Apple's Phil Schiller Initially Opposed 27% App Store Fee on External Purchases

[mrochester]

Because these companies need Netflix more than the other way round mate
That’s why

Errr, no they don’t! Netflix absolutely needs access to more and more customers to keep growing. They access those customers by offering their products in as many places as possible. This includes direct to consumer (such as via their website) or via third parties, such as Apple’s App Store, Sky, Virgin Media, Vodafone etc.

Where Netflix sells a subscription via a third party, the third party will take a commission. We know Apple’s commission is 15% or 30% depending on circumstances. The commission rate paid to those other companies is commercially sensitive and very unlikely to be revealed in public. The commission rate charged by Sky is highly sensitive information as it is an indicator of how much power Sky has over Netflix and Sky’s competitors. If Sky can charge Netflix a higher commission than Virgin Media it indicates that Sky has a more powerful position in the market than Virgin Media, and it means Netflix thinks Sky customers are worth more than Virgin Media customers. Neither Sky nor Netflix want Virgin Media to find that out.

When Netflix has acquired as many customers as they think they can via a particular route, they will stop those customers from paying via the third party, or they will charge those customers a premium. This is done because Netflix are greedy and what to grow their profits.

More broadly this is why the whole war against Apple’s commission being ‘abusive’ and anticompetitive is nonsense. Apple’s commission is far lower than commissions software developers used to pay and is also inline with competitors commissions. Apple certainly does not use its market power to demand unfair commissions.

 

[fabbydabby1]

Errr, no they don’t! Netflix absolutely needs access to more and more customers to keep growing. They access those customers by offering their products in as many places as possible. This includes direct to consumer (such as via their website) or via third parties, such as Apple’s App Store, Sky, Virgin Media, Vodafone etc.

Where Netflix sells a subscription via a third party, the third party will take a commission. We know Apple’s commission is 15% or 30% depending on circumstances. The commission rate paid to those other companies is commercially sensitive and very unlikely to be revealed in public.

When Netflix has acquired as many customers as they think they can via a particular route, they will stop those customers from paying via the third party, or they will charge those customers a premium. This is done because Netflix are greedy and what to grow their profits.

I’m not trying to be funny mate
But every time a point that is raised about this 30% charge being too high you it’s always the everyone else’s fault but Apple now all the companies that have an issue with it can’t be wrong.
Yet you keep going on

 

[mrochester]

I’m not trying to be funny mate
But every time a point that is raised about this 30% charge being too high you it’s always the everyone else’s fault but Apple now all the companies that have an issue with it can’t be wrong.
Yet you keep going on

I think your problem is you don’t understand how business works.

You think the answer is as simple as 30% too high.

It’s an awful lot more complicated and nuanced than that.

We know from court proceedings that 30% is not too high. All of Apple’s competitors charge the same. If Apple charged significantly more than its competitors then Netflix, YouTube, Epic would have a valid argument. But they aren’t, so they don’t.

 

[I7guy]

I’m not trying to be funny mate
But every time a point that is raised about this 30% charge being too high you it’s always the everyone else’s fault but Apple now all the companies that have an issue with it can’t be wrong.
Yet you keep going on

It’s irrelevant who has an issue with apples fees and commissions. They are legal. What I’m getting is devs want unfettered access to apples valuable customer base on apples dime.

That ain’t gonna happen. And if the economics of the fee structure are bad, customers will vote with their $$$ and it will be seen as to who the winners and losers are.

 

[fabbydabby1]

I think you problem is you don’t understand how business works.

You think the answer is as simple as 30% too high.

It’s an awful lot more complicated and nuanced than that.

I think the problem is mate when points have been said to you what company’s have said about it the 30% inapp charge you then go on to blame the company’s instead of being greedy. Yet it’s not conceivable that maybe Apple is the problem by charging 30% & not something like 12%

 

[mrochester]

I think the problem is mate when points have been said to you what company’s have said about it the 30% inapp charge you then go on to blame the company’s instead of being greedy. Yet it’s not conceivable that maybe Apple is the problem by charging 30% & not something like 12%

Apple charges 30% because it’s what they believe access to their customers is worth. It’s the same way Google charges 30% to access their customers, and Sony, and Microsoft.

Epic charges 12% because Epic customers are worth less than Apple customers. Epic actually loses money charging 12% so that fee will have to increase in the future. If Epic’s customers were worth a 30% commission then Epic would charge 30%.

It’s all just down to simple economics and capitalism I’m afraid.

 

[fabbydabby1]

Apple charges 30% because it’s what they believe access to their customers is worth. It’s the same way Google charges 30% to access their customers, and Sony, and Microsoft.

Epic charges 12% because epic customers are worth less than Apple customers. Epic actually loses money charging 12% so that fee will have to increase in the future. If Epic’s customers were worth a 30% commission then Epic would charge 30%.

