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

[djphat2000]

Facebook should pay Apple because I bought an iPhone and use Facebook on it? Should they pay my ISP too since Facebook is worthless without an internet connection?

No. Facebook as the application exists today (even the marketplace). Does not, and doesn't need to pay Apple anything "other than" the yearly fee. However, "IF" Facebook wanted to sell something within the application. That feature "Could" fall under the terms that require Facebook to pay Apple up to 30% of the sale of said service or good. IF it falls into such a category.

Facebook does indeed pay the ISP. You can't connect to Facebook with out them also paying for internet service. Several carriers in fact. That is not a bill I would like to have to pay monthly. But Facebook does pay it, each and every month. Your internet service is something you pay, and every business has to pay it on their end as well.

 

[djphat2000]

I’m not conflicting anything. Apple uses privacy and security as their argument when they think it suits them and they use IP as their argument when they think that suits them.

Both are true. It is their IP. Courts don't care about user privacy as an arguement. Unless you didn't protect user privacy. Then they care. So for Apple, they are actively protecting user privacy to avoid going to court because they didn't do a good job of it. Their IP is being challenged in court by EPIC. EPIC doesn't want to pay Apple for using it. Apple has a different view on that. They disagree. Hence EPIC being kicked off the darn store. For Apple to allow EPIC and others to do what EPIC did would jeopardize Apple's users. Privacy and security being the major concern. Since EPIC willfully modified the app to allow it to do something that totally violates Apples rules. Just think about what else they COULD have done.

 

[Student of Life]

I hope epic games continues to sue until they run out of money and are forced to file for bankruptcy.

Epic won’t run out of money because it has the state backing of China behind it, they own 40+% of the company. Thats when a lot of this starts to click, it was never about money. Epic has lost billions in profit to the point any publicly traded company would have replaced him years ago. This is all about access to your information, it’s the long con. Thats the real goal here.

 

[SnowPenguin]

Is $99 a year really going to break your bank? I mean, let's get real. If this is tooooo much for you, to have access to world class API's, incredible Developer Tools, hosting/distributing your app - then go elsewhere. Apple is not forcing you to stay. I ask you the same questions. Are you in a business to make money or can you afford to give your app away for free? Do you want to make profit on top of just staying afloat?

As a side note, I honestly don't consider Xcode to be a world-class development tool. In fact, it's one of the worst ones in my opinion.

 

[germanbeer007]

So do Apple don't have to sell within EU

hardly the same.

that's like Adobe spending billions investing into MacOS' open system where they can sell Creative Cloud for 100% of the revenue, and then suddenly Apple says "give us 30% or leave". you don't change the rules to make it drastically more strict after the flood gates have opened.

apple has only relaxed the rules since the inception of iOS App Store.

 

[Nuno Lopes]

Hehehe. This seams to be worst then the DMA. The world have been watching how Apple tries to circumvent the all thing.

So take this for something explicit.

Why doesn’t simply Apple charge for App hosting and distribution? I mean like a website host or something. A tiered service where each tier has a price and certain added benefits.

I have been warning that this would blow in Apple face. They seam to be totally unprepared … or not. Who knows.

This does not seam to be the way of the future of the digital economy Mr. Apple. Argue anyway you want.

 

[Rogifan]

No. Facebook as the application exists today (even the marketplace). Does not, and doesn't need to pay Apple anything "other than" the yearly fee. However, "IF" Facebook wanted to sell something within the application. That feature "Could" fall under the terms that require Facebook to pay Apple up to 30% of the sale of said service or good. IF it falls into such a category.

You’re arguing Apple could just because.

 

[Abazigal]

Regardless of what feelings people here may have towards Apple, I remain cautiously optimistic that Apple will succeed in its appeal.

1) It is precisely because Apple acted so poorly that led to Judge Yvonne retaliating in what I would best describe as "righteous fury", but it does not mean that Apple's justifications were invalid in the first place.

2) Just because you feel that Apple is not justified in collecting 27% of purchases made outside the App Store, does not mean you get to unilaterally decide that the value of Apple's IP is entirely zero henceforth (ie: they are not allowed to monetise their IP at all).

