Shulou(Shulou.com)11/24 Report--

When Phil Schiller stepped down as Apple's global marketing director two years ago, it was reported that the core figure of Apple seemed ready to retire for the rest of his life. This can be seen in his new title: Apple researcher (Apple Fellow).

Schiller is still actively involved in Apple's work and will still work overtime, according to people familiar with the matter. The App Store, which he is now in charge of, serves as the software hub for Apple devices, a platform that is now closely watched by antitrust regulators in the United States and around the world, and Schiller is naturally back in the spotlight. Mr Schiller served as a key witness last year when Epic Games filed an antitrust lawsuit against App Store's unfair practices.

It is widely expected that the US Judicial Commission's investigation into Apple will enter the litigation stage in the coming months. If so, Schiller will also play a leading role in this protracted legal battle.

Such a lawsuit will give the outside world a clearer picture of exactly how Schiller has run App Store since 2016. More and more app developers believe that Apple takes advantage of its dominant market position to seek financial advantage, using App Store to suppress competitors and squeeze developers' profits. Sales in the business have grown by about 30 per cent a year since Mr Schiller took over App Store in 2016, reaching $85 billion last year, according to Sensor Tower, a data company.

Value user experience over profitability? However, while it is hard for Apple to deny that App Store is hugely profitable, people who have worked with Schiller say that in the past, he has often ignored the issue of profit when making decisions, but will take into account factors such as advertising, privacy and content to make decisions that are best for users.

"Schiller's approach to developing App Store may not be the best, but it may be right in the long run." "Apple is very cautious about App Store and treats it as a brand, and it really feels that way," said Horace Dediu, founder of Asymco, a market analysis firm. "they don't want to ruin that image."

For example, although games now account for 60% of App Store's total sales, Schiller remains cautious in promoting video games. One of several changes he made since taking office was to stop displaying such games on App Store's home screen because he feared it might make some users uncomfortable, according to people familiar with the matter. "Bully: Anniversary Edition" is affected by this policy. In this popular game, high school students from elite prep schools attack their classmates with slingshots, baseball bats and firecrackers.

Under the leadership of Eddy Cue, the former head of App Store, Apple promised Rockstar Games, the developer of Bully, to promote the game through App Store during the 2016 holiday season. As a result, Rockstar employees rushed to work and finished the game within the time set by Apple. However, on the eve of the game's release, Schiller took over App Store. Although Schiller himself is a game enthusiast and even has a racing simulator installed at home, Apple representatives told Rockstar that they would no longer promote the game as promised. The incident annoyed Rockstar executives, according to people familiar with the matter.

Rockstar had no comment.

Mr Schiller's supporters say he has since made many similar decisions to strike a balance between the interests of developers, the user experience and Apple's reputation-three areas that sometimes conflict with each other.

The 62-year-old Schiller, who joined Apple as early as 1987, left for several years but returned to Apple in 1997. Under the leadership of the late Apple co-founder and former CEO Steve Jobs (Steve Jobs), Apple developed its own values, and Schiller is clearly one of the strongest defenders of those values. Protecting the interests of users is an important part of this value-Schiller firmly believes that as long as you stick to this idea, you can attract users and gradually turn them into loyal fans, and the profits will naturally rise, according to people familiar with the matter.

A spokesman for Apple said that the company's App Store is a secure application download platform that users can trust, and developers can also tap huge business opportunities. The spokesman said that App Store has always been Apple's economic growth engine, not only promoting competition, but also conducive to innovation, but also working closely with developers of different business models and sizes.

How did the application empire rise? When Apple released the first-generation iPhone in early 2007, Jobs initially disagreed with the idea of building an app ecosystem for the device. He thinks Apple should keep a firm grip on iPhone itself and doesn't want to bother to deal with the spread of viruses and other misconduct caused by apps.

But Mr Schiller contributed to the rapid change in Mr Jobs' attitude. Under the joint persuasion of him and other executives, Jobs finally agreed to launch the App Store in 2008 as a means to boost iPhone sales. Cue used the iTunes music store to help Apple successfully break into digital music sales, so he naturally became the head of App Store, while Schiller handled relationships with developers and led Apple's app review team, which scrutinized apps before they were released to make sure they met Apple's requirements.

Over the next few years, when some developers' apps were rejected by Apple, they began to complain publicly that Apple's review process was opaque. Others accused Apple of not implementing its own rules consistently, and even worried about being slow to release apps on App Store because of direct competition with Apple's own business.

Schiller took over from Cue at the helm of App Store in early 2016. This allows Cue to focus on developing subscription businesses, including Apple's Apple Music, which was launched just a year ago, according to people familiar with the matter.

Mr Schiller's style of managing App Store is more detailed than Mr Cue, according to people familiar with the matter. Cue leaves a lot of work to his staff, while Schiller often personally examines pictures and app copies on App Store. He encouraged colleagues to debate with each other to ensure that the voices of all parties were fully heard. People familiar with the matter said that whenever he had an idea, he would send emails, text messages and even make direct phone calls, giving people the impression that he never took a break.

The difference between Cue and Schiller in the way they work is much more than that.

In 2015, App Store employees suggested a revision to Cue, asking editors to write stories about apps or their developers, with the aim of encouraging users to visit App Store every day to find new apps, rather than treating App Store as a vending machine that only sells software. People familiar with the matter said Mr Cue did not take the advice, arguing that App Store had done well and was not worth investing in.

