Apple’s UK App Store prices will rise 25% following Brexit currency fluctuations
theverge.comGlobalization generally makes things cheaper and easier for consumers, but will also reduce employment in certain areas.
Restoring that employment is a separate track than reducing globalization - that is to say: you can de-globalize and exit whatever trade treaties you like, but those jobs you lost to globalization will not magically come back.
Citizens have been sold a bill of goods in both directions when experts and politicians under-report the side effects and exaggerate the benefits.
So then how do you stop the bleeding in the form of lost jobs to near slave-wage labor?
That is a very good question, and one that I wish more people would ask and consider the implications.
I don't know the answer to that question; I think most economists would tell you that you cannot and you should not try.
Many people talk about "job creation", but a lot of what we hear about job creation is political mumbo jumbo tax reduction bullshit.
Here are a few things that may help job creation from a political or government point of view:
1. Municipalities, State, and the Federal government should rationalize their requirements for starting and running a business. The US is already much better about this than other countries, but reducing bureaucratic friction is always good. This doesn't mean less government, it means smarter government.
2. One quick hit job creator is government infrastructure spending. The US did this after 2008, and so far it's turned out pretty well!
3. In the future there may be fewer jobs. Society needs to start seriously considering localized post-scarcity economies.
"While critics might note that Apple’s price increase is greater than the pound’s loss in value, financial analysts predict that the market still hasn’t fully priced in the cost of Brexit — that is to say the pound still has further to fall."
So what mechanisms keep the price from instantly dropping if "everyone" agrees it should be lower? Market inefficiencies? Or lots of money betting on an upswing?
> ...Apple’s price increase is greater than the pound’s loss in value...
It's 5% more than the pound's loss in value next to the Dollar. But bear in mind that for the last 6 months Apple has simply swallowed a 20% reduction in their (and developers) UK App Store revenue. Look at it that way and we in the UK have enjoyed subsidized prices for most of the last year.
Do app developers get to set their own prices for foreign app stores? Or are the prices automatically and uncontrollably set by Apple, based on US app store prices?
Apple does pricing in tiers. Tier 0 (free) to tier 87 ($1000 USD). You choose a tier which correlates to a fixed price from a drop down menu. These tiers are converted to a localized price through all the stores. The same works for in-app purchases.
Eg: Tier 87 is automatically $1399 CAD, as long as you allow that app to be available in the Canada App Store.
Thanks- Can a developer select one tier for the US and another tier for a different country?
Not with the sale price of the app at least. Just like there is a review process for the app, there is also a separate review process for in-app purchases. 1 tier across all countries for each in-app purchase and the initial sale price.
Now, with that being said, I have not seen an instance of a developer or seller abusing the localization API for this purpose... meaning forcibly charging other stores for the same in-app purchase content. A separate in-app purchase would have to be made in any case for other stores to route to. Apple has a pretty firm fist and I imagine location abuse like this may lead to the seller's account being banned or punished. It may be perfectly allowed however, I haven't dug too deep into the TOS.
I'm not sure I understand your post? I was thinking along the lines of a developer picking a different tier for one territory over another because they disagreed with Apple's default pricing. Maybe they don't like the exchange rate, or they have unique localization costs associated with one territory, or they have additional licensing costs for one market over others. I wasn't really thinking about in-app purchases.
In that case no, you cannot set multiple tiers over multiple territories for the price of an app. There's no override for Apples default "1 tier fits all" pricing system as far as I know.
They're set automatically; but they can be varied manually.
If that's true it would suggest that Apple are not in fact basing their price on expected further devaluations of the pound vs the dollar. So either they don't expect the price to fall further, or they do expect it to fall further but don't want to burden their UK customers with even higher prices at the moment.
Or they are aligning their prices against a psychologically meaningful breakpoint such as the increase from £7.99 to £9.99 given in the article, which happens to be about 25%, rather than a precisely 20% increase which would yield a price of £9.59.
People here are reading way more into that 5% than is remotely warranted and for ludicrously incidental reasons. What's actually happening here is very simple. Apple has been taking a hit for a while. They are re-aligning prices to the nearest logical breakpoint. That's it. All that analyst guff about Brexit downside risks because of a slight percentage discrepancy with exchange rates is just because analysts don't know crap about the real reason - marketing.
Uh 25% increase only leads to round prices at certain points. 25% increase on £1 is £1.25...
Otherwise I agree with you.
They increased the basic price 'unit' from £0.79 to £0.99. Although at higher price points they use a 'unit' of £1.49 that's now changed to £1.99.
