Apple Appeals Epic Games Ruling Over 'Anti-Steering' Provisions to U.S. Supreme Court

[Michael Scrip]

iPhone revenue in 9 months $156.8 billion in 2023

Ps5 sales 3.3 million in 2023

That’s why epic aren’t going after them but going after Apple & google.

But why is Epic "going after" anyone?

Here's what's funny about this whole thing...

Epic had a great relationship with Apple. Hell... they were on stage with Apple at the original iPad launch in 2010.

Eventually Epic went on to be making over a million dollars per day in revenue from Fortnite on iOS.

Then they decided to blow it up... getting themselves kicked out of both Apple's and Google's app stores.

And for what? I hope it was worth it...

😋

 

[Hails09]

($1099 - $501) * 200 million units sold would be a profit of 119 billion dollars a year.

I think maybe your numbers are off?

That was for the 14 pro max model
Sales are said to be 26.5 million
For that model.

 

[Analog Kid]

That was for the 14 pro max model
Sales are said to be 26.5 million
For that model.

My point was that you’re using a bunch of guesstimates and only counting the cost of the atoms. I guess I should add cherry picking to that list…

Epic appears to sell 1000 V-bucks for $8. Do you have a number for their cost to manufacture them?

 

[Analog Kid]

But why is Epic "going after" anyone?

Excellent point.

 

[bgillander]

But why is Epic "going after" anyone?

Here's what's funny about this whole thing...

Epic had a great relationship with Apple. Hell... they were on stage with Apple at the original iPad launch in 2010.

Eventually Epic went on to be making over a million dollars per day in revenue from Fortnite on iOS.

Then they decided to blow it up... getting themselves kicked out of both Apple's and Google's app stores.

And for what? I hope it was worth it...

😋

Because they wanted to make another 30%? It’s always more fun to call the other guy greedy. It seems like it isn’t usually the little guys complaining (or at least the ones that remember what it used to cost to try to market and sell on your own), but for some unknown rea$on, it is usually the ones big enough to be able to set up their own store and charge others.

 

[bgillander]

Bro, consoles are sold at a loss and the cost of the hardware is repaid by game purchases. A $499 Xbox Series X is more powerful than a $3600 M1 Max MacBook Pro to give an indication how much the hardware is "sponsored" by Microsoft.

Don't even try to compare this to an iPhone, which are sold at a huge profit.

I get your point, but saying it is more powerful seems a bit of an overstatement. I hadn’t researched this before, but assuming CPU Monkey’s page is accurate, it is interesting how well the Xbox does, as it does beat it on iGPU, but the Max appears to come out ahead on the other cross platform tests.

https://www.cpu-monkey.com/en/compare_cpu-apple_m1_max_32_gpu-vs-microsoft_xbox_series_x

 

[bgillander]

Bro, Apple doesn't have the same business model as gaming consoles. That is a fact. You cannot compare the two.

Wait, they both introduced their own computing devices and have the single source storefront for them. Why can’t they be compared?

That whole “gaming consoles selling at a loss” argument seems so strange, since I always thought selling at a loss was one of the first tests for antitrust rules, so that business model seems more of an issue.

Honestly, I have no problem with the game consoles or Apple having only their own storefront. Or anyone else that creates their own ecosystem. To massively oversimplify, if I buy land and build a store, I shouldn’t be forced to turn it into a mall unless it is my desire to do so. If you want to build a store, buy your own land and build away, but don’t try to build on my land unless I request it.

 

[bgillander]

But it matters how big you are and how essential the service is that you provide. That's why different regulations apply to electricity providers than for confetti manufacturers.

Fifteen years ago we might not have been at a point where mobile phones were so essential to people's lives that applying regulation would have been justified, but today they are.

Once a large enough fraction of society depends on something to a high enough degree, the companies providing that something can no longer be allowed to do just whatever they please.

You pretty much need a cell phone in today's world, at least the vast majority of people does. And developers need to make software for mobile phones because it's the largest part of the software market. Now if there's something that you need, but where you can only decide between two providers who both dictate the exact same conditions, then there is no actual competition and you are entirely powerless, right? That's where regulation comes in to help you as a developer or as a consumer.

That's where the video game console market is way different from the mobile phone market. Nobody needs video game consoles.

