US Supreme Court doesn't want to hear Apple, Epic's gripes about in-app purchases

Apple fans in the US may soon see links appearing in some of their iOS apps to non-Apple payment systems through which they can purchase stuff. That's because the nation's Supreme Court has decided not to hear appeals from the iGiant and Epic Games in the pair's long-standing spat over this processing of in-app payments. …

[Anonymous Coward]

Analysis: The curious case of Epic Games: how the developer beat Google but not Apple

Analysis: The curious case of Epic Games: how the developer beat Google but not Apple

“The Fortnite maker filed antitrust suits against both tech companies – while one emerged victorious, the other was found at fault on 11 claims”

[DS999]

Supreme Court "snub"

They accept less than 1% of the cases appealed to them. The ones they leave alone are because they think the lower court got it right, there is no conflict between lower courts in different circuits, and there is no issue of constitutional law to decide upon.

[jmch]

Re: Supreme Court "snub"

"The Supreme Court offered no justification for its snub."

...because it would have been rather undiplomatic to say "we really can't be bothered with this shit!!"

[Steve Davies 3]

Re: SCOTUS - "we really can't be bothered with this shit!!"

especially when they have more important things to decide like Trump wanting total immunity for everything he didn't do. Strange that he wants that because he's always proclaiming that 'I did nothing wrong'.

[Sora2566]

"Cupertino insists on collecting a cut of sales, up to 27 percent, even if a non-Apple system is used."

How in the holy heck do they plan on enforcing that???

"Gimme 27% of your revenue."

"No, it's mine."

"It was referred to you from our app store!"

"Prove it."

[doublelayer]

Apple: You signed a contract saying you would. We are suing you for that, and then we get to look at your files. We will prove it for you.

That's what they would try, anyway. I don't think they should be permitted to do that, and there's some chance that, if they try it like that, a judge will recognize what they're doing there.

[jmch]

"Apple: You signed a contract saying you would. We are suing you for that, and then we get to look at your files. We will prove it for you"

The 3rd-party payment providers can simply not store any referrer data (they are not obliged to keep it and usually this data is kept only for marketing). If they can save themselves 27% by dumping the data as soon as a transaction executes they surely would do it.

[doublelayer]

It probably won't work that easily. They will be required to keep accounting data, saying where money came from so they can report it to the tax authorities. That is enough to indicate that money was paid in return for their applications. They could try messing with their accounting so that it theoretically could have come from anything connected to the applications, then try to claim that it was only from Android users, but that's a lot of work to set up and requires that everything have some alternative pathway that could have avoided IOS.

Even then, Apple's lawyers can ask employees of the company in court to demonstrate where the funds came from, and unless they're being very careful, they can end up committing perjury if they say that it was from Android users, or even if they say that they don't know if they know that some data still exists to prove it. This is the kind of thing that makes lawyers very nervous, not that that necessarily prevents companies doing it anyway.

[jmch]

"Cupertino insists on collecting a cut of sales, up to 27 percent, even if a non-Apple system is used."

Surely that is going against the spirit, if not the letter, of the judgement? As I understood it, Apple demanding on-platform payments be made through Apple Pay is not monopolistic if links to outside payment providers are allowed, so surely insisting they get a cut of payments through externally-linked systems makes the whole system monopolistic?

[Spazturtle]

They are allowed to charge a fee for hosting and distributing the app on their app store as that costs them money.

Apple have long maintained that their 30% cut is split into a 27% hosting fee and a 3% payment fee. So by using a 3rd party payment provider you only save the 3% payment fee.

[sketharaman]

Exactly. In India, Google is saying 26% for hosting etc. and 4% for payments.

[DS999]

While a 27% hosting fee may seem excessive

Software companies gave up much more than that to the retailer in the days of packaged software. Back when Apple originally announced the App Store and its 30% cut the feeling among many developers was that was a great deal - they got to keep a lot more of the revenue than they did in the traditional software market which back then relied heavily on getting shelf space in major retailers, or operating your own business mailing CDs to those able to find you.

