Apple Has 'Lost Sight of the Tech Industry's Founding Principles,' Says Epic Games CEO

[Abazigal]

Forgetting the point that console makes sell their hardware at a loss and earn revenue through software sales, does apple do that? Kinda hard to compare two completely different markets

Could one argue that by intentionally selling their hardware at a loss, console makers are distorting the market and should be subject to antitrust investigations even more so than Apple?

Either way, I see nothing wrong with Apple selling premium hardware at handsome margins, then further getting a cut from the App Store.

 

[cupcakes2000]

Forgetting the point that console makes sell their hardware at a loss and earn revenue through software sales, does apple do that? Kinda hard to compare two completely different markets

But surely it’s completely irrelevant. You can sell your stuff for whatever you want. Who’s fault is it that console makers sell at a loss?

 

[the8thark]

This whole thread has people effectively implying that if Epic is allowed to have their own store, that's the complete death of Apple's App Store. That's not the case.

Actually it would be but not in the exact way you said.

Epic wants developers in general to have their own app stores to avoid the Apple 30%. So if Epic win, you can be sure every major developer will have their own app store on iOS to avoid Apple's 30%. Imagne having 10-20 different app stores with 10-20 totally different track records on privacy, the security (or lack of) of their payment processing, customer support etc etc. It would make iOS a fragmented nightmare.

 

[Colonel Blimp]

Forgetting the point that console makes sell their hardware at a loss and earn revenue through software sales, does apple do that? Kinda hard to compare two completely different markets

To my knowledge, no, Apple doesn’t sell their iPhones, iPads, and Macs at a loss and then recoup that loss through software sales.

The console upgrade cycle is several years, so the console makers have several years to recoup any loss. Apple’s customers tend to upgrade their hardware much more often, e.g. a new iPhone every two years, so that model wouldn’t work for Apple.

P.S. Tim Sweeney has said that he’d like to see third-party game stores (the Epic Games Store springs to mind) on the consoles, and I’m sure he’d be happy to pay a lower cut to the console makers, since they account for the vast bulk of his revenues. Call me cynical, but I suspect that his suit against Apple and Google is the thin edge of a wedge intended to crack open their hold on their platforms.

 

[LaFrentz]

In principle following is happening:

• Apple runs a big mall
• allows developers to rent space in this mall
• agrees on terms how Apple gets paid for running the mall with the developers
• EPIC is one of them, same contract like all
• EPIC wants but doesn't get a special deal
• EPIC tries to hide sales from Apple, e.g. attempt to steal
• get caught by Apple and finally excluded from Mall
• EPIC runs to court saying "we are Robin Hood"....

hmmm... I hope courts / judges know how to deal with this.

 

[BuffaloTF]

10% is the legitimate cost of payment processing. If you buy in bulk, that goes down to around 4%.

Apple provides far more than a merchant terminal. And depending on the market, payment processing varies wildly from 5% to 25%. Epic passes these costs on to the retail purchaser - ie, us - to be able to afford to charge their 12%. If a developer wants Epic to eat those costs, like everyone else does, they charge 25% instead and still don't provide the same level of support and features for that developer everyone else does. Like tax collection, tax payments and documentation of that tax being paid to the local authority.

Out of their own mouths…

https://twitter.com/x/status/1091025939109199879

https://twitter.com/x/status/1083860234505019392

And what Valve says about those transactions:

https://twitter.com/x/status/1109257799173730304

 

[AndiG]

In principle following is happening:

• Apple runs a big mall
• allows developers to rent space in this mall
• agrees on terms how Apple gets paid for running the mall with the developers
• EPIC is one of them, same contract like all
• EPIC wants but doesn't get a special deal
• EPIC tries to hide sales from Apple, e.g. attempt to steal
• get caught by Apple and finally excluded from Mall
• EPIC runs to court saying "we are Robin Hood"....

hmmm... I hope courts / judges know how to deal with this.