Good thing Epic doesn’t make games or profit off in app purchases of virtual coins! /s

I actually agree with your post’s sentiment, but I’m still trying to figure out how an iPhone seems to be more essential than healthcare or food (I’m thinking it might have to do with the potential profit for some, rather than the actual essential nature for the rest of us), but that is just my bitter take on the current state of the world.

 

[bushman4]

Sweeny must think the SC has no more important issues than its dispute with Apple. Doubtful SC will hear the case.

 

[Hails09]

My point was that you’re using a bunch of guesstimates and only counting the cost of the atoms. I guess I should add cherry picking to that list…

Epic appears to sell 1000 V-bucks for $8. Do you have a number for their cost to manufacture them?

Oh that’s not guess work that's in public domain that’s how much it cost.

Why does it matter to you if they offer an option to say you can purchase your content here instead of here & it’s cheaper.

 

[Muceda]

I hope Epic wins this in the end. I'm not an Epic fan at all, but Apple is way too big to behave the way it behaves and is definitely stifling competition and innovation at this point.

Taking a 30% cut of every mobile platform transaction when you're one out of two mobile platforms, the other of which is doing the exact same thing, is outrageous.

Google and Apple are enjoying a pseudo-competitive situation, in reality there's no competition and it's an implicit cartel. A duopoly is not a competitive situation, there is absolutely zero pricing pressure on either company because they both know they are the only two platforms available and too big and established for anybody else to have a chance to enter the ring.

I really don't understand why everybody is rooting for Apple so badly on this topic, it's a classical case of consumers rooting against their own interests.

You do realize it's you, the consumer, who ends up paying those 30% extra, right? It's not Epic or Spotify or any other company. It's the consumer for whom things are more expensive, only for the most valuable company in the world to become even richer.

Whether or not you like Epic is beside the point. You can still hate Epic, and of course they are fighting this fight for selfish reasons, but they just happen to be the only ones stepping up to challenge Apple to adopt more consumer-friendly App Store practices, so we should all be thankful for that.

You are confusing Fee with Price … neither Apple nor Google are setting up a price.
Also, do you really think that a 15% fee would mean a price reduction for the customer? Really??

Bonus: Can anybody sell skins in Fortnite? Have they made available a development kit so anybody could develop things on Fornite?
Apple invented a product, opened a door for developers setting rules an fees … now that is a monopoly but Epic not opening it is not????

I believe you should re-think your statements.

 

[bgillander]

But it matters how big you are and how essential the service is that you provide. That's why different regulations apply to electricity providers than for confetti manufacturers.

Fifteen years ago we might not have been at a point where mobile phones were so essential to people's lives that applying regulation would have been justified, but today they are.

Once a large enough fraction of society depends on something to a high enough degree, the companies providing that something can no longer be allowed to do just whatever they please.

You pretty much need a cell phone in today's world, at least the vast majority of people does. And developers need to make software for mobile phones because it's the largest part of the software market. Now if there's something that you need, but where you can only decide between two providers who both dictate the exact same conditions, then there is no actual competition and you are entirely powerless, right? That's where regulation comes in to help you as a developer or as a consumer.

That's where the video game console market is way different from the mobile phone market. Nobody needs video game consoles.

As I said in my earlier reply, I agree with your sentiment, so much so that I wondered why your post kept lingering in my thoughts. I think my issue is that while I do consider a cell phone pretty much essential (though I know a few people that survive without), I only know a couple of people with iPhones, and I wouldn’t consider an iPhone itself essential. If anything, it is the connectivity itself that is essential, and that is a telecomm function, and they are already regulated, and that has lowered so many costs for the consumer recently.

As a developer do I feel Apple’s fee at 15% for the first million per year is too high? Having lived in a time when software was delivered on floppy disks with paper manuals, even the 30% they charge if you sell over a million a year sounds pretty good to me. If I was regularly selling over a million a year, I guess I would probably feel differently, as no one wants less profit, but I doubt anyone would feel bad for me.

And as a customer, the single store and not having to search out different vendors for “exclusives” is a great thing, as that pain is something few people seem to remember. The funniest part of this argument, though, is the “consumer benefit”, as I can’t recall the last time I felt that iOS software was overpriced (other than the “I’m Rich” app, I think it was called) and I can’t even imagine that this would save the actual consumer money… it just might allow a fraction more profit for some developers (especially big ones selling over a million), and would allow Epic to make some profit off those developers, while allowing them to keep 100% of their Epic in-app purchase profits. So excuse me if I think Epic isn’t doing this for us.

