Apple rejects appeal from email app Hey

Why it matters: Apple's decision not to budge comes as the company is under antitrust scrutiny over its App Store practices, with the European Union on Monday announcing it has launched an investigation.

The latest: In rejecting Hey's appeal, Apple notes that the developers could work within Apple's rules by allowing the app to function as a reader for standard email, while also offering Hey subscriptions from its website. Alternatively, it says Hey can add an in-app subscription option, sharing revenue on those purchased within the app while keeping all subscription revenue earned outside of Apple's ecosystem.

• "The Hey Email app is marketed as an email app on the App Store, but when users download your app, it does not work," Apple said in a letter to Basecamp CEO Jason Fried on Thursday. "Users cannot use the app to access email or perform any useful function until after they go to the Basecamp website for Hey Email and purchase a license to use the Hey Email app."
• Apple notes that the Mac version of the Hey app was rejected on June 11 for the same reasons.

Between the lines: Hey's founders have been vocal that they believe Apple is not entitled to a cut of its subscription service. (Apple typically gets 30% of in-app subscriptions for the first year and 15% of renewals.)

However, there are a number of exceptions to this policy, which critics have said makes the overall system seem arbitrary.

• So-called "reader" apps that display content previously paid for are allowed.
• Apple has used that policy to allow a broad range of apps to be exempt from mandatory in-app purchases, including video and music services, e-book reader apps and some enterprise software. Apple also doesn't take a cut on sales of physical goods from within its app.

Apple, for its part, argues that its App Store has terms that are fair and applied to all. The company notes that the store has been operating for more than a decade and has never raised fees and only loosened the policy over time for software that qualifies under the reader rule.

David Hansson, CTO and co-founder of Basecamp, took issue with Apple's findings, saying its letter "fails to address the countless inconsistencies in their enforcements."

"All the rules they're citing should apply to Gmail and Outlook as well," Hansson told Axios. "So it's laughable that they state that we must follow the rules that everyone follows when it's plain as day that not everyone follows the same rules."

"But even if that was not the case. Even if Apple was perfectly consistent in its abuse of its monopoly status, it would STILL be abusive! Just because you say how you're going to abuse someone before you do it, does not make it any less abusive."

The bigger picture: Apple faces questions from more than just Hey over its policies.

• Tinder parent Match Group spoke out this week saying it disagrees with its policies, as does Fortnite creator Epic Games.
• Spotify, which filed a complaint that helped launch the European inquiry, has also been clear about its disagreement.

Meanwhile: Microsoft president Brad Smith noted Thursday that many of today's app stores exert far more control than Microsoft did with Windows back in the day.

• “They impose requirements that increasingly say there is only one way to get on to our platform and that is to go through the gate that we ourselves have created,” Smith said at a Politico event, per Bloomberg. “In some cases, they create a very high price per toll — in some cases, 30% of your revenue has to go to the toll keeper.”