Apple Facing $1 Billion UK Antitrust Lawsuit Over App Store Fees

[4odomi]

The irony is that I believe classical definitions of Monopolies and anti-competitive behavior are completely backwards.

Classical arguments concerning monopolies say that a monopoly will RAISE prices, and that raising prices is an anti-competivie behavior. This is why so many of you think that Apple is charging TOO MUCH and by doing so, they are hurting competition.

But this argument is exactly backwards.

Now that we have hundreds of years of market economies to analyze, it should be understand that what a monopoly power will do is to LOWER prices, thus making it nearly impossible for anyone to enter the market and compete on price.

If Apple wanted to really be anti-competitive, they'd lower their developer fees to 5% (losing money to do so) and really drive the market crazy. Everyone else might then be forced to lower their prices as well, meaning that everyone would be losing money. Apps would then be a loss-leader for Apple, and it would be a race to the bottom to see which companies can survive longest by losing money. A monopoly would likely have the most power to lose more money than the others and still survive.

Think about Amazon. I think of any of the large companies, they might most easily be seen as a monopoly. But, what do they do with that power? Do they raise prices? NO. They maintain their monopoly by lowering prices, making it nearly impossible for other online retailers to compete.

Apple would be contributing to a more competitive market by raising its fees, thus creating more room in the market for competitors to compete on price.

That's what's silly about most of this discussion. There's just so little rational basis for the arguments being made about Apple being anti-competitive.

You do realise these silly arguments are from developers and only developers!

 

[4odomi]

W

Wel i present you exhibit: A) the M1/M2 Mac with OS X. We can download from the AppStore and shockingly download from alternative sources. And developers can chose to pay 0€ to Apple and be outside the store or pay their fees to be on the AppStore.

Exhibit: B) windows who also have a hugely successful AppStore and the alternative to not use it.

Exhibit C. Developers on Mac OS, make far bigger profits through the App Store, then the ones side loading 😊

 

[4odomi]

They obviously picked 30% as a tax that they thought devs would reasonably bear, initially.

We are just people on a forum but there’s obviously a reason why many gvts across the world have antitrust probes open vs Apple.

Yes the reason and the only reason, is because Apple won't allow them back door access to our data!

 

[4odomi]

I'm not saying it's insignificant. I'm saying they're overcharging.

Apple is not a charity and developers are not a charity either. Apple's App Store depends on the developers. 15 to 30% of the cost is a lot to be asking for. Obviously I'm not the only one thinking that because some regulators are thinking the same too.

The regulators/governments have alternative motives, ie; Apples refusal to give them back door access.
Apple hasn't tied you up and forced you to develop for them, ore App Store is probably before your time, when developers were lucky to make 30% on their products 😏
This is just pure greed by developers!

 

[msackey]

The regulators/governments have alternative motives, ie; Apples refusal to give them back door access.
Apple hasn't tied you up and forced you to develop for them, ore App Store is probably before your time, when developers were lucky to make 30% on their products 😏
This is just pure greed by developers!

I guess I don’t understand your statement about developers being greedy.

Also, I’m not a developer. I’m a consumer of software and Apple hardware.

 

[4odomi]

I'm absolutely for competitive markets in the distribution of mobile apps.

It's just that such competition simply does not exist on iOS today. The main reason for that being that Apple has created a platform that 1. isn't substitutable or replacable and 2. that they're holding all the signing keys for, preventing third-apps from running on it.

Even if you did develop your own mobile OS to rival and compete with iOS (as Microsoft arguably did with Windows phone) overnight, nobody would use it - cause there are no apps for it.

Hmm, there were no third party apps, when the original iPhone was launched and over 6 million bought it, why? because the phone was revolutionary and people wanted it, the phone not the apps! 😊
I have never bought a phone, based on what third party apps are available on it 🤣

 

[4odomi]

I guess I don’t understand your statement about developers being greedy.

Also, I’m not a developer. I’m a consumer of software and Apple hardware.

Lets assume for the sake of the argument that you're not a developer, but a consumer 😊
Like the developers, it's your choice to be a consumer and when you became one, you knew what the landscape looked like.

 

[ackmondual]

They do have a choice. They can develop for Windows, Android, Linux, web, Playstation, Xbox, Samsung App Store, Nintendo Switch, etc. The terms were clear when they first signed up to develop for iOS - pay 30% for digital goods. They signed up knowing this term.