Apple uses prices aligned to multiples of these units, with some rounding. So when Apple realigns UK prices to take into account currency fluctuations, they do so based on a combination of how much and how long the exchange rate has changed, and what their target price units and price points are. Also I'm sure they factor in holiday season timing to e.g. avoid negative publicity running up to Christmas.
> "While critics might note that Apple’s price increase is greater than the pound’s loss in value, financial analysts predict that the market still hasn’t fully priced in the cost of Brexit — that is to say the pound still has further to fall."
Someone should probably tell the worlds biggest futures exchange that their forward rate for GBPUSD is wrong then:
http://www.cmegroup.com/trading/fx/g10/british-pound.html
Methinks someone is talking nonsense
> o what mechanisms keep the price from instantly dropping if "everyone" agrees it should be lower?
It would drop. It hasn't, because that is not what the "experts" consensus is
Forward prices are not a predictor, they are simply based on interest rate differentials between two currencies.
Not necessarily - the market has priced in multiple future outcomes according to their probability, each which see a massively different valuation of pound sterling. Article 50/hard Brexit/etc. is now very likely (lower pound sterling value), but there’s still the potential of a late change to this approach or a parliament refusal of the bill (higher pound sterling value).
And of course it suits Apple to focus on the highest probability event, particularly since (unlike FX traders) they don't stand to very quickly lose large amounts of money if low probability but cannot be ruled out yet positive news for the pound happens. The worst case scenario for Apple if the pound rebounds involves people thinking their UK App Store is a bit overpriced until they revise prices again.
GBP/USD is listed as "strong sell" on https://uk.investing.com/currencies/gbp-usd-contracts (right panel)
Earlier today it was "strong buy".
The market has always priced in all of the information that is available to its participants.
The "financial analysts" are talking nonsense basically. If they're so sure it's going to drop further they should short the pound now, as much as they can. That in itself would cause the pound to drop, and then whatever effect they're predicting would be priced in.
No, for several reasons. You might be sure that the value will fall but not know when. There might be short term risks that might make now a sub-optimal time to make that bet. There might be other effects that might mitigate this particular effect - so you might be convinced that Brexit will drive down the pound compared the the value it might otherwise have had, but not know what that price driven by other factors might be. Government intervention might mitigate the effect - George Soros made a fortune betting against the government but many others have lost fortunes the same way. The trading floors eat naive market perfectionists for breakfast.
Isn't that just the fundamental problem with financial analysts? If they were always right they could be really rich really quick. But I've never heard of that..
> So what mechanisms keep the price from instantly dropping if "everyone" agrees it should be lower? Market inefficiencies? Or lots of money betting on an upswing?
Asymmetric uncertainty: some people believe there is a small chance that things could change for the better; in that case, the market will go up spectacularly and Apple will update their prices again. If that doesn’t happen, Apple doesn’t have to change their price again, which is, I presume, a fairly costly operation — but the equilibrium rate with an effective Brexit is lower than where it is now.
Once such situation is if the Parliament refuses to approve the referendum: Courts have rules their vote is needed, and most MPs were against Brexit beforehand.
Are these the same financial analysts that said there was going to be an immediate meltdown post-brexit?
We aren't post-brexit yet. That's more than 2 years away.
I should have been clearer, the analysts said there would be an immediate meltdown in the UK economy after the brexit vote if it was leave.
That forecast was completely wrong, the opposite has happened.
As it's widely been reported in the UK, in both lefty and righty papers, I'm surprised you've failed to see it. It's been mentioned every time we get a positive growth figure, or an unemployment fall, or whatever.
Yes, predicting fuzzy emotional reactions to uncertainty is a lot harder than the analyzing the clear, solid legal and economic changes which are to come.
As has been mentioned on this thread before you posted, those analyses were based on the announced policy that article 50 would be triggered immediately. It wasn't. Long term Brexit is absolutely going to be disastrous for the UK economy, unless parliament can get us on to a soft-brexit EEA membership track.
The tragedy is that the British economy was going well through the beginning of 2016 and after a bumpy road immediately after the vote that momentum has held up over the last 6 months. That won't help us if we really do crash out of the EU hard.
> Long term Brexit is absolutely going to be disastrous for the UK economy, unless parliament can get us on to a soft-brexit EEA membership track.
No. It might be. I'll even accept will probably be. You haven't got a clue, I haven't got a clue. Professors of economics at respected universities don't agree, in house analysts at top financial institutions don't agree. At best you can say that heavily politically influenced bodies tend to agree.
