Apple to Epic: Sue me? No, sue you, pal! Apple has filed a countersuit against Epic Games as the two companies continue their battle over App Store royalties. The Cupertino giant is seeking a declaratory judgement [PDF] for breach of contract as it claims Epic has broken their agreement to distribute software and in-app purchases though the App Store. The filing is …
I wouldn't be so quick to dismiss Apple's claim just yet. Epic did breach their contract agreements with Apple. That much is plain to see. However, Epic MIGHT have a claim against Apple for anti-competitive behavior. As to how this plays out in the courts, your guess is as good as mine. All we can do at this point is sit back, wait, and watch....one court filing at a time.
Side note: In the Constitution, there is a clause about the supremacy of federal law, and federal law supersedes any contract within the U.S.A. So if the court finds that Apple violated the Sherman Act, Apple might be forced to open their closed ecosystem. As I said, this could go either way.
Then again they probably don't... But, please feel your freest to direct me to the nearest >insert diety< engraven stone where it states that life, is not only fair. but, by its very esssence must be.
Epic think they are too cool to play by the rules, so reality came, and smacked some sense into them. Hopefully the more earthly based Courts shall do the same.
Is Android similar though?
https://www.wired.com/story/install-apps-outside-app-store-sideload/ suggests that as an Android user I can pretty much install anything I want to.
...but with iOS I would be forced to explore various jailbreak-options that Apple seem eager to eradicate.
There is also the question of the special treatment that e.g. Amazon receives. (and Spotify, if memory serves me right)
>While the iOS is a strong walled garden I am not sure if one can argue anti-trust.
Depends on how you argue things. Apple have a total monopoly on the iOS walled garden.
Remember when MS was hit, there were fewer installations of Windows worldwide than there are iOS devices today.
The "number of installations" has nothing to do with whether a company is a monopoly or not. You could make a product that sells only a thousand a year and be a monopoly, or sell a billion units a month and not be. What matters if how much of the market you control.
iOS is under 50% of the smartphone market in the US, and far less in the rest of the world, so they are probably good from that perspective (in some places 50% is more than enough to be a monopoly, but not the US) But there is only one other competitor, so while they aren't a monopoly, Apple and Google together are an oligopoly which is often seen in a similar light.
I know people want to argue "Apple has a monopoly on apps for iOS" but it doesn't work that way, you don't get to qualify markets down to whatever level you want. It has to a functional market without alternatives - the "smartphone market" is the relevant market, not "iPhones" because there are many smartphones out there that provide the same functionality as an iPhone. Otherwise you could claim almost anything is a monopoly: Samsung has a monopoly on "phones larger than 6.7 inches that include a stylus", or Google has a monopoly on "phones that get special Android features".
It's an argument, and one that Apple themselves have made, that the market is "smartphones". However epic don't make smartphones, they make apps. So the market is "apps for $thing". Now Apple will certainly argue that $thing is "smartphones" and therefore the market is "apps for smartphones". But this argument, as strong as it may be, ignores a couple of important points.
First: The apps for Android and iOS are mutually incompatible. There are frameworks and languages that allow you to write once and compile for either, but that compilation step results in different apps for each OS. This may constrain the market, it may not, I don't know.
Second: Few users move between iOS and Android, sure some do, but as both are closed ecosystems users invest in one or the other and switching becomes a significant investment, in time effort, and money. Again this may constrain the market or it may not.
Now if I were fighting an antitrust case against a highly litigious company with very deep pockets I'd want to get some very good legal advice first. As these points haven't yet, to my knowledge, been tested in US courts I reckon it could go either way. But epic are presumably confident enough in their case to not only sue Apple, but to goad Apple into triggering that case by flagrantly breaching their contract. I suspect Apple will want to settle before the market is clearly defined by the courts.
Epic's market is the entirety of what they offer those apps for. They can't claim iOS is a specific market, when they offer Fortnite etc. on Android, Windows, macOS, PS, XBox, maybe others like Switch? If there was something special about iOS or iPhones/iPads that meant they could ONLY offer Fortnite on it, and alternatives had insufficient performance or didn't offer the right APIs then maybe they'd have an argument.
This would be like McDonalds crying monopoly if a mall had some really restrictive rules that banned signage, meaning they couldn't open a McDonalds with the big golden arches sign. It isn't like there wouldn't be other places they could open a McDonalds, they just couldn't open one inside that mall.
The available evidence would suggest that Epic can claim that iOS is a specific market. The fact that they appear to be doing just that would support the idea that they can make that claim. The claim has yet to be fully tested in court. The claim may fail, or it may succeed. I don't know, I'm not a legal expert.
And your analogy is pretty close, but it's more like the owner of a large chain of popular malls putting up those restrictions and McDonalds crying foul, than one single mall. But otherwise it holds rather well. And until a Court decides the issue either side may prevail.
It is worth noting that although Epic is making the headlines they are not the only entity upset with Apple's practices regarding the iOS app store. If the decision goes against Apple they stand to lose a lot of control. If the decision goes against Epic they stand to lose access to iOS users. Apple have more to lose in this case, but neither side can be complacent.
