 15-30% of our business through this. THIS IS ALL JUST FOR THE CONSUMER GOOD, YOU SEE. https://twitter.com/...
@bzamayo Benjamin Mayo on x
Okay maybe I gave Apple too much credit here. This ‘business app’ distinction isn't written in the guidelines and is stupidly subjective. https://twitter.com/... https://twitter.com/...
@benthompson Ben Thompson on x
Welcome @basecamp to the “Actually Apple's App Store is by far the biggest antitrust problem in tech” coalition! It has been an at-times lonely 7 years, but all are welcome. https://twitter.com/...
@virtualgoodz Simon Dawlat on x
Marketing 101, a lesson. → Build product → Pick high-profile bully (everyone love to hate Apple) → Create predictable fight → Take loud stance → PR-PR-PR → Ideologically-motivated customers. →Traction/sales. Disingenuous but brilliantly executed. https://twitter.com/...
@jsusek John Susek on x
@SpencerDailey @dhh @chrismessina @audible_com I really wish @dhh were using a more nuanced argument right now by acknowledging the existence of these “Reader” apps and pushing for that policy to apply to *all* apps.
@alexhern Alex Hern on x
This is total bullshit and every one of Apple's arguments that it isn't are themselves total bullshit https://www.protocol.com/...
@amyhoy @amyhoy on x
relevant reporting on the app store dustup w/ hey — also comment underneath this tweet point out that apple makes no such distinction between consumer and biz audiences in their agreement (as if that would work anyway) https://twitter.com/...
@benthompson Ben Thompson on x
UPDATE: I have made this 2018 Daily Update that expressly addresses many of the arguments that what Apple is doing isn't rent collecting free for anyone to access (no subscription required) https://stratechery.com/...
@dhh @dhh on x
This is scary. Apple is doubling down on the threat to forcefully remove us from the App Store, unless we pay the ransom. If you think you might ever want to use HEY, you might want to download the app now. HOW IS THIS HAPPENING?! 😩💔😱 https://twitter.com/...
@briannawu Brianna Wu on x
This sure seems like grounds for an anti-competition lawsuit. Apple is rejecting Hey from the App Store unless they give up 30 percent of the revenue. I pay for Gmail through Google's website, and Apple doesn't demand a cut if I use their iOS app. So why is Hey asked to? https://…
@lazerwalker Em Lazer-Walker on x
Apple's rules have always been selectively enforced. I once had an app rejected for having “not enough features”. I added a “rate the app” prompt and they approved it. It's also clear that making a stink on Twitter doesn't matter. Nothing's changing unless the gov steps in. https…
@alecstapp @alecstapp on x
“Apple has a monopoly on iOS apps” is not the slam dunk antitrust argument many people think it is
@shl Sahil Lavingia on x
Apple's 30% is probably the main thing holding back the creator economy. https://twitter.com/...
@gruber John Gruber on x
@thecoldriver @dhh If that was the case, Apple would have told them they objected to that sentence over the phone. And it clearly is a pain!
@dhh @dhh on x
@chrismessina @audible_com THERE'S NO SUBS AT ALL IN HEY FOR iOS! No billing, no signups, no nothing. It's a you-have-to-login-to-existing-account- to-continue app, just like Netflix or a million other services that have a free iOS app.
@kantrowitz Alex Kantrowitz on x
As I write Always Day One, you can grow a company in two ways: 1) Milk your assets 2) Build new ones. Apple's culture ensures ideas for new products don't move across the company. So it lives in Category 1: Squeezing money out of iPhone just as Microsoft did with Windows. https:/…
@sarthakgh Sar Haribhakti on x
We need this but for whether Apple will approve paid apps without in-app payment option https://twitter.com/... https://twitter.com/...
@firstadopter Tae Kim on x
The Protocol story is eye-opening: “Waugh was told that Apple would like a commitment and a timeline for implementing the payment system, or Apple might be forced to remove Hey from the App Store entirely.” https://www.protocol.com/...
@themacalope The Macalope on x
People seem to believe I think Apple can do no wrong. For the record, this is Apple doing wrong. https://www.protocol.com/...
@protocol @protocol on x
Jason Fried and David Heinemeier Hansson spent two decades telling anyone who would listen that remote work really could work. Now that a pandemic proved them right, they're shouting about email instead. https://www.protocol.com/...
