Now Apple wants to bulldoze the fitness app industry, even though many of these companies rely on the App Store and dutifully pay Apple its 30% cut
- Apple has a history of wiping out the little-guy developers, but this time it’s set its sights on the lucrative multi-billion fitness app industry.
- On Tuesday, Apple launched Fitness Plus, a studio fitness app that offers classes from fitness coaches and integrates tightly with Apple Watch.
- It’s a direct competitor to Peloton’s fitness app but it’s also a direct competitor to dozens of others including the many smaller developers who have trusted their livelihoods to Apple’s store, dutifully paying Apple its 30% cut of their recurring revenues.
- The big fitness companies can probably handle the blow, but what of the little guys? This is not good news for them.
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On Tuesday, along with a new Apple Watch, Apple launched Apple Fitness Plus, a new app that offers studio fitness classes and integrates with the watch and other Apple gear.
As many have pointed out, Fitness Plus is a direct competitor to Peloton’s fitness app, who has seen its business soar during these pandemic days.
But it’s also a direct competitor to dozens of other fitness apps that offer trainers, streaming, or on-demand workouts and classes ranging from smaller companies like MotionTraxx and Fitness 22 to giants like Strava.
And what do all of these apps have in common? They must sell their services via Apple’s App Store in order for their apps to be available for the iPhone, iPad, or Apple Watch, the three leading hardware products in their respective categories. And they are thereby obligated to pay Apple a 30% fee on their subscription revenues, the so-called Apple tax.
In other words, Apple has decided to compete with its own customers.
And not just any customers, but an app market that generates, across all platforms, billions of dollars; a recent research report expects the fitness app market to reach $14.64 billion by 2027.
Back in the day, hardware makers looked at their software suppliers as their partners and it was more than a matter of honor for the lines of competition not to be crossed, it was a matter of good business. If hardware makers started to compete by firing up their own software every time a big category would be created, many software suppliers would refuse to support their hardware. It was a symbiotic relationship.
But today, we have enormous platforms that are under the sole control of one massive tech company. Apple rules the app store just as Amazon rules its ecommerce site, watching for hits among its business partners to advise it on which of its own private-label products to create and promote.
Those who don’t follow Apple’s rules for its App Store have no other option to access iPhones, as the recent battle with Epic Games proved, where the “Fortnite” maker decided not to pay Apple the 30% and got kicked off the App Store. Now, the two are headed to court.
But Apple faces no such constraints. If, instead of offering new features, making them accessible through developer kits, and allowing a fitness app market to compete and blossom on its platform, it wants to bulldoze them over — even if they are contributing to its own bottom line — it can. We’ve seen it happen to other app categories from sleep tracking to screen-time monitoring, when Apple baked those features into its iOS devices.
Still, it won’t be the biggest guys that suffer most: Peloton and Strava are established enough to survive, even if they lose a chunk of Apple users. But the littler developer, the one Apple says it celebrates each year at its Worldwide Developer Conference, that’s another, sadder story.