Sorry, but you are getting it completely wrong, let’s make this right

• Apple and Google control all malls in the world
• Apple and Google make billions of money selling phones
• Apple and Google are so popular just because of all the apps
• if there wasn‘t Insta, Twitter, FB, TikTok, WhatsApp - no one would care about smartphones. Only nerds and blackberry users would have a smartphone.
• Apple and Google are the gatekeepers
• No one enters the market if Apple doens‘t like the app (for whatever reason)
• No one has a right to enter the markets (no one can sue Apple or Google)
• Apple competes with other apps - or copies them
• Smartphone markets gained a huge interest, no way to ignore smartphones
• Apple apps don‘t get charged a 30% fee, in opposite to competitors

Basically this is what defines a monopoly. Smartphones are extremly important. You can‘t sell a car without a smartphone app (in the future) - but to have a smartphone app you have to obey Apple/Google. It doesn‘t matter if your are Ford, GM, BMW - if Apple doesn‘t like you or doesn‘t like your app you won’t enter the Smartphone business. And Apple/Google can kick your app whenever they want to - or let’s say because Trump doesn‘t like the app.

So this has to change.

 

[BuffaloTF]

Forgetting the point that console makes sell their hardware at a loss and earn revenue through software sales, does apple do that? Kinda hard to compare two completely different markets

They don't sell their hardware at a loss.

The PS4, for example, starting earning profits on each hardware unit sold after their initial order of units were sold out. Took them 4 months - 381 to build, selling for 399. In fact, they're set to earn more on PS4 hardware than they did with the PS2.

Nintendo famously makes a *&^% load of money on their hardware. The Switch initially cost them 257 dollars, and it sells for 299.

Microsoft never sold the Xbox One at a loss. The original costing $471 to build, selling for $499. Kinect getting dropped? That's ok, each one of those cost Microsoft $75. Still a profit selling at $399. The One X? It's break-even.

 

[TiggrToo]

Apple and Google control all malls in the world

Amazon App Store on Android.

I stopped reading after finding the first point completely false.

 

[Colonel Blimp]

Epic wants developers in general to have their own app stores to avoid the Apple 30%. So if Epic win, you can be sure every major developer will have their own app store on iOS to avoid Apple's 30%.

For games, it’s already like that on macOS and Windows. There’s the Mac App Store and the Microsoft Store, of course, and then you have general-purpose game stores like Steam, GOG.com, the Humble Store, and GamersGate, which is fine, because choice is good.

But now the biggest publishers want to keep all of the profit for themselves (which is understandable) and are quite happy to sacrifice their customers’ convenience to do so. If you want to play the newest games from Electronic Arts, you need Origin. For games from Ubisoft, you need Uplay. For Activision and Blizzard, you need Battle.net. For Epic or their growing number of exclusive partners, you need the Epic Games Store.

(Epic have been quite aggressive in securing exclusive distribution deals for the Epic Games Store, taking games away from other stores like Steam even after customers pre-ordered them, or so I keep reading.)

I think it’s short-sighted and ill-advised of the publishers. I perfectly understand them wanting to maximize their profit, but I don’t have the time or patience to visit a dozen different online stores to see what’s available. I’ll check out Steam, GOG, and the Humble Store, and that’s it. If a game isn’t available to purchase on one of those stores, I won’t even see it.

The same principle applies to other software. If you want to maximize your profits, make it easy for people to discover your product.

 

[Colonel Blimp]

• if there wasn‘t Insta, Twitter, FB, TikTok, WhatsApp - no one would care about smartphones. Only nerds and blackberry users would have a smartphone.

Shouldn’t this be the other way ’round? Seems to me that without smartphones, no one would care about Instagram, Twitter, Facebook, TikTok, or WhatsApp.

• No one has a right to enter the markets (no one can sue Apple or Google)

This would seem not to be the case, since Epic are suing Apple and Google.

• Apple apps don‘t get charged a 30% fee, in opposite to competitors

Would you be happier if Apple charged themselves a 30% fee?

