Apple to Collect 27% Commission on Third-Party App Payment Systems in the Netherlands

[robco74]

You know what, **** it, you're right. Apple should charge every developer a per-seat license of $999/year to access all the services they currently charge $99/year for.

There are many ways to finance a business. Some offer free tiers in the hopes that enough users will chose paid options to offset the cost of providing the free tier. Some may use ads in addition to, or instead to offset the costs involved in running the business. Apple wanted the bar for entry to be low to encourage small and individual devs to write and publish apps. So yes, free apps are subsidized by paid apps, IAPs, and subs.

Epic offers the Unreal engine for free. For the first $X in sales, the developer pays nothing. Once they hit a certain threshold, they start paying. Larger, more successful titles cover the costs of underperforming ones, and to allow smaller devs to learn the framework.

In any case, I'm done.

 

[Sophisticatednut]

You know what, **** it, you're right. Apple should charge every developer a per-seat license of $999/year to access all the services they currently charge $99/year for.

There are many ways to finance a business. Some offer free tiers in the hopes that enough users will chose paid options to offset the cost of providing the free tier. Some may use ads in addition to, or instead to offset the costs involved in running the business. Apple wanted the bar for entry to be low to encourage small and individual devs to write and publish apps. So yes, free apps are subsidized by paid apps, IAPs, and subs.

Epic offers the Unreal engine for free. For the first $X in sales, the developer pays nothing. Once they hit a certain threshold, they start paying. Larger, more successful titles cover the costs of underperforming ones, and to allow smaller devs to learn the framework.

In any case, I don't argue with the willfully ignorant.

well one more funny thing then.

• Epic store commision= 12%
• Epic In app purchase= 12%
• Epic 3d party In app purchase= 0%
• UE5 license fee in Epic store= 0%
• UE5 license fee outside the store=5%( only after 1 million in gross revenue)

 

[huge_apple_fangirl]

End user-enabled sideloading will basically solve all problems:
- Gives end users the choice to retain the status quo: They can choose to exclusively download their apps from and make their purchases in Apple's secured walled garden App Store

If Epic has their way, not all apps will be on the Store. They’ll try to tempt other apps to leave.

- Promotes competition in app pricing and distribution

That‘s not actually a good thing for consumers. Having a centralized, safe place to download apps is great.

- Lessens the grip Apple has in acting as a single gatekeeper to their platform (censoring, stifling innovation)

Agreed.

- Apple will still be adequately compensated for their IP by hardware margin

Just because Apple sells their hardware at a profit doesn’t mean they aren’t also entitled to profit from their software/IP via commission if they so choose. (To be clear, I wish they wouldn’t choose that. It’s greedy, gross, and short-sighted.)

It's just the Mac/macOS (or Windows) operating model.

That model is a terrible one. The App Store created unimaginable levels of demand for software by making installing apps safe and simple. There’s a reason mobile has so many more apps than desktop. Personally, I wish all the Mac apps I downloaded were available in the Store.

 

[Sophisticatednut]

If Epic has their way, not all apps will be on the Store. They’ll try to tempt other apps to leave.

That‘s not actually a good thing for consumers. Having a centralized, safe place to download apps is great.

Agreed.

Just because Apple sells their hardware at a profit doesn’t mean they aren’t also entitled to profit from their software/IP via commission if they so choose. (To be clear, I wish they wouldn’t choose that. It’s greedy, gross, and short-sighted.)

That model is a terrible one. The App Store created unimaginable levels of demand for software by making installing apps safe and simple. There’s a reason mobile has so many more apps than desktop. Personally, I wish all the Mac apps I downloaded were available in the Store.

Problem: Apple charges 30% Fee for any app on App Store.

App Devs: This is too much. Let us use a different payment processor.
Apple: It's our App Store, our rules.
App Devs: So you're a monopoly? Let us use a different App Store or let users manually install our app without your App Store.
Apple: But MAH SECURITY. No other App Store or side load. No alternative payment methods because our App Store.
App Devs: Ok, we'll take you to court. Because this is a monopoly.
Court: Until you allow alternative payment methods or App Store, you're a monopoly on the platform used by too many people.
Apple: We are not a monopoly. We're totally disallowing alternative App Stores for security reasons. Ok, we'll allow more payment methods.