Epic wanted to have a free ride from Apple, where Apple gives them a slot on the App Store (including search so people can find their games) and provides downloads for free, and Epic gets 100% of the revenue as all the charges are post sale. Either that or letting them operate their own app store which is basically the same thing. The reason people would buy prepackaged software from places like Best Buy is customers knew they carried a big selection so they could find what they are looking for. Basically Best Buy built themselves up in a place customers wanted to go when they were looking for software by selling PCs and associated hardware, and software was part of the "PC" package. They had staff who could help people find what they are looking for. Basically Best Buy built themselves a "platform" by years of investment. Those selling software were willing to pay huge margins (reportedly 50% - 70% in those days) to Best Buy and similar retailers because that's where the customers were. Apple did the same building up iOS as a platform that had a ton of customers, now companies like Epic want to cut them out entirely.

The freemium model that exists today for almost all apps was not possible in the days of physical media. Not only did it cost money to produce CDs, no retailer was going to give you shelf space for something they couldn't make money on. I suppose it was inevitable that's where we'd arrive eventually, but if that model already existed when Apple created the App Store they would have had to either set up something where they got a share of that post sale revenue, or charge per download fees. Those wouldn't be a problem for Epic since they have a lot of post sale revenue, but it would eliminate a huge segment of the market for free apps that are either truly free or charge only a few bucks a year.

[doublelayer]

Re: While a 27% hosting fee may seem excessive

In the days where retail software purchases were more common, you still had the choice to sell your software elsewhere and handle payments yourself. Whether that meant mailing floppy disks and having a phone number for purchases, mailing CDs and having a website and presence on chat systems, or having downloadable programs and a license server, it's always been an option. Microsoft could have made their computers such that you can only install software when purchased at a set of allowed retailers, but if they had, it would have been investigated as an anticompetitive action. Apple is doing that by not having any alternatives. They are not providing an option which developers can accept and pay for or reject and build their own. The analogy is flawed.

[DS999]

Re: While a 27% hosting fee may seem excessive

Sure you could do your own and avoid the fee, but you'd get a fraction of the sales because most consumers couldn't find you. By centralizing ALL software the Apple and Google app stores have solved that problem for developers.

But now developers like Epic that got big because of those centralized app stores set up by Apple/Google/Sony/Microsoft figure they are big enough that their customers will follow them to the modern equivalent of "mailing floppy disks after someone calls". Sort like a rich person saying "I've got mine now fuck you I'm moving to another country where I don't have to pay taxes to the country that gave me the environment that helped me become rich"

[jmch]

Re: While a 27% hosting fee may seem excessive

"By centralizing ALL software the Apple and Google app stores have solved that problem for developers."

...and have also created another, that is, there are now tens or hundreds of thousands of apps on each app store. There are dozens of apps for even the most trivial functionality. For more common uses there are hundreds of apps. There is really no way a user can properly search through all of that, and the search functionality in-store is (possibly intentionally) crap. Many times I have searched for an app using a specific name, and the app either doesn't show at all, or is way down the list, with a bunch of competitor apps (or completely irrelevant apps) higher up in the list. The searching and ranking algorithms are, of course, highly secret but it would not be surprising if they are prioritised by whichever one gives more revenue to the store.

The 'Best Buy model you describe is quite different. Any computer store could offer a variety of software and games, and developers could sell their software at any one of those stores, as well as online or mail-order with complete freedom. The 50% retail cut is a 'normal' retail cut for a physical store that needs to pay rent and hire staff in a very high staff:sales ratio, and stores could compete against each other by taking a lower cut.

Apple's 30% isn't in itself monopolistic, what's monopolistic is the ban on competing App Stores. The 'payment provider' part is only a small part of it. Apple's insistence that all Apps have to be installed from their App Store is like if a car manufacturer disallowed servicing by any independent garage *that was competent to do so*. I completely agree that having strict App Store rules protect the Apple ecosystem, but in a true competitive market, anyone could run an iPhone-compatible App Store *as long as they could demonstrate equivalent security to Apple's*

[Michael Wojcik]

Re: While a 27% hosting fee may seem excessive

By centralizing ALL software the Apple and Google app stores have solved that problem for developers

I suppose if by "ALL software" you mean toys running on the most popular toys, then, yeah, that's pretty accurate.

