We are not in 2001 anymore. App Stores are a growing part of the real economy and Apple 30% makes no sense. Big tech has been under the radar of many because it started small and had little impact on the economy. To let tech companies grow revolutionized the world. That revolution is over, tech companies are the new car companies. Apple is not a new innovative company, it is a monopoly that churns the same product year after year and profits from its dominance and the natural tendency of technology to create monopolies.
Many businesses cannot survive if you cut 10% of their income. 30% is mind-blowing and unsustainable.
I hope that the popularity of Epic brand helps on this fight. This level of legal battle is not only won in the court, but also in the public discussion domain.
Apple provides useful services with its App Store: filtration and curation. The degree to which this is effective is debatable. But that it has an effect is not.
Apple also extracts socially useless rents from its App Store. The degree to which this exists is debatable. But its existence, given Apple's dominance in app industry profits, is not.
The first costs Apple in terms of labor, tools and research. The second is a result of their independently-profitable devices business. These costs are roughly the same from app to app, review to review.
One solution might be to charge a fixed fee per review. This scales perfectly with Apple's costs. But it's prohibitive for small players. A scaling fee structure relative to revenues promotes first movers, thereby keeping the app ecosystem fresh. Apple came up with a 30% flat rate. This made sense when apps made hundreds of thousands of dollars. It does not make sense when they make hundreds of millions.
A simple answer is a sliding scale. 30% for the first $20mm in a year. 20% for the next $40mm. 10% after $60mm. This is more than generous to Apple. It beats Epic's request for a 12% flat fee at $400mm. And it continues letting Apple give new entrants, who are both more sensitive to costs and more needing filtration and curation, a field to play on. As a bonus to Apple, it reduces the incentive for developers to litigate as a function of their capacity to sue.
I don't think the issue is the raw numbers, it's a question of market forces. Processing payments has costs and risks; if Apple solves that problem so well that a developer thinks their fee is worthwhile, that's all well and good regardless of what the fee is.
But by prohibiting apps from even telling the user about alternate payments, Apple is effectively trying to dictate how everyone on their platform can and can't do business. That seems problematic regardless of whether what numbers they dictate.
It’s also problematic when it means that Apple takes competitor revenues - for instance in the streaming audio market Apple is Spotify’s biggest competitor, while forcing Spotify to give them a bigger % of iOS revenues than their own margin. Apple ends up making more money out of Spotify on iOS than Spotify does, and then continues to spend money investing in a competing product.
Would it be feasible for Apple to discount their 30% developer/iap fees in app categories in which they compete with developers commensurate with Apple’s dominance in that category? As though they themselves had to pay the same 30% fees, but to developers in the category, rather than to themselves. Would that level the playing field?
> by prohibiting apps from even telling the user about alternate payments, Apple is effectively trying to dictate how everyone on their platform can and can't do business
Agreed. The problem of leveraging their App Store dominance for payments dominance is the issue. I don’t think there is an issue with the App Store being the only store on iOS devices.
The simple answer is allowing users to install their own applications on their devices.
If the App Store is worth the 30% cut, let them compete for it.
I don't think it's worth the cut. I think the overwhelming majority of people download apps they already trust directly from the source (like they do on computers), and the App Store provides exactly zero value in that use case.
If they actually provide value at a competitive rate then they should have no issue allowing competition with alternative stores. Market forces can decide the worth of the App Store.
> Apple provides useful services with its App Store: filtration and curation.
Yes, App Store does provide value and it can charge a cut. Having said that, Apple should equally provide a way to host different independent app stores just like Windows does.
Imagine on Windows/Linux/MacOS you could install software only from one corporate controlled store. Would you be fine with that?
Yes. I don’t need work requiring I install a Google App Store on my iOS device. I have a general-purpose computer already. One shouldn’t buy an iOS device if these restrictions are an issue.
For the next majority of population which gets connected to Internet, a smartphone would be the only computer they own.
When that happens having the power to dictate which apps are allowed (censorship, exclusive browser engines etc) along with taking a part of income from the apps, makes it unfair.