Having lived before both, nobody needs video game consoles, but nobody really needs iPhones, either. That said, I certainly don’t want to give either of those up!

 

[Hails09]

You are confusing Fee with Price … neither Apple nor Google are setting up a price.
Also, do you really think that a 15% fee would mean a price reduction for the customer? Really??

Bonus: Can anybody sell skins in Fortnite? Have they made available a development kit so anybody could develop things on Fornite?
Apple invented a product, opened a door for developers setting rules an fees … now that is a monopoly but Epic not opening it is not????

I believe you should re-think your statements.

This is the same as Spotify all over its to do with price. They already show it by the update that got them kicked off iOS
They showed the inapp price v non inapp price.
There was a dollar of a difference.
That’s why Apple don’t want companies to offer an alternative payment route.
This is not to do with security it’s about
Money.

 

[DeepWebinar]

Anyone that works there deserves it for working for such a moron of a CEO. Thinking he can just sue to force Apple to bend their business model to what he wants. You signed up for it. Deal with it or go away.

You as in Epic, not you as in you, btw. lol.

what an unnecessarily cruel statement

 

[iPay]

Other stores also take 30%. It's not just Apple and Google. Steam takes 30%. The consoles take 30%. It's almost like there's a general idea of what to take, and Apple didn't just pull the number out of thin air.

Really, it's an Apple tax. Started under Steve Holy Jobs, generalized to any app purchase around 2008. Apple were surprised they could get away with it so easily (iirc, Jobs was quoted e-mailing on "the 30% cut...while it lasts"). Google followed suit, then everyone and their bot. Apple picked the 30% figure and sticked to it. For instance, when a bank wants to support Apple Pay, it has to sign a commercial contract and a technical contract. The cut is discussed in the commercial part. As banks won't give away 30% profit, the agreement often results on what Apple can take 30% on.

 

[GMShadow]

Really, it's an Apple tax. Started under Steve Holy Jobs, generalized to any app purchase around 2008. Apple were surprised they could get away with it so easily (iirc, Jobs was quoted e-mailing on "the 30% cut...while it lasts"). Google followed suit, then everyone and their bot. Apple picked the 30% figure and sticked to it. For instance, when a bank wants to support Apple Pay, it has to sign a commercial contract and a technical contract. The cut is discussed in the commercial part. As banks won't give away 30% profit, the agreement often results on what Apple can take 30% on.

It may astound you to learn that the world existed prior to 2008, and that distributors have always taken percentages to distribute products.

 

[cocky jeremy]

what an unnecessarily cruel statement

It be like that sometimes.

 

[Analog Kid]

that’s not guess work that's in public domain that’s how much it cost.

You're going to have to link me to it because I would be absolutely dumbfounded if Apple released that information into the public domain.

You avoided my question. If you are going to talk about revenue versus manufacturing cost, what is the manufacturing cost per unit for V-bucks? Fortnite itself-- what does it cost them to manufacture each instance of Fortnite?

 

[Naraxus]

And that’s my point. It’s not sold at a loss. Companies need to make money. If it’s truly sold at a loss a company will end up going out of business. The fact they ARENT contradicts the statements like the consoles are “given away”

It IS sold at a loss. Video game companies sell their consoles at a loss initially and make it up with game sales.

According to Microsoft Gaming CEO Phil Spencer, Microsoft loses as much as $200 on every Xbox it sells

Xbox Loses As Much As $200 On Every Xbox It Sells, Phil Spencer Says

Microsoft expects to make back the money through sales of games and accessories.

www.gamespot.com

Update: Sony says that the PS5 disc is actually making money after initially being sold at a loss. The PS5 digital is still selling at a loss

Sony Gaming Profit Drops 33%, Partially Due To Selling PS5 At A Loss

That’s one of the main takeaways from Sony’s recent earnings report, where the company is up overall, but in the gaming sector, revenue rose just 2% while profit dropped 33% year over year.

www.forbes.com

Companies might sell the consoles at a loss initially to lure customers, gaining market share from competitors. The strategy looks to make up for any lost revenue by selling games and online subscriptions.