I can still see this issue going either way, neither side's argument is particularly concrete to my mind.
If Apple's walled garden is antitrust and they need to reduce their cut or open to outsiders, then the same will be true of the walled gardens operated by Sony and Microsoft in the console world. They even take a cut in the physical world if you buy a game at Walmart or wherever.
Epic itself might have to take a smaller cut from its own games store, which would be pretty funny if it happened.
It is one thing for apple (or Google) to take a % cut of the app purchase price but why oh why should apple be able to dictate how in app purchases or subscriptions are done?
It seems like epic are not even able to advertise that people can use none apple solutions (within the app).
That just seems totally wrong.
"Second once an app is available it is pretty much survive or sink without interference from Apple or Google."
Not really. There is no option with IOS to sell your software through a third party. Unless the user jailbreaks their phone, they can't load software from anyplace other than Apple's app store unless they are a registered developer. This is the number one reason I have an Android phone. Cost is another big factor. I really don't see any value for me with the most expensive phones. The only one I'd consider spending big bucks on is the CAT phone with the IR camera built-in. Very useful for trouble shooting electrical/electronics.
"Apple might be forced to open their closed ecosystem."
Perhaps, but this doesn't seem to be the case that would crack that nut. Epic breached their contract with Apple and I expect the contract states that breaches can result in removal from the Apple Store along with other remedies.
If Epic had a viable suit that claims they have software they'd like to peddle to IOS users and meets all of Apples requirements that Apple refuses to publish because they have a secret agreement with another publisher that protects them from Apple listing competing software.
Epic's issue right now isn't one of anti-trust. Apple is certainly monetizing their control over IOS and their IOS customers. Something that would be hard to do with desktop/laptop users. This is why I do "work" on my desktop and use my mobile devices for very limited things. The portability is a big step forward, but the input methods and the umbilical to the makers are a huge steps backwards. I see the same thing with newer cars. No longer is your car a stand alone product but remains attached to the manufacturer forever. If they drop support, your car is worthless and the really convenient features become antiquated very quickly. I'd rather add my own satnav and entertainment system than to have them inextricably integrated into the car. It might also mean a massive expense to "upgrade" a core black box so the car can continue to receive limited updates.
"You Keep Using That Word. I Do Not Think It Means What You Think It Means" - Inigo Montoya
This is a contest between scumbag corporations, and California's SLAPP laws are irrelevant here. Epic is clearly & deliberately in violation of it's contracts with both Google & Apple. They clearly are hoping for Apple or Google to settle as courts are pretty unlikely to rule in their favor based on established Contract Law, and that settlement to undermine the other in the marketplace. It's a gamble and it will be interesting to see how it plays out.
"Epic is clearly & deliberately in violation of it's contracts with both Google & Apple"
you're right, but Google & Apple are clearly in violation of anti-trust laws. They only got away with this until now because nobody dared to sue them, but now that the cat is out of the box, other competitors will want a piece of the cake and will testify.
Therefore, at the end, Apple will loose. Like with the spare-parts case.
That's my guess right now as well, although my legal knowledge is limited, this seems like a fairly clear case of anti-competitive behavior. Google less so than Apple, as other companies aren't barred from running their own app store in Android, but both are clearly trying to push away any form of competition when it comes to access to apps. Apple is most blatant though, they are simply saying that if you want to use software on their platform, they must purchase that software via their store and no other, there's really not a lot they can say to defend that.
The easy defence this time round is that Epic isn’t entering into the smartphone market but the video gaming market with their software, where Apple are charging less than their competitors for reviewing updates ($250/year) and not much more than the competitors for processing purchases. Why is this the case? The PlayStation Store and Xbox Live Marketplace are not smartphone marketplaces and the same product is sold there too. The market is dictated by the product you sell, not where you market it.
Unlike Spotify, Epic don’t seem to have a leg to stand on. I wish Spotify the best of luck with proving Apples monopoly abuse and I wish Epic the best of luck in keeping their developer account for Unreal Engine but Fortnite needs to respect the rules.
>Why is this the case? The PlayStation Store and Xbox Live Marketplace are not smartphone marketplaces and the same product is sold there too.
So all Apple need to do is to demonstrate that a member of the public can buy the iOS version of an Epic game from either the Playstation or Xbox store and install it on their iOS device, without involving Apple...
Ie. Fortnite (iOS) is not the same product as Fortnite(Xbox).
"So all Apple need to do is to demonstrate that a member of the public can buy the iOS version of an Epic game from either the Playstation or Xbox store and install it on their iOS device, without involving Apple..."
That's not the issue. The problem arrises from Epic violating the terms of the contract they have with Apple. If they tried to argue anti-trust, the judge would/should terminate that line of defense from being considered. If the judge wanted to be very loose, he could ask Epic's lawyers to convince him first that it would merit being heard in open court. I don't see it.
Epic wants a bigger piece of the pie and decided to just take it without saying "please sir, may I have some more". Not being a ignorant waif, they are up for a spanking.