I'm fine with you stating an opinion on this stuff, I have my own expectations (chunky period of inflation and stagnant growth at best) - but I'm awfully tired of people selling forecasts as facts
those analyses were based on the announced policy that article 50 would be triggered immediately
Then they were naive analyses rather than expert analyses weren't they?
Did anyone seriously think Cameron would stay on to implement Brexit? Only someone utterly clueless about British politics could have thought that - it was obvious there'd be a leadership change in the event of a leave vote.
It is also obvious that Article 50 was deliberately botched, the guy who wrote it have said so explicitly. 2 years is a stupid choice for the amount of time available, designed specifically to discourage people from trying to leave. So assuming it'd be invoked immediately anyway was a very bad assumption.
No matter how you slice it, the so-called "experts" were completely wrong and excuses don't cut it.
In the mean time lots of money to be made raising and lowering the price of the pound based on various announcements.
I'm writing a bot that shorts on Donald Trumps tweeting company names...
And, in fact, the talk the past few days from Phillip Hammond/the leaks is that there will be a collapse in the economy ("short term" is a euphemism that can cover just about anything. Short term, the sun will expand and melt the earth).
Yes, but we were told article 50 would be called immediately however it hasn't been.
"This latest round of price changes doesn’t just affect the UK (customers in India and Turkey are also going to see increases).."
OK, '25 percent due to Brexit' is going to get more clicks.
Different countries change over time for different reasons, and Apple tends to change them in bulk.
Are you arguing that the massive drop in the pound isn't due to Brexit? As far as I'm aware even the most rabid Farage-fanciers don't argue that, but argue it's a good thing (Cheaper exports! As though we don't import most of the raw materials, but that's not as snappy).
I was stating the headline was somewhat sensationalist given the statement from Apple was pretty vague.
Where you get me arguing about the massive drop in the pound I don't know?
> Where you get me arguing about the massive drop in the pound I don't know?
Because, Apple has changed it's prices because of the drop in the pound?
The pound dropped because of Brexit.
You said that Brexit wasn't the cause of the price change.
You seem determined to draw me into an argument?
No, but any Brexit discussion is always rife with huge denials and lies.
So when one of the first comments on a report of an actual, verifiable consequence is implying that "This has nothing to do with Brexit and is just lying about it to get clicks", then I think that shouldn't be allowed to just stand on it's own?
Not really, Brexit is the proximate cause for the change in pricing in the UK (since Apple has concerns about currency instability) but that doesn't mean other countries aren't also going to see pricing changes that are unrelated to Brexit.
Apple sometimes eats the currency difference but if they think the currency value will trend down they generally don't.
Apple is full of it. 5/7 years ago it was cheaper to fly to New York from Paris, buy a Macbook Pro there and come back since the dollar was pretty low. And you still had money left! Of course they don't care about the exchange rates when they can charge the same price NUMBER in Euro and in Dollars despite the difference. They also overcharge for UK, the "localisation cost" excuse doesn't fly here.
I'm glad time have changed and there is less fanboism from Apple evangelists online. Their arguments were just obnoxious.
Really? Exactly when was that the case?
I know that dollars = pounds/euros is usually how it works, but the disparity is never quite as large when you consider both the currency valuations and the fact that the price never includes tax.
I can verify the claim, but can't point to specific years. That was however not specifically Apple, but merely electronics in general. I used to import hardware parts through an American friend when he came to visit because it was so much cheaper, and I would say it was more than 5 years ago. Now the difference is negligible.
This is a great example of when to not use percentages in a headline. Or, you know, go for it! If you're trying to get clicks.
Could you elaborate? I don't understand what is wrong with the headline being a fact.
I will elaborate.
Percentages are not good measures of small quantities. 25 percent of zero is still zero.
It's not a meaningful number.
If you're dealing with small amounts, use small amounts. This is junk.
The problem is that apps in the app store have a variety of price points from $1 to $10 and they are all increasing 25%. Would you rather the title of the article be a table that maps the quantity of increase for each price point?
Your range is off by 1. Quite a number of apps are actually cost zero dollars.
This is a great use case for a thing called averages.
The correct title for the article would be this:
"Apps to increase in price by almost nothing following . . ."
Did the prices rise by 25% in GBP or not?
Did the price of anything go up by 25% in GBP or not?
In this case, 25% doesn't matter. It's literally not a big deal. It's 50 pence.
