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

[kognos]

Good time to repost this: https://www.macrumors.com/2020/07/22/apple-app-store-fee-study/

That's interesting but irrelevant. Apple is being sued because there are no alternatives. In most if not all of those cases, with the exception of Apple, you can acquire and install software (or product) using other means. Apple holds the unique position of saying "You have an Apple device? 100% of all developers absolutely, positively, must pay these extra fees to install any software on our device whatsoever, no exceptions."

And apple hides behind those stances in the name of security, but that is a seriously weak argument. Apple has always utilized security-by-obscurity instead of even attempting proper device hardening all in the name of maximizing profit. Sideloading would've saved them here, required Apple to toughen up security, and yes, diminish Apple's massive profits derived from all app sales that absolutely must fork over a percentage to Apple... on every. single. purchase.

Of course they're going to spin the messaging here to maintain their highest profit line item with operational costs so low (100mil a year to run the Apple Store, with nearly 17bil in profits). Big of them.

 

[Macropanda]

It’s mad how little a uk developer sees of any app income.
First take off VAT, then Apples cut, then pay your own personal tax and NI.
You’re lucky to see half of any income for yourself.

 

[Michael Scrip]

The suit accuses Apple of abusing a dominant position by charging a 15% to 30% fee on in-app sales in the App Store

The lawsuit says 15% to 30% is abuse.

But if it was 5% to 10% then it would not be abuse?

Since the lawsuit mentions those percentage fees specifically... it sounds like the percentage fees are the big issue.

It'll be interesting to see if Apple will lower the fees.

 

[neuropsychguy]

"It also argues UK consumers are missing out because developers are being deprived of money that could be spent on research and development to help drive app innovation."

That money could also be spent on increasing profits for the developers/companies, which increases UK tax revenue.... It could be spent on igniting wildfires. It could be spent on drugs. It could be spent on just about anything. Hypotheticals aren't great arguments here.

 

[ggibson913]

This argument is almost as old as the App Store itself. You basically have to camps. The first camp that thinks it is fair for Apple to charge developers a percentage of the profits to maintain the app store and host the apps. The second camp thinks that Apple makes enough money as it is, and should maintain the app store and payment system for developers for free. The two sides will never agree.

 

[jlc1978]

It still beggars belief how Apple is still allowed to get away with this. Shopping malls charge a yearly rent fee for individual shop owners to sell there goods in the mall. Market stall providers charge a yearly rent fee for stall holders to use a stall so they can sell their goods in the market. Neither the shopping mall or the market stall providers charge a fee for every sale made by individual shop or stall holder, so why should Apple be allowed run a system where not only do they get a yearly fee from every dev but also charge a fee for using a payment system devs have no choice but to use because Apple prevents other payments systems from being used. If shopping malls are not allowed to charge a fee on every purchase made from the shops within their mall, why is Apple allowed to charge a fee on all purchases made within their store?

Shopping malls have what is known as percentage leases in some cases, where you pay a percentage of sales in addition to rent. In addition, if you don't make any sales, the mall owner doesn't say, "No problem, you don't owe us any rent this month."

Also, some rental agreements require renters to pay for the costs of maintenance and grounds, which means if a tenant leaves the remaining ones now pay more since fewer tenants are sharing the costs.

Apple has bundled a lot of services into a fixed percentage that is only paid if a product is sold; and allow almost any developer access to the store as long as they meet the rules. I doubt you find many, if any, malls that offer teh same terms and let anyone roll their cart in and sell that meets their rules.

 

[Skyscraperfan]

Even Ebay does not have any fees for sellers any more. At least in Germany. That was a revolution.

 

[indiekiduk]

Before the app store I sold one license a month. After app store it was 3000 a day. So I think 30% cut for distribution of 90,000% increase in sales is a pretty good deal. I'll be opting out of this class action.

 

[PlayUltimate]

It could also be said that if it weren't for 3rd party app developers, the iPhone might not have become the success that it is today.

Remember that Steve Jobs didn't think 3rd party apps were right for Apple and the iPhone.

Steve Jobs resisted third-party apps on iPhone, biography reveals

Stuart Dredge: CEO was initially reluctant to allow non-Apple apps but was swayed by lobbying from execs and board members

www.theguardian.com

Walter Isaacson's authorised biography of former Apple CEO Steve Jobs explains that Jobs was initially unconvinced that apps would benefit Apple or its iOS platform.