3) The judge is basically ruling that companies like Spotify and Netflix are entitled to Apple's IP and distribution without needing to pay Apple anything at all. Arguing that Apple's 30% cut is too high is completely different from arguing that it ought to be zero. There is why I feel Apple has a strong counterargument. Apple’s rate may be anticompetitive, but it may also be the case that setting it to zero is equally illegal.

So the irony here is that the judge's remedy may have been so heavy that it winds up being found illegal in hindsight.

We will just have to wait and see.

You’re arguing Apple could just because.

Well, the core technology fee is an example of how Apple might have chosen to tax developers based on app installs instead of revenue in an alternate universe, or if Apple had somehow found a way to marry this with their existing 30% cut.

 

[Rogifan]

Both are true. It is their IP. Courts don't care about user privacy as an arguement. Unless you didn't protect user privacy. Then they care. So for Apple, they are actively protecting user privacy to avoid going to court because they didn't do a good job of it. Their IP is being challenged in court by EPIC. EPIC doesn't want to pay Apple for using it. Apple has a different view on that. They disagree. Hence EPIC being kicked off the darn store. For Apple to allow EPIC and others to do what EPIC did would jeopardize Apple's users. Privacy and security being the major concern. Since EPIC willfully modified the app to allow it to do something that totally violates Apples rules. Just think about what else they COULD have done.

I’m not defending what Epic did in-app. I’m defending apps not being required to use IAP. I think Apple’s privacy and security arguments there are bunk since IAP only applies to digital goods (and not even all digital goods. I buy stuff in the browser all the time. Is my privacy and security being compromised because I’m not using Apple’s IAP where they get a cut?

 

[Rogifan]

Well, the core technology fee is an example of how Apple might have chosen to tax developers based on app installs instead of revenue in an alternate universe, or if Apple had somehow found a way to marry this with their existing 30% cut.

Honestly I’d rather see something from Apple that applies to all apps and is focused around the cost of running the App Store. Instead it’s hey you’re making money; we think we’re responsible for it and thus we deserve a cut of your money.

 

[germanbeer007]

Apple did NOTHING to make any of the Netflix TV shows or movies.

And Netflix is free to not include IAP. So not only does Apple distribute the app to millions of people everyday around the world (including the updates), they have human reviewers to look at every update to make sure there isn't any "obvious" malicious thing going on. Even if it may be security theater, it still gives users a piece of mind, increasing the likelihood of downloading the app.

Apple loses money distributing Netflix ($99/year is not going to cover human and bandwidth costs).

 

[Abazigal]

Honestly I’d rather see something from Apple that applies to all apps and is focused around the cost of running the App Store. Instead it’s hey you’re making money; we think we’re responsible for it and thus we deserve a cut of your money.

I do see the logic of the decisions that went into App Store pricing.

In order to boost the vitality and vibrancy of the iOS App Store, you want to attract as many developers to release apps for iOS as possible. This is where a percentage cut based on how much money you earn makes sense. Make no money, and you don't have to pay Apple a cent (beyond the initial $99 annual fee). Make more money, and you pay more to Apple. It's similar to how taxation works. Earn below a certain wage bracket, you don't have to pay the government a cent in taxes. Conversely, the more you make, the more you pay in taxes.

The money that comes from your top-grossing apps goes back into maintaining the App Store for everybody. I believe Apple when they say that the vast majority of apps in the App Store are free and make Apple no money. Yes, maybe some of you feel it is unfair that companies like Epic are indirectly subsidising the makers of free apps, but the counterpoint is that it is another challenge altogether to differentiate an app like Facebook which makes money off ads, vs another free app which doesn't make any money at all. Apple has no insight into how much ad revenue a developer would make, and I don't think anybody here wants Apple to go there.

So far, we are only hearing complaints from your larger developers such as Epic and Spotify, who believe they have outgrown the App Store. We have not heard anything from the smaller developers who do find Apple's App Store terms reasonable.

I go back to other app stores with a similar business model like the Switch and PS5. If there is a way for game developers to get out of paying Nintendo and Sony their 30%, I am interested to know how it is done. I genuinely feel that in the very least, all games should pay Apple 30%, be it paid, or IAP. Similar to how it is charged on other game consoles.

