Apple takes flak for restrictive new NFT rules

by James · October 25, 2022

Apple is known to take advantage of its position of power in the mobile software world. However, Apple has been quietly restrictive with limited public perspective around blockchain-related technology including crypto and NFT. The NFT momentum has changed that in recent months, despite a broad crypto bear market, and has led Apple to bring policy changes to address NFTs directly – and those changes are not particularly NFT friendly.

Apple Policy Addendum… Restrictions may apply

Speculation began at the end of September that the dominant technology company was opening the doors to NFT-based apps in the App Store. It led to mixed reviews: it’s undoubtedly positive for NFT enthusiasts to see big tech companies approaching them, but Apple’s exorbitant ~30% fee was widely believed to be unsustainable, unwanted and unreasonable in the NFT communities.

Now that official policy changes are taking effect, we want to highlight three main pillars from the policy changes that summarize everything you need to know:

NFTs are approved for “issuance, listing and transfer:” Yes, you read that right. Apple has directly approved app use of NFTs, a big win for blockchain-based ecosystems that build mobile platforms and services.
NFTs will be limited to in-app purchases only: Now the less exciting part. As speculated in our report last month on the matter, Apple limits any kind of financial transactions to live within the functionality of the app – meaning there are ~30% collection fees. No external links, no buttons directing to external sources, and no directing consumers for out-of-app purchases. This has been a long-standing point of contention for major parties even in web2, such as Epic Games, who contested that Fortnite purchases should be exempt from the exorbitant Apple fees (albeit with limited success).
In-app NFT ownership cannot “unlock features or functionality” in any app: The restrictions continue. One of the biggest selling points around many NFT collections and projects will be left to the wayside. With this policy adjustment, there are no mobile features that can be closed through in-app NFTs, as Apple seems likely to limit NFT effects in apps.

All in all, while we can commend Apple for their willingness to address NFTs directly, most community members across the NFT landscape are left with a lot to be desired from the company’s latest policy changes.

Apple (NASDAQ:AAPL) has been a dominant name in tech for many years, and its App Store dominance and stranglehold over fee structure has long contributed to it's positioning in the mobile marketplace. | Source: NASDAQ:AAPL on TradingView.com

The big picture

Despite a heavy hand, it’s still remarkable to see Apple acknowledge NFTs in this way. It comes amid significant technology and social media dialogue around crypto and NFTs; across social media, buzz has been floating around with major channels for the past week, especially around Twitter and Reddit.

Twitter is reportedly working on a crypto-wallet product for users, while Reddit has made headlines for the momentum surrounding its pillar NFT project, ‘Collectible Avatars’. Without leaning into the NFT aspect of Reddit’s NFTs (powered by Polygon), the social channel has found a way to “mainstream” NFTs with significant success that has been largely unparalleled. All this to say that there is a lot of action in technology and social.

Elsewhere in social and technology, Meta (formerly Facebook) has found similar points of criticism that we see today at Apple; The platform charges a similar “hardware platform fee” for its VR product, Meta Quest, that Apple charges for in-app transactions (about 30%), and then adds almost 20% for its Horizon Worlds transactions.

Beyond social, however, many traditional tech players have appeared to be getting involved in the crypto space – but it’s been a slow burn with little involvement from Apple to date. Beyond their restrictive outlook around new NFT-related policies, Apple recently had to fend off a class-action lawsuit over “dupe” apps, and has had to deal with the Senate’s investigation into US surround crypto app fraud.

All in all, there are plenty of frontline battles for Apple, which makes their insistence on such significant in-app fees all the more highlighted. The problem hasn’t just been a web3 problem either – even web2 brands have expressed disdain for the “Apple tax” and its restrictive tendencies. We’ll see how it shakes out – for web3 and beyond – in good time.