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Photo: Basecamp

Apple on Thursday rejected an appeal from Basecamp over the availability of its new email app Hey in Apple's App Store.

Driving the news: Apple said the company needs to either offer an in-app subscription option or offer an email reader for nonsubscribers in order to be in compliance with its App Store rules.

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."
— Basecamp CTO David Hansson

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.”

Go deeper

Ina Fried, author of Login
Updated Sep 15, 2020 - Technology

Apple updates Apple Watch and iPad models, adds fitness service

Screenshot: Axios via Apple.com

Apple on Tuesday unveiled new iPad and Apple Watch models, as well as a new fitness service and Apple One, which bundles the company's main services for one monthly price.

Context: Apple has launched new iPhones in September in the past, but production issues have flipped the script this year and the new smartphones are expected to be unveiled at a second event, likely next month.

Complaint to FTC: Amazon search results full of potentially deceiving ads

Photo: Nigel Kirby/Loop Images/Universal Images Group via Getty Images

Amazon does not sufficiently distinguish between its search results and paid ads, potentially "deceiving millions of consumers," according to a complaint filed to the Federal Trade Commission.

Why it matters: Joan Moriarty, research director for the Strategic Organizing Center, a coalition of labor unions that filed the complaint, told the Washington Post the group is "very hopeful" that the FTC will investigate the complaint because Lina Khan (D), a known Amazon critic, is now chair.

4 hours ago - Health

Pfizer-BioNTech: Booster doses more effective at blocking Omicron

Prepared doses of the BioNtech-Pfizer Covid-19 coronavirus vaccine in Germany on Dec. 7. Photo: Thomas Kienzle/AFP via Getty Images

Pfizer and BioNTech said Wednesday that two doses of their COVID-19 vaccine were significantly less effective at neutralizing the Omicron variant in early lab tests, but a three-dose regimen was more effective.

Why it matters: Omicron, which has been labeled a variant of concern by the World Health Organization after being identified by scientists in South Africa last month, has forced vaccine makers to reassess the effectiveness of their vaccines against this specific new form of coronavirus.

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