Apple buying Google ads for high-value subscription apps

Except they aren't forced to sell through Apple, Netflix doesn't allow in app-purchases for this very reason.

It's about Apple driving up the user acquisition costs for these companies so much so that it become entirely uneconomical for them to buy ads that direct users to their own websites, and instead the campaigns that target users to download the app - which results in 30%-to-Apple IAP subscriptions - become much more attractive again. So Apple is trying to make the cost of running these ads so prohibitive to the companies that they stop trying to drive web subscriptions and instead go back to driving app subscriptions only, where Apple gets 30% of everything.

As you can see it's even more sinister than it first appears - it's not a short term land grab, it's a long term strategy to prevent developers from legitimately acquiring users outside of Apple’s walled garden.

(Looking at the economics make this even more clear. Let's say Tinder has a $100 subscriber LTV (lifetime value). If the user purchases the subscription in the app, Apple takes $30 of that, so if Tinder wants to run a marketing campaign on Google, Facebook, etc that drives an app install, they can't pay more than $70, otherwise their spend has a negative margin.

On the other hand, if tinder can use these ads to get people to subscribe on the Tinder website, they have a ~$97 LTV ($100 minus 3% payment processing fee via stripe/adyen/etc). So now they can run a campaign on Google where they can spend up to $97 to acquire a user, much more than the $70 before. And because Google and Facebook inventory availability scales non-linearly with your maximum bid, a 38% increase in acquisition cost allowable could mean a 100% increase in available inventory, and potentially higher quality inventory at that.

But if Apple - with their unlimited cash pile and not caring about negative margins - comes in and soaks up all this inventory by bidding the same $97 for every user, all of a sudden the cost for Tinder to acquire these users goes way up and becomes negative margin. At that point, the rationale thing for tinder to do is stop running these campaigns. This means they stop getting web subscriptions, stop diversifying their business away from Apple, and Apple maintains its iron grip on Tinder.

Remember, in this case Apple is paying $97 to acquire a user who will generate $30 for them (30% of the $100 LTV), so they're massively in the hole on this spend. But they don't care because their goal isn't to profitably acquire users; their goal is to make the costs for Tinder to create a more diversified business so high that Tinder stops trying to. That's some f-ed up sh*t.

I think we are all in agreement there. But it has such sophistication and is so amazingly efficient that it has an intrinsic value as a mere concept. This is because it enables activities that would otherwise be impossible. A good analogy would be a computer program. This i think is where we differ. But i think it's obvious that money is more than "nothing"- after all it sustains the entire banking industry.

>The difference (some would argue, improvement) is that shekels have a worth of their own, so can be stored against harder times

Again this isn't (and was never) the true reason for money. It was only a security against the money and helped people to visualise the concept better (i know i'm oversimplifying but i think that's the basic idea)