Apple Says App Store Changes Go Too Far in New Epic Games Appeal Filing

[jlc1978]

What does hosting an app have to do with giving Apple 30% of digital purchases?

Access to Apple's lucrative customer base, just as any store marks up products. Maybe Apple should have simply done that, let the developer decide a price and simply add a markup instead of setting it as a fee. The developer gets what they want and Apple gets theirs.

The vast majority of apps on the App Store are free to download and don’t require IAP to use.

Apple has decided free apps need not pay to be in the App Store, which is their perogative. If an app makes more than a set amount, Apple collects 30%, 15% for apps that make less than a set amount.

 

[djphat2000]

100%, it's actually kinda crazy that we're even having this debate. Apple has somehow managed to convince everyone that it is entitled to 30% of every single dollar that moves through that device to install an app. No wonder they are defending it to the very end. Who would want to lose that? If this happened on the Mac there would be outrage, although anyone paying attention can see this is where they are trying to move it with every new release of Mac OS.

Don't spend any money on Apple. And this problem goes away.

 

[surferfb]

Just curious what you think the legitimate arguments are? Especially for things that exist across many platforms (i.e. not some drawing app that takes advantage of the Apple Pencil and only exists on iOS).

To quote @Abazigal above:

Digital goods often have low or zero marginal costs, compared to an uber ride or Amazon delivery which have costs involved in the delivery of said product.

I’d add:

• Digital goods are delivered entirely through Apple’s infrastructure (APIs, servers, downloads, updates). Physical goods are delivered/logistically handled by the merchant/developer annd Apple isn’t involved. (In other words, with physical goods/services, Apple really is acting more as an advertiser (With digital ones, Apple is the one providing the good))
• With digital goods, Apple handles chargebacks, scams, parental controls, and customer service headaches. (Think kid runs up charges on a scammy game). With physical goods, that liability sits with the merchant.

To be clear, they don’t all apply in all cases but they’re there. And as I said, companies have wide latitude to set prices. I charge different customers different prices for the same services literally every day.

Apple’s stance is “you’re selling digital access through our platform, you’re using our IP and we get to set the terms.” In the US, it’s a high bar to interfere in that. We’ll see what the court says.

 

[Rogifan]

macOS and iOS were built in different eras with fundamentally different assumptions. macOS has been open for 40 years, serves ~100M (with a large contingent of power-users and developers), and was designed to tolerate complexity and risk. iOS was deliberately built as a closed, tightly-managed ecosystem to serve 1–2B everyday consumers who expect security, privacy, and simplicity out of the box.

A vulnerability that hit only 5% of iPhone users would be equivalent to a vulnerability affecting half of all Macs. The scale is totally different and so a different model is warranted.

OK so now we’re back to privacy and security and not paying for use of IP?

Let’s be real here: Apple found out it can make a s—t ton of money from the App Store commission and Apple executives will fight tooth and nail to keep as much of it as they can and they’ll use whatever argument they think will work in the moment. So one minute it’s privacy and security, the next it’s paying for use of IP, but only for certain developers/apps and Apple should be allowed to arbitrarily decide who pays and who doesn’t. If you’re big and popular and Apple needs you (or directly competes with you) then you’re exempted. If not, pay up because it’s wrong and unfair for you to use Apple’s IP for ‘free’.

 

[djphat2000]

Here’s an idea. How about Apple just competes? Allow other payment systems, but only charge developers a 1% commission on payments made through Apple. What developer would use a different system then? Even if they had their own, it would be more than 1%. Apple could compete on price instead of just making a monopoly and being the only option available. Oh, right. They don’t want to do that. They just want 30% of everything.

The reverse could then be true as well. Apple is lowering the cost to eliminate competition as well. As it would be so cheap to use Apple's than any other option. That would drive out competition.
Imagine if Apple created a credit card network in addition to their credit card. Offered it world wide at .0001% transaction costs/fees for everyone and everything thing. And a 5% cash back on any Apple purchases. Higher than any other card could offer. So cheaper than Master Card, Visa, Amex, Discover/Capital One/UnionPay/JCB/etc. With over a billion devices that can use it instantly. And any developer on the iPhone could switch to from whatever they currently use.

 

[djphat2000]

You are right but some believe 5% or 10% is criminal and that 1-2% is fair.

You don't get to decide what is fair for Apple and or fair for any company that wishes to accept the current rate they pay. You do get to decide what is fair for "you" though.

 

[Rogifan]

As far as I know, a person or company can discriminate all they want against their client/customers as long as it’s not based on immutable traits (ie racist/sexist discrimination).

But if a store wants to charge one customer $10 for a a license and another customer $50 for a license, there is nothing illegal about that.

I guess this is the best argument from a legal standpoint but it’s a crappy one from a company that claims to care about developers.

 

[Rogifan]

The ones that do pay the fee support those that don't pay the fee. That "haves" are subsidizing the "have nots". In most cases. This allows those free apps to be "free" on the store and enjoy the same access to the end user as does an app from a well know developer like Microsoft etc.