I’m not trying to be flippant. Originally, Apple sold the iPhone with only their own apps on it; then they published an SDK and allowed other developers to ship iOS apps through the App Store for a 30% commission. You surely aren’t suggesting that because Apple have started allowing other developers onto the App Store, they should pull all their own apps off the iPhone.

So what’s the alternative? The only one I can see is for Apple to preload a large number of competing app stores on the iPhone, none of which would pay any commission to Apple, but all of which would be able to install apps unreviewed by Apple with the same security and API access that Apple’s apps have. Or am I missing something?

 

[Soylent Yellow]

Epic literally sells in game dances for $9.

Dance routines that they copied from the original creators without any compensation. To start about the “rights of creators” now is more than a bit hypocritical.

 

[foodtraveler]

Creators don't get the percentages you say they do...you have a pretty obvious option though to get more without seeking special treatment...

How YouTube Makes Money Off Videos

YouTube's revenue is growing even if the profits aren’t, and some growth is better than nothing.

www.investopedia.com

Sure sure, Sweeney. And yet you argue that Apple should receive 0 for the use of their platform, their software, their effort and that you should be allowed to just take all of the revenue...all the while, you wish to make your own store and post that store on the App Store that has gained a strong trust with it's users. Will you also be servicing direct customer support the way Apple does for customers who wish to seek refunds the way Apple does for all App developers as the majority of App developers have no contact information available to users for assistance? I doubt you will. Leave that to Apple, eh? Why don't you switch to a subscription service to get that 85% of profits, and make in-game purchases a smaller source of your revenue. Seems like an obvious choice, really. Considering the mass majority of your players are too young to have money of their own and have to borrow their parents CC info/account info every single time they want one of your stolen dance moves, etc...I'd bet their parents would be much more satisfied with such a move.

You can also post your store on your website to purchase vbucks. Yes, you will not be able to direct users to do this through your App, but users wanting to save money will spread that word for you. You won't get all of them, but you will reduce the income Apple receives.

 

[0924487]

Amazon App Store on Android.

I stopped reading after finding the first point completely false.

Amazon App Store doesn't operate all most phones.

 

[AndiG]

Shouldn’t this be the other way ’round? Seems to me that without smartphones, no one would care about Instagram, Twitter, Facebook, TikTok, or WhatsApp.

Both is correct. But have you met any kids/young people recently - are you aware of what they are doing with their smartphones?
90% of the users own a smartphone to take a selfie and upload it to a social network.

Simple as that. Maybe Insta wouldn‘t exist - Facebook did before. But be honest - how many iPhone Apple would have sold? Without all that social network stuff?

10% - 20%? Apple would be a $300-$500 billion dollar company today - far away from being a $2 trillion dollar company. Apple makes lots of money with the help of the developers.

 

[cp1160]

I've been involved with IT for nearly 40 years. IT existed long before that. I don't recall the founding principles of IT that Tim Sweeney refers to:

"Foremost among those principles: the device you own is yours," Sweeney wrote in a Twitter thread Wednesday. "You're free to use it as you wish. Configure it as you like, install software you choose, create your own apps, share them with friends. Your device isn't lorded over by some all-powerful corporation."

Sweeney added that creators have the "right to build apps, share them with users directly, and do business directly, without being herded through a single centrally planned, anti-competitive store" which are the "foundation" of the game developers legal battle with Apple.

"Money is several layers removed, as the medium of exchange between users who choose to buy digital items, and the creators who made them," Sweeney said. "Epic isn't even seeking monetary damages. We are fighting for change!"

Yes, these are principles, but they sure are not any founding principles.

Imagine how things would function if apps could be obtained anywhere....the hackers and scam artists and even worse would love that......