Second, correct me if I'm wrong, but while the Spotify app is available on the PS5, there is no option to subscribe to the service within the app, only to log in (which means that you are expected to have created your account and paid for your subscription elsewhere). This seems to mirror the reader category on iOS, where Spotify and Netflix at least have the option to direct users to their website to create an account (and therefore avoid Apple their 30% cut). I similarly did not find a way to pay for Premium in the app on my Switch as well.

If I were running Apple, my line in the sand would be - continue charging games 30%, everything else 0% (eg: that Fantastical or Play or Infuse subscription made via iTunes, minus payment processing fees). I get to retain the bulk of my App Store revenue, while exempting most developers from the cut.

But that's just me.

 

[deevey]

Why doesn’t simply Apple charge for App hosting and distribution? I mean like a website host or something. A tiered service where each tier has a price and certain added benefits.

That would not make a dent in the lost revenue from IAP's.

Free apps would disappear completely, given that plenty of completely free apps are gigabytes in size (COD mobile is somewhere around 14GB for example) and I've never once made an IAP in the years I've played it.

The App Store rules were in place. All developers loved it, All developers made money. Fast forward a few years and the massive developers got greedy about all that extra cash on the table and decided to throw a hammer in the works.

None of this garbage will benefit 99.9% of consumers at the end of the day. A tiny fraction of people who want to run emulators, adult content (which could be served via browser) or pirated apps will be the outspoken minority that screws up our devices because they "like the hardware" and refuse to switch to the already broken alternative.

Now what Apple should not have done IMHO is attempted to collect IAP commissions on any services they were also competitive in e.g. Music / Video Streaming Apps / Books etc. Had they done that there would be far fewer big players to question their commissions in courts.

 

[wbeasley]

He didn't want apps either. He wanted everything to be web apps. We can argue if that would have been a better solution. But there are lots of devs making a good living off of the App Store. That market would not be there if everything was a web app

Sorry I was pointing out to someone else who claimed Jobs created the AppStore and Cook is stuffing it up...

Jobs eventually cam around and the store became the huge success it is for devs and users.
I'm tired of people trying to break it.

 

[tornadowrangler]

You know, devs, you don't have to develop for iOS. Just leave. Problem solved.

Just like how I can choose not to develop for the Epic Games Store using Unreal engine on Windows. I can develop for Steam using Unity for Mac.

Same thing could be said for Apple. If they don't want to let people to sell apps for the iPhone without paying them a commission, they could just stop letting people develop apps for the iPhone and close it down to only pre installed apps again.

But of course that would be crazy, because it is the very apps that Apple wants to receive a commission for that GIVE the iPhone it's value. People buy the phone FOR THE APPS.

And I've still never heard a good reason why they demand a commission for iPhone apps but not Mac apps. And also why apps like Uber and McDonalds do not have to pay a commission but a game or utility app does.

I personally do not pretend to know if Apple should be legally forced to change any of that. But those things are why I haven't been an iPhone user for about two years.

 

[zahuh]

And Netflix is free to not include IAP. So not only does Apple distribute the app to millions of people everyday around the world (including the updates), they have human reviewers to look at every update to make sure there isn't any "obvious" malicious thing going on. Even if it may be security theater, it still gives users a piece of mind, increasing the likelihood of downloading the app.

Apple loses money distributing Netflix ($99/year is not going to cover human and bandwidth costs).

Apple's 2023 App Store Transparency Report stated there were over 30 million registered developers. Let's pretend 10% pay 99/year. That's 300 million dollars. Seems more than enough to have a team of reviewers. Thanks for your time.

 

[deevey]

And I've still never heard a good reason why they demand a commission for iPhone apps but not Mac apps. And also why apps like Uber and McDonalds do not have to pay a commission but a game or utility app does.

McDonalds and Uber offer the customer a physical product, the app facilitates what would be already a physical transaction through their own outlet.

In the case of a virtual transaction, Person searches Apple, chooses the app they want (in many cases completely free with limited functions). They then decides to buy/subscribe based on an app they "Picked up" in the App Store.

Should Apple not be taking a cut for facilitating that search visibility, making it a simple one click transaction process quickly convert customer interest into a sale, handle the billing, handle worldwide licensing, accounting, and signing of that app?