"When it first came out in early 2007, there were no apps you could buy from outside developers, and Jobs initially resisted allowing them," writes Isaacson. "He didn't want outsiders to create applications for the iPhone that could mess it up, infect it with viruses, or pollute its integrity."

Hence no external apps for the first iPhone. However, the book explains that behind the scenes, Apple board member Art Levinson and SVP of worldwide product marketing Phil Schiller were pressing Jobs to change his mind.

"I called him a half dozen times to lobby for the potential of the apps," says Levinson, while Schiller adds that "I couldn't imagine that we would create something as powerful as the iPhone and not empower developers to make lots of apps. I knew customers would love them."

I continue to believe that Apple will never allow side loading. Instead they will close the store and "force" all apps to be made available via a segmented subscription model similar to Apple Arcade. This would, arguably, be in line with SJs original conjecture.

 

[jlc1978]

The problem is not that Apple charges 30% in their store. The problem is the monopoly.

The App Store is not a monoploy. You have plenty of options when it comes to what mobile to buy, as well as what platforms will run apps you like.

If YOU pay a lot of money for your iPhone, you should be able to install on it what you want from whatever source you choose.

Except you know upfront what you are buying; and have a choice to buy into the model or not.

Imagine a car manufacturer would tell you where you can drive with your car an where not. And if you used your car as a taxi, the manufacturer would demand 30% of the money you make with it.

No, it's like every other store in the world: "If you want access to our customers here is what it costs..."

Even Ebay does not have any fees for sellers any more. At least in Germany. That was a revolution.

Not quite. That's only for private sellers on ebay.de, which are a small percentage of eBay sellers. International selling fees still apply, and are determined by the item delivery address or buyer's registered address. That is why you are seeing sellers in Germany offering items for sale on Ebay Australia since the International selling fee is lower.

Commercial sellers still pay fees.

 

[H2SO4]

If it weren't for Apple creating the App store in the first place, those developers would never have sold a thing.

lol, NO.
Devs have been creating apps for computer platforms since the year dot.
Apple facilitated it in some areas but please don't think that f Apple never existed an App Store wouldn't have existed either.

 

[nicho]

Before the app store I sold one license a month. After app store it was 3000 a day. So I think 30% cut for distribution of 90,000% increase in sales is a pretty good deal. I'll be opting out of this class action.

3000 a day = 90,000 sales a month… isn’t that actually a 9,000,000% increase?

 

[rikki_t]

Jobs had his head firmly in manufacture, Timmy the beancounter knows better, the money is in services, all the games consoles exist to sell services, iOS is the same

 

[fuchsdh]

That's interesting but irrelevant. Apple is being sued because there are no alternatives. In most if not all of those cases, with the exception of Apple, you can acquire and install software (or product) using other means. Apple holds the unique position of saying "You have an Apple device? 100% of all developers absolutely, positively, must pay these extra fees to install any software on our device whatsoever, no exceptions."

And apple hides behind those stances in the name of security, but that is a seriously weak argument. Apple has always utilized security-by-obscurity instead of even attempting proper device hardening all in the name of maximizing profit. Sideloading would've saved them here, required Apple to toughen up security, and yes, diminish Apple's massive profits derived from all app sales that absolutely must fork over a percentage to Apple... on every. single. purchase.

Of course they're going to spin the messaging here to maintain their highest profit line item with operational costs so low (100mil a year to run the Apple Store, with nearly 17bil in profits). Big of them.

But no one forces you to buy an iPhone in the first place. Its reputation as a walled garden is well known.

My ultimate problem with all these monopoly arguments is they single out the platform with <50% market share and act like phone app stores are some unique market, when Apple doesn't have a monopoly of any market segment, and the rates they charge are the same as everyone else in the business.

It's like the whole Epic Games thing—they spent all this time arguing that it's unfair they shouldn't get to put their own App Store on iOS, but also twist themselves into knots trying to explain how Sony and Microsoft and Nintendo having their own closed platforms for games is somehow okay. Either all platforms should be open and the platform holders shouldn't be able to charge for using it (which is bonkers, but at least ideologically consistent) or targeting Apple is nonsense. You don't get to have it both ways.