 

[DaveN]

Great article about Epic and their sleazy enticement of children practices:

Column: 'Fortnite' maker draws praise for fighting Apple, but lawsuits allege it rips off kids

"Fortnite" tempts children into spending their and their parents' money on virtual game items without fully understanding what they're doing and with little or no chance of obtaining refunds, lawsuits allege.

finance.yahoo.com

 

[TiggrToo]

Amazon App Store doesn't operate all most phones.

Huh? Please explain. I used to have it installed on all my Android devices back in the day. It just had to be side loaded.

 

[GadgetBen]

Oh, I do. I’ve seen its consequences in my extended family. And it’s absolutely preventable in children by, guess whom, their parents.

A very ignorant opinion.

 

[WiseAJ]

Both is correct. But have you met any kids/young people recently - are you aware of what they are doing with their smartphones?
90% of the users own a smartphone to take a selfie and upload it to a social network.

Simple as that. Maybe Insta wouldn‘t exist - Facebook did before. But be honest - how many iPhone Apple would have sold? Without all that social network stuff?

10% - 20%? Apple would be a $300-$500 billion dollar company today - far away from being a $2 trillion dollar company. Apple makes lots of money with the help of the developers.

Developers also make over double that amount of money with the help of Apple, Apple’s device/tools, and Apple’s customer base.

 

[jonblatho]

A very ignorant opinion.

If you use the iPad as a babysitter, it will become the babysitter, and I can’t think of a worse one. Devices are excellent tools for learning and leisure for kids in moderation, but it’s a parent’s job to know when it’s time to cut them off because a kid can’t do it for themself. They just can’t. They’re kids.

A parent’s job is to be a parent, not necessarily a friend, especially when there are significant behavioral changes indicative of addiction. That’s simply protecting their child from something that can and often will have lifelong consequences if not handled early.

 

[cult hero]

The tech industry’s founding principles?

Brah... regardless of how I feel about either party here, vendor lock-in and monopoly are the tech industry’s founding principles. Let’s not confuse the academics who sort of took the WWW over from the military with a bunch of Silicon Valley entrepreneurs who really, really like cash—like to the degree that they bathe in it.

• IBM
• Microsoft
• Google
• Apple
• Facebook
• Intel

Everyone is looking to be the 800lbs gorilla. Most of the big boys manage to do it successfully for a while until they miss the next big thing (IBM, Microsoft) and even then tend to be huge long after. I’m not saying I think this is a good thing but let’s not get nostalgic about “founding principles” here. Maximizing profit isn’t just a founding principle of the tech industry, it’s the cornerstone.

 

[MagMan1979]

Can this SOB just **** already?!?!?!

 

[I7guy]

Can this SOB just **** already?!?!?!

Which SOB?

 

[Ethosik]

I know what you’re trying to say, but you’re not saying it quite right.

You say “A contract can be enforceable without courts.” But the court is the enforcement mechanism, if you are trying to compel the breaching party to perform against their will.

In your non-compete example, the non-breaching party (the original employer) can certainly fire the employee. In fact, the contract both parties signed would have set out that consequence: failure to abide by the terms of this agreement may result in the employee’s immediate termination.

But what if the contract specified this: if employee violates, company may immediately terminate the employee and employee must repay the $10,000 relocation assistance company earlier provided.

Yes, the employee may very well owe the company the $10k, but what if employee refuses to pay? Company will have to file suit in court in order to compel the employee to repay the $10k, i.e. to enforce the contract.

But what you said is true, the employer would not need any court involvement to act in accordance with the contract terms and immediately fire the employee. Just as all the other (legal) mutually agreed upon terms are valid without the court having to agree.

I hope that makes sense!

Yes that is my whole point. They fired the employee. If you refuse to pay, or if you feel you were fired improperly, you can certainly challenge in court. I am not saying they need to give up 10K without any issues. If you have that 10K on hand and are fine with paying it, then the contract is enforceable without the courts. However if you either do not have 10K to provide, or find issues with it, you CHALLENGE the contract.

If you 100% agree to pay 10K right away, courts do not need to be involved and the contract is enforced without them.