I come back to my Desktop example. Imagine Adobe had to pay 30% of their revenue to be on Windows, and Windows could dictate which browser engine all browsers must employ.
Does it hurt UX a bit to install a different app store? Maybe. But it's an inconvenience only for those who use their smartphones as a secondary computer.
You are missing the point. App Store is a distribution channel.
And so the 30% isn't just for the upkeep of the store but also all of the work involved in maintaining/growing the tens of millions of iOS users at the other side of the channel. For example, Apple spends well over $2 billion a year on marketing which would need to be factored into your costs.
Also I don't understand how anyone could support Apple taking less money from big developers.
Apple markets its own products, not whatever is in their store (with some early exceptions).
Apple benefits from third party developers, third party developers benefit from Apple. Third party developers don't get a slice of iPhone sales revenue.
You wouldn't support Kitchenaid only allowing curated vegetables and charging their vendors 30% (or even 3%).
You should read about the diamonds industry and their marketing, from a marketing point of view this industry did great but from a user point of view you will be disgusted.
After you read(or watch a vide) about diamonds ask yourself if something similar is happening under our noses today and we are not seeing it because the marketing is so clever that is invisible, there is a chance you will spot some parallels with other companies in present day.
Funny, it's the same punch line they've been using to stick it to Steam for a while now. I wonder if there will be a day of reckoning when they see fit to raise their own rates to something similar?
The difference with Steam is that there is an alternative - there wouldn’t be a problem if Apple let you sideload apps or alternative app stores that could compete.
I was working in the office, where next doors we had a company that was doing English language learning software that was sold on CDs in book stores. Once I was talking with the owner of that company, he was investigating options to move beyond CDs, which were starting to decline (all this was like 10 or 11 years ago).
So I've told him about applications, app stores as a new kid on the block, but I've warned him about that 30% cut. The guy started to laugh and said that comparing to that what bookstores want this 30% is nothing.
Appstore has a lot of convenience, paying 30% for distribution, accounting (you just deal with a single invoice, not tones of invoices), return policy, automatic updates of applications it not that bad in the world of software.
It's not the number that matters, it's the fact that apple doesn't allow competition. Everyone is fine with the app store taking a cut. They can make that cut whatever they want. But consumers should be able to choose an alternative if they're unhappy with the app store.
Apple though is competing in these same spaces (game store, music store, video on demand, etc) and not only they don't have to pay 30%, they take 30% from the competition, making this unhealthy.
Well, let me be the first to say I won't be shedding anguished tears for a multi-billion dollar Chinese tech giant known for it's close ties to the CCP.
> Well, let me be the first to say I won't be shedding anguished tears for a multi-billion dollar Chinese tech giant known for it's close ties to the CCP.
Me neither nor for a USA backed company owned by one of the richest mans on Earth.
I am rooting for a healthier economy that helps everybody. Apple takes 30% cut of small developers, that are the ones that depend on that 30% to break-even. I want apps to be cheaper for consumers as they do not need to add a 30% as a fixed cost. It is not about Epic.
Absent that healthier economy it seems smart to at least root for the side which is not running concentration camps, USA's and Apple's sins considered.
I am going to assume that you don't know much about business.
Because Apple's 30% is their charge for selling a product using their distribution channel. It is no different to how Facebook/Google/Twitter etc have a CPC for ads. Or how a brick/mortar store would charge to put your product on their shelves. Or as was discovered how Nintendo charges 40-60% as a publisher fee for the Switch. Or even the percentage for most affiliate or influencer programs.
Perfectly legitimate to argue that it's unfair that you're forced to use their channel. But it's simply ridiculous to say that it's an excessive or unsustainable percentage.
As the CEO of a SaaS startup I would kill to have such a cheap and profitable channel.
IMO the Google vs Apple, Apple vs Epic Games and all other similar cases are secondary. My main issue with Apple is that it is violating user rights - the users, who owns the device - should have the freedom of doing any thing they want (including installing any app they want) with the device. It's not Apple's place to arbitrarily decide what I can or cannot do with my phone.