Strangely, there are still some computers which aren't Apple or Android smartphones,¹ and some software which runs on them.

¹Some researchers have even reported evidence of non-Google sources for Android software, though it amounts to little more than blurry photos and untrustworthy eyewitness accounts.

[doublelayer]

Re: While a 27% hosting fee may seem excessive

Even if I accept all of those things as fact, which I'll get to in a bit, it doesn't matter. You could do it then, and the option has been taken away now. That decreases choice and, since Apple and Google have such a large chunk of the market, that's legally risky. If the Apple store is so useful to developers, why not let others run one; it shouldn't hurt them very much if nobody wants to use another one. The existence of FDroid and the Amazon app store doesn't seem to have caused Google much concern.

I also disagree that Apple's store provides anything like the services that a retail store did. It doesn't cause people to promote the app. It doesn't provide the average customer with some staff to ask questions about the product who have at least some knowledge about what it can do and what you need. It doesn't give you customer support assistance. It does two things: it makes it so that a user can probably find your app if they type its name in a search box, although no guarantees, and it means Apple can handle distributing the app package. As a developer, though mostly not of mobile apps, I'm not at all concerned about my downloads. If I needed to start handling all the bandwidth of users downloading my binaries, I could do that with ease.

[gnasher729]

Against the spirit?

Absolutely not. Epic demanded 10 items. One was the right to have a link to their own payment site, another not to pay commission on sales done that way, and eight more.

The judge gave them one (link to payment site must be allowed) and denied everything else. So the spirit of the decision is that apple can charge.

And the first commenter here said how easy it would be for companies to just lie about sales and not pay up. That makes it obvious then that apple can take precautions like the right to perform audits. Companies that buy hundred licenses for some software are used to the fact they can be audited to make sure they don’t use 200 copies. Exactly the same situation.

[RedGreen925]

Yeah not enough misery and destruction in the case for them. They need some nice and meaty case where they can destroy people lives, create misery and deny them their human rights to be interested enough to take it on.

[Anonymous Coward]

SCOTUS is busy

Deciding the medical rights available to women and girls.

They can’t have women making their own decisions, now can they?

[deadlockvictim]

Re: SCOTUS is busy

I'm surprised about this one. The case deals with interstate commerce so the US Supreme Court should oblige the US Congress to deal with the matter.

[jmch]

Re: SCOTUS is busy

"the US Supreme Court should oblige the US Congress to deal with the matter."

SCOTUS cannot oblige Congress to do anything, and although it can highly recommend clarity of legislation regarding certain topics, Congress is not bound to heed that advice

[sketharaman]

"Apple is allowed to require that in-app purchases must use Apple's own payment method (through which the mega-corp takes a cut of the sales) but it can't stop apps from linking to outside payment systems through which people can also buy stuff (and from which Apple may not be able to take a cut.)".

From the app owner POV:

- First part of sentence means apps MUST use Apple's own payment method.

- Second part of sentence means apps CAN use non-Apple payment method.

Sounds contradictory unless app developers split their price into two parts, route Part A through Apple payment method and Part B through outside payment method.

[doublelayer]

I think it means that your app can't accept payment for in-app items without going through Apple and paying Apple's fees, but it can link to a different thing, your website most likely, which can. You still have to redirect the user outside your app to be allowed to use something else, but the restriction that formerly prevented you from doing that has been removed, until Apple finds a way to put it back that is.

[I could be a dog really]

First part says that you cannot cut Apple out of it - i.e. you must include Apple's payment system as an option.

Second part says that you can, if you wish, additionally offer other payment options.

It's not contradictory. You can offer any payment options you want, but one of them has to be via Apple. Or put another way, you can't make your own alternative payment option the only one available.