Right so Apple wants Epic to subsidize Meta, Netflix, Spotify etc.

 

[djphat2000]

I bought something on amazon.com on my Mac, APPLE SHOULD GET 30%!!! I bought something on Ebay app, APPLE SHOULD GET 30%!!! It's done on Apple's device and they should get a piece of every transaction!!! Oh wait, doesn't make ANY SENSE and they've made BILLIONS. I wish someone would sue them and give us developers our money back WE EARNED by a user going to our website/app and buying something.

You do realize that Amazon and Ebay make money off of things sold within their stores. That they didn't "make" or produce in anyway right? They too make billions as well. If I sell something on Amazon or Ebay should I get my money back of the cut "they" got of the sale?

 

[Rogifan]

Access to Apple's lucrative customer base, just as any store marks up products. Maybe Apple should have simply done that, let the developer decide a price and simply add a markup instead of setting it as a fee. The developer gets what they want and Apple gets theirs.

Ok but where does it end? Without AT&T and my ISP my iPhone isn’t nearly as useful. Should they be in on a cut because it’s their lucrative customer base too?

 

[Shirasaki]

Too far in Apple exec and shareholders eyes of course. As a consumer I might argue Apple isn’t going far enough. With that being said, Google is closing doors on Android side loading so there’s that. Apple might not really need to go very far with getting their App Store operate more similarly to Google Play Store at the end of the day.

Besides, virtually no one say Apple should deliver their services for free/at no cost. But yeah people will still argue “Epic is demanding Apple to provide free services” regardless.

 

[djphat2000]

Right so Apple wants Epic to subsidize Meta, Netflix, Spotify etc.

To a degree yes. Facebook is "free" to use. But if they decided to charge for something within Facebook. They "should" pay apple a cut of that sale. Say they wanted to charge $10 to update the look and feel of the facebook app. Apple should get a 30% cut so, $3 to Apple. So long as it isn't something already with an exception to that rule. Like being an Ebay or Amazon. Facebook marketplace would be an exception. But, when EPIC sells a DLC to an end user. That does subsidize say the "free" games other developers make (and update regularly).
Technically Spotify "would" and "should" pay a cut. But, they simply don't offer sign ups via the AppStore. You are required to go to them directly (no link-out). And are only presented with an existing user account login. They seem to be managing JUST fine. Same for Netflix.

 

[Shirasaki]

Ok but where does it end? Without AT&T and my ISP my iPhone isn’t nearly as useful. Should they be in on a cut because it’s their lucrative customer base too?

In fact, I don’t think newly purchased brand new iPhone can be activated without internet connection at all. And an iPhone stuck at initial setup screen surely ain’t gonna be of any use.
AT&T and alike probably should charge Apple an ongoing commission for using their infrastructure.

 

[ksec]

Apple could charge higher for Xcode, and other price for its library and Developer accounts.

 

[djphat2000]

Ok but where does it end? Without AT&T and my ISP my iPhone isn’t nearly as useful. Should they be in on a cut because it’s their lucrative customer base too?

They do get a cut. The monthly subscriptions to their network. They charge for bandwidth and overall capacity to provide that bandwidth. Such as limits to data per month to an end user. Or VERY high bandwidth costs per month to a large institution. For instance, as a business we pay $2000 a month for a Point to Point 10Gb dark fiber circuit. This has no internet access. Just over a carriers network from building A to building B. If that was an internet circuit, it would be MUCH higher than that. For a normal end user, your cellular plan has very high data speeds over 5G. Up to multiple GB worth of bandwidth. BUT they limit how much data you can get at those speeds each month. And if you want more data, you pay extra for it. They don't care what the data "is" per se. Just that its more than they are willing to provide to you at a given fixed price point

 

[djphat2000]

In fact, I don’t think newly purchased brand new iPhone can be activated without internet connection at all. And an iPhone stuck at initial setup screen surely ain’t gonna be of any use.
AT&T and alike probably should charge Apple an ongoing commission for using their infrastructure.

They used to subsidize the end user price of the device. So long as you used "their" network. The price of the device was cheaper with them, but you paid the monthly bill to say AT&T at whatever rate they wanted to make up the difference.

 

[djphat2000]

I hope apple loses. 30% or even 15% for payment processing is criminal. In addition they don't even support our license type and so for years I had to go through this huge headache with apple almost every time we have a major app update.

If Apple was reasonable and said 5% or 10% nobody would have batted an eye. Their greed has put them in this position.

Would it not be fair to also say your greed got you to sell on Apple's platform in the first place? 30% cut was better than 50% or more elsewhere or rather nowhere since it was the first of its kind. How did you sell on say an HP or Compaq mobile phone? Or Nokia or Palm, or Blackberry? You made money then no?

 

[djphat2000]

The iPhone is a pocket computer. On all other computers we can install whatever we want. The set up with the iPhone should be exactly the same as a Mac. On a Mac we have an App Store, if you want to use it, go ahead and use it. If you don't.. no worries, don't use it. iOS should be the same.