But Schiller approved the revision proposal on his first day in office, according to people familiar with the matter. He believes that App Store has lost much of the spontaneity and interest associated with the discovery of new applications. He believes that the editorial team can restore these features.

In 2017, the revised version was officially launched, and the new App Store includes three new tabs, "Today", "Game" and "App", to introduce different kinds of applications and developers to users. According to people familiar with the matter, a survey conducted by Apple after the revision shows that users generally believe that developers need to pay fees to get the key referrals of App Store, but this is not the case. Schiller allows the editorial team to choose which apps and features to promote through these tabs without pressuring them over business decisions or collaborative goals.

But the way the editorial team promoted the application annoyed other App Store employees, especially the business management team. The team has been led by Apple executive Carson Oliver since 2018 and has about 100 employees dedicated to helping developers increase app revenue. If Oliver's team wants to build momentum for a developer, it has to convince the editorial team to do so.

Schiller has clashed with the business management team before. When App Store was revised, some members of the team thought that after users opened App Store, they should first present the "search" tab to them, because it was more in line with the user's app download habits. But people familiar with the matter said Schiller told them that if they adopted this model, they would not be able to get users into the habit of reading the "Today" tab every day, and they would not be able to learn about new apps every day in this way. Schiller's point of view finally prevailed.

Oliver has a lot of influence within Apple, and he is responsible for regularly introducing App Store operations to Apple CEO Tim Cook. People familiar with the matter said it was Oliver, supported by Mr Schiller, that led to Apple's launch of a small business programme in 2020 to reduce the commission rate for developers earning less than $1 million a year from 30 per cent to 15 per cent. Mr Oliver made a similar proposal under Mr Cue, but was rejected, according to documents in Epic v. Apple.

Some elements of Schiller's revision do not seem to resonate with users. Some former employees who have worked for Apple's editors and business teams say long messages about developers and apps tend to have low click-through rates and most visitors skip them quickly. For example, internal data show that in January 2021, less than 4% of App Store visitors spent at least 2 seconds reading the long text at the top of the "Today" tab.

An Apple spokesman said the internal data did not match their own data. However, he did not give details, saying only that such indicators are not the most important criterion to measure the success of the revision.

Huge profits outweigh the original "rules"?

In deciding which applications to promote through App Store, Schiller reached a compromise with the business management team to prevent certain rules from affecting lucrative software categories.

For example, the main tag page of App Store was initially unable to promote first-person shooter games such as "Fortnite" because they contained violent elements. The business management team finally persuaded Schiller to relax the rules, requiring that App Store promotions should not include images of "Fortnite" pointing a gun at others or pointing at a screen. Schiller's editorial team also tried to avoid mentioning the core game of "Fortnite" when writing, focusing instead on other aspects such as character clothing.

The game contributed a total of $300m in commission to Apple from its launch on App Store in March 2018 to Apple's removal of the game in August 2020 on the grounds that it violated policy, according to people familiar with the matter.

When Fortnite was taken off the shelves, Apple began using the same standards to promote other first-person shooter games such as call of Duty and PUBG on the main tab of App Store.

An Apple spokesman said that because first-person shooters are essentially games, App Store employees are particularly strict in keeping tabs on such content.

At sensitive moments such as mass shootings in the United States, Schiller's team tends to suddenly stop promoting first-person shooters or postpone their original promotion plans by weeks or more, according to people familiar with the matter. Under the leadership of Cue, App Store does not have such a rule. The rule also does not apply to other products he is responsible for, such as violent movies on iTunes Store.

At the same time, Schiller seems reluctant to compromise in other areas of gaming. Social gambling games are one of them. Players need to buy virtual currency in such games and then bet on virtual rewards. After Schiller took the helm of App Store, his editorial team refused to promote the games because they feared they were addictive. The business management team, on the other hand, supports social gambling games, which contribute hundreds of millions of dollars to App Store every year, so they are inevitably frustrated by this policy.

An Apple spokesman said that increasing revenue has never been the main goal of the App Store editorial team, but they have brought in billions of dollars in revenue and downloads, both of which have risen every year since the revision.

When Apple introduced its "app tracking transparency" policy in 2020, there was a similar contradiction within App Store. App tracking Transparency is a privacy policy that requires apps such as Facebook to obtain user permission to track users between apps of different developers. Oliver's team told Schiller that his move could lead advertisers to cut back on iOS apps and switch to platforms such as Google Android that better measure advertising effectiveness, eventually costing App Store billions of dollars in revenue.

Mr Schiller told his team he didn't care, according to people familiar with the matter. He believes that the privacy feature is good for users, and advertisers can eventually adapt to the change.

But there are signs that Mr Schiller's mind has changed when it comes to advertising-related decisions. Advertising has increasingly become an important source of revenue for Apple as it diversifies its dependence on hardware.

Now, Apple is going to add new ad space to App Store for developers to buy. Recently, Apple sent a message to developers inviting them to attend an online meeting to encourage them to buy ads. This also means that Apple will greatly increase the number of advertising space.

In July, it was reported that Apple would place more ads on the App Store's "Today" tab and app pages. It comes at a time when Apple's new privacy policy squeezes ads placed through Google and Meta's advertising networks while rapidly expanding its own digital advertising business.

Mr. Schiller, who initially opposed Apple's search advertising business, which displays an ad at the top of App Store search results, has for years disagreed with adding ads to the "Today" tab and app pages, fearing it would damage the user experience, according to people familiar with the matter.

Apple has not yet announced when these new ads will be officially launched on App Store, but it is predictable that Apple will continue to tap the cash-earning potential of App Store.

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