Apple to Devs: Solution!!! Presenting new payment methods of your choice. Still pay us the 27% tho.
App Devs: .....
Court:...
Regulators enters the chat:

Essentially, it saddens me as I do not wish for sideloading, but it seems to be what will be forced in the end if apple continue on this course

 

[Michael Scrip]

well one more funny thing then.

• Epic store commission= 12%
• Epic In app purchase= 12%
• Epic 3d party In app purchase= 0%
• UE5 license fee in Epic store= 0%
• UE5 license fee outside the store=5%( only after 1 million in gross revenue)

I see what you're saying... but let's clarify some things.

When a game developer puts their game in Epic's store... the Epic store is just that... a store. And I think 12% is perfectly fine for just being a store.

But Apple is offering a little more. A lot more, actually. Apple is providing a store... and also providing all the tools, support, and a whole host of resources that I referenced from an earlier comment.

So yeah... I can understand when people say "Epic only charges 12%... why does Apple charge 30%?"

Well I hope you can see that Apple's commission isn't from just being a store. Apple offers a whole lot more.

Rather than comparing Apple to Epic... maybe a better comparison would be Apple and Google. You'll notice that Apple and Google have very similar platform fees. They both charge 15% for small developers and 30% for larger developers, for instance.

 

[Michael Scrip]

Problem: Apple charges 30% Fee for any app on App Store.

Regulators enters the chat:

Essentially, it saddens me as I do not wish for sideloading, but it seems to be what will be forced in the end if apple continues on this course

Or... Apple could lower their fees.

That is the problem, right? The fees?

Maybe if Apple comes up with all new fee structures that better fit today's market... they won't have to be forced to allow sideloading.

We'll see!

 

[huge_apple_fangirl]

Problem: Apple charges 30% Fee for any app on App Store.

App Devs: This is too much. Let us use a different payment processor.
Apple: It's our App Store, our rules.
App Devs: So you're a monopoly? Let us use a different App Store or let users manually install our app without your App Store.
Apple: But MAH SECURITY. No other App Store or side load. No alternative payment methods because our App Store.
App Devs: Ok, we'll take you to court. Because this is a monopoly.
Court: Until you allow alternative payment methods or App Store, you're a monopoly on the platform used by too many people.
Apple: We are not a monopoly. We're totally disallowing alternative App Stores for security reasons. Ok, we'll allow more payment methods.

Apple to Devs: Solution!!! Presenting new payment methods of your choice. Still pay us the 27% tho.
App Devs: .....
Court:...
Regulators enters the chat:

Essentially, it saddens me as I do not wish for sideloading, but it seems to be what will be forced in the end if apple continue on this course

It's gonna play out like this:

Devs: 30% is too much. Let us use a different payment processor.
Apple: No.
Devs: Then let us distribute our apps outside the Store.
Apple: No.
Devs: Regulators, Apple is a monopoly.
Apple: No, we're not.
Regulators: Let them use a different payment processor. <--- we are here
Apple: No.
Regulators: LET THEM USE A DIFFERENT PAYMENT PROCESSOR.
Apple: Fine, but you need to pay us a 27% commission.
Devs: What the heck? Regulators!
Regulators: Let them distribute apps outside the Store.
Apple: No.
Regulators: LET THEM DISTRIBUTE APPS OUTSIDE THE STORE.
Apple: Fine, but you need to pay us a 15% commission.
Devs: What the heck? Regulators!
Regulators: ?
Devs: ?
Apple: ?

 

[huge_apple_fangirl]

Or... Apple could lower their fees.

That is the problem, right? The fees?

Maybe if Apple comes up with all new fee structures that better fit today's market... they won't have to be forced to allow sideloading.

We'll see!

It is starting to look like the commission is far more important to Apple than App Store control. If Apple really was motivated by control, they would compromise on commissions to avoid the "nuclear option". Instead they are barreling right towards that reality.

I think if Apple was given two choices: control of the Store for a much reduced cut, or 30% cut on all transactions, on and off the Store, they'd drop the "but privacy and security!" argument so fast your head would spin.