Obviously Apple's interest isn't only in security; they're a company, after all. But that turns right back around onto the developers. The idea that developers are going to pass on the savings they make from commissions to fund "innovation" and give cheaper apps to consumers? That's hilarious nonsense. They're going to pocket the extra profit.

This isn't actually about what's good for consumers, it's people squabbling over how much money they make. I don't care about the antitrust lawsuits because they're not actually making my life any better. I don't care at all about devs bellyaching about paying more than they want. As an end user, it only affects me in a nebulous abstract.

 

[0339327]

Here we go again…
Do these countries really expect Apple to manage the App Store and ensure device security for free?

We all know that if Apple opened up the iPhone for downloads, that Apple would be held at fault for the increase in hacking and spamming.

 

[3xBoom]

I'll put $1 bln on Apple in this tussle. They will easily prove that the cost breakdown of the app store justifies the "grab". Furthermore, every app store out there does it invalidating the entire case.

 

[Sebalto]

The problem is not that Apple charges 30% in their store. The problem is the monopoly. If YOU pay a lot of money for your iPhone, you should be able to install on it what you want from whatever source you choose.

Imagine a car manufacturer would tell you where you can drive with your car an where not. And if you used your car as a taxi, the manufacturer would demand 30% of the money you make with it.

That one billion is peanuts. If those fees were against competition laws, Apple should pay back every Cent they made with those fees over the years.

The difference is that Apple do not conceal the fact that you cannot sideload, but they still sell like hotcakes. Suggests to me that this isn't an issue for the majority of consumers.

Now try and sell a car that will only go in certain areas...

 

[Xiao_Xi]

The App Store is not a monoploy.

The authorities don't agree with you.

The App Store has a monopoly over downloads on iOS devices and the Play Store accounts for over 90% of native app downloads across Android, HMS, and Fire OS devices.

The lack of competition faced by the App Store and Play Store allows them to charge above a competitive rate of commission to app developers.

Mobile ecosystems market study final report

The Competition and Markets Authority (CMA) has published a Final report in connection with our market study into mobile ecosystems.

www.gov.uk

 

[3xBoom]

It could also be said that if it weren't for 3rd party app developers, the iPhone might not have become the success that it is today.

Remember that Steve Jobs didn't think 3rd party apps were right for Apple and the iPhone.

Steve Jobs resisted third-party apps on iPhone, biography reveals

Stuart Dredge: CEO was initially reluctant to allow non-Apple apps but was swayed by lobbying from execs and board members

www.theguardian.com

Walter Isaacson's authorised biography of former Apple CEO Steve Jobs explains that Jobs was initially unconvinced that apps would benefit Apple or its iOS platform.

"When it first came out in early 2007, there were no apps you could buy from outside developers, and Jobs initially resisted allowing them," writes Isaacson. "He didn't want outsiders to create applications for the iPhone that could mess it up, infect it with viruses, or pollute its integrity."

Hence no external apps for the first iPhone. However, the book explains that behind the scenes, Apple board member Art Levinson and SVP of worldwide product marketing Phil Schiller were pressing Jobs to change his mind.

"I called him a half dozen times to lobby for the potential of the apps," says Levinson, while Schiller adds that "I couldn't imagine that we would create something as powerful as the iPhone and not empower developers to make lots of apps. I knew customers would love them."

And he was absolutely right. App store is filled with garbage as is; try to find an app from scratch and you'll find yourself sifting through dozens of crappy apps.

 

[VulchR]

Nothing prevents app developers from jumping to Android, or passing the cost on to consumers. Nothing. This is a ridiculous lawsuit. if governments want to make the system fair, then they should force Apple to guarantee consumers quality control, transparency, and security for the fees Apple charges.

 

[Sophisticatednut]

Still a full payment system and store front doesn’t come free anywhere else - I for one like the IAP because it uses the trusted Apple payment system etc. With a market share of 10-15% it’s hardly a monopoly?

The market isn’t phones, it’s iOS customers. As they can only be accessed by the AppStore

You mean after, and not before, lawyers' fees have been paid.

This is what's known in the business as an important detail.

I think UK have the same way as in EU, and the lawyer firms don’t have a right to the fees granted as compensation. The fee is already settled before.

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.

Nope, come back when I can write a game in Xcode and use it on Xbox, tell me when a game made in Unreal or unity can just be sold in the PlayStation store, Xbox store, Linux, windows or Mac.