I think so too but I don't buy Apple in that case. I have spend < 10$ on apps from stores and it was mostly just a test for me. I don't like smartphones as software platforms at all, I think we could have done much better than what the market supplies but I have niche expectations the common companies cannot fulfill. That said, the casual users in my circle don't spend anything on apps either. That isn't a good solution as well, since the alternatives finance themselves via adds.
Before app stores, you could actually get real free software that didn't use customer data to finance themselves. Sustainable as a business? Perhaps not, but certainly an advantage to users.
I don't buy Apple either but its getting frustrating when they take the best talent to build the best chips. Good for them but what if the trend continues such that the alternatives are at a serious hardware disadvantage?
There is the danger that users aren't educated and would accept everything the app does. I'd say casual users want and expect some kind of protection.
Is that fine? If yes, I guess we'd need to make the "install anything" option sufficiently inaccessible to the regular user. Is that ok? In this case is Apple's Dev Program an acceptable solution?
I'm asking lots of questions, because I genuinely wouldn't know how to approach this. What this difficult is that I'm fine with the current state. I don't use my phone for hacking and I'm happy that someone else monitors apps, even if it means that I have to pay more or go through additional steps to run my own code.
Windows and MacOS have a different user base (I'd guess most non-tech users prefer mobile for personal use).
Android's big scary full screen warnings didn't seem to work, people allowed weather apps to read their messages. I was referring to this in my earlier message:
> There is the danger that users aren't educated and would accept everything the app does. I'd say casual users want and expect some kind of protection.
> It's not Apple's place to arbitrarily decide what I can or cannot do with my phone
This is a good way to kill Epic's fight.
If I want a hackable general-purpose computer, I can get one. I have one. The iPhone is not that. That's made clear at the time of purchase. It's a tradeoff between freedom and specific utility, and it delivers the latter in droves.
As a result, most Americans are fine with it. "Free software" is a great mantra from an important minority or Americans. But it's a minority nonetheless.
Big tech antitrust, on the other hand, is going mainstream. Epic's fight is riding that wave. Muddying it with an old and weaker argument is not helpful.
Then make the case. I think there should be general purpose computers. But not every computer need be one. There are advantages to a locked-down ecosystem.
> But not every computer need be one. There are advantages to a locked-down ecosystem.
I agree with it. But I think game consoles should be locked but smartphones shouldn't. Finally I predict that smartphones to be the Computer for citizen.
I hope Epic wins this. I would buy from Apple again if they would open their platforms. I think it's ridiculous that when I was working on an app, the app would expire after a week unless I paid them more money for the privilege of keeping an app I wrote on a phone I paid for. Nevermind software other people made that I should be free to choose to run.
You can distribute an app for free if you are part of their developer program - which is something like $99 for all the needed software and tooling (perhaps one of the lowest SDK prices historically?). They will actually subsidize all your bandwidth / storage / distribution costs in that case.
True, that is why Android and feature phones rule in such countries, not iOS, thus making a moot point when customers aren't using Apple devices anyway.
The existence of this video demonstrates that Epic Games anticipated the App Store ban long before they made their recent update to bypass Apple's payment system.
The entire thing looks like a thinly-veiled attempt to abandon the Fortnite mobile apps, and direct community blame on Apple.
The entire thing looks like a successful attempt to get standing to sue Apple for their anti-competitive actions, and you know, get some free PR while you do what you need to do to make millions more dollars because why not.
I don't get how any of this relates to anti-competition, since Fortnite doesn't compete with Apple, and is using and capitalizing on the money making potential of the app store (and refusing to pay the fees). Meanwhile Apple's actual competition in the App store market does the exact same ban... In an actual court of law (rather than court of public opinion) there is no way Epic will win especially since Google took the same stance.