 

[Sophisticatednut]

Or... Apple could lower their fees.

That is the problem, right? The fees?

Courts have already identified apple forcing their payment methods as anticompetitive, so it's already past the point of no return.
Apple's taking a 27% fee makes it impossible for any price below 10$ to use alternative methods as the costs then increase
15% makes 9$ or less impossible as costs increase

Maybe if Apple comes up with all new fee structures that better fit today's market... they won't have to be forced to allow sideloading.

We'll see!

I can't honestly see what fee structure apple can implement that won't still fall in the anticompetitive

 

[Michael Scrip]

I can't honestly see what fee structure apple can implement that won't still fall in the anticompetitive

So is Google is also anticompetitive since they charge the same 15% and 30% that Apple does?

Or since Google allows sideloading and alternative stores... will that save them?

?

 

[Sophisticatednut]

It's gonna play out like this:

Devs: 30% is too much. Let us use a different payment processor.
Apple: No.
Devs: Then let us distribute our apps outside the Store.
Apple: No.
Devs: Regulators, Apple is a monopoly.
Apple: No, we're not.
Regulators: Let them use a different payment processor. <--- we are here
Apple: No.
Regulators: LET THEM USE A DIFFERENT PAYMENT PROCESSOR.
Apple: Fine, but you need to pay us a 27% commission.
Devs: What the heck? Regulators!
Regulators: Let them distribute apps outside the Store.
Apple: No.
Regulators: LET THEM DISTRIBUTE APPS OUTSIDE THE STORE.
Apple: Fine, but you need to pay us a 15% commission.
Devs: What the heck? Regulators!
Regulators: ?
Devs: ?
Apple: ?

na i think it will play out like this with the nuclear bomb DMA.

Devs: 30% is too much. Let us use a different payment processor.
Apple: No.
Devs: Then let us distribute our apps outside the Store.
Apple: No.
Devs: court, Apple is a monopoly.
Apple: No, we're not.
Court:: Let them use a different payment processor, this obviously anticompetitive monopoly. <--- we are here
Apple: No.
Court:: LET THEM USE A DIFFERENT PAYMENT PROCESSOR.
Apple: Fine, but you need to pay us a 27% commission.
Devs: What the heck? Regulators! <--- we are here
Court:...
Regulators: Let them distribute apps outside the Store.
Apple: No.
Regulators: LET THEM DISTRIBUTE APPS OUTSIDE THE STORE.
Apple: Fine, but you need to pay us a 15% commission.
Devs: What the heck? Regulators!
Regulators: ?
Devs: ?
Apple: ?
European court of justice enters the Chat:....
EUCJ: thats it!! Apple and App Store will be forced to be separate companies and bared from cooperating or pay 10% on global revenue in a fine or be faced with a sales ban in EU.
Apple: okej...?

 

[Sophisticatednut]

So is Google is also anticompetitive since they charge the same 15% and 30% that Apple does?

Or since Google allows sideloading and alternative stores... will that save them?

?

As it seems, that's what's saving them. Other part is investigated such has forcing phone maker to make google services the default such as search and other functions. But I haven't heard any EU regulators mention googles cut on the store.

 

[Sophisticatednut]

So is Google is also anticompetitive since they charge the same 15% and 30% that Apple does?

Or since Google allows sideloading and alternative stores... will that save them?

?

a funny thing is that google have payed short of 8 Billion dollars in fines.

The story behind Google’s secret offer to settle EU Android probe​

thats funny as it ended in a 5 billion dollar fine the largest in EU's history.
and that only after the EU found against Google in the search anti-trust case in 2017 did Google attempt to settle on the issues of the Android anti-trust issues, which was far too late after the EU filed the initial charges against Google

Google revamped how it would distribute its Google Play Store with Android in the future Charging a licensing fee for the store, without requiring installation of Google apps, but making it free to pre-install the Google apps if they want.[33] Furthermore, Google's hardware partners will be allowed to market devices in the EU that run rival versions of Android or other operating systems.[33] In March 2019 Google announced that it will give European users of Android phones an option of which browser and search engine they want on their phone at the time of purchase to further comply with the EU's decision.[

The Commission identified three points of concern in the first Statement of Objections:[24]

1. Whether Google actions impede development of the market of mobile devices and access of competitors thereto by demanding or encouraging smart phone manufacturers to pre-install Google apps and services on their devices.
2. Whether Google suppressed attempts of smart phone and tablet PC manufacturers willing to install Google apps on their devices to run on modified and potentially competitive versions of Android.
3. Whether Google unlawfully impeded the market development by way of tacking the installation of certain Google apps with the use of other apps of this company or its software interface.