It's like suing Walmart, America's largest retailer, because you don't want to continue to pay the fee to have your products in Walmart stores. If you don't like Walmart's fees, then put your products into Kroger, Albertson, Target, Amazon, etc.

Next time Apple does something that's hostile to their users, we can just tell Apple users they can always just switch to Windows, and Android

Likewise, Apple has a choice too. If they don't want to follow the laws of the country they're operating in, they can always leave.

 

[ackmondual]

Why aren’t they investigating Amazon which takes 50%! It makes Apple’s fee structure look absolutely inexpensive in comparison. 💸

Because Apple is.. low hanging fruit!

 

[senttoschool]

Next time Apple does something that's hostile to their users, we can just tell Apple users they can always just switch to Windows, and Android

There are a ton of phone makers out there ready to serve you.

 

[SFjohn]

Next time Apple does something that's hostile to their users, we can just tell Apple users they can always just switch to Windows, and Android

Likewise, Apple has a choice too. If they don't want to follow the laws of the country they're operating in, they can always leave.

What has Apple ever done that was hostile to users? Seriously! Protect their data & privacy? When governments change their laws to go after Apple’s customer private data, then Apple can act accordingly.

 

[Skyscraperfan]

The consumers are not suing Apple, because we all know, we can't side load on an iPhone, so we make an informed decision when we buy it!
As do the developers when they sign up with the App Store !

The fact that you know it before you buy an iPhone does not make it okay. It is an oligopoly. You can just choose between two evils: Either Apple with its closed system or Google not respecting your privacy. So the authorities have to stop both.

 

[dsut4392]

Probbaly not. When Apple reduced fees for small developers did they drop prices or merely pocket the windfall?



Sure. Right now, beyond a developer account, time and some hardware there is no up front costs for marketing an app. If it fails, yo are out a lot less than if you had to pay for marketting, storage, downloads, etc. It really lowered the bar for app development. I suspect developers would find it a lot harder to start or stay in business if they had to upfront the money for things Apple covers with its cut. They are likely to find out instead of getting 70% of sales they are getting 30%, if they are lucky.

As others have pointed out, alternative app stores are not likely to be cheaper or offer the same reach and breadth of services Apple does.



Of course. I suspect they'd find that pirating their apps just got a lot easier for many non-technical users and be forced to go to subscriptions to try to make money.



What is fair? Is it fair that Apple doesn't get a cut if the app doesn't sell or is free? If apps are allowed to be free but collect subscription fees outside of the IAP process and not give Apple a cut? That Apple gives small developers a break on the fees?



The value of a service does not depend on the cost of delivering it.



Dis it take Cybertune's developer 16,566% longer to develop it than Procreates?

App store commissions don't seem to have held ProCreate back. I ride past their HQ (294 Elizabeth St Hobart) every day on my way home, and in the past few years they have gone from having just a small office at the back of a joint tenancy to now taking up the whole building, plus another whole building a few doors further up the road. If you want to see how much better their app would be at a lower commission rate, check out those app stores on other platforms and see what's out there...

 

[svish]

Legal troubles seem to be never ending for Apple.

 

[laptech]

The consumers are not suing Apple, because we all know, we can't side load on an iPhone, so we make an informed decision when we buy it!
As do the developers when they sign up with the App Store !

Oh please, give it a rest with this signup crap, it's been done to death. Just because Apple write it to make sure dev's are severely restricted on what they can do with regards to using payment systems and restrictions on how they advertise their own pay systems within their own app, does not make what Apple is doing right.

 

[Sophisticatednut]

It does seem like apple has a natural monopoly on the IPhone iOS and the App Store. At least in the US but we will see about the UK.

I guess the bias is how narrow your view of the market is. We will see what the outcome is.

Well I define the market as the market that businesses compete on for the same customers. Even EU sees it like that, as the iPhone is two different markets such as the phone market and the digital market of that device.
Apple is a monopoly in every avenue you can think of in the UK as they define it as 25%>

So, again, then tell me. Why doesn't Apple charge 40%?

They don’t want to.

To be clear, Steam charges 30% to developers. Even to small developers (Apple charges 15%).

Indeed and developers think they are getting a lot of value from valve even when Epic takes 0%.