@fmanjoo Farhad Manjoo on x
it's weird how they go to the troubled to create rules that are also completely arbitrary https://twitter.com/...
@nickstatt Nick Statt on x
Seems like a bad idea for Apple to pick a fight with @basecamp and @dhh over an inconsistently applied App Store rule for a relatively niche, new email service just a week before WWDC and on the same day as an EU antitrust investigation getting announced. https://www.theverge.com…
@snazzyq Quinn Nelson on x
Not only is the App Store clearly an anti-trust issue that needs to be investigated but Apple's own inconsistency in moderation is wildly frustrating, economically damaging, and downright cruel. https://twitter.com/...
@stroughtonsmith Steve Troughton-Smith on x
The 'it's Apple's store, they can set the rules' argument would be totally fine if iOS was just one player in a wider market. But as @dhh says, if you're not on Apple's platforms, you may as well not exist. They control the future of software, unregulated, and they know it
@benthompson Ben Thompson on x
Multiple emails, several of which will only communicate via Signal. I'm of course happy to do that, but also think it is striking just how scary it is to even talk about the App Store.
@akitaonrails @akitaonrails on x
Yep, one of the reasons I left the Apple ecosystem years ago and never looked back. It's acting more and more like Microsoft in the late 90's. https://twitter.com/...
@jasonfried Jason Fried on x
Apple's pirate flag used to mean rebellion. Now it just means looting. https://twitter.com/... https://twitter.com/...
@nbashaw Nathan Baschez on x
Apparently Apple allows “business” and “reader” apps to not use IAP but not anything else. What is the justification for those exemptions but not consumer software? https://twitter.com/...
@dhh @dhh on x
It's the same trap Microsoft fell into in the late 90s. Being predatory was just too easy, with too few consequences, so it became the default mode. Apple 2020 smells a lot like Microsoft 1998. But MS became better. Fresh leadership, fresh ideas, STILL WORTH A TRILLION!
@backlon Dieter Bohn on x
Apple's subscription policies are like the No True Scotsman fallacy only instead of it being a fun philosophy exercise it's taking money away from new businesses using monopoly power over a platform. https://twitter.com/...
@jdeamattson Jordan Dea-Mattson on x
Spent 13 years working at Apple. Poured my life into it. Disgusted by what I am seeing here. @tim_cook https://twitter.com/...
@reneritchie Rene Ritchie on x
How would you handle current App Store complaints? - Give up all rev-share, turn it into a loss-leader to fuel hardware sales? - Give up security concerns, allow side-loading from alt stores? - Keep App Store as is, divest all competing products/services? - Something else?
@reckless Nilay Patel on x
I think ⁦@dhh⁩ is making a strong argument here - but even if you buy Apple's legalistic argument, how is “we made a list of apps that are okay and email apps aren't on it” good for anyone? https://www.theverge.com/...
@pierce David Pierce on x
As for questions like “What if I pay for G Suite on my personal email, isn't that the same thing,” or “What about all the other subscription email services that work kinda the same way,” the answer seems to be https://twitter.com/...
@steven_aquino Steven Aquino on x
I usually don't comment on App Store policy, but here's one re: the Hey brouhaha. Nobody should rush to defend Apple, the $1.5T behemoth. They can and should do better. Yes, it's their platform and their store. That doesn't mean they can antagonize developers. Change policy.
@chrismessina Chris Messina on x
Better grab it before it's pulled or they fall back to Testflight! https://apps.apple.com/... https://twitter.com/...
@benedictevans Benedict Evans on x
I don't think Apple's payment terms are sustainable. But sandboxed apps and curated app stores are changes in the model that are as essential as E2E encryption or open source. /end
@tomwarren Tom Warren on x
I am truly interested in the EU's antitrust investigation into Apple. It's about time they face regulation for their abuses and the toxic environment of fear they've created for developers https://www.theverge.com/...
@dhh @dhh on x
“It appears that Apple obtained a ‘gatekeeper’ role when it comes to the distribution of apps and content to users of Apple's popular devices,” @vestager. Indeed it does, indeed it does. https://ec.europa.eu/...
@mynameismurray Murray Webber on x
@tomwarren Yeah, it's crazy how Apple demands a cut of subscriptions ordered through an app, that Apple didn't develop, and for a subscription Apple doesn't manage. It's crazy wrong. TBH, I'd like to see them be forced to offer user choice of default apps (how about a browser bal…
@harrymccracken Harry McCracken on x
I pay Google outside of the App Store for my Gmail, and am not sure how this is different. https://www.protocol.com/...