>Epic wants a bigger piece of the pie and decided to just take it without saying "please sir, may I have some more"
Which is exactly what Apple did when it set up the iOS walled garden and set the tariffs at the level they did...
Yes, Epic have gone about starting an anti-trust case in a cack-handed way and as you note, will probably get this defense for their action thrown out, which will be a shame, as it is time the monopoly app store business models where legally investigated.
That is of course a different story, and how much a jury will see the phone market as being something compleatly other then say ye ol traditional PC Market, and that should not be to wide a strech. As everyone plus the family dog, can scrape your "mobile waste data" for fun, and PROFIT. Although a few people have mummered about this before. most just chose to look the other way for the sake of an easy life, of point to point GPS Navigation, Wireless Payments, or for the more mentaly ill amoung us.... Targeted Ads.
So let us NOT go saying that this is not how the PC Market does things. Because the Phome Market has never had anything outside of the wider Internet, and all that in there lay. to do with it.
And for the second time in really not very long at all, I am ok with them being the only winners.
Locked down walled garden monopoly vs online digital tat slinger targeting children with useless habit forming rubbish. I don't know who I look down upon more. (Maybe Epic, maybe...)
Epic are probably not doing this for customers, or other developers.
I found it interesting to read a few weeks ago that Epic's ultimate goal is to open another app store on iOS.
I'm not sure that is a good thing. Through their apparently rigorous checking, they've kept iOS relatively virus free. Certainly when compared to Android. Yes, I can install anti virus on my phone, but while I am happy to have an anti virus running on my computer (whatever the OS it's running), my computer has enough power available that the Anti Virus really doesn't slow it down much, or use enough battery power for me to notice. Neither is true for a phone, where resources are far more limited.
Also, are multiple app stores good for the consumer? People often say that more stores means cheaper products. In general this is true, but I'm an active PC gamer. Have been since the late 90s. I paid between 30 and 40 pounds for a AAA game then, and even with access to steam, Epic Store, Gog, Battle.NET and various other app stores, I'm still paying 40 pounds or more for a AAA game. Yes, older games are sometimes heavily discounted (especially on GOG), but they were before all these app stores appeared. In short, a greater number of suppliers arguably has NOT reduced PC game prices.
Don't get me wrong: I buy from all of those stores, but it also means I have to have multiple app store clients on my PC, which, TBH, is a waste of resources.
but I'm an active PC gamer. Have been since the late 90s. I paid between 30 and 40 pounds for a AAA game then, and even with access to steam, Epic Store, Gog, Battle.NET and various other app stores, I'm still paying 40 pounds or more for a AAA game.
...and in the late 90s that game came on a physical medium, in a box, and had been transported to a shop somewhere, yet now the digital download are still often pricier than the physical copies.
Oligopolies don't really help anyone it turns out.
Has anyone else noticed that the other 800 lbs gorilla in the room is strangely silent? While Apple and Epic conduct their kids' playground fight in a very public way, nary a peep from Google. The nice thing about Android is that you can install apps without the Google Play Store, so Epic has a way in for a competing app store. Apple, on the other hand is a completely closed ecosystem. You have no choice but to use their app store...unless you have a jailbroken iDevice where you can install whatever you want.
Epic MIGHT have a case against Apple for being anti-competitive as a result, although I am not a lawyer. To be fair to Apple though, Apple does guarantee that all apps on their store function are are safe, which is the result of that closed ecosystem. However, Epic did violate the contracts they had with Apple, which is the core of the dispute.
Not sure where you dredged that idea up from. Microsoft are constrained because they DO have a monopoly on desktop operating systems (around 90% of the market when I last looked).
Apple on the other hand have about a 20% market share for mobile phones. That's not a monopoly. The argument that they have a monopoly of Apple phones doesn't fly as that has been tried and found wanting in other product areas. Unless a company holds monopoly control of a market for a class of product (e.g. mobile phones), and use that position to prevent other competition from joining the market (looking at you Qualcomm) then there's no problem.
Microsoft held a monopoly in desktop operating systems, and tried to use it to prevent others from joining the market (DRDOS, Linux etc), which got them into trouble, and they've been careful ever since.
Apple does have a monopoly on iOS devices, a market that is worth more than the Android market (I recall Epic saying 60%of their mobile revenue is through Apple). The critical battle of this suit will be defining the market, and Epic will point to Apple restrictions on transferring in app purchases between platforms as creating a distinct market.
I'd expect that's covered by the "argument not flying" portion of their response — I don't actually think there's a (legit) situation where a licensed iOS can be installed on a non-Apple device, so it wouldn't be regarded as a monopoly the same way you couldn't say Microsoft have a monopoly on Windows PCs (but they do on desktops).
The reason microsoft got hit for the IE thing was using their dominance in OS to push their Browser.
Apple's market share in more devleoped nations is considerably larger than 20%
(India skews the average, being 92% android and only 4% iOS- with 813 million mobile users)
in the US Apple have a 60% market share, in the uk its closer to 50%
Under UK Law the definition of a monopoly is 25% market share in the US Federal Law, its the less defined "significant and durable market power"
IMHO, Apple dont have a leg to stand on they have a monopoly and cant justify the commision rates as costs + reasonable profit.