Google countered to this investigation that their practices with Android were no different with how Apple, Inc. or Microsoft bundles their own proprietary apps on their respective iOS and Windows Phone, and that OEMs were still able to distribute Android-based phones without the Google suite of apps.[25]

During the investigation, Google formed Alphabet Inc., a holding company for Google's various subsidiaries, with Google becoming one of Alphabet's subsidiaries.[26]

A year after, on 20 April 2016, the European Commission announced the issue of the second Statement of Objections, now addressing both Google and Alphabet within its charges.[27] The new set of complaints, amending those of the first Statement of Objections, asserted Google violated EU's antitrust laws by:[28]

• by requiring mobile manufacturers to pre-install Google Search and Google Chrome browser and requiring them to set Google Search as default search service on their devices, as a condition to license certain Google proprietary apps;
• by preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code;
• by giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google Search on their devices.

 

[huge_apple_fangirl]

European court of justice enters the Chat:....
EUCJ: thats it!! Apple and App Store will be forced to be separate companies and bared from cooperating or pay 10% on global revenue in a fine or be faced with a sales ban in EU.
Apple: okej...?

Ah, the Elizabeth Warren solution. I think that is the only way to keep Apple from stubbornly trying to collect its commission through some sort of contrived process, but it would also be terrible for iOS. Hopefully that doesn't happen.
It's a very radical idea so it probably won't.

 

[Sophisticatednut]

Ah, the Elizabeth Warren solution. I think that is the only way to keep Apple from stubbornly trying to collect its commission through some sort of contrived process, but it would also be terrible for iOS. Hopefully that doesn't happen.
It's a very radical idea so it probably won't.

Hopefully not. And I do think that considering the changes the Eu commission have convinced Google to change with a small payment of 8 billion dollars, I think apple might do it as well. at least the DMA breakup power is intended as last resort.

But it will be interesting to see considering Google have yet another Anti-competitive probe in how they abuse google add sense and YouTube etc

 

[AppliedMicro]

apple's 15% cut is more competitive than the usage of stripe.
Stripe takes 1.4% plus 0.25 cents
Apple takes 15-30%

The fact that Stripe hasn’t yet “scaled” their pricing to account for small app purchases doesn’t necessarily mean they couldn’t (though maybe they’d have to operate on some sort of wallet/account scheme, rather than charging each purchase to a payment card individually)

So if Apple has to treat iOS the same as macOS, why shouldn't Microsoft treat XboxOS the same as Windows? Why shouldn't Sony treat PSOS as a Linux distro?

The usual answer: cause they aren’t general purpose computing platforms that dominate the market.

Apple has never said their commission is to cover for anything but the act of being their agent/commissionaire and sell the app, but you have just assumed this based on no information

I think they argued that in the court trials - so at least retroactively adopted the argument?

 

[AppliedMicro]

If Epic has their way, not all apps will be on the Store

Well, neither are they today, are they? Apple are censoring what‘s allowed to get on and what‘s not. Perfectly legal apps such as emulators or adult entertainment apps get denied.

That‘s not actually a good thing for consumers. Having a centralized, safe place to download apps is great

But the unitary pricing power they have certainly doesn‘t.

So is Google is also anticompetitive since they charge the same 15% and 30% that Apple does?
Or since Google allows sideloading and alternative stores... will that save them?

The question is:

? What’s stopping Apple from jacking up their comissions to something like 60% percent? Maybe tomorrow?

I mean, it’s not as if they legally promised developers they wouldn’t, did they? If sideloading is allowed, there’s at least some alternative ways of competing available. Even major mainstream media would probably be quick to explain how sideloading works There’s at least some checks and balances keeping Google in check, if you will.