@rustyshelf Russell Ivanovic on x
In the lead up to WWDC, Apple would like all developers to know that you need to pay the protection money or GTFO. Or in their own words “Nice business youse gots here, be a shame if...” https://twitter.com/...
@reckless Nilay Patel on x
This is... actually insane. Why get into this war just days before WWDC? https://twitter.com/...
@ws Will on x
so you're telling me vendor lock-in is a... bad thing? https://twitter.com/...
@benthompson Ben Thompson on x
We have now moved into the “genuinely sad” part of this saga where I am learning about apps that have been in the store for years serving the most niche of audiences being held up for what, a few hundred dollars a month?
@jasonfried Jason Fried on x
If you want HEY on your iPhone, even if you don't have an account yet, I would *highly recommend* downloading it right now before Apple decides to pull it because of their predatory, onerous rules —> https://apps.apple.com/...
@caseynewton Casey Newton on x
In hindsight we never should have allowed anyone to compete with us https://twitter.com/...
@brian_henderson @brian_henderson on x
The white elephant in Apple's AppStore approval process. New apps often hit with revenue restrictions by Apple that are allowed on more popular iOS apps. A form of discrimination, as there is no regulation nor 3rd party oversight. https://twitter.com/...
@benedictevans Benedict Evans on x
Just to be really clear: I think is no justification for Apple's policy on Spotify and Kindle. I do think you can make a very strong case for requiring Fortnite to use IAP. And there's a big grey area in the middle.
@5tu Stu Maschwitz on x
How is what @basecamp is doing here any different than Google G Suite, which includes gmail for business. You pay Google for that service, not through Apple, and you download the client app for your device and log in. https://twitter.com/...
@jamesrbuk James Ball on x
This is a weird one: Apple's policy seems unfair, but Hey is a new startup who say they have no business model if they're not on iOS, while trying to deny Apple revenue for that. Both sides will bluster, but it's clearly more a commercial than a moral dispute. https://twitter.com…
@mvolpe Mike Volpe on x
This is not new news. All of the App Store providers (both b2c and b2b) shake companies down like this. Kudos to the team at Hey for being smart enough to turn it into a PR win for them! https://twitter.com/...
@dhh @dhh on x
This certainly does not get any better by the fact that we're technically competing with Apple head-on now. Apple sells email services as part of their iCloud bundle. So not only are they running the only shop in iPhone town, they're also selling their own competing service.
@romaindillet @romaindillet on x
The App Store sucks, but criticizing Apple when you've turned email (a beautiful open protocol!) into a closed platform also sucks 🙄 You can't be an open web and open internet champion and then give up on open protocols. https://www.protocol.com/...
@caseynewton Casey Newton on x
This is not your typical developer hyperbole. Apple's behavior here is truly inexplicable and I imagine it will have implications for the various antitrust investigations now underway https://twitter.com/...
@dhh @dhh on x
Remember the Apple pirate flag? When being a pirate meant being a rebel? Countering the navy, the establishment? Now this flag is a better symbol for Apple plundering small, independent software developers. https://www.businessinsider.com/ ...
@dhh @dhh on x
Yesterday was such a happy day. We've worked so diligently for over two years to make HEY. The press and customer reactions were making me euphoric. To have Apple, of all companies, be the ones to piss in our puree, and ruin that moment, is just personally heartbreaking 💔😩
@dhh @dhh on x
We've been in the App Store with Basecamp for YEARS. We know the game. It was always rigged. It was always customer-hostile, deeply confusing, but the unstated lines were reasonably clear. Now Apple has altered the deal, and all we can do is prey they don't alter it further.
@dhh @dhh on x
On the day the EU announced their investigation into Apple's abusive App Store practices, HEY is subject to those very same capricious, exploitive, and inconsistent policies of shakedown. It's clear they feel embolden to tighten the screws with no fear of regulatory consequences.
@dhh @dhh on x
Apple has been capriciously, inconsistently, and in a few cases, cruelly, enforcing their App Store policies for YEARS. But most of the abuses were suffered by smaller developers without a platform and without recurse. Apple saw that it worked, and that it paid. Now moving up.
