Apple Earned Over $100 Million From Fortnite

[I7guy]

It is standard practice within the business world that companies will charge consumers high prices for their products so the company can put the profits from one product into that of another. Apple have every right to do this to the CONSUMER but they do not have the right to do this to businesses that pay Apple for using a service of theirs. If Apple need money to keep the app store going, to pay employee wages, hosting costs, advertising costs, distribution costs, server costs, network line costs and so on, then Apple should be pricing the apps in the store accordingly to recover those costs through the consumer, with a bit extra on top to help keep the app store running.

Apple do not, in my opinion have the right to charge businesses (app developers) a comission based fee on every in-app purchase made to help pay for Apple other projects. If the figures from the data analytical firm are correct, where did the bulk of 2020's $22 billion commision goto?, because it certainly did not go all on the app store. Spotifiy and Epic have an app in the app store and thus any monies payed from their app should go into the running and upkeep of the app-store and nothing else.

It's my opinion, that as a the facilitator of the delivery of physical and e-goods, the app store is entitled to a standard 30% and Apple is entitled to make as much money as they can. The same way you are entitled to make as much money as you can.

Apple provides a complete management and distribution platform. And instead of charging an upfront fee of thousands or millions of dollars, Apple takes a commission on the back-end. (Charging an upfront fee, would stifle innovation and make "free" apps an impossibility).

At any rate, you are relying on a third party and don't know how accurate the estimate is. But at any rate, I don't agree with your sentiment.

 

[SuperMatt]

It is standard practice within the business world that companies will charge consumers high prices for their products so the company can put the profits from one product into that of another. Apple have every right to do this to the CONSUMER but they do not have the right to do this to businesses that pay Apple for using a service of theirs. If Apple need money to keep the app store going, to pay employee wages, hosting costs, advertising costs, distribution costs, server costs, network line costs and so on, then Apple should be pricing the apps in the store accordingly to recover those costs through the consumer, with a bit extra on top to help keep the app store running.

Apple do not, in my opinion have the right to charge businesses (app developers) a comission based fee on every in-app purchase made to help pay for Apple other projects. If the figures from the data analytical firm are correct, where did the bulk of 2020's $22 billion commision goto?, because it certainly did not go all on the app store. Spotifiy and Epic have an app in the app store and thus any monies payed from their app should go into the running and upkeep of the app-store and nothing else.

Commissions are used all the time. One’s opinion doesn’t enter into it. They are completely legal, so they literally DO “have a right” to charge them. Mortgage brokers, insurance agents, travel agents, airbnb, Uber, and countless other examples. There is no rule that they cannot make a profit on those commissions. Apple created a marketplace that other businesses want to sell in. They can charge a commission, and there’s no rule that says it has to be a break-even proposition.

 

[1129846]

Absolutely. Apple built a platform costing how many $$$. For a paltry $99 and blood, sweat and tears, you can publish an app, with a complete management and distribution platform while giving access to the app to over 1 billion devices.

Seems like a fair deal.

So lets remove all the apps from your phone that are not Apple.
How many iOS devices would be sold?
Apple built the eco system to sell more iPhones and iPads. The developer part sorry this was to sell phones. Apple 30% cut is higher than before the App store.
So that 99 honest people pay covers more than the cost for almost every app to run the app store.

 

[1129846]

Commissions are used all the time. One’s opinion doesn’t enter into it. They are completely legal, so they literally DO “have a right” to charge them. Mortgage brokers, insurance agents, travel agents, airbnb, Uber, and countless other examples. There is no rule that they cannot make a profit on those commissions. Apple created a marketplace that other businesses want to sell in. They can charge a commission, and there’s no rule that says it has to be a break-even proposition.

The problem is there is no alternative to sell else where. Google unlike Apple can completely say you can host it you self. Let them download it yourself and install it your self. You have to create your own system to do that but it can be done on any android device if you want to avoid the fees. Epic choose to go that route with Android.

iOS tell me how you would do that? Apple choose to lock down the device so rules are a little different. Apple could allow places to self host and no go threw the app store then they could use that argument but Apple does not do that.