With Apple?

 

[laptech]

......

? What’s stopping Apple from jacking up their comissions to something like 60% percent? Maybe tomorrow?

.......

Apple have every right to do that because it is their store but they also have to abide by selling laws and business practice laws and providing services laws and lot's of other consumer laws in that if a company/business charges a fee for something, that company has to make it explicitly clear what that fee entails. With the Dutch regulator issue Apple have now been caught wanting because for years they have been saying that the 30% or 15% commission is to cover the costs of payment processing and people begrudgingly accepted that. No where in any publicly released document does Apple state that the 30% or 15% commission covers the running costs of other app store processes, not bandwidth costs, not employee wages, not development tools, not other API's but just for payment processing and services.

So when Apple announced what they were going to do to appease the dutch regulator, turns out that it actually only requires 3% to cover the costs of payment processing. So naturally, people are confused because Apple have persistantly stated that 30% or 15% is to cover the costs of payment processing but as it turns out, that is not actually true, only 3% is required. So of course people are asking if it only 3% is required to cover payment processing and services why did Apple set it at 30% or 15%? Remember, IAP developers are being charge this so they have every right to know exactly what the breakdown of that charge is. It's like with the airline companies, everytime they introduce charges for something, we want to know exactly what the charge is and the breakdown of that charge so we can gauge if we are being ripped off or not. Apple did not do that with the 30% commission, they just kept saying it was for payment processing and services.

Now defenders of Apples are arguing the case that the 27% commission pays for 'other things'. But here's the thing, if that was true then Apple have a legal responsibility to make it clear what the whole 30% commission is paying for. Turns out 3% is actually for payment processing, but what about the rest? In my opinion Apple have been caught ripping people off. All of the app developers who have complained about the 30% IAP commission being too high was right because Apple only actually had to charge them 3% for covering payment processing and services, the rest is just pocket change to help Apple get rich.

 

[AppliedMicro]

turns out that it actually only requires 3% to cover the costs of payment processing. So naturally, people are confused because Apple have persistantly stated that 30% or 15% is to cover the costs of payment processing but as it turns out, that is not actually true, only 3% is required

I‘m not sure what the „confusion“ is or how it would be warranted?
Looking at their services margins in their financial filings and financial analyst estimates, no reasonable person would have thought that 30% was „only“ to cover payment processing (or even the entire running of the store). Nor would any reasonable person have ever believed payment processing had magically halved in price when they announced the 15% for long-term subscriptions and small businesses - or either offered those at Apple‘s loss.

Apple did not do that with the 30% commission, they just kept saying it was for payment processing and services.

If they indeed claimed that, it was all a lie - but every sane person knew (or should have) that already: were making huge profits from their app store commissions. And even in the earlier court case in California it was stated quite clearly that part of the app store fees was compensation for their IP (and customer base) and its use thereof.

What‘s changed with the Dutch case? Apple has pretty openly admitted that they’re willing to charge (approximately) 27% for non-payment processing no matter what. Just because they can - and yes, have laid the groundwork with their platform IP.

IAP developers are being charge this so they have every right to know exactly what the breakdown of that charge is

if that was true then Apple have a legal responsibility to make it clear what the whole 30% commission is paying for.

How does Apple have a legal obligation to break down their commission pricing to developers?

 

[laptech]

.......


How does Apple have a legal obligation to break down their commission pricing to developers?

Because the EU say's companies have to. There are 2 classic cases of this exact same thing going on with UK estate agencies that provide letting services and the airline copmany Ryan Air. There has been a profilic rise of estate agents in the UK offering letting services and one of the fee's they charged potential customers was an 'admin' fee which could be in the range from £300 to £1000 and due to the number of estate agents using this practice of charging customers to use their services, more and more people were asking just exactly what th 'admin' charged entail. The estate agents would not tell the customers what it was in that it was just an 'admin' fee. Well it started to get out of hand and the government told the estate agents to change their ways. They resisted, still kept the high admin charges which resulted in the government stepping in to force estate agents that they must clearly give a breakdown list of what the 'admin' charge entails and when they did it was noticed very quickly that estate agents had been ripping customers off for years hiding behind the excuse of 'oh it's an admin charge'. The actual 'admin' services estate agents provided were found to be no where near what they were charging. Turned out the estate agents were making up the high fees just for the fact they could and no one challenged them about it.