There is a difference mate Apple can reduce the 30% but chooses not too hence why they buckled for Netflix & have special deals with Amazon.
Again nobody is asking for it to be free not once has a developer came out & said it should be free.
However to blatantly keep blaming other companies as the problem is not right.
Yet you keep going

 

[mrochester]

There is a difference mate Apple can reduce the 30% but chooses not too hence why they buckled for Netflix & have special deals with Amazon.
Again nobody is asking for it to be free not once has a developer came out & said it should be free.
However to blatantly keep blaming other companies as the problem is not right.
Yet you keep going

Hence you have the 15% rate, which I believe is at or just under break even point for Apple (I believe court documents suggested 18% was the minimum needed to be self-sufficient, but I can’t quite remember).

If you end up in a situation where Apple operates the App Store at a loss and has to subsidise through profits made somewhere else (such as profits made from selling the iPhone) then that’s highly anti-competitive.

 

[fabbydabby1]

Hence you have the 15% rate.

My understanding is it’s for smaller developers & they only implemented that when I believe epic took them to court or when some big developer was about to take them to court.
So that actually proves the point because they can reduce the fee completely down but are choosing not too.

 

[mrochester]

My understanding is it’s for smaller developers & they only implemented that when I believe epic took them to court or when some big developer was about to take them to court.
So that actually proves the point because they can reduce the fee completely down but are choosing not too.

Apple doesn’t reduce the fee down just to be nice. The fee goes down when they feel the competitive pressure to reduce it to remain competitive. The fee will be as high as it possibly can be for as long as possible.

It’s the same way Netflix and YouTube could charge less by choosing to make slightly less profit. But they won’t because they want to make as much money as possible, and continue growing how much they make.

The 15% rate is also for subscriptions that have been maintained for 12 months plus. So all of Netflix’s IAP customers were on the 15% rate, but Netflix still canned it. Netflix want Apple to charge 0% so they can make more money. They are greedy.

 

[webkit]

They charge a different amount to iOS customers because they are greedy and trying to price gouge.

It is not "price discrimination" or "price gouging" for a business to charge more for their goods in one place than another when the reason is tied to differing overhead costs. That is a fairly common cost-based pricing model. It is not greed but rather a desire to maintain relatively consistent margins.

 

[fabbydabby1]

Apple doesn’t reduce the fee down just to be nice. The fee goes down when they feel the competitive pressure to reduce it to remain competitive. The fee will be as high as it possibly can be for as long as possible.

It’s the same way Netflix and YouTube could charge less by choosing to make slightly less profit. But they won’t because they want to make as much money as possible, and continue growing how much they make.

The 15% rate is also for subscriptions that have been maintained for 12 months plus. So all of Netflix’s IAP customers were on the 15% rate, but Netflix still canned it. Netflix want Apple to charge 0% so they can make more money. They are greedy.

No but what they will do is if they think they will lose certain App Store policies then they will suddenly implement the small developer 15% policy to try & take the heat off
again nobody is asking for iap to be free but it’s too high.
Again if you think Netflix wants it to be zero then that’s what you think

 

[Hails09]

It’s irrelevant who has an issue with apples fees and commissions. They are legal. What I’m getting is devs want unfettered access to apples valuable customer base on apples dime.

That ain’t gonna happen. And if the economics of the fee structure are bad, customers will vote with their $$$ and it will be seen as to who the winners and losers are.

But it is relevant because the ones who have taken them to court have all basically said the same thing about the 30% inapp purchase charge.
Again nobody is asking for free iap what most are saying is it’s too high hence why either companies are removing it or they are charging extra to compensate for it.

 

[I7guy]

But it is relevant because the ones who have taken them to court have all basically said the same thing about the 30% inapp purchase charge.

The ones who have taken them to court have lost. Nobody is leaving the platform because if high fees while they are making money. The devs are as greedy as they claim Apple is. Can you name devs who got the 15% fee who actually lowered their price. (I’m sure one dev did it, but I’d be surprised if there were two)

Again nobody is asking for free iap what most are saying is it’s too high hence why either companies are removing it or they are charging extra to compensate for it.

Apple is allowed to ask what they deem is legal market price for these fees.

 

[Hails09]

The ones who have taken them to court have lost. Nobody is leaving the platform because if high fees while they are making money. The devs are as greedy as they claim Apple is. Can you name devs who got the 15% fee who actually lowered their price. (I’m sure one dev did it, but I’d be surprised if there were two)

Apple is allowed to ask what they deem is legal market price for these fees.

Yet did Spotify not take them to court over certain things like that & Apple are due to pay a big fine because of it.
Yeah they can do however then either companies remove the option altogether or charge more for subscription on iOS so either way nobody wins.
But hey that’s just the cost of doing business

 

[I7guy]

Yet did Spotify not take them to court over certain things like that & Apple are due to pay a big fine because of it.

That’s not in the US where there is an anti-Apple sentiment and a pro-home court sentiment…and Apple hasn’t paid a dime yet. Let us know when they pay the fine.