In terms of customer conversions, unless you are currently paying for business ads and have dealt with the abandonment rates at checkout, you may have no idea how much value that the extremely simple apple checkout process is worth in terms of impulse buy transactions especially for the likes of games where items might only be 99¢

When Epic sells VBucks in a physical store, the store also gets a commission. So Apple facilitates the sale of a product that has no physical overhead (virtual product) that they help facilitate the sale for, should they also not receive a commission of some type?

Apple's 2023 App Store Transparency Report stated there were over 30 million registered developers. Let's pretend 10% pay 99/year. That's 300 million dollars. Seems more than enough to have a team of reviewers. Thanks for your time.

Server farms are not cheap, developers are not cheap, lawyers are not cheap. Epic charge 12% which according to some reports is the bare minimum to keep an App Store afloat.

I personally do not pretend to know if Apple should be legally forced to change any of that. But those things are why I haven't been an iPhone user for about two years.

What? Wait? You mean there's options other than the Apple Ecosystem? Please tell everyone!

 

[germanbeer007]

Same thing could be said for Apple. If they don't want to let people to sell apps for the iPhone without paying them a commission, they could just stop letting people develop apps for the iPhone and close it down to only pre installed apps again.

Or just don't let the developers who don't want to pay develop apps and let those who are willing to pay and/or offer IAP exclusively outside without steering develop apps. which is exactly where we are at now.

But of course that would be crazy

Agreed, that suggestion is crazy.

, because it is the very apps that Apple wants to receive a commission for that GIVE the iPhone it's value.

Apple developed tools, services, and a vibrant user base that is more likely to spend money (than Android) to give developers value for developing apps for iOS. it's not an equal exchange of course. so around 15%-30% for certain apps is fair.

People buy the phone FOR THE APPS.

Sure. And developers get the majority of the revenue.

And I've still never heard a good reason why they demand a commission for iPhone apps but not Mac apps.

They demand it for the App Store on iOS and Mac.

They don't demand it for outside the Mac App Store because that's how it's always been and it would be ridiculous to suddenly ask billion dollar companies who invested billions of development into the Mac to suddenly pay 30% even when offered outside the App Store.

Once you open the flood gates, you don't just suddenly change the rules to be more restrictive in a major way that could bankrupt or severely hurt companies financially. That would be entirely unfair.

There's your reason.

And also why apps like Uber and McDonalds do not have to pay a commission but a game or utility app does.

Because it would be impossible for services that operate on low margins for offering physical goods and services to be profitable. Therefore those companies would never make an app but the user base will demand it. Apple has no choice but to make an exception here to satisfy users.

I personally do not pretend to know if Apple should be legally forced to change any of that. But those things are why I haven't been an iPhone user for about two years.

Hope all of the above explains it.

 

[zahuh]

McDonalds and Uber offer the customer a physical product, the app facilitates what would be already a physical transaction through their own outlet.

In the case of a virtual transaction, Person searches Apple, chooses the app they want (in many cases completely free with limited functions). They then decides to buy/subscribe based on an app they "Picked up" in the App Store.

Should Apple not be taking a cut for facilitating that search visibility, making it a simple one click transaction process quickly convert customer interest into a sale, handle the billing, handle worldwide licensing, accounting, and signing of that app?

In terms of customer conversions, unless you are currently paying for business ads and have dealt with the abandonment rates at checkout, you may have no idea how much value that the extremely simple apple checkout process is worth in terms of impulse buy transactions especially for the likes of games where items might only be 99¢

When Epic sells VBucks in a physical store, the store also gets a commission. So Apple facilitates the sale of a product that has no physical overhead (virtual product) that they help facilitate the sale for, should they also not receive a commission of some type?


Server farms are not cheap, developers are not cheap, lawyers are not cheap. Epic charge 12% which according to some reports is the bare minimum to keep an App Store afloat.


What? Wait? You mean there's options other than the Apple Ecosystem? Please tell everyone!

I keep answering your question and then instead of acknowledging you were wrong you add more and change the question. Apple makes 30% for subscriptions and 15% the year after and 30% on paid Apps and 15% from less than $1 million paid apps. Apple also has a search business and of course iPhone itself. That's how Apple covers the costs and becomes a $3 trillion company. The California courts deemed what they did was unlawful to require developers to use their in app purchase system and not advertise a different payment system option. That is where we are at. You may disagree with the courts and that's ok. Doesn't change that what Apple did was against the law.