The irish airline company Ryan Air have been caught out for doing the same thing. The have persistantly added 'service charges' to the cost of a airline ticket and customers have been asking just exactly what is this new 'service charge' we are being asked to pay and Ryan Air would just reply with 'it's a service charge'. Eventually the government stepped in and told Ryan Air they have to be explict in what the service charges are and it was found they was charging customers twice for the same thing.

The UK was in the EU at the time and thus had the advantage of using EU laws to assist them in taking on the estate agents and Ryan Air.

The US system may not require Apple to make it clear what the 30% commission entails but the EU will and will want a breakdown of what the 30% is. This is why you will find the dutch regulator is still not happy with Apple because Apple are still adamant they want commission and the dutch regulator are saying 'ok, fine, give us a breakdown of what the commission entails' but Apple are not doing that, they just keep on saying they are going to charge 27% commission on transactions.

 

[Abazigal]

Now defenders of Apples are arguing the case that the 27% commission pays for 'other things'. But here's the thing, if that was true then Apple have a legal responsibility to make it clear what the whole 30% commission is paying for. Turns out 3% is actually for payment processing, but what about the rest? In my opinion Apple have been caught ripping people off. All of the app developers who have complained about the 30% IAP commission being too high was right because Apple only actually had to charge them 3% for covering payment processing and services, the rest is just pocket change to help Apple get rich.

I have no idea that Apple was somehow obligated to operate the App Store at a break even rate. Must have missed a memo somewhere.

 

[laptech]

I have no idea that Apple was somehow obligated to operate the App Store at a break even rate. Must have missed a memo somewhere.

People in here need to understand that there is a law of business and law of doing business and that is anyone wanting to run a business has to do so fairly and justly and follow rules of law. This means any fee's they charge for services they provide or fee's for products they supply must be fair and just and must be clearly identified so those paying the fee's know exactly what they are paying for but as we know there are thousands upon thousands of companies that do not play by the rules, do not play fair and do not play just so us the paying customers put pressure on our elected governments to make sure companies do play fair, just and by the rules. Thousands upon thousands of companies get shut down for not playing by the rules. Thousands upon thousands of companies are told to change the way they do business because they were caught ripping people off.

A business cannot do what it wants and as it pleases because if they do there will come a time when the regulators come calling forcing them to toe the line.

Apple have the right to make a profit, just as any company does but it must be seen to do it within the bounderies of the law and the rules of business. But what Apple does not have the right to do is to rip people off with over exuberant fee's for services they provide. If a service provided only amounts to 3% which covers everything that sevice provides, they cannot just stick on 27% for the hell of it and say 'that's what it costs to process payments', because eventually the company will be found out and yes, Apple due to their own mistakes have now be found out.

Apple could have said they will charge 5% for payment processing, 3% to cover the actual payment process and 2% for a bit of profit for the privilege of using the payment processing service, but no, Apple said they wanted 30% and now excuses are being made for them for setting it at 30% when in fact it could have been much much lower and still Apple would have made a profit, just not the mega billions profit they are getting today.

 

[Abazigal]

Apple could have said they will charge 5% for payment processing, 3% to cover the actual payment process and 2% for a bit of profit for the privilege of using the payment processing service, but no, Apple said they wanted 30% and now excuses are being made for them for setting it at 30% when in fact it could have been much much lower and still Apple would have made a profit, just not the mega billions profit they are getting today.

Is there anyone else here who honestly thinks that 1-2% margin is all it takes for the App Store to break even? When Epic charges 18% and is still operating at a loss?

Apple pays for everything, from offering customers a safe and trusted environment to transact with apps, to supplying the ecosystem and related technologies required to make an iOS app transaction possible in the first place. Allowing developers to sidestep this 30/15% cut via third party payments is, in my eyes, akin to jumping over the turnstile at the train station to avoid paying for the subway. You want to use a critical part of your city’s infrastructure for your own benefit, but refuse to pay your share of the upkeep.