 

[SuperMatt]

The problem is there is no alternative to sell else where. Google unlike Apple can completely say you can host it you self. Let them download it yourself and install it your self. You have to create your own system to do that but it can be done on any android device if you want to avoid the fees. Epic choose to go that route with Android.

iOS tell me how you would do that? Apple choose to lock down the device so rules are a little different. Apple could allow places to self host and no go threw the app store then they could use that argument but Apple does not do that.

Apple doesn’t have a monopoly on cell phones.

Nintendo does exactly the same thing, but they don’t have a monopoly on video game consoles either.

Lots of game makers don’t sell on iOS. Lots of game makers don’t sell on Nintendo. They have options, as do buyers of phones and game consoles.

If this was illegal, why have console makers been doing this for decades?

 

[1129846]

Apple doesn’t have a monopoly on cell phones.

Nintendo does exactly the same thing, but they don’t have a monopoly on video game consoles either.

Lots of game makers don’t sell on iOS. Lots of game makers don’t sell on Nintendo. They have options, as do buyers of phones and game consoles.

If this was illegal, why have console makers been doing this for decades?

That argument might work if it was not for the fact that Cell phone and tablet OS is a duopoly. There are only 2 choices. Android or iOS.
in the console market you have PC, Xbox, Play station and Nintendo. There is competition there. in the Phone OS world there is not really any competition. Also this is not just about games. It is about all apps.
This case what is Apple doing for Epic. They are not hosting the game. Most of that is on Epic services. They sure as hell are not handling updates and purchases against handle by Epic.
Apple is just hosting a small part of the app and then charging 30% to be a payment processor. That is 30% to do nothing more than be a payment processor. Apple cost are next to nothing. Apple could charge 5% and still turn a profit. Apple cost at most are 3-4% and that is being high as chances are Apple has a much cheaper rate with the major CCs.

 

[RedRage]

Apple doesn't deserve $100MM from Epic just for having their app in the App Store. It's really way more than that which is why they don't want to reveal the true amount. It will make them look bad for collecting that for doing nothing. What world do some of you people live in where you think it's okay for Apple to collect money on every IAP made on Epic's app? When I buy a computer at Best Buy they don't collect a fee for every purchase I make on that computer after I buy it so why does Apple deserve a cut after the initial app purchase? Can you imagine Best Buy collecting 30% from every Amazon purchase I make on the computer I bought from them? lolz

The fix is simple. Charge for every app that has IAP's with it. Epic could charge $5 for their app. Apple gets a cut of that one time purchase fee each time someone buys that app. THAT'S IT! What consumers do with the app after purchase is for Epic to control, not Apple. Apple doesn't deserve 30% of their IAP's forever.

This doesn't look good for Apple. I can't wait for them to lose.

 

[I7guy]

So lets remove all the apps from your phone that are not Apple.
How many iOS devices would be sold?
Apple built the eco system to sell more iPhones and iPads. The developer part sorry this was to sell phones. Apple 30% cut is higher than before the App store.
So that 99 honest people pay covers more than the cost for almost every app to run the app store.

Right, and if there weren't this great app distribution program where a dev pays no upfront $$$, there wouldn't be any incentive to be innovative or make a buck. The app store is an enabler. Remember the iphone 1 sold pretty well without an app store or cut and paste.

 

[Nuno Lopes]

Very bad analogy.

Well it’s based on the moral principle. But I suspect that it may be guided also by something else that you never explored in this exchange.

 

[I7guy]

Well it’s based on the moral principle. But I suspect that it may be guided also by something else that you never explored in this exchange.

Because your analogy is not based on legalities with respect to hardware and software purchases, that's why it's a bad analogy. The moral principle is you own the phone and get a license to use the software.

 

[coachgq]

No. Because I can go and buy the same goods at any other store I want and am not limited to only being allowed to buy my wares at Wallmart, regardless of which car I drive into the parking lot...

There is android. You can buy a large portion of the same apps. Boom Roasted.

 

[Nuno Lopes]

Because your analogy is not based on legalities with respect to hardware and software purchases, that's why it's a bad analogy. The moral principle is you own the phone and get a license to use the software.

