As reported by VentureBeat and others today – Apple has pulled the extremely popular AppGratis from the app store for violating two provisions of the App Store guidelines:

2.25 – Apps that display Apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store will be rejected.

and

5.6 Apps cannot use Push Notifications to send advertising, promotions, or direct marketing of any kind.

While these provisions have been there for a while, there have been very little known enforcement until now. The practice of cross promoting other apps in an app you own via display or push notification is commonplace, and frankly is one of the major ways that app developers can earn revenue.

Particularly of concern is the enforcement of 5.6. A number of apps in the app store today are what I would categorize as “App Discovery” apps – their entire purpose is to facilitate their users to find new apps in the App Store, particularly free ones or ones that go from paid to free. Some examples of these would be:

• FreeAppADay
• AppsFire
• AppsGoneFree by AppAdvice

and plenty more. Most of these apps use push notification to let their users know what apps have gone free or on sale – keeping the user from having to remember to open and check each app every single day. As users – they download these apps specifically for this purpose, opting-in to push notification and with the ability to quickly and easily opt-out if they decide the advertising is not something they wanted in the first place.

App discovery in iTunes is a major problem that gets worse each year. As more and more apps enter the App Store (with few leaving), the ability for new apps to get discovered, or existing apps to stay competitive gets harder and harder. Large developers and brands have the ability to spend big bucks on advertising – but the smaller developer with less resources often only has one good shot at buying advertising due to the cost, and need to get the apps rank high enough for the organic boost that comes from being well ranked in iTunes.

App discovery apps help solve this problem by giving smaller developers the ability to boost their ranking up through a targeted burst of ads. Because push notifications can be delivered to users at a rapid pace, they are able to drive downloads rapidly – and the rate of download of an app seems to be one of the main factors in determining an apps rank. The same number of downloads achieved through display advertising will generally not drive the same lift in rank because with display ads – you have to wait until a user goes into another app, sees an ad, and chooses to click on it and follow through with a download. A process which can take much longer, and has  much lower conversion rate leading to a higher cost for the developer.

App discovery apps are also big business. AppGratis claims almost 10 million users, and has $13.5 million dollars in venture backing to support it’s rapid user acquisition. With app ranking being so important to discovery, developers are willing to pay big bucks (and give up revenue by making their app free) in the hope that the burst of new users will create a viral effect and people will start to share the app with friends, or buy select in-app-purchases. After what is often hundreds of hours of development time, it is important that they can drive revenue and put food on their table so that they will continue to improve their apps – a benefit to everyone who owns an iPhone or iPad.

We understood when Apple banned TapJoy’s incentive’s download model – it encouraged downloads of apps not because someone wanted the app, but because they wanted the incentive, creating artificial rank boosts where there was no real interest. We also understood and appreciated when Apple cracked down on “top 25 guaranteed” networks like AppMagenta and Gtekna that seemed to be relying on bot farms to push fake downloads – but apps like AppGratis others are downloaded by users specifically for this purpose. Real people are download the apps these systems promote, and not because they have an incentive to do it other than wanting to save a few bucks on downloads.

As Apple cracks down on legitimate ways to promote apps, they alienate the smaller developers who helped make the App Store what it is today. Will more developers focus their time and efforts on Android where the marketing options are larger and there are multiple distribution options, or will Apple take significant steps to improve the nightmare that is currently iTunes app discovery?

Drop us a comment below and let us know what you think! ~Aaron