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

TikTok faces bans around the world

Data: AppTopia; Chart: Naema Ahmed/Axios

TikTok, already threatened with a U.S. ban by President Trump, is also facing the prospect that its stunning 2020 growth could be ended by multiple bans around the world.

The state of play: TikTok is already banned in India, where it was downloaded more than 118 million times in 2020. A U.S. ban would cut into a significant amount of the user growth it has seen this year.

Trump issues order banning TikTok if not sold within 45 days

Illustration: Aïda Amer/Axios

Americans and U.S. companies will be banned from making transactions with ByteDance, the Chinese owner of TikTok, in 45 days, according to a new executive order President Trump issued Thursday evening.

The big picture: Last week Trump announced his intention to ban TikTok but said he'd leave a 45-day period for Microsoft or other U.S.-based suitors to try to close a deal to acquire the popular video-sharing app.

Updated Aug 6, 2020 - Axios Events

Watch: Ethical tech in crisis

On Thursday August 6, Axios Cities author Kim Hart hosted a conversation on how technology companies are responding to the pandemic, featuring former U.S. Chief Data Scientist DJ Patil and Human Rights Watch Executive Director Kenneth Roth.

DJ Patil unpacked how tech companies are building ethical and responsible tech centered on privacy and transparency during a time of crisis.

  • On the issue of misinformation during a pandemic: "It's no small statement to say [misinformation] is life or death. And so platforms have responsibility right now to figure out what is the right level of action at a bare minimum. It's creating stricter standards for how and what is allowed on their platforms."
  • On his concerns with the lasting consequences of quickly developing COVID-19 response technology: "It's easy to say this technology can be beneficial. But I have very serious reservations about it being deployed. What happens once it's deployed? Do we keep that in place after a pandemic? Those are the questions that we should be prepared to answer right now."

Kenneth Roth discussed different contact tracing models, highlighting the Bluetooth-based contact tracing system designed by Apple and Google.

  • On apps that use Bluetooth technology rather than location data for contract tracing: "Not relying on location data is a huge step forward in terms of privacy...[The app] did not identify infector, [it] simply told somebody that you were near somebody who was infected. They didn't put the data in a central database that the government might use for other reasons."
  • On the responsibility of Big Tech when it comes to moderating what contract tracing apps are allowing in their stores: "When you have problematic uses of technology of this sort, Google and Apple shouldn't participate. They should say we're not going to let you put apps like this on our stores if you're going to be using it this highly abusive way."

Axios co-founder and CEO Jim VandeHei hosted a View from the Top segment with
Chief Ethical and Humane Use Officer at Salesforce Paula Goldman who discussed Salesforce's work on ethical tech development.

  • On having clear priorities in developing ethical technology: "Even though there's no definition of responsible tech for a pandemic, we need to think about things like privacy. We need to think about how vulnerable groups [are] being affected."

Thank you Salesforce for sponsoring this event.