@dhh @dhh on x
This is while @RepCicilline is literally preparing another hearing on big tech antitrust where @tim_cook might be asked to appear! While the DOJ is taking to witnesses of App Store abuses! While @vestager and her team is investigating. HOW BRAZEN CAN YOU GET?!
@dhh @dhh on x
This is exactly the issue I gave testimony in front of congress earlier this year! We hadn't yet launched HEY, but I said it worried me, what Apple might do, if you're in direct competition with them. And now we know what they'd do. Attempt to crush us. https://m.signalvnoise.com…
@dhh @dhh on x
It's clear that Apple feel like they're now so far above the trifling concerns of antitrust law that even while under the scrutiny of regulators and justice departments on TWO CONTINENTS, they can still afford to tighten the screws. Gotta make that pivot to services pay!!
@jacknicas Jack Nicas on x
The founders of HEY, the flashy new email app, say Apple threatened to remove their app from iPhones because it couldn't take a 30% cut of sales. Apple effectively competes with HEY. This comes on the day the EU announced it's investigating Apple's power over the App Store. https…
@matthewkeyslive Matthew Keys on x
I love Apple. Their stuff just works. But I hate the tax they impose on developers. https://www.protocol.com/...
@timbray Tim Bray on x
The case for breaking up Big Tech is becoming such a no-brainer. The offerings from Microsoft, Google, Facebook, Apple, and Amazon should come from somewhere between 20 and 100 smaller companies. https://twitter.com/...
@dhh @dhh on x
And frankly, it's hard to see what they have to fear. Who cares if Apple shakes down individual software developers for 30% of their revenue, by threatening to destroy their business? There has been zero consequences so far! Most such companies quietly cave or fail. We won't.
@dhh @dhh on x
But while I'm sure Apple's attempt to cut off the air supply to the likes of @spotify is board-room stuff, I think what we're facing is simply the banality of bureaucracy. Apple has publicly pivoted to services for growth, so KPIs and quarterly targets trickle down.
@ow Owen Williams on x
This is a *bad* look on the exact day that Europe announces an antitrust investigation into Apple's practices, and a good demonstration of why they need to be forced to change this: https://www.protocol.com/...
@shiraovide Shira Ovide on x
“I will spend every dollar that we have or ever make to burn this down until we get to somewhere better.” https://twitter.com/...
@benedictevans Benedict Evans on x
A hill I would die on: curated app stores have been hugely, unambiguously good for users and software developers, and especially for user security and privacy. 1/
@martinsfp Martin Sfp Bryant on x
The Basecamp/Hey thing has driven a conversation about iOS being opened up and Apple's control of the App Store being loosened. That's totally overthinking it. Apple should just charge a lower fee and be consistent about applying clear, transparent rules.
@beirutspring Mustapha Hamoui on x
Bottom line on Apple's behavior with Hey: (from @gruber ) “the distinction is not so much between [..] what is or isn't a “business” app, but between which companies are too big for Apple to push around” https://twitter.com/...
@film_girl Christina Warren on x
Very much agreed with @gruber here https://daringfireball.net/...
@dhh @dhh on x
@edbott @harrymccracken I'll let @gruber deconstruct the argument in full length: https://daringfireball.net/...
@dhh @dhh on x
“I'm paying for Hey using the same company credit card I use to pay for Basecamp. How is that not a business service? I'm sure as shit reporting it to my accountant that way”, @gruber destroys the consumer v biz argument 🎯 https://daringfireball.net/...
@firstadopter Tae Kim on x
I fully agree with @gruber 's takedown on Apple's seemingly arbitrary implementation of its App Store rules https://daringfireball.net/... https://twitter.com/...
@jasonfried Jason Fried on x
Spot on piece by @gruber re: Apple, HEY, what's pro/business, what's consumer, what's prosumer, and what any of it means anyway —> https://daringfireball.net/...
@zachwaugh Zach Waugh on x
I keep coming back to the business vs consumer part as well. In that one paragraph they admit their reviewers don't know how to apply their own policies consistently AND they have additional unwritten policies they apply. How can we be expected to know what's allowed then? https:…
@sam_l_shead Sam Shead on x
The EU is ultimately asking whether its right and fair that companies have to go through Apple to reach consumers. Apple takes a 30% commission on other company's App Store revenues including rivals like Spotify https://www.cnbc.com/...

Chronicles