At the end of the day Fortnite/Epic is just trying to maximize their shareholder value in leveraging lower/no fees from Apple for a revenue source for them that is frankly optional (iOS/Google Play are just two platforms they can choose to offer their app, and there is competition from the Windows and macOS platforms as well which do not charge these fees). Even if Epic wins you're still not going to jailbreak your phone and install malware the way you really want to.
The "anti-competition" platform is great because consumers just want to install random apps on their phones, but we bought our iPhones/Google phones knowing the app store was restricted to those who paid... we still did it.
> Meanwhile Apple's actual competition in the App store market does the exact same ban
Google Play doesn't compete with Apple's app store or Apple's payment processing... since you can't install Google Play on IPhones.
Fortnite does compete with Apple, in terms of payment processing. Fortnite chose to do it themselves (to get standing), and were promptly banned from operating on IPhones. Epic Games distributes Fortnite themselves in their own app store, but apple has prevented that app store from being installed on IPhones.
> In an actual court of law (rather than court of public opinion) there is no way Epic will win especially since Google took the same stance.
You definitely shouldn't be stating this this strongly. You might think it's a weak argument (I don't), but it's certainly far from hopeless.
If you'll excuse the appeal to authority (since repeating the fine legal arguments in the brief seems pointless, you can read them better written there). Look at who has signed onto this complaint for a moment. The lawyers representing Epic Games include a former Federal Trade Commissioner and senate confirmed assistant Attorney General heading the anti-trust division (https://en.wikipedia.org/wiki/Christine_A._Varney) and a former judge (https://en.wikipedia.org/wiki/Katherine_B._Forrest). You don't get people like this to represent you if they don't agree with you.
Google Play does compete with the App store. Both on the developer side (choosing which platform to support) and on the consumer side (choosing which phone/ecosystem to enter).
Google Play is a competitor with Apple's app store at the level of being an important component in an ecosystem that you choose between. They are comparative.
You have to look at the situation from Apple's perspective.
They are trying to create a level playing field for all developers on the App Store. I get that Epic would be unhappy that they don't have the weight to force Apple to bend to their whim, and App Store policies are by and far non-negotiable.
I don't understand the anti-competitive angle here, if anything Apple is promoting competition. Furthermore, Apple's AppStore policies have created a very high quality marketplace.
> In an actual court of law (rather than court of public opinion) there is no way Epic will win especially since Google took the same stance.
Apple is being investigated by numerous governments around the world [1][2] for antitrust regarding their app store, and just lost an antitrust case in Russia [3]. Epic Games simply adds a big name to the list.
Monopsony is also deemed to be anti-competitive and illegal. Technically as an app developer or service provider, when you're selling an app or service on iOS, you're not selling it directly to the user. You're actually selling it to Apple who then on-sells it to the user. Because of the way the walled-garden has been set-up, there's no alternative way of reaching customers unlike in Android where a customer can have the option of multiple app stores or the ability to just sideload the app.
That's if you draw the bounds artificially on the iOS ecosystem, then yes. Apple is famous for creating an end-to-end experience, so if you consider the products as App store ecosystem and iOS device, then you are encroaching on their product experience that they are selling.
Not to mention Apple is charging the standard rate similar platforms are charging.
One argument I don’t see being made is that mobile phones are actually in fact a duopoly and because the duopoly acts exactly the same, they should probably be treated as a monopoly inasmuch as they do act the same.
Listen, I get there’s a whole legal world you can argue around this, but really if I consider Apple + Google together, the lump sum of all their anti-competitive practices are enormous. In fact, they sort of thrive off each other.
For example: you can’t change the default search engine on iOS to anything but the four that come built in. How this isn’t anti-competitive is beyond me. But it’s because “the other half” of the oligarchy avoids monopoly. But is duopoly really tangibly different when they both have a sort of “agree not to infringe on each other” deal. Google basically stays out of the premium device market, and Apple stays out of search and advertising.