There's another point to be made here that goes along the same lines as this horse-crap. It's this: shit it going to get weird when brexit happens.
Well, we don't know that yet. It's probably true, but we don't know for a fact yet.
But people post shit like this with bullshit click-bait titles, and then who knows what happens next? Why don't you just stop?
Why don't you fuck off until you know something for real is going to happen?
I haven't checked (I don't make enough from it to get excited about it) but presumably my income from the app store from the rest of the world should also increase. Does Apple work out my revenue in Dollars and then convert to GBP at the exchange rate at the time of payment?
I imagine they do, if they're like most other multi-currency platforms. If the license terms are on a percent of revenue basis, they'd more or less have to.
It looks like the GBP has been in decline for years.
Here's the last 10 years: http://www.xe.com/currencycharts/?from=GBP&to=USD&view=10Y
The GBP has been pretty stable against the dollar in normal times. The graph shows two discontinuities: the 2008 crisis and Brexit.
There was a stable level at 1.95 in 2007-2008, then a drop and a sinusoid around 1.55 for 8 years, then another drop to lower levels after Brexit. We'll see where it goes from there.
Yes, but you can also see the decline rate increased significantly after Brexit.
(not that currency exchange rate is by any means a health indicator)
So the pound is soaring higher this morning.. they will have to cut prices!
So much higher: http://www.xe.com/currencycharts/?from=GBP&to=USD&view=2Y
a 2 year chart!? check the 1 day chart. or ok let's see where it is in another 2 years.
Call me crazy but I think some entity is trying to manipulate the market in the short term here. By all reason the Pound should be falling even further with the increased uncertainty of a hard brexit and leaving the single market, instead someone out there is buying up as much as they can. Somethings not right.
Eurozone debt-to-GDP: 92%. This is BEFORE one considers (a) member country debt, (b) troubled bank liabilities which EU must backstop (eg. Deutchebank), and (c) immense social, security and defense costs which EU nations must incur due to recent global events.
By contrast UK debt-to-GDP: 90% and falling, and a US-UK trade deal is likely very soon.
I'd rather own Sterling.
> and a US-UK trade deal is likely very soon
The earliest that this can happen is 2019, when the UK ceases to be a member of the EU. And since EU rules prohibit members from negotiating their own trade agreements, its probably going to be 2020 or later before a deal is signed.
Not true. Article 50 stipulates the maximum negotiating period, not the minimum. T-May could quite legally declare Article 50, negotiate for a day, then join NAFTA the day after...
There are many many thorny issues to be untangled. It's not as simple as saying "we're leaving"; Britain's membership in the EU is a complex thing that's going to take a lot of work to dissolve. The Article 50 negotiations are about those issues, not a future trade deal.
If you just walk away, you leave a mountain of chaos that would have to be handled in courts.
Sure, but it takes two to tango. The EU can't force the UK to wait two years because the UK can simply walk away. This is a loophole that the writers of Art 50 didn't consider.
Theoretically true, but extremely unlikely in practice.
As for the UK joining NAFTA: politically impossible.
> for the UK joining NAFTA: politically impossible.
Maybe not Nafta, but TTIP could probably be signed the day the UK leaves. Whether that's a good thing for the UK... eh.
TTIP is a proposed agreement between the Us and EU. Why would the UK want to ratify it, or even be invited to do so?
Because the UK was a (or even the) driving force behind that attempt, so Ms. May would probably be very happy to sign a quickly-relabelled draft - just s/EU/UK/g and off you go. After all, she will need a quick victory after the breakup, and a TTIP clone would be an easy one. TTIP drafts were always pretty unbalanced towards US interests, so Mr. Trump should be quite happy to sign it as well.
It would be very ironic, in the Morrissette sense: the spectre of TTIP ratification was used by Brexit supporter in the referendum campaign as a reason to leave the EU, and now we could end up being the only country that actually signs it.
No, the UK cannot unilaterally withdraw before the end of the two year period. An earlier withdrawal is only possible if the UK and the EU both agree.
well, technically as long as it is aiming for an hard brexit it can withdraw unilateral whenever it wants. The two year period is a safety blanket to negotiate a better deal while still enjoying the existing rules.
According to the text of Article 50, a withdrawing state remains bound by the Treaties (and thus by EU law) until either (1) an exit agreement is made and enters into force; or (2) two years pass after Article 50 is invoked.
