Why is Apple scared of NFTs?

You may have seen the recent news that coinbase had to stop the transfer of NFTs between wallets because Apple had ridiculously started to demand their normal take of the gas fee in the transfer. This is the fee that goes to the eth or whatever validators and not the company themselves (https://www.theverge.com/2022/12/1/23488448/coinbase-ios-wallet-app-apple-nft-fees-in-app-purchase-store).

Apple have also made it clear to creators that they cannot utilise NFTs to unlock extra features, or allow them to be purchased through anything but apple's own payment system in a recent update (https://techcrunch.com/2022/10/25/apple-cracks-down-on-nft-functionality-social-post-boosts-with-app-store-rules/).

So what's going on? Why are Apple so scared of NFTs?

Well, that's easy. It isn't that they don't understand or are confused. NFTs aren't a security risk, or something users need to be protected from. Apple are worried that they offer a way around the fees Apple earn on all purchases in the walled-garden of their app store. This currently has a yearly income of many billions of dollars, 31 alone in the last quarter (https://sensortower.com/blog/app-revenue-and-downloads-q3-2022). If the app store alone could be listed on the stock market it would be one of the best profit earning entities in the USA.

So how do NFTs get around this? Aren't they just silly monkey pictures? They can be. But they are much more and have a lot yet to give.

I know that NFTs have got a bad rep. But the side of them that is important here is the immutability and the way they can guarantee an ownership of something. For instance, a company could mint and sell an NFT that acts as a subscription access to what would otherwise be a paid service. They control how many exist, and the initial price. If they do so then Apple would not be able to get that subscription fee. All it would need would be the app to be able to connect to a crypto wallet app and see that the NFT is owned in that wallet. The technology already exists. The NFT could also be traded outside of the Apple ecosystem and that would be a further source of revenue Apple would miss out on. Apple don't want to miss out and they are making moves.

This is a knock for NFTs on a whole, but also a reason why I think they have a big role to play in the future. I can easily see a situation where Apple are forced to backpedal on this. They have been smart in attempting to ban them now before a popular use case is established. But I don't think they will be able to hold this line in the long term. All it would take would be for a different brand of phone to allow this to eat into the hardware revenue and they would need to reconsider. We've obviously got the Solana phone on the way (insert pun about being broken) and Google are yet to take a stance.

If Apple continue to stop apps from allowing NFTs to offer the sort of functionality that they do (e.g. unlocking features), developers are ultimately going to move elsewhere. Clearly Apple want revenue. But so do developers. And while they can code royalties from NFT sales (although that's another can of worms) that Apple can't get to, they are going to look to do that. We have Epic taking Apple to court over revenue (https://www.macrumors.com/2022/11/14/epic-games-apple-appeals-court/). And we might not be far away from a test case on NFTs.

Now your response to all of this might still be "NFTs suck". But I think it's important to pressure the likes of Apple on things like this and not just cave in. Whatever Apple say, they are trying to establish a future where everything you do online that involves money gives a slice to them. And this can't be bad for innovation long term. There are a lot of bad takes on this such as "Apple has no idea what NFTs are..." (https://www.youtube.com/watch?v=Gx2VgMhOoWg) and it's important to realise that they know EXACTLY what they are doing.

OG coinbase thread: https://twitter.com/CoinbaseWallet/status/1598354819735031809?s=20&t=NkEYWXRllNyTXlrrvrJYng