And honestly Apple even taking 15% is highway robbery compared to what you get for your money in the AppStore compared to steam.

Example: Bear notes uses CloudKit for free.

Apple can simply charge the user a separate fee for apps using CloudKit. Or charge the developer a separate fee for using CloudKit.

Or Bear uses something else,

If Bear Notes must now eat additional costs, it will be passed onto the consumer.

Same goes for Apple Maps.

They can use something else.

The irony is that I believe classical definitions of Monopolies and anti-competitive behavior are completely backwards.

Classical arguments concerning monopolies say that a monopoly will RAISE prices, and that raising prices is an anti-competivie behavior. This is why so many of you think that Apple is charging TOO MUCH and by doing so, they are hurting competition.

But this argument is exactly backwards.

Now that we have hundreds of years of market economies to analyze, it should be understand that what a monopoly power will do is to LOWER prices, thus making it nearly impossible for anyone to enter the market and compete on price.

If Apple wanted to really be anti-competitive, they'd lower their developer fees to 5% (losing money to do so) and really drive the market crazy. Everyone else might then be forced to lower their prices as well, meaning that everyone would be losing money. Apps would then be a loss-leader for Apple, and it would be a race to the bottom to see which companies can survive longest by losing money. A monopoly would likely have the most power to lose more money than the others and still survive.

Think about Amazon. I think of any of the large companies, they might most easily be seen as a monopoly. But, what do they do with that power? Do they raise prices? NO. They maintain their monopoly by lowering prices, making it nearly impossible for other online retailers to compete.

Apple would be contributing to a more competitive market by raising its fees, thus creating more room in the market for competitors to compete on price.

That's what's silly about most of this discussion. There's just so little rational basis for the arguments being made about Apple being anti-competitive.

This is silly UK and away have not defined monopoly or anti competitive behavior like this for decades, or ever.

Apple is being anti competitive by preventing competition in the first place. Apple is a monopoly because they don’t allow others to enter “their” market.

 

[The-Real-Deal82]

They do have a choice. They can develop for Windows, Android, Linux, web, Playstation, Xbox, Samsung App Store, Nintendo Switch, etc. The terms were clear when they first signed up to develop for iOS - pay 30% for digital goods. They signed up knowing this term.

It's like suing Walmart, America's largest retailer, because you don't want to continue to pay the fee to have your products in Walmart stores. If you don't like Walmart's fees, then put your products into Kroger, Albertson, Target, Amazon, etc.

Times change and maybe developers want a higher share of the profits. The iPhone wouldn’t be as popular as it is without third party apps existing, so it’s in Apple interest to make sure developers are paid fairly. If they all just decided to pull away from iOS, Apple would have a huge problem.

 

[mrochester]

Times change and maybe developers want a higher share of the profits. The iPhone wouldn’t be as popular as it is without third party apps existing, so it’s in Apple interest to make sure developers are paid fairly. If they all just decided to pull away from iOS, Apple would have a huge problem.

Normally getting a higher share of the profit comes from collective action and/or negotiation. Of course taking action has the side-effective of temporarily damaging your own business. I’m not entirely sure that any developers have taken this collective action as a negotiating tactic (other than Epic, you could argue, but alone they don’t have enough influence).

 

[Denzo]

This idea of "fair" is not part of modern market economics. Short of labor laws that protect the vulnerable, the idea that Uber has to be fair to anyone misunderstands markets. Uber, actually, has never made money. In 2022, they lost nearly $10 billion. Uber is struggling to survive; I'm not sure they will. But no restaurant is required to use Uber Eats. Restaurants can manage their choice of services to offer all on their own. And many do not use Uber Eats.

Understanding the modern market you reckon.

So, Uber is what, operating at loss cleaning up 30% of business revenue paying drivers $30 an hour and running an app? OK.

You sure there not light on paying tax with all these losses

 

[Dremmel]

So where do UK developers sign up? Surely there are more than 1500 in the UK? Apple have been ripping off IOS developers since at least 2013, and I'm not talking about the 30% (or 15%) commission.
Did a Google but can't find a link to sign up or become involved.

 

[jlc1978]

I have too long made the point that App store charges to developers are excessive. 15% to 30%? For what? For keeping up with the basic infrastructure which Apple also ultimately depends on to run their iPhone? C'mon!

