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Intro
Apple’s monopoly makes iPhone users dependent on the App Store when it comes to using apps and extensions. If you own an iPhone, there’s no way you can download an application from any third party and enjoy it as you would do with App Store apps. So if an app gets removed from the App Store, there’s no way it can reach iPhone users.
There are roughly 1.5 billion active Apple devices in the world, so technically today it’s Apple that at its sole discretion decides which content to show to their owners, where and on what terms. Does the fact that there’s a single company controlling this even sound right? There’s no effective instrument out there that allows you as a developer to stand up for your rights and appeal against unfair treatment and vicious circles of app reviews.
What is Eristica & what happened?
We’re helping Gen Z spend time online with fun content and, at the same time, make money with their talent. How it works is very straightforward: our users ask their friends or even strangers to complete funny and positive challenges to make money and prove it by posting a video. The Eristica company was started in 2015. It went through a Taiwan-based accelerator from SOSV (MOX) in 2017 and had a rebirth in late 2018 with a more scalable brand name and became breakeven in 2020. But on July 15th, 2020 our app was removed from the App Store due to violation of the guideline “1.4.5 Safety: Physical Harm” without any specific explanation.
Our attempts to resolve the issue
After a call with the App Review representative, it became clear that, apparently, Apple doesn’t allow any features that let users post content because it may be harmful, despite the fact it’s going through severe human pre-moderation and post-moderation. If that doesn’t sound right or make sense to you — you’re not alone. Saying that an app needs to be removed because reviewers may miss bad content is akin to saying that the App Store itself should be closed because they might miss bad content (which they do in 15% of the cases).
It also became clear that arguing about this as well as about the total lack of any evidence of such content on Challenge App is not going to bring us back, so we decided to stay on the safe side and obey Apple’s guidelines. To resolve this issue we have been submitting new app builds, where we have gotten rid of our most important features, which let users generate content.
Since the App Review Team wasn’t communicating a specific feature or screen they didn’t like, we’ve been continuously submitting app builds getting rid of all content generation features step-by-step (totaling 7 different app builds). Guess what? They all were rejected with the exact same wording as on the picture above. I don’t need to specify, there were no details given or evidence of any violations.
Since there were 7 rejections of our app builds, we decided to ask around and find relevant people that actually could make decisions at Apple. I was introduced to an ex-Director of the App Review Team that built it from 4 up to 300 people in 2009–2016 and had the ability to reach out to C-level executives. That person was so kind and understanding about our case and helped us reach out to Tim Cook (Apple’s CEO), Phil Schiller (responsible for the App Store), Greg Joswiak, and Ron Okamoto. After 3 emails were read and ignored, we asked our users to email Phil Schiller and kindly ask him to bring the App back to the App Store. There were a total of around 50 emails sent their way.
What’s next?
Unfortunately, the iOS app was the main driver of the company’s revenue with 90% of the total income and 80% of all active users. Thanks to our iOS app and despite Apple’s 30% commission fee, we managed to reach the break-even point five months ago. Not only that, we were thrilled to become the #4 top app in the social category in the U.S in July.
At that point, we had managed to scale the company up to half a million users over the last 2.5 years. Our average cost of user acquisition was $0.06 (16x lower than the market average) and our ARPU was $0.25, which makes our ROMI extremely attractive — we were making $4 in revenue for each $1 invested in marketing. It could have been $6, but we were fine with sharing $2 with Apple (30% commission fee) as it is a mandatory condition of being on the App Store.
Here’s what we’ve brought to the community of our users:
- Challenges submitted: 775,335
- Satisfied users: 660,456
- Money earned by users: $3,509,799
- Money donated to charity: $175,489
Since our app was such a booming success by any standard, we received commitments from leading VC firms for an investment round A to start scaling faster than ever before. This round could have potentially helped us reach 30 million users and at least USD$7m in revenue by the end of 2021. Since Challenge App has been taken off the App Store, our company can no longer show such growth — there’s no way we can reach iPhone users anymore.
We could have shifted our focus to scaling the Android app through Google Play and alternative stores, but with the intransparency of content policies and lack of communication, there is no way to guarantee that the same thing wouldn’t happen on the Android app. Moreover, that wouldn’t make any economic sense on our side: ads with bloggers only bring 20% of the traffic to the Android app, which means that CAC is going to be increased 5x and ROMI goes negative (-20%). This implies that scaling Challenge App on Android would only scale our net loss.
If we were a larger company, we could absorb the loss. As you’ve probably heard already, Epic Games was fine with losing $26m a month after their extremely popular multiplayer game, Fortnite, was removed from the App Store. Epic Games battled Apple to repeal their decision, resulting in hefty PR and legal costs. Being a small software company, we unfortunately can’t afford to fight with the Goliath. If we had a runway of more than a month, we could have waited longer than these two months with no revenue, during which we’ve been waiting for Apple’s move. But since the lives of all 13 members of our team depend on us, we were forced to make the tough decision to suspend our operations and switch to the maintenance mode until the situation has been resolved.
We have spent the last 6 years of our lives working up to the results we finally saw come to fruition in June and we were thrilled to scale even further in partnership with world’s leading VC firms. The last thing we expected was for Apple to become this ‘black swan’ and put a knee on our neck. We wish the best of luck to all SMEs, entrepreneurs, and developers who are standing up for their rights in the battle for the free access to their products and users.