They literally got caught for agreeing not to poach each other’s employees. They both basically are acting together to preserve the golden cows, respectively, while both implementing a wide variety of truly despicable policies designed to further entrench their moats, suffocating whole swaths of startups along the way. Look no further than AMP and the ever-expanding google inline search answers and widgets, or on Apples side the complete lockdown of third party apps and unchangeable search engine. Then add the huge cut of app payments for both which mysteriously neither seems to think they need to compete on the cut they take? Somethings not right there. Especially given they both make more profit than just about any other company on earth.
It’s tiring to see all the legal-first thinkers who love to jump in and show how they aren’t monopolies... well, sure. But they are coordinating their efforts. The day Apple launches a search engine or Google actually attempts to build out a premium line of laptops (no the Pixel notebooks don’t count, they dropped those immediately), I’d have a little more faith.
People need to make the argument that they are coordinating and in effect acting as a monopoly because of it.
Google and Apple should not be allowed to act in as coordinated a manner as they do.
Two changes that would immediately make the world a better place. First, mandating that search engines cannot be locked down, and must be presented as a choice at setup without pre-determined order. Second, mandating that alternative app stores be allowed with no extra overhead. The second I don’t see how it happens legally, but outside that, it would absolutely be good for the world, no doubt at all it would increase competition dramatically.
> They literally got caught for agreeing not to poach each other’s employees.
For anyone who is wondering, Adobe, Apple, Google, Intel, Intuit, Pixar, Lucasfilm and eBay all colluded with each other[1] in order to keep tech employee compensation below market rate.
Also, it's worth mentioning that the layman discussion around whether Apple and/or Google fits the dictionary definition definition of a monopoly is a red herring. The government doesn't determine whether or not a trust is a monopoly based on that definition[2]:
> Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power.
> Also, it's worth mentioning that the layman discussion around whether Apple and/or Google fits the dictionary definition definition of a monopoly is a red herring. The government doesn't determine whether or not a trust is a monopoly based on that definition
I disagree. The market power test is an objective measure of exactly what the dictionary definition of monopoly is. The problem in lay discussions isn't the definition of monopoly but that markets in lay discussion are delineated by descriptive boundaries of markets rather than objective measures of actual competition like the market power test.
I love this comment because it exemplifies how easy it is to mix facts (the first part) and fabrication (the second part) and how facts make an obviously made up statement sound legitimate.
If you're going to take on the world's most valuable company, it's irresponsible not to game out every likely outcome and be prepared to respond.
Yes, Epic anticipated that a ban was one possible outcome -- but that doesn't mean they thought it was the only one. If Apple had reacted differently, this video would never have seen the light of day, and Epic would've wasted thousands of dollars producing it -- but that's a small price to pay when billions are at stake.
Fortnite is a console-quality game, so it may have trouble with continuing support for the low-power passively cooled CPU/GPU's found in mobile devices.
No "might" there - the switch has a heatsink + fan(s), sizable vents and probably a much larger battery (when portable, unlimited power supply when docked). The Switch works with a much larger power budget compare to the iPhone - input and output.
Does that really matter though if they have 100,000,000+ downloads on iOS? It would make sense to just do whatever you can to work around performance issues when it brings in the amount of money it does.
They knew that they would be banned so they had the ad and lawsuit ready to go. Obvious and pretty smart once they decided that paying 30% Apple is way too much. This is horrible timing with the monopoly talk in the media and Congress. I hope they win.
This reads as pre-planned and co-ordinated to me. My guess is Apple will soon introduce some reduction of platform fees as long as you comply to certain editorial standards in your app, and everybody will be happy.
I don't believe so.. As part of Epics business strategy since the Tencent investment they have been working to reduce license and distribution costs across the industry to the benefit of a lot of developers; and themselves of course.
Now Epic is worth over $18b, has some VERY big name investors, and controls the most popular game on the planet. They have the power to sway public sentiment against Apple, a legal leg to stand on as far as anti-trust, deep pockets, and powerful friends.
My guess, and hope, is that Epic takes Apple to the cleaners.
If I owned a grocery store chain, and some food company decided to trash me in the press, mock me, and sue me, I would never allow a single one of their products on my store's shelves again, forever, regardless of the outcome. I honestly don't understand what Epic hopes to achieve here. Why wouldn't Apple just ban Epic products from their store for good after this?