Yeah they can do however then either companies remove the option altogether or charge more for subscription on iOS so either way nobody wins.
But hey that’s just the cost of doing business

Exactly, let the market forces work their magic.

 

[Hails09]

That’s not in the US and Apple hasn’t paid a dime yet.

Exactly, let the market forces work their magic.

Yeah but they will have to pay it regardless
Because that’s how it works
Yeah it’s great for consumers that you have to either pay more or you can’t subscribe at all because of a 30% charge that’s well good decision making on behalf of Apple

 

[webkit]

Exactly, let the market forces work their magic.

Unfortunately, Apple prevents market forces from working their "magic" when it comes to app distribution on a major mobile OS platform. By Apple restricting/blocking alternative iOS app stores (outside the EU), they are preventing a competitive iOS store/distribution market to exist. If alternatives were allowed, there would be less reason for people to complain about Apple's "high" commissions.

 

[I7guy]

Unfortunately, Apple prevents market forces from working their "magic" when it comes to app distribution on a major mobile OS platform. By Apple restricting/blocking alternative iOS app stores (outside the EU), they are preventing a competitive iOS store/distribution market to exist. If alternatives were allowed, there would be less reason for people to complain about Apple's "high" commissions.

Apples App Store is quite legal in the US. Market forces will dictate whether or not devs deploy their apps on iOS or not. Apple providing alternative app stores in the US is like Costco allowing popup stands in their stores.

Devs have a choice of how and where to deploy their wares.

Feel like this may have been discussed in the past.

 

[I7guy]

Yeah but they will have to pay it regardless
Because that’s how it works

Well they haven’t paid it yet. So we’ll see if that is “how it works”.

Yeah it’s great for consumers that you have to either pay more or you can’t subscribe at all because of a 30% charge that’s well good decision making on behalf of Apple

Market forces at work. If devs and consumers don’t like it devs will find an alternative distribution platform.

 

[Hails09]

Well they haven’t paid it yet. So we’ll see if that is “how it works”.

Market forces at work. If devs and consumers don’t like it devs will find an alternative distribution platform.

Because if they don’t pay it then they can restrict income made in that region that’s why they will have to pay it.

Yes that alternative distribution platform is android so ultimately that’s the alternative
Hence why they have been forced to have alternative app stores in the EU

the Costco example is not very good because if you want a pop up stand you can do that in the mall like real life.
But you can’t do that on iOS in the US because it’s a closed shop with no alternative but to use the App Store

Hence why they can force their 30% on charge to developers because they are the big company & it’s only the big companies that challenge it because they won’t stand for it

 

[webkit]

Apples App Store is quite legal in the US. Market forces will dictate whether or not devs deploy their apps on iOS or not. Apple providing alternative app stores in the US is like Costco allowing popup stands in their stores.

Devs have a choice of how and where to deploy their wares.

Feel like this may have been discussed in the past.

You like to talk about people voting with their wallets, about letting market forces work their magic, etc. and I am simply pointing out that it doesn't necessarily work out that way when a company controlling a major part of a market blocks or restricts alternatives/competition in that market such as Apple does with iOS and alternative app stores.

 

[I7guy]

Because if they don’t pay it then they can restrict income made in that region that’s why they will have to pay it.

They haven’t paid it yet.

Yes that alternative distribution platform is android so ultimately that’s the alternative
Hence why they have been forced to have alternative app stores in the EU

In the US the iOS app store has stood a court challenge.

the Costco example is not very good because if you want a pop up stand you can do that in the mall like real life.
But you can’t do that on iOS in the US because it’s a closed shop with no alternative but to use the App Store

Going to multiple place with a popup store is an apt analogy.

Hence why they can force their 30% on charge to developers because they are the big company & it’s only the big companies that challenge it because they won’t stand for it

The devs should vote with their $$$ then. But there is a lot of entitlement surrounding the iOS App Store.

 

[I7guy]

You like to talk about people voting with their wallets, about letting market forces work their magic, etc. and I am simply pointing out that it doesn't necessarily work out that way when a company controlling a major part of a market blocks or restricts alternatives/competition in that market such as Apple does with iOS and alternative app stores.

As I just said, there is a lot of entitlement surrounding the iOS App Store, which in the US has stood a court challenge. Apple in the US depending on estimates has approximately a 50% share. Not really a majority by operating system, by vendor probably.

The point is Apple isn’t the only game in town.

 

[Hails09]

They haven’t paid it yet.

In the US the iOS app store has stood a court challenge.

Going to multiple place with a popup store is an apt analogy.

The devs should vote with their $$$ then. But there is a lot of entitlement surrounding the iOS App Store.

Yes big developers do vote with their wallets
Like Netflix & Spotify hence why no more inapp purchases & Apple beg Netflix to stay by saying we will give you a discount not to go because we need you.
Yet people like you defend that kind of behavior from Apple & its 30% charge but when a big company says we are removing the option Apple then buckles by offering them a discount yet when it’s anyone else
That’s different because Apple says so.