I thought you weren’t a lawyer. On the other hand I thought you were arguing based on principle not legalities. Apple owns the platform and are entitled to do whatever they think with it, that is what you have argued. It is applied to many things. This does not seam to be arguing based on legalities specific to hardware and software but moral principles around property ownership.

Now you are correct in saying one buys the phone and licenses the OS. But does that license Apple to than use something I own and sell access to it to others without boundaries? Haven’t read that in the license. What I’ve read software blablabla. Software a big ball of anything that people can relate to. You may use but software implosion is at our own discretion … imagine a building.

Look man, tech companies had it good for too long under software blackbox (oh it’s just software). It’s time to pay attention on what software is actually enabling. It’s not just software.

Like you I’m all to avoid regulation. But if companies abuse good will and act in bad faith thinking only about what they can extract out of absence of it the coming of it is mostly down to them. Software in general may not be regulated but specific kinds of software applications can. Consider the earths materials as software, out of it people build buildings, cars, planes … we don’t regulate the use of earths materials mostly but it’s applications.

If it was not good will and faith consumers wouldn’t be using software. It this good will that allows companies come with amazing tech innovations otherwise very few would buy into them.

Software is a very young industry. Younger than planes and cars.

Against me I talk.

 

[I7guy]

I thought you weren’t a lawyer. On the other hand I thought you were arguing based on principle not legalities. Apple owns the platform and are entitled to do whatever they think with it, that is what you have argued. It is applied to many things. This does not seam to be arguing based on legalities specific to hardware and software but moral principles around property ownership.

Now you are correct in saying one buys the phone and licenses the OS. But does that license Apple to than use something I own and sell access to it to others without boundaries? Haven’t read that in the license. What I’ve read software blablabla. Software a big ball of anything that people can relate to. You may use but software implosion is at our own discretion … imagine a building.

I'm not a lawyer, but that is my layperson's interpretation of what I understand is the real world use case without arguing principles or legalities. The truth is you are free to do whatever you want with your phone and apple can't stop you. But they do own the app store and they do own ios. If you can get around those two items, more power to you, but Apple isn't obligated to assist. That's the difference between legalities and principles.

Look man, tech companies had it good for too long under software blackbox (oh it’s just software). It’s time to pay attention on what software is actually enabling. It’s not just software.

Like you I’m all to avoid regulation. But if companies abuse good will and act in bad faith thinking only about what they can extract out of absence of it the coming of it is mostly down to them. Software in general may not be regulated but specific kinds of software applications can. Consider the earths materials as software, out of it people build buildings, cars, planes … we don’t regulate the use of earths materials mostly but it’s applications.

If it was not good will and faith consumers wouldn’t be using software. It this good will that allows companies come with amazing tech innovations otherwise very few would buy into them.

Software is a very young industry. Younger than planes and cars.

Against me I talk.

Software may be younger than cars, but algorithmic thinking (Turing machine) and a general purpose computer (Eniac) was available in 1945. So not that much younger. But this appears to be a common standard that I'm just discussing. So I'm not sure where this is headed.

 

[IG88]

You realize that Sony gets a 30% cut of every PS5 game, and all IAPs too, right? Then add to that fact that any physical games sold in-store have Wal-Mart’s profit margin too, so the developer is getting less than the 70% of revenue they get from Apple?

Good point there. It's relevant for sure.

Epic should be forced to show their full financials for Fortnite across all platforms. As well as any games they've done that are not free to play where most of the revenue is up front Purchase.

And there should be some sort of disclosure for what the typical revenue split is for games like RDR 2 where you're paying like $60 up front.

In other words, Epic can't pretend like Apple exists in a vacuum if they're basing a case on Apple's 30% cut.