Epic probably plans to win the case and force Apple to loosen restrictions on iOS.
Apple isn’t the store owner, they are the shelf manufacturer. We are the store owners, and Apple is telling us what we’re allowed to put on our shelves. You know, I don’t think this is a great metaphorical framework.
Apple definitely is the store owner. They built and run the AppStore app and backend infrastructure, set the rules for what goes on the shelves and what doesn't, take a (large) cut for providing distribution, arrange things on the shelves, point people to products. Whether you disagree with Apple or not in this case, these are functions of a store, and it's clearly Apple's store.
> My guess, and hope, is that Epic takes Apple to the cleaners.
They're not asking for money, they're just asking for an order ordering Apple to stop their anti-competitive behavior with the app store and with payments. No cleaners are likely to be involved in this process win or lose.
Not necessarily. Tim Sweeney owns more than half of Epic Games, and (presumably, I'm obviously not privy to what contracts he has signed) has no obligation to sell for any amount of money. He is also rich enough to have "fuck the world money" and not accept a price that is far above what his share in Epic Games is actually worth.
That would be a stupid strategy for Apple, for a multitude of reasons:
1. Fighting it out in court, and then paying damages is probably going to be cheaper than 18 billion USD.
2. I don’t know if AppStore profits (NPV of discounted future profits) make it even worth 18 billion USD.
3. If they buy out Epic, they’re signaling weakness which is basically asking the next company to play the same game.
4. It just provides more evidence & impetus for those pushing for antitrust action.
There is technically a chance Apple might eventually acquire Epic, but if so, that would be driven by Apple seeking an interesting platform for its VR hardware, not to just close down this lawsuit.
You just don't start a fight without a plan. The legend of David and Goliath says that you need to be clever to take on an oppressive opponent that is far more powerful than yourself. Apple forgot that as it became the Goliath.
> My guess is Apple will soon introduce some reduction of platform fees ...
My guess is that Apple will fight this vehemently, to the highest courts they can, and try to minimise the financial damage by constraining whatever compromises they are forced to make on a per-country basis, and will continue to actively discourage this behaviour.
The part where they go to court is the core of the plan. They've timed it to coincide with the antitrust case. Apple will have to be very careful how they defend this case to avoid their statements coming up in the antitrust case that could cost them much much more than giving Epic a lower appstore fee.
> Apple still needs to pay credit card processors.
That's why I said 5%. They don't need to run it at-cost or take a loss from it, but considering it's a closed platform, it shouldn't be a massive profit center, either,
It looks like Epic expected this to happen. It could even have been waiting for it.
I don't know why the application developers don't develop their own OS/phones. If this is the only way we can have an open Linux phone, I am all for it.
I'm not against 30% Apple tax. It's their service and they can argue about it. But, the fact that there are no alternative app stores for IOS users, makes it wrong.
Fortnite's primary demo is people in their teens and early 20s. They are all too young to get the cultural reference of this ad. This isn't directed at them - hell, how many of them have actually read 1984? (Honest question, is that book still taught in high school?)
This ad is targeted at us. I'm inclined to agree with others in this thread who think this entire episode was some kind of product operation, designed to exit the (probably failing) mobile market and gin up some controversy as a convenient excuse.
1984 is still a very popular book to assign in schools.
It's both. The cleverness of this ad isn't just that those that get the reference think it's a great riff but if you don't get the reference that means your first time seeing this legendary ad is not for the Mac but about this issue. In either case it's a great success for awareness and the hashtag at the end doesn't hurt either. Also it's not just an ad they put on YouTube this plays as a cinematic when players launch Fortnite right now.
And of course it's all planned. Not only is it perfect timing to do this but mere minutes after getting banned they posted legal action and pushed a cinematic in game. You can't just do that instantly without having known.
https://news.ycombinator.com/item?id=24148548
There a zillion more related to Epic/Apple, but those are about the ad.