Apple Threatens To Remove Twitter From App Store

Key Takeaways

• Elon Musk has claimed that Apple is threatening to remove Twitter from the Apple App Store, without providing a reason why.
• There are suggestions that it could be due to the change in moderation policies, with Musk reinstating a number of previously banned accounts.
• He’s hit back at Apple, stating that their 30% App Store commission represents a “secret tax” and he has alluded to “going to war” with the company over it. He’s shared this message as you might expect, with a meme.

Elon Musk has claimed that Apple has threatened to remove Twitter from the App Store, which is suspected to be due to issues with its moderation policies under Musk’s ownership. The explosive allegation comes off the back of Musk taking shots at Apple, stating that App Store fees equate to a “secret 30% tax” on the internet.

Apple’s hefty cut of App Store revenue has been the source of multiple lawsuits, including a major ongoing dispute with Fornite creator Epic Games. The lawsuit alleges that Apple’s market position equates to anti-competitive behavior.

Musk tweeted on Monday that “Apple has also threatened to withhold Twitter from its App Store, but won’t tell us why.”

It’s the latest in a series of challenges Musk has faced since taking Twitter from a public company to a private one this year, a move that required a lawsuit of its own to finalize.

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The ‘free speech’ dilemma

Twitter’s move from a public company to a private one controlled by Elon Musk has made many nervous. Advertisers have pulled much of their budgets from Twitter over concerns of Elon Musk’s plan to ‘bolster free speech’ on the social app.

Opponents have suggested that this will see an increase in hate speech and negativity, on a platform that’s already known for its polarizing discussion. In their defense, Musk and Twitter have continued to release data that shows that hate speech is at all-time lows and engagement is at all-time highs.

The controversy has also been stoked through an online poll which asked Twitter users whether former President Donald Trump should have his account reinstated. He was infamously banned by Twitter, “due to the risk of further incitement of violence.”

It came off the back of the US Capitol being overrun by protestors.

As well as Trump, Musk has reinstated a number of other banned accounts, including Jordan Peterson, The Babylon Bee, Kathy Griffin (who Musk himself banned) and Andrew Tate.

Why Elon Musk is taking shots at Apple

With all of this controversy going on in the background, Twitter has been hemorrhaging cash. Advertisers have been pulling their budgets en masse, with Musk tweeting that the company was losing around $4 million per day.

He’s taken some high profile steps to try and plug this gap. Firstly, there have been massive layoffs at the company which used to boast a headcount of around 7,500. He has already laid off around half of the company, with suggestions that the remaining 3,700 could be reduced by a further 75%.

There has been a lot of coverage on the situation, with many employees not shy about taking digs at Musk on Twitter.

On the other side of the coin, Musk has been looking for ways to increase the company’s revenue, especially given the dramatic fall in advertising income. The monetization of Twitter verification has been the main focus of this, which has had a messy implementation, to put it mildly.

Initially the plan was to remove the original blue check Twitter verification, to be replaced by a new version of Twitter Blue. This was originally suggested at a price point of $20 per month, but later dropped to $8 per month.

As expected this caused a lot of confusion from existing verified users, media outlets and companies as to how they were going to prove to users that they were genuine accounts.

The implementation saw many parody accounts imitating official ones, some of which were downright hilarious, such as an official looking Pepsi account with the handle @PEPICO tweeting simply that “Coke is better.”

It’s this situation which has caused Elon Musk to take a dig at Apple.

For a company that needs every scrap of cash they can get their hands on, having up to 30% taken off the top from the App Store is a bitter pill to swallow.

It’s not a shock to anyone in the industry with Apple’s cut a well known staple of Silicon Valley. The company takes a 30% standard commission on app purchases and additional in-app purchases, though this drops to 15% for subscription revenue after the first 12 months.

It’s fair to add that the Google Play store also takes a 30% cut, as does the Galaxy Store and the Amazon App Store. Microsoft charges 30% commission for Xbox purchases and 15% on PC apps.

So while it’s understandable that Musk would prefer Twitter to keep a larger chunk of the revenue to themselves, it’s clearly not an issue that is specific to Apple.

Will Twitter be banned from the Apple App Store?

As mentioned by Musk, Apple hasn’t publicly stated why they are considering whether Twitter meets the conditions for listing in the App Store. With that said, the guidelines for listing on the App Store are public, and there are some stand out requirements that could be causing Apple to take a closer look.

Content moderation systems

Apple’s guidelines state that apps with user generated content (i.e. social media platforms) must have strong content moderation systems in place. There have been cases of other apps being taken down for failures in this area, notably right-wing Twitter competitor Parler in 2020.

Content moderation has changed dramatically since Elon Musk has taken over, with reports that the team in charge of this area has been significantly reduced.

Fee workarounds

Apple wants their cut. In the past, apps have tried to implement workarounds to the in-app purchase process in order to avoid paying the 30% fee. Epic Games is the most high profile example of this. They implemented their own payment system within the mobile version of popular online game Fortnite, allowing players to make payments directly to Epic Games, without going through Apple’s in-app purchase system.

It’s this situation that kicked off the lawsuit between Apple and Epic Games, with the latter accusing Apple of anti-competitive behavior.

While Musk hasn’t suggested anything to workaround the payments system, it’s the kind of tactic you can well imagine the eccentric billionaire trying.

What does this mean for investors?

Twitter isn’t a public company anymore, so investors who aren’t already on the cap table aren’t likely to be that bothered about them in particular. However, this issue is touching on many other companies in tech which investors can invest in.

During boom times, most companies are happy to let issues slide among record revenues and increasing cash flow. When income starts to tighten up, many will look for ways to improve the bottom line, which can lead to conflicts like the type we’re seeing now.

This can be a real challenge for investors. Lawsuits can be expensive and unpredictable, and there’s no telling when a judge’s ruling could massively impact the fortunes of a company.

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