 

[coachgq]

Apple doesn't deserve $100MM from Epic just for having their app in the App Store. It's really way more than that which is why they don't want to reveal the true amount. It will make them look bad for collecting that for doing nothing. What world do some of you people live in where you think it's okay for Apple to collect money on every IAP made on Epic's app? When I buy a computer at Best Buy they don't collect a fee for every purchase I make on that computer after I buy it so why does Apple deserve a cut after the initial app purchase? Can you imagine Best Buy collecting 30% from every Amazon purchase I make on the computer I bought from them? lolz

The fix is simple. Charge for every app that has IAP's with it. Epic could charge $5 for their app. Apple gets a cut of that one time purchase fee each time someone buys that app. THAT'S IT! What consumers do with the app after purchase is for Epic to control, not Apple. Apple doesn't deserve 30% of their IAP's forever.

This doesn't look good for Apple. I can't wait for them to lose.

Does apple still provide a service to Epic after the 1 time purchase? If so, they deserve to be paid for it.

 

[smetvid]

No, it isn't really. Walmart gets a cut off of selling you a PS5 game, up front, one time, & only if you choose to buy it from Walmart. Any future DLC related purchase, Walmart gets nothing.

What Apple is doing would be like Walmart being the sole source of every PS5 game and getting a 30% cut of all of that as well well as any / all DLC purchases for the games.

Yes but in your example what companies want to do is sell the PS5 in Wal-mart without paying a fee to do so. They want to use Wal-mart for free and benefit from the customers shopping at Wal-mart.

In this case apps that are free and only make money from IAP are doing basically that. Its a back door way to use the App Store and Apple for free. They benefit from the iOS user base and pay Apple nothing for all they effort to create that iOS user base and market. By not charging for IAP or subscriptions specifically that is essentially what will happen. Everyone and their brother will do IAP and Apple will never earn a single penny.

Wal-mart is selling physical goods for a one time fee and not sticking products on their shelves that people can walk into the store grab and walk out without paying. Wal-mart is getting compensated for every transaction.

Apple has a different business model. Should Apple just ban all forms of IAP? Thats not exactly fair to those that use it as a legit means to sell their hard work. Yes apple could do an alternative and charge $100,000 for an endless license to sell subscriptions with no fees. The reality is however this would only make sense for a handful of companies the size of Epic. No small developer is going to pay that and hope their app sells millions to justify that cost. Even some larger developers may be hesitant to go that route.

It would also increase the cost for all the other developers. Apple was able to cut the app fees for anything under $1,000,000 down to 15% because they make most of their money from the larger developers. This is more like a tax system where some societies tax big companies to help offset the taxes for the rest of the citizens. If the taxes suddenly drop for the larger companies then the taxes will go up for smaller developers.

Apple was also trying to make it easier for small indie developers to find success. In the Wal-mart example it is almost impossible for most of us to create a game, box it up and get Wal-mart to sell it on their shelves. It would cost us a small fortune to do it and we would not be able to. Apple didn't want that and they wanted a system that would help the smaller developers. The system is fair across the board. An app sells $10.00 it pays 30%. An app sells $1,000,00 it pays 30%. Much like a tax system. We all get charged 30%. That makes it very easy for a developer who may only make $10.00 to still keep developing apps and keep their app out there to pick up another $10.00 in sales after word of mouth spreads.

If Apple charged a flat fee like Wal-mart does to sell an app on the App Store it would likely mean 90% of app developers would not do it. It would return the game development industry back to the hands of a few larger companies where they controlled all the power. This is why most online stores like Steam and Nintendo also charge 30%. It is that single fair move that made the indie game and app industry actually work today and stand a chance competing against the large gaming companies.

There is also the argument that if there was no iOS platform companies like Epic wouldn't be making their 70% anyway. It is because of iOS that companies like Spotify even exist today. If there were no mobile apps there would be no Spotify. Period. So iOS and Apple are responsible for that entire companies existence. In the case of Epic they are now earring that much more money than they did before they had a iOS version. Its an existing game that was ported to iOS. Every penny they pull in now is gravy on top of their usual game revenue for computer users. 30% seems like a lot but 70% extra profit is even more.

I am an app developer and if I made a game and it sold $2,000,000 I am very happy to pay Apple 30% because I know without mobile, iOS the App Store and Apple there would be no way I would have ever done anywhere close to a $2,000,000 game. Just like I earn more money than my dad and I'm happy to pay more in taxes than he does. Its fair that I pay more taxes because I earn more.