Google have a few legs, but still its an effective monopoly and the commision rates are THE SAME
Not according to Kantar
https://www.kantarworldpanel.com/global/smartphone-os-market-share/#
Roughly 45% at the moment according to them. Also Europe as a whole has a much lower iOS uptake than the UK (which seems to be an outlier). Germany is at about 25%, while Italy is at around 16%
> they've been careful ever since.
Oh really? Like when they bought Nokia to kill their Maemo and Symbian platforms, and push their god-awful Windows Mobile in their place? (by setting them up with a stooge CEO to tank their share price first, no less!)
Or when they bought LinkedIn, to give them effective control over everyone's job prospects?
Or when they bought GitHub and NPM, to tighten their deadly embrace of those pesky open source projects?
Microsoft have a monopoly on Evil, as far as I can tell. They always had, since the 90's. If they can see a beneficial precedent from this case, they won't hesitate to try it, is all I was saying. ;)
No, not about those. The "careful" referred to desktop operating systems, where they have a monopoly. They've been careful not to do too much to competing desktop operating systems so the courts don't go after them again, because the courts would likely hold that they still have a monopoly. They don't have a monopoly in mobile OSes, or in code repositories, or in social media, or in job placement websites. Different markets, different levels of control, different restrictions. What's illegal is to use dominance in one market to either try to destroy competition in that market or obtain dominance in another market. Know this so you can argue on the facts.
They're already trying it to a certain degree.
When I built a new system in Jan 2019, I finally and reluctantly moved onto windows 10 Pro... but I locked it down as best I could with OOSU10 and that involved removing cortana and the windows store amongst other things to disable telemetry and so on and so on.
When I wanted to install my printer, I initially set it up wireless and didn't need to install much at all.. but when I needed to run some diagnostics and cleaning... I found I needed the epson software.
So off I go to the epson site to grab it... nope.. can't do that... it redirects you to the ms store as the only place you can get it... and I'm not signing up for an ms account EVER!!! so I can.
After some searching, I found what I needed elsewhere... and got it installed no problems.
But yeah... fuck the lot of em... although as much as I loathe apple... kinda on their side on this one. Epic broke the contract and did so deliberately so they could lob this sueball... this is no 'accidental' contract breach... this is malicious and with intent.
So on the contract side... if epic wins... it'll be bad news... on the anti trust side of things... I'm not a fan of walled gardens in general. But when it comes to keeping malware out of app stores... Apple are the only one doing a decent job of it... everyone else just waits for it to be discovered and then takes action after outside sources notify them... in this regard apple is proactive and I think that's a good thing.
So I'm kinda torn on this issue... apple bad... epic bad... walled gardens bad... but kinda leaning towards apple on this specific issue.
I'd be happy to see the % cut reduced... that would hopefully apply across the board to all app stores... But I'd rather not see a 'reasonably safe' app store get diluted and open to malware like others are.
"Has anyone else noticed that the other 800 lbs gorilla in the room is strangely silent? While Apple and Epic conduct their kids' playground fight in a very public way, nary a peep from Google."
Clearly you've not been paying attention. Google have also banned Fortnite from their app store, and have been sued by Epic in turn.
https://www.theregister.com/2020/08/14/epic_games_apple/
That's not what Epic wants though. They already offered Fortnite on Android via sideload to avoid the fee, and found the uptake was miserable so they were forced to swallow their pride and put it on the Play Store.
So basically they want the exposure the Play Store gives them, without paying for that exposure.
Anti-competitive rulings are unlikely as it's not like Apple are giving different developers differing levels of charges.
Epic haven't brought in Android and held it aloft to show what a more open marketplace is like. Instead they have insisted on the Apple store being the root of all evil, but since the scope is so tight I think their argument fails to be compelling.
This post has been deleted by its author
Google is silent for the same reason Xerox was silent in the mid-90's when Apple went after Microsoft claiming Windows infringed on Apple's Mac OS because Windows had windows. Xerox knew that if Apple prevailed, then Apple would have already proven, on Apple's own dime, that Apple infringed on Xerox's OS for the Alto from the mid-70's. So it's not worth it to Google to spend money when Apple's case will tell them whether they have a problem or not.
Apple didn't "steal" it though, they made a deal with Xerox that included giving some shares/options in Apple, which if they had held onto them would be worth tens of billions of dollars now (far more than Xerox is currently worth to be sure)
That some people didn't think Apple paid enough doesn't make it theft, any more than if I sell a painting for $5 at a garage sale and you craftily buy it recognizing it as a lost Picasso and sell it for $5 million at auction the following year.
> To be fair to Apple though, Apple does guarantee that all apps on their store function are are safe
Guarantee how?
https://www.theregister.com/2020/08/24/advertising_sdk_1200_ios_apps/
https://www.wired.com/story/apple-app-store-malware-click-fraud/
Apple created the App Store and iOS for its own devices. They provide a service where they verify that your app is "safe" and they provide "advertising" of your app on the App Store. This makes for a "safe place to find and install apps". So far, so good.