The Economics of Gaming Consoles

Margin levels for both gaming consoles and games collectively is a central component for gaming business management and analysis.

www.investopedia.com

 

[DeepWebinar]

It be like that sometimes.

i’m sure you believe that

 

[Analog Kid]

Really, it's an Apple tax. Started under Steve Holy Jobs, generalized to any app purchase around 2008. Apple were surprised they could get away with it so easily (iirc, Jobs was quoted e-mailing on "the 30% cut...while it lasts"). Google followed suit, then everyone and their bot.

When Apple presented the 30% to developers at the time, the response was generally positive. It's 30% of revenue, not profits. It covers all distribution expenses including hosting and credit card handling. It puts apps in front of the entire Apple user base. Free apps are free to distribute.

This was seen as a boon to the developer community, particularly for smaller developers. Far better than the existing model they faced.

There’s a simple market based solution to those who don’t like sharing revenue with the store providers. Create a side loadable app for Android and/or desktop. Or create a web app. It‘s really that simple. If access to these markets aren’t worth the fees to you, don’t go into those markets. If the markets are worth it, pay the price of entry.

Anything else is market distortion and heavy handed destruction of competition among business models to the detriment of the consumer.

Apple picked the 30% figure and sticked to it. For instance, when a bank wants to support Apple Pay, it has to sign a commercial contract and a technical contract. The cut is discussed in the commercial part. As banks won't give away 30% profit, the agreement often results on what Apple can take 30% on.

It’s in the commercial agreement because it’s a commercial detail, and discussing what is appropriate between the parties is standard contract procedure. There’s nothing unusual in anything you’ve laid out here.

 

[Unregistered 4U]

When Apple presented the 30% to developers at the time, the response was generally positive.

I would only modify this to say that “generally positive” was an understatement. I think we can say without reservation that it was universally celebrated. It was easy to understand, it was low, and it was for everyone. And, most importantly, it was for an App Store on the hottest device going with millions of users, each with a valid credit card tied to their Apple ID and whom were not afraid to spend money on digital items. 🎉

 

[Analog Kid]

I would only modify this to say that “generally positive” was an understatement. I think we can say without reservation that it was universally celebrated. It was easy to understand, it was low, and it was for everyone. And, most importantly, it was for an App Store on the hottest device going with millions of users, each with a valid credit card tied to their Apple ID and whom were not afraid to spend money on digital items. 🎉

I agree, but really don't want to get into a "then how do you explain this one guy on YouTube who thought it sucked" debate... I'd rather just understate the facts up front.

 

[Michael Scrip]

I would only modify this to say that “generally positive” was an understatement. I think we can say without reservation that it was universally celebrated. It was easy to understand, it was low, and it was for everyone. And, most importantly, it was for an App Store on the hottest device going with millions of users, each with a valid credit card tied to their Apple ID and whom were not afraid to spend money on digital items. 🎉

Agreed. It is definitely a wonderful thing to sell software at the tap of a finger... without all the hassles of software distribution in the old days. And it flipped the revenue model, too. It used to be that developers were lucky to make 30% while the retail stores and distributors kept 70% or higher.

But now that a lot of this software has moved to subscriptions... does the platform need to keep getting a cut from what is essentially an automated electronic transaction every month?

That's where many developers are having a problem with this.

Yes... Apple has reduced their cut to 15% on subscriptions... but only after a year. I'm not seeing the difference between months 1 through 12... and month 13 through whatever.

And like I said... this is an automated process. The customer's credit card gets charged automatically every month in a fraction of a second. No humans are even involved in this task.

I'm generally in support of the app store model. But I still think there are certain aspects that need to be re-examined.

 

[Unregistered 4U]

But now that a lot of this software has moved to subscriptions... does the platform need to keep getting a cut from what is essentially an automated electronic transaction every month?

No, they don’t need to keep getting a cut. They can just take their app from the App Store and don’t have to worry about any of those pesky payments anymore.

That's where many developers are having a problem with this.

A small percentage of disingenuous developers have a problem with it. Or, I should say, they have a problem with it NOW. When they signed up, they were like “Whatever, as long as I get access to your customers and their credit cards.” That’s why I say disingenuous. Now they’re like, “I still want access to your customers, but, do I still have to pay? Yeah, I signed an agreement saying that I would fine with that but… c’moooon!” They had an opportunity to stand on their principles, and found it convenient not to.

And like I said... this is an automated process. The customer's credit card gets charged automatically every month in a fraction of a second. No humans are even involved in this task.

No humans… are involved… with the upkeep… and maintenance… and security… of an international payment system.