My own internal math pegs the break even rate at 20% (19.75 to be exact), but until we get an actual look at Apple’s internal statements, I guess it’s “you say, I say”.

There is also the oft-ignored point about how Apple actually helps in funnelling users to developers, by virtue of them having aggregated the best customers in the world (as evidenced by the App Store raking in more revenue than the google play store despite there being more android users around the world). I do feel that Apple is also entitled to a cut for its role in bringing a developer more sales than they otherwise would have. Can we honestly say that something like the windows store is able to provide a comparable benefit?

I am really not sure what the critics were expecting Apple to do (and I basically expected that Apple would react along this line). If the debate is simply about what the “right percentage” is, then there is no objectively “right” percentage beyond what one is able to negotiate through clout and market pressure. Are they expecting the government to come in and issue an ultimatum to Apple, saying that must lower their cut to some equally arbitrary number? Which again brings us back to what this “right number” ought to be and why.

The context of the dispute was just about allowing external payments, so it shouldn’t be a surprise that Apple’s response was just about external payments. Including the thorny issue of Apple auditing developer revenue, which is troublesome but necessary, because a rule is only as effective as it can be enforced.

I continue to be of the opinion that Apple is right to charge for third party payments. A consumer should be indifferent between using iTunes or third party payments to purchase an app, and opting for the latter should not allow the developer to get away with not paying Apple their rightful share.

 

[laptech]

Is there anyone else here who honestly thinks that 1-2% margin is all it takes for the App Store to break even? When Epic charges 18% and is still operating at a loss?

Apple pays for everything, from offering customers a safe and trusted environment to transact with apps, to supplying the ecosystem and related technologies required to make an iOS app transaction possible in the first place. Allowing developers to sidestep this 30/15% cut via third party payments is, in my eyes, akin to jumping over the turnstile at the train station to avoid paying for the subway. You want to use a critical part of your city’s infrastructure for your own benefit, but refuse to pay your share of the upkeep.

My own internal math pegs the break even rate at 20% (19.75 to be exact), but until we get an actual look at Apple’s internal statements, I guess it’s “you say, I say”.

There is also the oft-ignored point about how Apple actually helps in funnelling users to developers, by virtue of them having aggregated the best customers in the world (as evidenced by the App Store raking in more revenue than the google play store despite there being more android users around the world). I do feel that Apple is also entitled to a cut for its role in bringing a developer more sales than they otherwise would have. Can we honestly say that something like the windows store is able to provide a comparable benefit?

I am really not sure what the critics were expecting Apple to do (and I basically expected that Apple would react along this line). If the debate is simply about what the “right percentage” is, then there is no objectively “right” percentage beyond what one is able to negotiate through clout and market pressure. Are they expecting the government to come in and issue an ultimatum to Apple, saying that must lower their cut to some equally arbitrary number? Which again brings us back to what this “right number” ought to be and why.

The context of the dispute was just about allowing external payments, so it shouldn’t be a surprise that Apple’s response was just about external payments. Including the thorny issue of Apple auditing developer revenue, which is troublesome but necessary, because a rule is only as effective as it can be enforced.

I continue to be of the opinion that Apple is right to charge for third party payments. A consumer should be indifferent between using iTunes or third party payments to purchase an app, and opting for the latter should not allow the developer to get away with not paying Apple their rightful share.

Your doing the same thing as many others, trying to make it about Apple not having the right to charge for the services they provide. That is not the issue here and never has been. It has always been about the cost of those charges, so please, stop trying to make out that the issue is about Apple not being allowed to make a profit or that they cannot charge for services they provide. They can, they just have to do it fairly and justly and as I have pointed out time and time again, with the dutch regulator investigation/issue, that 30% has now be proven to be 'unfair and unjust' because it only costs 3% for payment processing, not 30%.

This is why the UK & EU keep going after Amazon because every year Amazon say they make billions in profits but yet pay less than $10,000 in taxes and each time when questioned about it Amazon say 'we pay the legal amount of taxes'. The UK and EU know Amazon is upto something no good, they just have not been able to prove it.