 

[germanbeer007]

Apple's 2023 App Store Transparency Report stated there were over 30 million registered developers. Let's pretend 10% pay 99/year. That's 300 million dollars. Seems more than enough to have a team of reviewers. Thanks for your time.

Or, you know, you could just calculate the cost per year for an app reviewer to review a single developer's worth of updates.

App reviewer makes $30/hour
Each developer can submit unlimited number of apps. But assume a developer submits 1 update per month on average (conservative, plenty of companies submit per week, and even some multiple builds per a day)
That's 12 reviews per year on average. Assume each review takes 15-30 minutes. Let's say 20 minutes.
That's 4 hours, or paying each app reviewer $120 just to review each developer's builds every year on average. A developer only pays $99/year so that means Apple is losing money from just reviewing apps if they weren't compensated more.

That's not even including when a second/third reviewer comes to review when there's a discrepancy. Also the app reviewer needs to manually respond to appeals, manually reviewing the app again, manually typing up emails saying why something is still rejected. ETc..


Then there's:
- 100% free use of Apple Maps (google charges tens of thousands per month for google maps for big apps)
- Up to a petabyte of free storage via CloudKit PER APP for developers. That's $22k/mo just for storage via AWS S3. Not including transfer bandwidth which could be tens to hundreds of thousands of dollars per month.
- App Store distribution, including China (good luck setting up a shop for you as a developer. you need access to Baidu maps, AWS china servers etc...). Factor in storage and bandwidth for distributing billions of updates every day.
- Running TestFlight service
- GameCenter service
- Free weather service data
- On demand service for serving extra levels/content for your games, hosted by Apple. As well as coreML model updates
- Push Notification servers
- Credit card fees
- App Store customer support for refunds
- Credit card chargebacks
- etc...

I would know because...I develop apps using all of these free services for the low price of $99/year. Hope that helps

 

[Arlen4]

No I am not.
Your example is amazon a shop. They get a cut of the sales, thevapp store is apples shop, they should get a cut of the sales or why provide a store for you to do business in in the first place
My example was to show how an app in the app store functions if it is selling all goods directly even though it wouldn’t brbanle to do so without the existence of the app store

Hope that clarifies

see what you mean, but I think the comparison with Amazon isn’t fully aligned. Amazon is itself a retailer, whereas Apple runs more like a platform or marketplace. The key difference is that an app in the App Store isn’t really “using” Apple to sell its goods in the same way a seller uses Amazon it’s just using iOS as a gateway to reach users. Without the App Store, yes, many apps wouldn’t exist on iOS, but that doesn’t automatically mean Apple should take a cut of every type of transaction that happens inside those apps.

Do you want me to make this more formal (like debate style) or more casual (like a friendly discussion)?

 

[zahuh]

Or, you know, you could just calculate the cost per year for an app reviewer to review a single developer's worth of updates.

App reviewer makes $30/hour
Each developer can submit unlimited number of apps. But assume a developer submits 1 update per month on average (conservative, plenty of companies submit per week, and even some multiple builds per a day)
That's 12 reviews per year on average. Assume each review takes 15-30 minutes. Let's say 20 minutes.
That's 4 hours, or paying each app reviewer $120 just to review each developer's builds every year on average. A developer only pays $99/year so that means Apple is losing money from just reviewing apps if they weren't compensated more.

That's not even including when a second/third reviewer comes to review when there's a discrepancy. Also the app reviewer needs to manually respond to appeals, manually reviewing the app again, manually typing up emails saying why something is still rejected. ETc..


Then there's:
- 100% free use of Apple Maps (google charges tens of thousands per month for google maps for big apps)
- Up to a petabyte of free storage via CloudKit PER APP for developers. That's $22k/mo just for storage via AWS S3. Not including transfer bandwidth which could be tens to hundreds of thousands of dollars per month.
- App Store distribution, including China (good luck setting up a shop for you as a developer. you need access to Baidu maps, AWS china servers etc...). Factor in storage and bandwidth for distributing billions of updates every day.
- Running TestFlight service
- GameCenter service
- Free weather service data
- On demand service for serving extra levels/content for your games, hosted by Apple. As well as coreML model updates
- Push Notification servers
- Credit card fees
- App Store customer support for refunds
- Credit card chargebacks
- etc...

