Apple Vs NFTs: A New Tech Battlefront?
Coinbase Wallet no longer supports NFT transfers on its iOS app, citing Apple's in-app purchase policy. Let the battle over Web3 begin...
I feel like I've been writing about Coinbase COIN 0.00%↑ Wallet a lot lately. Between the username domains being centrally managed by the app owners and the company dropping support for some high ranking coins earlier this week, Coinbase Wallet has been interesting to say the least. Even more so yesterday after Coinbase Wallet shared on Twitter that it can't offer NFT services on the iOS app any longer:
You might have noticed you can't send NFTs on Coinbase Wallet iOS anymore. This is because Apple blocked our last app release until we disabled the feature.
The company went into even more detail in an entire thread and it's really worth a read. Some of the other interesting parts condensed into one quote:
Apple’s claim is that the gas fees required to send NFTs need to be paid through their In-App Purchase system, so that they can collect 30% of the gas fee. For anyone who understands how NFTs and blockchains work, this is clearly not possible. Apple’s proprietary In-App Purchase system does not support crypto so we couldn’t comply even if we tried. This is akin to Apple trying to take a cut of fees for every email that gets sent over open Internet protocols.
While I'll give Coinbase some credit for trying to offer an analogy, I think a better one might be this would be like Apple AAPL 0.00%↑ demanding a cut of any transaction done through any app on an iOS device for any good or service. If you buy a coat through the eBay EBAY 0.00%↑ app with an iPhone, should eBay pay Apple for the privilege of having an application on Apple's phone? If you buy stock through your Wells Fargo app on an iPad, should Apple get a cut of that transaction? Are these not both in-app purchases?
The difference seems to be when you utilize Apple's StoreKit functionality for purchases in your application. As best I can tell, eBay and Fidelity don't do this because they don't have to. They both have desktop web browser websites independent of StoreKit and Apple isn't required at all for the facilitation of the types of transactions I described above. But if the reason is as simple as StoreKit not being required, the same then should apply to Coinbase NFTs as well since Apple isn't required to buy an NFT on Ethereum (ETH-USD) through Coinbase's web browser application.
This seems like an odd hill for Apple to die on.
What's Going On Here?
This should have been expected. Back in late October Apple announced changes to how it would be handling apps that allow for in-app purchases or functionality of NFTs. According to the policy:
Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, cryptocurrencies and cryptocurrency wallets, etc
This essentially means Apple is taking the position that any NFT-related transactions or added functions must go through Apple's iOS app store. In October TechCrunch explained Apple's potential motivation for the policy as an attempt at stopping developers from using "NFTs" as a creative way to dodge app store fees:
Folks from the industry pointed out that these changes could have serious implications on the functionality of web3-dependant apps (including games) within the Apple ecosystem. Until now, they might be using NFTs as a way to thwart Apple’s App Store fees and simultaneously as a token or key to unlock features for users — but that won’t be allowed anymore.
Bold my emphasis. I think this is just beginning.
This Isn't The First Time Either
Yesterday, Coinbase was seemingly the first victim of Apple's new policy but we've actually seen Apple pull this even before the policy change. Way back in September of 2021, Apple blocked Gnosis Safe from the App Store for the exact same reasoning. According to Crypto Briefing, Apple's message to Gnosis Safe:
Since NFTs are digital assets that have a price and cost associated with them, Apps that access, whether it is just simple storage or marketplace, are not appropriate for the App Store. We suggest you remove this feature from your app.
What's interesting about this policy is it would essentially make apps like STEPN, Upland, or Splinterlands not compliant with the new policy if the developers of those apps are not paying Apple the 30% app store fee. And as far as I can tell, none of them currently are. Which means, this could get ugly real quick if the people at Apple are actually plugged into the NFT space.
Is The Walled Garden Approach Toast?
Maybe this shouldn't really be a surprise to anyone who knows how Apple has historically operated. Apple is the quintessential "walled garden." Everybody else uses mp3, so Apple has to have m4a. The company has relied on a solid UI and brand loyal consumers to adopt strategies that keep people within its own ecosystem and make it very inconvenient to abandon that ecosystem once you've been in it long enough.
The kneejerk reaction from Apple users who don't like the new NFT policy could be to flock to Android. But there's nothing stopping Alphabet GOOG 0.00%↑ from enacting something similar. As brutal as this is going to be for NFT advocates, I actually don't think Apple is going to turn around on this because the entire point of NFTs is to disrupt the kind of control over seemingly everything that Apple has.
If society wants to move to a more interoperable future, could there be challenges to the Apple/Google duopoly of mobile operating systems? I don't know. Right now, motivated users can escape the duopoly if they're willing to install something like GraphenOs on an Android device and install apps through F-Droid. But you'd have to be somewhat tech savvy to be able to do that, you wouldn't have access to most apps, and I think typical people would rather just have the convenience of the duopoly prison. I know I'm stuck in it (for now).
Interestingly, crypto may have it's own answer to this. I'm not generally high on Solana (SOL-USD) at the moment but the company is working on a mobile stack that would figure to be pretty appealing to fans of NFTs who want to escape the Apple ecosystem.
Then again, maybe crypto won't have to solve it all. There are numerous "normie" companies like Starbucks SBUX 0.00%↑ , Reddit, and Meta Platforms META 0.00%↑ that now have connections to NFTs. Disney DIS 0.00%↑ brought Polygon (MATIC-USD) into its accelerator program for a reason - I'd imagine these companies don't want Apple deciding what they can and can't build in the future. It's all certainly something to keep an eye on because I don't think Apple's war against NFTs is over. Should be fun to watch.