Game Developers Accuse Amazon Of Ripping Them Off With Unfair Terms

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Amazon's bid to earn money by making an Apple-like curated version of the Android Marketplace seems clever, if controversial, and a potential winner for Android users. But according to some, Amazon may be applying unfair restrictions to its software partners.

The warning has gone up in the form of a stern open letter from the International Game Developers Association, addressed to "all members of the game development community" and directed at Amazon, which hasn't yet responded to the IGDA. The association notes it "applauds Amazon's efforts to build a more dynamic app marketplace" but has "significant concerns about Amazon's current Appstore distribution terms and the negative impact they may have on the game development community." In particular the IGDA is advising all game developers considering signing up to Amazon's deal to "educate themselves" on the pros and cons of the Appstore terms. IGDA thinks the long-term implications of the deal are dangerous; since its membership is reported as over 10,000 developers worldwide, the organization packs some punch.

The main issue IGDA has is the parts of the Appstore developer agreement that relate to pricing of apps and the revenue share with developers. IGDA alleges "Amazon reserves the right to control the price of your games" and that it also controls how it pays out at "the greater of 70% of the purchase price or 20% of the List Price." The association notes that price control is operated by many retailers, both online and off, but it's "not aware of any other retailer having a formal policy of paying a supplier just 20% of the supplier's minimum list price without the supplier's permission." Amazon also restricts how developers can set their list price--it cannot be above the list price "available or previously available on any similar service." And here's the killer: If you sell your app in another market, and conduct even a temporary price-slash promotion, you must lower the price on the Appstore too, and leave it permanently lowered.

Amazon's control has set off alarm bells because it effectively straightjackets app developers into offering exclusive control over app pricing strategies, and if you sign up to Amazon and sell your app elsewhere then these other markets are effectively slaves to Amazon's decisions. Even if you assume the Appstore is the new de facto Android marketplace, and only sell your app there, Amazon could suddenly decide to drop its price as part of a promotional bundle--and thus sap your earnings below levels that you may be comfortable with if you'd chosen to try your own discount promotion.

The IGDA goes so far as saying that with these T's and C's, Amazon has "little incentive not to use a developer's content as a weapon with which to capture marketshare from competing app stores." It's pushing Amazon to require developer's permission to make price adjustments that may be to the detriment to some developers incomes.

This kind of trickery sounds familiar for a reason: Apple raised concerns with the conditions in its new subscriptions service, which have a very similar-sounding "you can't sell it cheaper elsewhere" clause, although Apple doesn't interfere with pricing in the way Amazon seems like it intends to. Apple was subjected to a press roasting on this issue--largely because it's king of the app store at the moment, and how it chooses to run its business may be used as a model by others (which might be what Amazon's doing here).

This may be a tactical move by Amazon to seize control of the unwieldy, unruly, and sometimes dangerous Android app market--a necessary evil which will result in a better user experience, ultimately. Our money is on the fence here: If Amazon faces a backlash, it might soften its T's and C's--as it really needs developers on its side. But it's a company that's often demonstrated it'll do whatever it feels necessary to earn income. We've approached Amazon for comment, but they haven't responded at this time.

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