Apple's NFT policy has sparked debate.
Apple updated its App Store guidelines on October 24 to change its policy regarding non-fungible tokens, or NFTs.
The new policy expressly permits app developers to "sell [non-fungible tokens] and sell services related to [NFTs]." This means that apps can support the "minting, listing, and transferring" of NFTs within the app.
However, there is a significant caveat: the policy prohibits the sale of "utility" NFTs. App developers are not permitted to use NFTs to unlock in-app functions or features, nor are they permitted to redirect users to external purchasing mechanisms.
These constraints will almost certainly be detrimental to blockchain-based games that use NFTs. However, it is unclear that such apps have a large presence in the first place, as a search of its app store yields only nine NFT apps.
Apple first began supporting NFTs in late September, after being chastised for relying on its payment mechanism. This strategy entails Apple levying a 30% tax on NFT sales in high-revenue apps, a policy that also applies to other apps with transactional features.
Why You Should Be Concerned
Apple has gotten involved in cryptocurrency to gain a piece of an otherwise decentralized market and capitalize on customer data because they can track purchases and transfers made in-store.
The guidelines contradict cryptocurrencies' and NFTs' decentralized potential, as they enter a centralized platform controlled by a central authority and can be tracked and deleted at any time, resulting in censorship and the prohibition of specific functions.
However, numerous restrictions are disadvantageous for NFTs and GameFi projects, as they are all subject to the 30% Apple Tax and all of their payment-related functionalities and features are locked behind the App Store's paywall, as they can only be activated in-store. Apple is centralizing NFTs and GameFi projects, creating a barrier for developers that did not exist previously in the decentralized space.
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Could Apple's policy have an impact on web3 and NFTs?
The implementation of these guidelines may cause havoc in the NFT market. This is especially true as more people enter the play-to-earn space. They hope to do so by entering the mobile device market, which is already a thriving one for games.
Apple's rules on NFTs and content locking could have a significant impact on the growth of the NFT market and, potentially, web3. On the one hand, some may applaud the company for making content available to all. On the other hand, it prevents one of the key characteristics of NFTs.
Other payment methods that redirect users to different websites or apps are not permitted in games. Any premium NFT functionality in-game can only be unlocked via an in-app purchase, not by directly using the NFTs.Related reading:The Future of Mobile Gaming: Blockchain Gaming
This simply means that anyone attempting to compete with Apple in terms of primary or secondary NFT purchases is out.
Any blockchain-enabled apps or games cannot use their mechanism to unlock content or functionality, where the updated terms cited license keys, augmented reality markers, QR codes, cryptocurrencies, and wallets. Apple must be able to control and track any purchase made to profit from it.
Collectors who want to display their collections, on the other hand, do not need to be concerned, as NFT collections can still be displayed and viewed by others. This assumes that there are no buttons, external links, or other types of call-to-action that may redirect customers to purchasing mechanisms other than in-app purchases.
Licensed exchanges can still facilitate crypto transmissions, resulting in much more convenient sales of any listed GameFi-related tokens, assuming they are only available in countries and regions where the app has the necessary licensing and permission to provide the services.
NFT pricing is currently uncertain
Apple is well-known for deducting 30% from in-app purchases. The company has refused to budge on this position for NFTs, dubbed the "Apple Tax." This creates a pricing issue for NFTs because in-app purchases must use pre-set prices such as $14.99. However, this is incompatible with the market's dynamic pricing.
However, not everyone is pessimistic about the future of NFTs on Apple platforms. Yat Siu, co-founder and executive chairman of Animoca Brands, believes that as blockchain gaming grows in popularity, Apple will no longer take a 30% cut. The most recent guidelines are a departure from that, so it's unclear how the future will unfold.
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The new policy has elicited a mixed response. Some have praised Apple's policy, with headlines from Forbes and Game Developer highlighting the fact that the new store policy explicitly allows for NFTs.
Others have criticized Apple for its restrictive policy and its ostensibly excessive 30% cut.
Epic Games CEO Tim Sweeney has criticized both sides, claiming that Apple is neither for nor against NFTs and is only motivated by money. "They support NFTs that are taxed and prohibit NFTs that are not taxed," Sweeney observed.
Some have pointed out that Apple's restrictive NFT policy is not unique. The absurdity of Apple introducing "the same in-app purchase rules that other apps have to, and watching the entire [tech] sphere meltdown in response," noted Bryan Ross, a staff software engineer at Docker.