So the UK can't 'withdraw unilateral whenever it wants' without creating a giant legal problem as its erstwhile partners attempt to enforce its (still extant) obligations.
the UK is sovereign, so it certainly can. The other parties can of course impose sanctions (likely) or go to war (unlikely, hopefully).
Sure, if the UK is willing to violate its treaty obligations, it can do whatever it wants. But the context of the discussion was the legal situation under Article 50.
Before the last election the pound was close to $1.65, after the election it started falling and currently the sentiment is we are heading for a hard brexit. I suspect it has found it's new level.
Until that level changes again.
Markets are not and never have been perfectly efficient. This is why traders are able to make money - they use information at their disposal that indicates the market value is incorrect to trade against that value. By definition if the market value was always correct that wouldn't be possible. So there is a feedback mechanism from information to market values, but there are many reasons those mechanisms might not work. There might be other more attractive targets for money that would otherwise be used to take advantage of that information. There might be a lack of liquidity preventing funds being deployed at all. There might be short term risks deterring long term bets on accepted trends.
Imagine if half the currency traders in the world stopped trading. All of a sudden all of those inputs into currency prices would no longer exist. Would currency prices continue being traded in exactly the same way and weeks or months later be at exactly the same value they would have been before? No, because losing all those inputs into the market would reduce the information flow that drives market value. To look at the opposite case, does the world have the ultimate possible expression of the ideal set of perfect currency traders using perfect information? Probably not, so the market value probably isn't what it would be if there were, i.e. the current market prices probably isn't at it's perfect ideal value.
I don't disagree however markets aren't perfectly inefficient either, they do reflect what is going on in the world.
I think what I was trying to put across is there probably isn't much news that could come out of brexit that would push them much lower, the worst outcome for the markets is heading towards WTO rules and that looks like what we are going to get.
Source? Everything I can find says that it is still rising, including several newspaper articles late 2016, but the only data I can find runs up to 2015, including the automatic google-chart:
https://www.google.co.uk/publicdata/explore?ds=ds22a34krhq5p...
Which has UK increasing, and Germany and the EU decreasing.
> and a US-UK trade deal is likely very soon.
Again, source for this, other than magical wishful-thinking? Considering
a) It's still illegal for the UK to make trade deals until it's out of the EU b) "Fast" is entirely based on a statement from Trump. Trump's statements are entirely meaningless because he always says exactly what the person wants to hear, regardless of complexities or whether it's actually achievable (allowing the press to trumpet the statements as fact). Trade deals are never fast because it's never a zero-sum game.
it will be all but signed, ready to go on the first day
there's very little the EU can do to stop it
The UK should read the fine print on such a deal very carefully. Trump has no interest in giving anyone except himself a good deal.
Of course there may not be much room for negotiation given the UK has been successfully burning bridges with the other EU members.
I think they call it "out of the frying pan into the fire".
So; I was going to wait until Monday, but have just read a whole load of statements by Trump that the first day literally means the first day.
So where is the UK trade deal?
> a US-UK trade deal is likely very soon.
Sure, right after Mexico sends a check for the wall.
The UK has enough troubled bank liabilities of its own (e.g. RBS) and its own social, security and defense costs. None of which go away on leaving the EU and many of which increase since they can no longer be shared.
Debt to GDP does not look falling to me: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxe...
Will this affect Apple Music subscription? If so then I'm out.
I don't think they can change that without big consequences. A 9.99 price point is pretty important which is evident given that it costs $9.99 and £9.99 and €9.99.
I don't like prices increasing as much as anyone, but if this gets people to stop and think before buying Apple products then I'm all for it. They have been overcharging for their products for the last 10 years.
So you think the way to stop Apple overcharging is for Apple to overcharge even more? Look, if you just don't want anybody to buy Apple products at all, irrespective of the price, just say so.
Bear in Mind Apple have been eating the post-Brexit drop in their UK revenues with no price rises for the last 6 months.
If you firmly believe that people are choosing to go against their best interests, it's not a far stretch to think that going even further from their best interests would snap them out of it, make them learn their lesson. It's winter here right now and I'll admit to seeing my neighbor's sidewalk covered in snow and ice and thinking "well when someone falls and sues them, they'll finally learn to clean it".
So if the parent believes that Apple is overcharging but consumers just aren't seeing it properly, maybe if they overcharge even more, consumers will finally realize they've been bamboozled the whole time.
News Flash: Developers set the prices for their apps. Not Apple.
Not really. Developers choose a pricing tier for their apps. Apple sets the price of apps in each tier for each currency they support.