Apple provides a number of services, including tax compliance, hosting, payments, etc. I suspect third party stores will find it difficult to provide teh same services, and the customer base, for a lesser fee.

I also suspect developers will find it onerous to keep up with tax laws in all the countries they may sell a product; and potentially find themselves fined for non-compliance by a tax authority.

That’s the thing, it’s not the same app. And most importantly, Apple doesn’t own their customer base. People speak like it’s apples property when it isn’t

Access to it as a group is controlled by Apple, just as with any retailer.

That would be the best.

Well isn’t that the point?
And the last part is illegal and have not been in the agreement for years.

My point is once there are alternative app stores the argument "Apple has a monopoly" goes away since there is now competition. Actions that were previously viewed as anti-competitive are no longer because developers now have a choice. Thus Apple should be free to change the rules and add restrictions since developers can chose where to sell their product.

Developers may find that to protect their revenue stream Apple changes the fee structure and starts charging upfront for services that previously were include in their cut; or charging to host and d/l free apps that offer subscriptions outside of an IAP. In the end, small developers may be hoisted by their own petard in order for a few big players to get a sweet deal.

Exhibit C. Developers on Mac OS, make far bigger profits through the App Store, then the ones side loading 😊

Exhibit D: Developers did not lower prices when Apple lowered its cut, or often charge less for non Mac App Store products.

Times change and maybe developers want a higher share of the profits. The iPhone wouldn’t be as popular as it is without third party apps existing, so it’s in Apple interest to make sure developers are paid fairly. If they all just decided to pull away from iOS, Apple would have a huge problem.

This whole "not paid fairly" and "rip off developers" makes no sense. Developers get to set a price for tehir product, and Apple marks it up. If I want 10 Euros for my software, I know Apple will price it higher than 10 Euros and I still get my money; just like any other store in the world.

Developers go for iOS because it is a very lucrative market. Android, in many ways, is a hot mess for developers to try to make a profit like they can with iOS.

Perhaps developers should price their apps fairly, i.e. cheaper, because they make more from iOS than Android and taht is unfair to consumers. Damn greedy developers who pocketed the money instead of cutting prices when Apple lowered their cut.

In the end, this isn't about fairness but greed. Developers see how much they make off of iOS and have decided they want an even bigger size of the pie and Apple is an easy target. I wonder what they'd say if Apple offered to settle by saying "We'll cut our take to 10% but you have to cut your prices by 20% so the consumer benefits from the deal." Wanna bet how many would take that deal?

 

[I7guy]

Well I define the market as the market that businesses compete on for the same customers. Even EU sees it like that, as the iPhone is two different markets such as the phone market and the digital market of that device.
Apple is a monopoly in every avenue you can think of in the UK as they define it as 25%>

[…]

The US courts have a different definition. I have a different definition.(mine is less important than the US courts). The reason that apple hasn’t been taken down in the US is lawyers who know the law. The EU is in a witch-hunt. But the EU in time will shoot themselves in the foot.

 

[laptech]

Car manufacturers used to have exclusivity with their cars, spare parts and servicing in that who can have the cars, who can have spare parts and who can do the servicing but the courts told them they cannot do this because it is ant-competitive and thus they cannot control who they sell cars and parts to and restrict who can do the servicing but yet Apple can restrict what payment system is used and restrict what payment methods/controls are put in an app and no court finds a problem with that. Why does it work for Apple being allowed exclusivity and restrict what payment systems are used in it's app store thus preventing other payment systems to be able to be used but when others want exclusivity and restriction so they can control their product, they are told no, why?

Apple has total control of what goes on in it's app store but a car manufacturer is not allowed to have control over it's spare parts and servicing? something is very well screwed up here.

 

[playtech1]

I feel like some people in this thread would have welcomed it if Edison owned the power lines and we were only allowed to plug in approved electrical appliances, the manufacturers of which needed to pay Edison a 30% fee to approve them as not electrocuting anyone...

 

[I7guy]

[…]

Apple has total control of what goes on in it's app store but a car manufacturer is not allowed to have control over it's spare parts and servicing? something is very well screwed up here.

Apple has total control over its ecosystem because…it’s their innovation. Costco has fits control over its showrooms. Honda has Rita control over what goes into its cars.