Apple's iPad App Approval Rules: One SMB's Tale

Apple iPad 2 3G Teardown

ShareFile on Wednesday released a native iPad application for its file-sharing and backup platform, and it was a long time coming--it had sat ready and waiting since May. The holdup? The app took an arduous, two-month trek through the Apple approval gauntlet.

CEO Jesse Lipson said ShareFile got swept up by Apple's increasing--yet sometimes inconsistent--enforcement of its in-app purchase (IAP) rules. Lipson had been concerned about his company's iPhone app prior to its launch earlier this year because of growing buzz around approval obstacles, but the worry was unnecessary--the iPhone app was approved in less than a week.

ShareFile's new iPad app is functionally very similar to its older iPhone sibling, aside from the obvious difference in screen size. So Lipson said he was "blindsided" when he had to fight a much tougher battle, undergoing two rejections and making a series of changes necessary to appease the final review board. The first red flag was that the iPad app sat in the review queue for about three weeks with no word from Apple. The reviewer assigned to it eventually rejected it because it didn't incorporate the IAP system.

"It was a very big surprise to us. We were totally shocked," Lipson said. "We were also disappointed that they took so long to get back to us."

Apple's terms essentially dictate that other companies must use its IAP system and fork over 30% of revenue generated by the app. ShareFile challenged the reviewer's rejection on the basis that the IAP didn't apply to its Software-as-a-Service (SaaS) model. Lipson said he has no issue paying Apple a finder's fee for new customers acquired via an iOS app, but that the IAP system simply doesn't mesh with ShareFile's platform. He added that IAP is best suited for one-size-fits-all consumer offerings, rather than full-fledged SaaS applications for businesses.

"We have fairly complex business plans," Lipson said. "IAP is just not sophisticated enough to capture that." For example, ShareFile needs to offer business users the flexibility to adjust for changing bandwidth, storage, or license needs. "Their system doesn't capture the situations that a true SaaS app like ours has to deal with," Lipson said. The argument didn't sway the reviewer, however, and the app was rejected a second time. That led to a follow-up phone call with the reviewer.

"She basically swore up-and-down there was no way our app was going to get approved without IAP," Lipson said, adding that the reviewer commented that was especially true for a file-sharing app. ShareFile decided to appeal to Apple's final review board. The decision wasn't without some risk: If the review board sided with the initial reviewer, then ShareFile's hands would be tied: Either implement IAP, or forge a mobile strategy without an iPad app.

It's not like ShareFile had much choice. The bootstrapped, 70-person firm fights for its share of the crowded file-sharing and backup market, and it knew several of its competitors had already rolled out iPad apps--some without implementing IAP--or were in the process of doing so. ShareFile focuses on business customers, for whom mobility is becoming a must. Lipson said around 10% of users have begun using one of ShareFile's smartphone apps since they launched at the end of March.

ShareFile has also rolled out a native app for Android tablets as it rounds out its mobility support, but Lipson said uptake has been slow so far. That's a function of Apple's dominance to date in the tablet market--and the influence it wields over iOS applications as a result.

Apple iPad 2 3G Teardown

"Apple has so much power right now that there's not a whole lot we can do about it," Lipson said. He added: "From a business standpoint we considered it essential to get the iPad app out there. If we needed to implement IAP, we were going to implement IAP, because we had to have the app out there."

The Apple review board finally weighed in that while it would rather ShareFile implement IAP, it would give its blessing without it--as long as every link to sign up for a trial subscription on ShareFile's site was removed. ShareFile removed the links; Lipson said several users have already downloaded the app and then emailed the company asking why they can't sign up. Although Lipson would rather have an embedded sign-up link for prospective customers, he said the app is primarily for current subscribers and he's happy it is finally available to them.

SMBs concerned about the fate of their own iOS apps can glean a couple of lessons from ShareFile's approval experience.

First, don't forget the human element in the review process. There could be some luck in who you draw: "The sense I get is there is a lot of variability between reviewers," Lipson said. "We may have just gotten a certain reviewer for the iPhone app who interpreted things a certain way and let us through, and for the iPad app we might have gotten somebody who had a very different interpretation."

Second, if your app is rejected, don't fear the final review board--it's not a doomsday scenario. Though ShareFile had to make key revisions to steer clear of IAP, the board ultimately stamped its approval. In the end, Lipson found the final review process reasonable.

The real problem was how long it took for that to happen, Lipson said. Speed is often a key competitive advantage for a smaller business like ShareFile. In this case, they were hamstrung by a giant company. Lipson has an idea for his fellow CEO Steve Jobs that might produce a nice ancillary revenue stream for Apple: He said ShareFile would have gladly paid a fee to expedite the review process and facilitate better business-to-business communication--perhaps as much as $500--because the app was a strategic priority.

"It still feels like there's a real arbitrary nature to the speed of the review process and the conclusions that the reviewers come to," Lipson said.

Lipson said it took 30 minutes to publish ShareFile's Android apps, and he likes that his company can offer its BlackBerry app for direct download outside of the RIM ecosystem. For the time being, though, Apple holds the cards when it comes to mobile apps.

"It will certainly be nice if [Apple] starts having a little bit less power and a smaller market share, and they have to start falling in line with what the other guys are doing," Lipson said.

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