# How platforms squeeze the apps built on top of them
In 2008, Apple opened the App Store and told developers they had found a goldmine: a built-in audience of millions, one distribution channel, no need to build their own payment rails. By the early 2020s, some of those same developers (Spotify, Epic Games, Basecamp) were suing Apple, testifying before Congress, and lobbying regulators in Brussels. Same platform. Same 30% cut it had charged from day one. What changed was the size of the businesses now trapped inside it.
This is the lifecycle every platform ecosystem eventually reveals: welcome the apps, grow the pie, then reachreachThe number of unique people exposed to your message in a given period. Unlike impressions, reach counts each person once, no matter how often they see it.View full definition → back in and take a bigger slice. This lesson breaks down the exact mechanics platforms use to do it.
A platform is a business that creates value primarily by connecting two or more groups: buyers and sellers, developers and users, merchants and shoppers. Think Apple's iOS, Salesforce's CRM () infrastructure, or Shopify's e-commerce backend.
No platform can build every feature its users want. So it opens an "app store" or "marketplace" layer: Apple's App Store, Salesforce's AppExchange, Shopify's App Store. Third-party developers fill gaps (accounting integrations, loyalty programs, shipping tools) that would take the platform years to build itself.
Early on, incentives align. The platform wants developers to join because more apps make the platform stickier for end users. Developers want in because the platform hands them distribution they couldn't otherwise afford.
This is the honeymoon phase. It never lasts once an app category proves it can generate serious revenue.
Platforms reclaim value from their ecosystems through three repeatable mechanics.
The simplest lever: raise or restructure the cut the platform takes on transactions.
Apple's headline App Store commission has been 30% on most digital goods and subscriptions since 2008, though it introduced a reduced 15% tier in 2021 for developers earning under $1 million a year and for subscriptions after year one (Apple's official rate card). The number itself matters less than the fact that Apple, not the developer, unilaterally sets it, and that it applies even to relationships the developer originated (a user who found an app entirely through word of mouth still pays through Apple's in-app purchase system on iOS, at least historically).
Salesforce's AppExchange uses a different structure: it doesn't universally take a revenue cut like Apple, but requires listed apps to go through a security review and often pushes vendors into revenue-share deals for co-selling or premium placement, and the OEM (original equipment manufacturer) pricing arrangements for deep integrations can be steep.
Shopify takes 0% listing commission on most app sales in its App Store as of recent years, a deliberate contrast to Apple, but it applies a revenue sharerevenue shareThe percentage of total industry sales your company captures in a given period. It measures competitive position relative to rivals in a defined market.View full definition → (historically around 20%) on apps sold through certain referral or partner programs, and it earns separately through Shopify Payments, pushing merchants toward its own payment rails with fee penalties for using third-party processors.
The second lever: once a third-party app category proves demand, the platform builds its own version and bundles it for free or near-free.
Classic examples outside SaaS include Microsoft bundling Internet Explorer into Windows, which triggered the landmark *United States v. Microsoft* (1998-2001) antitrust case. Inside SaaS, the pattern repeats constantly:
Bundling is powerful because the platform doesn't need to be as good as the incumbent app. "Good enough and free, pre-installed" beats "better, but $4.99/month and requires a download" for most users.
The third lever is subtler and often more devastating: restricting the data or APIs (application programming interfaces, the technical channels that let outside software talk to the platform) that third-party apps depend on.
Facebook famously cut off developers' access to friend-graph data in 2015 after building an ecosystem around it, killing numerous social apps that depended on that data flowdata flowAn automated sequence of steps that moves data from source to destination: ingestion, transformation, validation, and loading, so it arrives clean and ready to use.View full definition →. Twitter (now X) sharply restricted free APIAPIApplication Programming Interface: a standardised interface that lets applications communicate and exchange data without knowing each other's internal workings.View full definition → access in 2023, forcing many third-party clients and analytics tools to shut down or pay steep new fees.
In SaaS specifically, Salesforce controls APIAPIApplication Programming Interface: a standardised interface that lets applications communicate and exchange data without knowing each other's internal workings.View full definition → call limits by pricing tier, meaning an AppExchange partner's product can be throttled or made economically unviable for customers on lower Salesforce plans. Shopify has periodically tightened checkout customization APIs, restricting how deeply third-party apps can modify the checkout flow, partly for security, partly to protect its own Shopify Payments and Shop Pay checkout experience from being routed around.
The mechanism is quiet but total: you don't need to ban a competitor's app, you just need to make the plumbing it relies on slower, costlier, or off-limits.
Knowledge check
1. Why do platforms initially open their ecosystems to third-party developers rather than building every feature themselves?
2. According to the lesson's framing of the platform lifecycle, what typically triggers a platform to start 'squeezing' an app category it previously welcomed?
3. What is the key distinction between the 'honeymoon phase' and the 'squeeze phase' of the platform-developer relationship, given that the take-rate (like Apple's 30% cut) may stay identical throughout?
4. Select ALL correct answers about what defines a 'platform' business in this lesson's sense.
Select all the correct answers.
5. Select ALL correct answers about why large, successful third-party developers become especially vulnerable to platform squeezes over time.
Select all the correct answers.
This all comes down to switching costs and distribution control.
An app built on Shopify's infrastructure cannot easily "leave" Shopify without its merchant customers rebuilding their entire storefront elsewhere. An iOS app cannot reachreachThe number of unique people exposed to your message in a given period. Unlike impressions, reach counts each person once, no matter how often they see it.View full definition → iPhone users except through Apple's store (absent regulatory intervention). This asymmetry is the core power dynamic of the module: the platform owns the distribution chokepoint, and the app is a guest, no matter how large it grows.
Regulators have started pushing back. The EU's Digital Markets Act (DMA, in force since 2023) designates large platforms as "gatekeepers" and forces some, including Apple, to allow alternative app stores and sideloading (installing apps outside the official store) on iOS in the EU, plus alternative payment systems. In the US, the *Epic Games v. Apple* litigation (initial ruling 2021, with an injunction significantly strengthened in 2025) forced Apple to allow US developers to link out to external payment options without the standard commission, a meaningful crack in the toll booth.
These interventions show the countervailing power in this dynamic: regulators (DMA enforcers at the European Commission, US courts, the FTC), large developers with enough revenue and legal budget to litigate (Epic, Spotify), and occasionally coordinated developer lobbying (the Coalition for App Fairness). Small developers rarely have this leverage alone; they absorb the squeeze or exit the category.
Why Apple and Epic Games Are Fighting
Say a subscription productivity app on iOS charges $10/month and has 100,000 subscribers.
That 15-point difference is the entire margin many small SaaS (software-as-a-service) companies operate on. It is also why the threshold rules (who qualifies, how it's calculated) are themselves a site of negotiation and lobbying, not just an abstract policy detail.