The iPhone is "also" a pocket computer. It is a PHONE though.

You can NOT install whatever you want on an iPhone. Since everything is NOT available for it, for you to install on it. It either doesn't make sense to create it for the Phone or the developer had other reasons for not making it. Or Apple has its reasons for not allowing it.

Since you didn't create and don't maintain the platform. It isn't up to you what Apple does with its product. If you wanted it to be up to you. You have to create and maintain something like it. Then it would be your right to do with it as you see fit. But, just like Apple has faced in the past and currently. Others don't have to develop for it even if you made it exactly the way they and you wanted it to be.

The iPhone is what the iPhone "IS". The Mac is what the Mac "IS". They do similar if not almost identical things. But, other things each do on its "own". That is how they are made, and we only have the choice to either purchase it or not.

 

[Abazigal]

Here’s an idea. How about Apple just competes? Allow other payment systems, but only charge developers a 1% commission on payments made through Apple. What developer would use a different system then? Even if they had their own, it would be more than 1%. Apple could compete on price instead of just making a monopoly and being the only option available. Oh, right. They don’t want to do that. They just want 30% of everything.

Other payment processors don’t have to deal with the costs of running an App Store. It’s easy to charge less, when you are also doing less for the money.

For example, I don’t think there is an option for game developers to avoid paying steam their 30% cut regardless of which payment processor they favour.

Even if other payment options are allowed in the App Store, I would argue that Apple is still entitled to a cut (could be 15% or 20% or even 27%). We can argue till the cows come home about what an appropriate percentage ought to be, but bottom line - Apple still deserves something at the end of the day.

 

[djphat2000]

OK so now we’re back to privacy and security and not paying for use of IP?

Let’s be real here: Apple found out it can make a s—t ton of money from the App Store commission and Apple executives will fight tooth and nail to keep as much of it as they can and they’ll use whatever argument they think will work in the moment. So one minute it’s privacy and security, the next it’s paying for use of IP, but only for certain developers/apps and Apple should be allowed to arbitrarily decide who pays and who doesn’t. If you’re big and popular and Apple needs you (or directly competes with you) then you’re exempted. If not, pay up because it’s wrong and unfair for you to use Apple’s IP for ‘free’.

How about this analogy. It's a different set of rules for say a cover band to play some other bands IP (music). Or a bar to show a sporting event. Than say "you" at your really big nice house to "charge" people to come hang out and listen to said bands music on CD/Tape/Vinyl/Stream/download or UFC/Boxing/Pay-Per-View event.

 

[djphat2000]

Ok but where does it end? Without AT&T and my ISP my iPhone isn’t nearly as useful. Should they be in on a cut because it’s their lucrative customer base too?

The answer to that was an iPod Touch. But, people stopped buying them in favor of just getting an iPhone. You can purchase "out-right" an unlocked iPhone from Apple if you so choose too. And "use" it without a network if you so choose to. Yes, it would have much less functionality but, so too would most computers without an internet connection of some kind.

 

[surferfb]

OK so now we’re back to privacy and security and not paying for use of IP?

Let’s be real here: Apple found out it can make a s—t ton of money from the App Store commission and Apple executives will fight tooth and nail to keep as much of it as they can and they’ll use whatever argument they think will work in the moment. So one minute it’s privacy and security, the next it’s paying for use of IP, but only for certain developers/apps and Apple should be allowed to arbitrarily decide who pays and who doesn’t. If you’re big and popular and Apple needs you (or directly competes with you) then you’re exempted. If not, pay up because it’s wrong and unfair for you to use Apple’s IP for ‘free’.

As I said above, there can be multiple reasons behind things, and there are legitimate IP arguments that resonate more in some places (like court) and legitimate security/privacy arguments that resonate better in others (like with end users). They don’t invalidate each other. It can be true that Apple’s model is better for security and privacy AND the court unconstitutionally took away Apple’s IP rights at the same time.

 

[Abazigal]

Right so Apple wants Epic to subsidize Meta, Netflix, Spotify etc.

If you have a solution to force Meta, Spotify and Netflix to pay their “fair share” to Apple. I am all ears. 😄

 

[racerhomie]

Good Argument by the Apple Lawyers. Impressed. Lets get the job done!

 

[zahuh]

You do realize that Amazon and Ebay make money off of things sold within their stores. That they didn't "make" or produce in anyway right? They too make billions as well. If I sell something on Amazon or Ebay should I get my money back of the cut "they" got of the sale?

Don't change the subject. Of course I realize amazon and Ebay make money ON THEIR PLATFORM what we are talking about is WHY THE HELL IS APPLE MAKING AN ADDITIONAL 30% ON TOP OF THAT?! It increases the price for customer and APPLE did NOTHING when I was on amazon/ebay. It's called the internet/app. APPLE should not get 30% TAX on the INTERNET