Drivers have to pay a service charge to use a toll road and how that service charge is made is broken down in detail showing paying customers where the money goes, to whom and for what for. When toll prices increases drives want to know in detail the reason for the increase and what the increase is actually paying for.

Apple has not done this. They just say '30% commission for payment processing and services' and that's it. When they are asked to give a breakdown of that 30% showing what percentage pays for what, Apple has always refused.

So, do you think it's fair that companies that run toll roads have to give details as to what the toll service charge pays for, a breakdown of who gets what percentage and what that percentage pays for but for the likes of Apple they do not and people fiercely defend them for not having to explain why.

How many drivers would be happy if they were told 'toll fee is 30%, if you do not like it go find another route' or when pushed on what the 30% fee goes to pay for, they are told 'it's a service charge thats all you need to know'. Would you be happy with that? because that is exactly what Apple is doing with it's 30% commission charge.

 

[Sophisticatednut]

The fact that Stripe hasn’t yet “scaled” their pricing to account for small app purchases doesn’t necessarily mean they couldn’t (though maybe they’d have to operate on some sort of wallet/account scheme, rather than charging each purchase to a payment card individually)

True that they could but haven’t yet as no demand exist? But they do have the ability to request custom billing

I think they argued that in the court trials - so at least retroactively adopted the argument?

I have Never seen them argue it in any court filing outside of. We have a right to take a cut.

Is there anyone else here who honestly thinks that 1-2% margin is all it takes for the App Store to break even? When Epic charges 18% and is still operating at a loss?

With court filing epic is making a profit with a 12% cut with healthy margins

Apple pays for everything, from offering customers a safe and trusted environment to transact with apps, to supplying the ecosystem and related technologies required to make an iOS app transaction possible in the first place. Allowing developers to sidestep this 30/15% cut via third party payments is, in my eyes, akin to jumping over the turnstile at the train station to avoid paying for the subway. You want to use a critical part of your city’s infrastructure for your own benefit, but refuse to pay your share of the upkeep.

My own internal math pegs the break even rate at 20% (19.75 to be exact), but until we get an actual look at Apple’s internal statements, I guess it’s “you say, I say”.

I think you need to check you math, their own number put the margin at 70% for all services. The court filing put it at 80%.
That would put the break even at 6-9% but likely less with 90% of apps being free.

There is also the oft-ignored point about how Apple actually helps in funnelling users to developers, by virtue of them having aggregated the best customers in the world (as evidenced by the App Store raking in more revenue than the google play store despite there being more android users around the world). I do feel that Apple is also entitled to a cut for its role in bringing a developer more sales than they otherwise would have. Can we honestly say that something like the windows store is able to provide a comparable benefit?

Perhaps but no evidence have been presented outside of assumptions. A lot of customers com to the store already aware of the app

I am really not sure what the critics were expecting Apple to do (and I basically expected that Apple would react along this line). If the debate is simply about what the “right percentage” is, then there is no objectively “right” percentage beyond what one is able to negotiate through clout and market pressure. Are they expecting the government to come in and issue an ultimatum to Apple, saying that must lower their cut to some equally arbitrary number? Which again brings us back to what this “right number” ought to be and why.

Considering apple have putt themselves in a pickle. The number can actually be very close to zero just from the fact they where judged anticompetitive for not allowing 3d party options

The context of the dispute was just about allowing external payments, so it shouldn’t be a surprise that Apple’s response was just about external payments. Including the thorny issue of Apple auditing developer revenue, which is troublesome but necessary, because a rule is only as effective as it can be enforced.

I continue to be of the opinion that Apple is right to charge for third party payments. A consumer should be indifferent between using iTunes or third party payments to purchase an app, and opting for the latter should not allow the developer to get away with not paying Apple their rightful share.

It actually is a surprise. The court didn’t say apple was a monopoly or even care for it, they said. Apple was using anti competitive practices by preventing 3d party solutions.

And with a 27% cut anything bellow 10$ must use apple’s solution.

Effectively apple cut x% plus’s typical strip fee 1.4%+24cent will be anticompetitive if the fee is higher than using only apples solution