Apple already charges the developer around $100 per year for the ability to submit apps to the App Store. Seems to be a fair price for the security review that Apple performs, so OK.
Now you make your app available and either charge a fixed price and/or have in-app purchases. Apple now starts taking a percentage of the money that people pay in either case. Well, if you're using their payment system that seems fair, but it should be similar to the fee levels that credit cards charge - down in the low percents rather than around 1/3 of the value.
However, Apple have stitched everyone up - you have to use the App Store and cannot use a different payment system and they have pegged their fees at a disproportionate level. (Google have done likewise, but side-loading is possible at the user's risk.)
I don't really understand why governments haven't taken action over this anti-competitive, monopolistic behaviour. It's not like app developers have a real choice here.
Bear in mind apps can be "free", and then have lots of in app purchases (so devs such as Epic make cash)
If Apple took no commission on in app purchases they would get no income from "free" apps.
Everyone would make their apps free with in app purchases that went solely to the devs.
Not sure how much apple charge a dev a year (I have made android apps but not Apple ones), but assuming the 100 fee mentioned is correct, that's nothing to a big dev like Epic (especially when you think how many apps that covers, essentially huge loss for Apple on verifying every Epic app is "safe")
From my view as having done "one man band app development" (albeit Android) on occasion, google play store allowed me to distribute stuff, make money, if I did not use that then purchasers would have been very unlikely to find my app by other means
What the money is used for is irrelevant. Apple uses its monopoly control over the store to force developers to use its payment system. Other payment systems could work fine and cost less, as Epic demonstrated, but you aren't allowed to use them.
This is anti-competitive, but I don't think that's even in dispute.
The dispute is whether Apple's control over its store constitutes a monopoly in 'the market'. Apple will argue that 'the market' is all mobile apps, so because Google and Android exist they aren't a monopoly. Because they aren't a monopoly they can do what they like in their store.
Epic will argue that 'the market' is iOS apps, so Apple are a monopoly and so can't do what they like in their store.
Google is in a similar boat, but has a much stronger claim to not be a monopoly because alternative Android app stores (and alternative payment methods) actually exist.
"Because they aren't a monopoly they can do what they like in their store."
no they can't, the legislators have thought about that, it's called a "cartel" (when competitors agree not to compete and align their offerings), and it falls into the same bag as a "monopoly". The fact that Google charges the same amount as Apple, and the fact that they have banned Epic from their store at the same moment as Apple, is proof enough that it's a cartel.
Apple is sure to loose this one, their counter-sue stinks of desperation.
It is only a cartel if there was actual cooperation. If Google just said "hmmm Apple is charging 30%, sounds good to me" and charged the same then it is NOT a cartel. On the other hand, if they could prove that Google was planning to charge 20% and Steve Jobs called up the Google CEO and suggested they charge 30%, then it would be a cartel.
> If Apple took no commission on in app purchases they would get no income from "free" apps.
> Everyone would make their apps free with in app purchases that went solely to the devs.
Thing is, that's a straw man because, firstly that's not the only alternative, and secondly nobody is demanding Apple take zero commission on payments (despite what Apple implies).
Consider that if Apple just stopped requiring their and only their payment mechanism for in-app purchases, devs could then make value judgements on which payment provider to use in their apps, and Apple's own payment service would have to demonstrate competitive value for the cut they take.
I'm sure that, even given such competition, a lot of app devs would be happy to keep giving Apple their cut anyway, simply due to the familiarity and simplicity, for both the developers and their customers.
Its not easy. I started out thinking its cut and dry, but now I think I've changed my mind... Why should apple be obliged to allow consumers to load code anyway? I cant do that with my washing machine (yet)...
Its clear they actively prevent developers selling stuff without gouging them... but BMW won't let you attach any old shit to their cars either.
This doesn't prevent Epic from releasing their own 'games' smartphone.
I can see app makers like SMS providers, email clients having a claim (as apple doesn't pay the 30% itself), but if Apple aren't offering an app that competes with this app, its just the cost of business - so by rights the game should cost 30% more on that hardware, and less on phones that don't take that cut. The only argument I can see is cartel behaviour with Google in collusion to prevent alternative platforms competing based on app offerings (as Apple would win that war due to fewer form factors etc)
I'm glad I'm not a lawyer, actually
From UK Warranty guidelines
"Neither the Manufacturer, the selling BMW Centre or any BMW Group company in the UK can be held responsible for modifications to the vehicle which lead to defects, unless those modifications have been approved by the Manufacturer, an Authorised BMW Centre or a BMW Service Authorised Workshop"
You can smash your iPhone with a hammer, sure, but Apple are not letting you...
My point is, they are not obliged to support or replace a device which is taken 'outside' its purposful scope - and that scope is entirely defined by the manufacturer, as far as I can see... I can't believe I'm arguing it either, I have a problem!
The App Store is not a fucking payment processor. They are in most regions the store, the contract of sale for the app is with them, they are responsible for transfer of VAT to the appropriate body. You want to deal with tax regulations across 100 countries be my fucking guest, but to equate the App Store to a card processor shows you don’t understand anywhere near enough to be taken any notice of.
