My colleague Sarah shared an intriguing tale this week about a “NFT” app on the App Store that Apple seemed to prohibit out of nowhere, despite the fact that it had been operating in the open for months. Apple said that the app deceived customers by offering “NFTs” that couldn’t be resold and weren’t even kept on a blockchain. In my opinion, the app is a touch sketchy, but that isn’t entirely the fault of the app developer; the app appears to be constructed to operate in the gray area of Apple’s nonexistent advice for NFTs. (It’s worth mentioning that Apple shockingly reinstalled it in the App Store within an hour of our report being live.)
This small incident raises a more intriguing question: what are Apple’s ambitions for NFTs? On the one hand, I’m sure Apple would love to officially exclude NFTs from the App Store. Apple has maintained that one of the App Store’s primary functions is to safeguard customers against frauds, which is a challenging task in today’s NFT climate. Regulating the sector within Apple’s App Store’s walled garden sounds like a nightmare, requiring Apple to effectively create its own internal Securities and Exchange Commission.
But — and there is a big but — Apple also likes money, notably income from the App Store’s services. The App Store’s most popular sector, gaming, generates Apple tens of billions of dollars each year. Over the next decade, gaming businesses are expected to embrace NFTs in a big manner, and losing out on that money would be disastrous for Apple’s hold on in-app payments in mobile gaming. But how does Apple account for NFTs and blockchain assets in its IAP in-app payments system?
While particular applications may be able to justify the Apple tax on primary NFT sales, the same costs will not be acceptable for secondary peer-to-peer purchases of already-owned NFTs. NFT stores like as OpenSea and Rarible have already developed native applications on the App Store, however these apps only enable users to browse NFTs and not interact with their storefronts. The majority of legitimate NFT firms are debating how to proceed on mobile, and Apple’s refusal to issue clear standards may encourage more developers to invest in web-based experiences, which are exempt from App Store regulations.
One thing is clear: if Apple establishes a special exemption for NFTs in its App Store guidelines, it will be on its own terms. It might go in a variety of directions; for example, I could envisage a situation where Apple only allows certain assets on specific blockchains or even creates its own blockchain. Apple’s way to managing the user experience, on the other hand, will very certainly entail Apple having a direct role in creating its own smart contracts for NFTs, which developers may be obliged to utilize in order to comply with App Store guidelines.
This might easily be defended as an attempt to guarantee that users have a consistent experience with NFT platforms on the App Store and that they can trust them. These smart contracts might automate the payment of Apple royalties, resulting in a new in-app payment fee pipeline that could even continue outside of the Apple environment (!).
Apple may also provide more complicated capabilities, allowing it to handle operations like reversing transactions. Any of these measures would, without a doubt, be divisive among existing developers. Any requirements from Apple on how smart contracts are created and which ones are allowed to be utilized would be a big shift in the crypto world, causing havoc in the developer community. But I believe it is evident that Apple will find it difficult to ignore this market for much longer.