Because this is currently an impossible choice. The day it’s the equivalent is when developers can sell the same game on steam, Walmart, GOG and their own website.

That’s when it’s a choice, now they make a different version for each platform.

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.

Se above comment. You can take your bread completely unchanged and sell it in any store. Every store doesn’t need a unique compatible bread to be sold.

So, the developers want AppStore and all the nice stuff (payment processing, family sharing, parental controls, gift cards, visibility, whatnot), but they want 100% of the sales? Or would they rather have side loading and handle everything on their own?

They want the choice to chose competing solutions.

On Android one can distribute apps outside Play. Do we have success stories of developers actually doing that?

What about Sony, Microsoft and Nintendo who take a cut of not just digital sales, but physical sales too?

I do agree that 30% is too much and it shouldn’t be anything like that for stuff like streaming where Apple itself competes. Although very few people have ever paid via AppStore for something like Spotify. The book service app I use just throws me to an in app web browser where I can manage the subscription.

The majority of Spotify customers bought the the AppStore untill they removed it many years ago. And the book app is like under apples new other services

Good time to repost this: https://www.macrumors.com/2020/07/22/apple-app-store-fee-study/

Not an argument, especially when it’s outdated. Epic store have 0% and windows store also have 0% for all apps excluding games.

Would the ability to side load apps make this kind of thing go away? Would side loading apps, for those who chose to do so be 30% cheaper than Apple's App Store? Also if the majority of smart phone users aren't using an iPhone where is the monopoly.

The monopoly is the iOS market, iOS developers don’t compete with android developers. Just how mac developers don’t compete with windows or Linux developers as they don’t share the same customers

 

[theluggage]

Apple but it isn't, they want more money and they way they do it is by only allowing one payment system if the dev's want to use in-app purchases in their app and that payment system is owned and run by Apple. Instead of including usage of Apple's payment system as part of the yearly app store fee, Apple worked out they could make bundles of money if they charge a percentage every time their payment system is used

Alternative: Apple allows 3rd party in-app purchases, in which case every App maker with an ounce of avarice switches to the "freemium" model, leaving Apple with 30% of nothing.

It still beggars belief how Apple is still allowed to get away with this. Shopping malls charge a yearly rent fee for individual shop owners to sell there goods in the mall.

However such charges are calculated they amount to a significant fraction of the likely turnover of most stores. Apple's $99/year fee is trivial for any app selling more than a handful of copies and doesn't bear comparison.

Make no mistake - this fuss about the App Store is 'astroturf' stirred up by a few big developers who want to lock people into their own App Stores/in-app-purchases without paying Apple for the privilege. The likely result of forcing Apple to allow 3rd party payments and App Stores is that they'll have to hike up the annual fees and lock out a load of small/amateur developers.

That's interesting but irrelevant. Apple is being sued because there are no alternatives.

There are plenty of alternatives: the iPhone only has about 20% of the smartphone market! If you don't like the Apple store, choose Android, Chrome OS, Windows, Linux... or run web-based apps on your iDevice. Most "essential" apps are available for at least Android as well as iOS.

 

[I7guy]

[…].

The monopoly is the iOS market, iOS developers don’t compete with android developers. Just how mac developers don’t compete with windows or Linux developers as they don’t share the same customers

Yes a natural monopoly. In the same way Honda has a monopoly on the accord.

Have some proof for the bold, because I know many households that are multi-operating system on the workstation side.

Anyway good luck to them winning.

 

[klasma]

I am not a fan of side loading. But if this is the only solution to avoid the monopoly, then it will have to exist.

Sideloading is more about allowing you to use any software you like on the hardware you own (as opposed to only what Apple deems “appropriate”) rather than about Apple not getting a cut. Of course, the latter can be a side effect.

 

[laptech]

......

However such charges are calculated they amount to a significant fraction of the likely turnover of most stores. Apple's $99/year fee is trivial for any app selling more than a handful of copies and doesn't bear comparison.

......

Apple do nothing in the design and development of an app that belongs to someone else. Apple provides all the tools and a place to put the app but the dev does all the hard work and Apple has the nerve to say they want a piece of that hard work for what? for Apple doing nothing!!!. Apple should be content on getting the yearly app store fee but no, they want everything and they are making damn sure they get it.