I imagine that the more this drags on, eventually Uncle Sam will come in to play and that would be disastrous for Apple. Apple will fight this tooth and nail as it is one of their cash cows - that is just about all profit. I must admit that their profit margins are absolutely stunning.
Like as said above, I hope they wound each other severely. This industry of ours reeks of injustice. I can not begin to count the people who have lost their jobs to overseas sweat shops and through automation. The more profits the tech giants make, the more ruthless they become. We are the enablers here. We innovate, scale it, and drive it. At the end, WE are redundant. See what happens when the scope finally swings around to the marketers and bean counters; their screams will be louder than ours.
When you automate people out of jobs, the idea is to give them different work that needs humans - but industry is now addicted to those margins; like a sheep dog that has tasted blood. Something has to give here, the herd is getting smaller, the stakes are huge. It is your way of life on the line - do not think it is not.
I can finally take some time off, so here is a beer to say cheers.
"Epic... simply wants to pay nothing for the tremendous value it derives from the App Store"
Okay Apple. So how do you justify a levy of nearly one third of the cost of any purchase made through your app store? Exactly how much effort goes into vetting each app and IAP item that goes on sale? Can you honestly say that this effort is at least equal to just under half that put in by the developers to build the app, test the app, add the new IAP items, test that they work properly and (in this case) don't break in in-game balancing?
Do you really, truely honestly believe you can justify such a huge cut? Because we developers don't for a second. This is just mudslinging - make the other guy look bad rather than trying to fix your own broken policies... we say the same thing every day in government.
The stupid thing here is that there's an easy way to sort this, and all it would take would be for Apple to eat a bit of humble pie, accept that 30% "might be a bit much", and invite Epic and others to join some kind of negotiations to establish what the new cut should be... and, possibly, how best to slice it: rather than having 30% across the board, splitting by whether the thing on sale is an app or an IAP item, how many IAP items an app offers, total revenue, total number of purchases...
But I guess that requires effort...
Same with Google. You can buy ITunes & Google Store cards from supermarkets, often at a 5-10% discount. So for every £1 you might only be paying 90p, and after Morrison’s take their cut Apple might only get 85p. They then have to have the data centre capacity to host not just your app but hundreds of thousands of others (& videos & music & podcasts etc), around the world with failover & redundancy in place to make sure that even on Christmas morning, little Tommy can buy your fart app for his new iToy.
The thing is, that ain’t cheap, and given the plethora of free apps, they have to make that back through paid for apps & services.
Just because the app developer only sees 70p in the £ does not mean that Apple is making 30p profit for every £ spent on the App Store.
In an earlier ruling, the judge did indicate that while 30% sounds high, 0% is clearly too low. I expect a lot of discovery will focus on the true cost of running the big 2 app stores and the actual value to developers. There is a serious chance that common sense will prevail. And be overturned on appeal.
Indeed and Kevin's "Morrison's cut" calculation above assumes UK bricks & mortar grocers make about 6% gross margin - seems about right! Why then does Apple need substantially more for what, after all, is some online distribution and a bit of QA?
In your quote Judge Rogers also said, "Not even Epic Games gives away its products for free" which will come as a surprise to people with over a hundred full-price games given away free in the Epic store - Apple the "innovator" stifling innovation?
All Apple have to do is quantify the value in keeping old hardware refreshed with new software. It is that as much as anything else that creates the value in the App Store (an unfragmented market of potential app buyers); it is hard to imagine Apple would continue to support 5 year old devices if there weren't that virtuous circle available.
I suspect the 30% levy will stand up once you compare the rate to standard retail markups. Normal retail markups are at least double the cost to retailer (50% levy or higher). So Apple and Google are being cheap compared to Wally World and others. The app makers are getting 70% of retail which is actually quite high. While 30% does give a hefty margin it is not all profit, the app store does cost money to run which someone has to pay for. Also, right now I believe it is app producer that sets the retail price not Apple which is another difference between the app store and traditional retail.
Retail actually have considerable costs to justify their markup,
hosting the app store and assessing the apps do not even compare to Staffing, premises, distribution, etc. that retail have.
best comparrison is probably online market places or payment processors:
Amazon Marketplace charge 15% ish
Ebay is about 12% once you tak into account the fixed fees
Payment providers are between 2% and 7%
I suspect the outcome will probably force A and G to at least half their cut and maybe further for "as Currency" items
So what?
Apple created the entire ecosystem that developers rely on, there would be no 70% cut of anything had they decided not to open up iOS to third parties and had instead decided it would be Apple designed apps only. Developers benefit from having access to a market of over a billion active iPhones, shouldn't Apple be able to be compensated for that?
Just like if I got a product on the shelves of every Walmart I might increase my sales of it 5000%. Shouldn't Walmart be entitled to make a nice profit of the sale of each such item because they are giving me access to THEIR customer base?
eBay is closer to 15% in the real world just for the basics. Also don't forget the problems of fraud (eBay almost always side with buyers, so losses to "didn't receive it - refund me" claims are real, for instance), "optional" fees that are essentially mandatory in order to get any sort of ranking, and so on. eBay sellers I know reckon the real-world cost is anything up to 30% when calculated over a year.