I would know because...I develop apps using all of these free services for the low price of $99/year. Hope that helps

Sorry can't continue. You start with one thing and just keep piling never acknowledging you were wrong. Now you're bring up maps?? The subject is so far gone. I tried to bring you back but you went further. iPhone brings in 200 billion a year. That covers all costs you brought up. Have a good day 👍

 

[Nuno Lopes]

Free apps would disappear completely, given that plenty of completely free apps are gigabytes in size (COD mobile is somewhere around 14GB for example) and I've never once made an IAP in the years I've played it.

I think you may have your economics wrong. The average app size is somewhere 20-60MB.

Now games. Indeed some go over 1GB. But do you know a standard Netflix movie in 4K UHD is somewhere 6GB to 14GB for a 2 hour movie? That is every two hour watch. So if the economics around hosting and bit distribution was as you speculate these companies would be busted after a month. Heck, ISPs would be busted. Apple one time wanted 30% of the subscription to host and distribute a 38MB file.

Websites are free. and average working with a web app quickly gets to 8MB. Now do that a couple of times a day.

So indeed is a rip.The business leverage is the fact that there are billions of iPhone users and the underlying smartphone economics and lifestyle.

None of this garbage will benefit 99.9% of consumers at the end of the day.

Has a client, for a company with such a cash flow it seams to be struggling actually outing innovation that regular people can buy. Take Vision Pro. Even the HomePod is so so. Everything else, rising prices with product tiering…

This is what happens when a company becomes a gatekeeper … without minimal regulation over its business practices.

The fact is that most people when they choose the iPhone do not think of making the App Store choice. They just want to run their apps and use their digital services on their phone. As much as they do not with other smartphones.

Cheers.

PS: Neither using Apple contactless payment / NFC. They just expect to be able to use it. But in many countries for a long time that was not the case because Apple wanted a royalty for every money transaction …

Apple has the right to protect their intellectual property, so does everyone else.

PS: The very same people that argue against this strongly believe that a 30% tax to use sanitation infrastructure, trash disposal, basic medical, is … a robbery.

The rope is being pulled too much. People don’t notice directly on every single instance … but indirectly they do. And they cannot describe why … it’s in the air.

I believe the world is going “insane”.

 

[J InTech82]

Or, you know, you could just calculate the cost per year for an app reviewer to review a single developer's worth of updates.

App reviewer makes $30/hour
Each developer can submit unlimited number of apps. But assume a developer submits 1 update per month on average (conservative, plenty of companies submit per week, and even some multiple builds per a day)
That's 12 reviews per year on average. Assume each review takes 15-30 minutes. Let's say 20 minutes.
That's 4 hours, or paying each app reviewer $120 just to review each developer's builds every year on average. A developer only pays $99/year so that means Apple is losing money from just reviewing apps if they weren't compensated more.

That's not even including when a second/third reviewer comes to review when there's a discrepancy. Also the app reviewer needs to manually respond to appeals, manually reviewing the app again, manually typing up emails saying why something is still rejected. ETc..


Then there's:
- 100% free use of Apple Maps (google charges tens of thousands per month for google maps for big apps)
- Up to a petabyte of free storage via CloudKit PER APP for developers. That's $22k/mo just for storage via AWS S3. Not including transfer bandwidth which could be tens to hundreds of thousands of dollars per month.
- App Store distribution, including China (good luck setting up a shop for you as a developer. you need access to Baidu maps, AWS china servers etc...). Factor in storage and bandwidth for distributing billions of updates every day.
- Running TestFlight service
- GameCenter service
- Free weather service data
- On demand service for serving extra levels/content for your games, hosted by Apple. As well as coreML model updates
- Push Notification servers
- Credit card fees
- App Store customer support for refunds
- Credit card chargebacks
- etc...

I would know because...I develop apps using all of these free services for the low price of $99/year. Hope that helps

But but but but but but but but but wahhhhhhhhhhhhh wahhhhhhhhhhhhhhhh /s

 

[Arlen4]

Thanks