Similarly for Amazon - the true cost (with referral fees, closing fees, etc.) can easily exceed 20%, and in some cases hit 30% (their fees are variable depending upon the category).
Frankly 30% isn't out of step with what sellers pay in the real world to list on platforms.
Yep, what people are paying for is not "eBay/Amazon processing their payments" they are paying for the massive exposure that goes along with being on those platforms. If they sell it on their own site, or on some small online shopping bazaar a thousandth the size of Amazon, they will get far fewer customers so even if they got to keep a greater percentage it isn't a good deal for them.
Fortnite wants the benefits of exposure on the App Store or Google Play, which have that exposure due to what Apple and Google did, without paying for it.
It is not a fucking levy, it is markup on what is effectively the wholesale price set by the developer. The developer chooses $10 as the cost in the store they know they are providing the app to the store at a cost of $7, and the store is then adding on $3 markup. The store is not taking anything from the developer. You can argue the developer should be allowed to provide the app to another store and that is a fair point, but to claim a stores markup is taking away from a developer is bullshit.
So how do you justify a levy of nearly one third of the cost of any purchase made through your app store?
Maybe you should check into how much developers made out of every dollar spent on applications sold in brick and mortar stores like Best Buy. Hint: their cut was closer to 30% than the 70% they get from Apple and Google.
When Apple announced the App Store and the 30% cut developers were delirious with joy because they'd be able to keep so much more of the revenue than they did selling physical copies of software.
What people are missing here is that the app stores leveled the playing field between the big boys like Epic and the lone developer slaving away in his bedroom. If they produce a good product that gets good reviews they will be placed just as prominently as a similar product from a big company, so they compete on equal footing. Guess who doesn't like all that extra competition?
I think there must be many young people here :)
In the old days, you *paid* for OS updates. If you didn't, your computing device got progressively harder and harder to keep going. You often *had* to pay for the OS update *in order to* use the latest software. Even now in the Android world, unless you're using vanilla Android then you're playing roulette as far as receiving support is concerned.
Today, I can install iOS 13.7 on an iPhone 6S, a device released 5 years ago. Not only can I install it; unlike in the bad old days, it will run (like-for-like software) at least as fast, and in some cases faster, than the original iOS 9 it shipped with.
I do not want to go back to the old days. I'm very happy that the markup I pay for App Store purchases goes to fund the continuing development of the OS and its support on older platforms. It keeps my hardware fresher for longer; it keeps my hardware more valuable for longer; it allows me to keep on buying apps from developers via the App Store for longer.
By doing this, Apple *more than* justifies its mark-up; by doing this, Apple ensures there's a tremendous (and unfragmented) market for app developers, which in turn allows app developers to prosper.
Let's not forget that the App Store itself was an innovation.
It is not a coincidence that app developers (as a whole) make *far* more money on Apple. Sadly, however, that last may be their undoing; if developers make more money on iOS than on Android, perhaps that shifts the balance in terms of market position and anti-competitiveness? If it does, however, it will be IMHO a very sad day, since the model will have proved itself so good as to be destroyed!
I honestly think Epic’s proposed remedy will include opening up third party app stores on iOS (and that is why they took the more difficult route of suing Apple and Google separately). They already have a working app store on PC with a payment system that undercuts Steam and they can offer devs using Unreal a simple route to publishing and payment.
I picked up Satisfactory from steam and didn't have to install the epic launcher or even make an account. That's only needed if you intend to use multiplayer with someone not on steam. But if you're solo, or only playing with other steam users, the steam version doesn't require the EGS launcher or even have an account with them.
They get a second lawsuit, which augments their chances to have a legal decision in their favour — if there are two opposite rulings, chances are that nothing will change. And they get to implicitly threaten any other developer thinking of doing the same: If you try your luck, we'll sue you.
That said, I hope very much EPIC stick to their guns, don't come back on the App Store, and only use third-party app stores for Android. If they can make it work, other successful developers might join them, and Apple seeing the App store depleted of the most successful apps may eventually change their policies, to avoid users switching to Android.
Apparently, people who already have Fortnite on their iPhone can keep using it to play, so EPIC isn't even losing a lot of users yet.
Epic originally was sideload/third party app store only on Android, but found the uptake was miserable. They were forced to swallow their pride and put Fortnite on Google Play.
So if what you think Epic should do "sticking to their guns" had worked, they would never have sued Google because they wouldn't have needed the Play store. But funny thing, getting access to EVERY Android user versus only those who want to use third party app stores is a much bigger market.
Basically Epic wants access to the huge customer base that GOOGLE built, without paying for it. Fuck 'em.
It seems to me that Apple have rules, and Epic broke them and it's that simple. But if you consider that a small dev or an indie gets real value out of being able to use the App store, it basically makes the app known, and handles all the eCommerce, payments, obviously those services have a value. What happens though when you turn over $100Ks, or $100Ms and so on? Clearly the value of any positioning and services is then far less important - they we're probably paid for hundreds of times over already.
Various tweets and posts suggest that Epic has made this into a crusade for the benefit of all after initially trying to negotiate a different deal for themselves.
Obviously Epic is doing very very well with fortnite, and making a huge amount of money, but imagine if it were your company. It is clearly unreasonable for Apple to demand 30% across the board on the basis of fair-play. Yes, this goes against there being a level-playing field for the little guy, but Epic don't need advertising,nor payment processing, nor would they really need the App Store access at all if there were a reasonable alternative (or if they were allowed to supply their own alternative), so in this case, all developers deserve there to be some scalability in Apple's pricing. i.e. if you accept that Apple deserve a cut of what goes through their store, and you accept that bigger players actually require less from Apple, shouldn't apple charge a lower percentage as revenues increase? Perhaps Epic would have paid 30% on the first $50M or whatever, but only 10% on the rest say?
I can't say what's acceptable to both parties, but at the moment it's being painted as Apple takes 30% of your entire business on their network and that seems steep when you get into the big numbers.
Also consider if there were to be an alternative app store via another organisation than Apple - presumably unless Apple are ordered to allow this free of charge, there would clearly have to be a different tariff in place than 30% of all revenue - an alternative app-store couldn't operate under those terms.
In PR terms I can see that this lawsuit is as nakedly about PR as Fortnite's is. Which makes sense. However I wonder about Apple's common sense in having a go at Fornite for ripping off kids with in-app purchases of virtual money.
I mean I totally agree with them that it's shitty behaviour. But Apple created and nurtured that market and of course take 30% off the top of it - in loads of apps in their store. And have been perfectly content to do so.
When I've talked to parents whose kids have manage to use this and waste loads of money, it's Apple that the parents are pissed off with, not the app makers (who they've probably never heard of). So I'd suggest that Apple might want to exit their glass house, before lobbing that stone. A PR own-goal. Unless of course they disapprove of it, in which case they have the power to stop it.
So you want Apple to make value judgments about what is and is not a suitable in-app purchase, and block those apps from everyone because some parents are unhappy?
iOS provides a way to disable all in-app purchases, parents should set that up and use the parental control settings to prevent their kids from changing it. If they have a "legitimate" in app purchase they can come to mom and dad and get them to enter the passcode to approve it.
How is that Apple's responsibility? They provide a way for parents to lock down the phone, and make instructions available. They can't lead parents to water if for them setting up a wireless router would be insurmountably difficult task.
As an alternative, the parents could get one of those refillable debit cards and link that to their kids' phone and tell them "when it is out of money, you have to refill it yourself so be careful about what you spend". Good opportunity to teach them about savings/budgeting, and it would be a cheaper lesson to learn blowing through $50 on purchasing in game crap the week after Christmas than to learn it as an adult when you have your first job and are paying all your own bills for the first time and spend your whole paycheck before the rent check has cleared.
"As an alternative, the parents could get one of those refillable debit cards and link that to their kids' phone and tell them "when it is out of money, you have to refill it yourself so be careful about what you spend""
Make it a high school project: preferably senior year, assign them an allotment for them to obtain various things but tell them they need X to buy their graduation gown, and if they don't get the gown, they don't get to graduate. It's one thing I'd love to see added to a mandatory cirriculum.
Epic contends that Apple’s contract is onerous and legally unenforceable. Apple most likely does not expect a dismal at this point, but by countersuing they can request legal fees from Epic if they prevail and Epic can not unilaterally drop the suit if they see themselves losing. This is just foreplay for the legal teams.
They've been vocally unhappy about the 30% and giving up control since day 1. They actually pulled the game off Google's store for almost two years in favor of sideloading from their own store. Google slowly made it somewhat harder and scarier to sideload, so Epic eventually gave in.
This post has been deleted by its author
The lack of competition is a major issue here. Apple have been known to hamper access to apps that compete with theirs and without a valid alternative for distributing apps this is a major issue in a free market.
Use a supermarket as an example. If your selling a product and one supermarket starts lowering the amount they pay you taking a bigger slice of the profits you can walk away and sell that product at another supermarket. You will have access to the same customers but with a different storefront. As customers if we aren't' happy with the supermarket we are free to start buying from any other supermarket. We don't have to switch our kitchen because it's an Apple kitchen that can only use Apple supermarket goods. Likewise should apply to mobiles. If we don't like apples storefront we should be free to use another one and we shouldn't have to switch phone to facilitate this.
You won't "have access to the same customers". I have gone to the same grocery store for many years, and wouldn't switch if they stopped carrying a product I liked, I'd just find another product.
And you give up a lot more than 30% to put your product on the shelves of a supermarket - and the bigger the 'reach' of that supermarket the less they will pay you. i.e. Walmart will pay you a lot less per unit than your local grocery store, but if you get a product on the shelves of every Walmart you've got it made. That's the price Epic pay if they want the exposure the App Store / Google Play gives them - and it was Apple / Google that made the platforms what they are and created that exposure. Epic is just trying to take a free ride on what others have built.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2023
