Apple's Phil Schiller Takes the Stand in Epic Games v. Apple Trial

[DaveP]

To a point I disagree with Schiller. They didn't want an App Store. They stole the App Store idea from Installer. Heck, the App Store's icon color-scheme is reminiscent of Installer from back in the day. Even today.

The idea of an App Store is very obvious, and not just in retrospect. They already had iTunes as a centralized, Apple controlled place to purchase and download third party music. Shifting that model to applications doesn't take any great insight.

Though it is true that many within Apple were very opposed to third party native applications, regardless of distribution/installation method.

 

[schlitzz]

How does it cost $50m to run WWDC. Some creative accounting going on there.

To be fair, they're auditing the expense accounts for Bill Gates too. Lots of serial port issues....

 

[Scipster]

How does it cost $50m to run WWDC. Some creative accounting going on there.

$50M pays for everyone's salary who's involved with WWDC months in advance

Agreed, calculate everyone's salaries and it quickly adds up. Tim Cook makes $1500/hour before stock options, and about $7200/hour if you add in the stocks. If he spends an entire week dedicated to planning and interacting with WWDC, that's between $60 - $288K right there. Add in a couple more Apple Executives and you're already looking at a few million.

Wow... I just realized Tim Cook makes more in one day than most people make in an entire year 😂

 

[Rogifan]

Schiller said that Apple hoped, in 2008, that the App Store would make money. However in a Wall Street Journal interview at the time Steve Jobs said different.

IPhone Software Sales Take Off: Apple's Jobs - WSJ

www.wsj.com

It seems clear that in the beginning the 30% was to cover the cost of starting up the App Store and process credit card transactions. Jobs wasn’t pitching it as something Apple deserved because Apple was supplying developers customers. Jobs felt apps would make the hardware more compelling and thus drive more hardware sales. Once hardware growth started to slow Cook & Co. decided to pivot towards “services” revenue (the bulk of which comes from the App Store tax/commission) to make up for declining hardware revenue. It’s pretty clear now Apple doesn’t need 30% to run the App Store. It‘s no longer about the cost of running the App Store it’s about ensuring the App Store is very profitable.

 

[haydn!]

Everyone trying to figure out where that $50m is going, and only focusing on Apple people costs? You're all missing some pretty hefty lines off that invoice!

• Entire venue hire (probably best part of 2-3 weeks solid for setup, event, tear down)
• AV set-up and crew, not just for the main keynote, but all those breakout sessions too. Most large venues come as an empty shell. You have to hire everything from carpets to cabling, as well as your lighting, staging and screens...
• Physical environment - Apple brand the sh*t out of that venue. Those full glass building wraps they've done won't come cheap.
• Keynote production - intro videos, product videos, etc, etc
• Keynote streaming/broadcasting - Apple will be having to hire and dedicate some pretty big resources to simultaneously broadcast WWDC live around the world. Quite possibly involving hiring saterlite or two.
• Breakout session recording and editing - over 100 seperate seminars filmed, edited, etc
• Catering for several thousand people for 5 event days and multiple set-up/tear down days.
• All the merch and promo callateral they'll be handing out.
• And so much more!

An event of this scale, I can see it totalling up pretty big in the end. But just because it 'costs' $50million, doesn't mean that's the bottom line as Apple will be covering some of that with the ticket sales.

 

[ouimetnick]

How does it cost $50m to run WWDC. Some creative accounting going on there.

It’s not just the rent, the probably figure out that if they have 1000 apple engineers there, they are paying the engineers to stop doing what they normally do. Those engineers are being paid even though they aren’t doing their jobs, they are helping developers.

 

[TraceyS/FL]

Everyone trying to figure out where that $50m is going, and only focusing on Apple people costs? You're all missing some pretty hefty lines off that invoice!

• Entire venue hire (probably best part of 2-3 weeks solid for setup, event, tear down)
• AV set-up and crew, not just for the main keynote, but all those breakout sessions too. Most large venues come as an empty shell. You have to hire everything from carpets to cabling, as well as your lighting, staging and screens...
• Physical environment - Apple brand the sh*t out of that venue. Those full glass building wraps they've done won't come cheap.
• Keynote production - intro videos, product videos, etc, etc
• Keynote streaming/broadcasting - Apple will be having to hire and dedicate some pretty big resources to simultaneously broadcast WWDC live around the world. Quite possibly involving hiring saterlite or two.
• Breakout session recording and editing - over 100 seperate seminars filmed, edited, etc
• Catering for several thousand people for 5 event days and multiple set-up/tear down days.
• All the merch and promo callateral they'll be handing out.
• And so much more!

An event of this scale, I can see it totalling up pretty big in the end. But just because it 'costs' $50million, doesn't mean that's the bottom line as Apple will be covering some of that with the ticket sales.

Add in all union workers for the center (I assume since SFO is union), in Vegas that cost you $50 a day to empty A SINGLE trashcan. The whole set up here has to be insane - and they seem to have it booked for a month if I recall when the banners started going up. They probably LOVED the virtual one last year since that expensive overhead is gone.

 

[citysnaps]

$50mil for a week event?

Doesn't surprise me at all.

 

[1258186]

It’s not just the rent, the probably figure out that if they have 1000 apple engineers there, they are paying the engineers to stop doing what they normally do. Those engineers are being paid even though they aren’t doing their jobs, they are helping developers.

Their jobs are whatever Apple tells them to do. They are not developing Apple products during that period but they are helping developers built apps that Apple takes a 30% cut from. So they are still making money for Apple.

 

[1258186]

Agreed, calculate everyone's salaries and it quickly adds up. Tim Cook makes $1500/hour before stock options, and about $7200/hour if you add in the stocks. If he spends an entire week dedicated to planning and interacting with WWDC, that's between $60 - $288K right there. Add in a couple more Apple Executives and you're already looking at a few million.

Wow... I just realized Tim Cook makes more in one day than most people make in an entire year 😂

These articles make me laugh. Tim Cook gets paid no matter what he does. He gets paid while taking a dump. Should they cost how much toilet breaks cost now.

 

[1258186]

Schiller said that Apple hoped, in 2008, that the App Store would make money. However in a Wall Street Journal interview at the time Steve Jobs said different.

IPhone Software Sales Take Off: Apple's Jobs - WSJ

www.wsj.com

View attachment 1776303

It seems clear that in the beginning the 30% was to cover the cost of starting up the App Store and process credit card transactions. Jobs wasn’t pitching it as something Apple deserved because Apple was supplying developers customers. Jobs felt apps would make the hardware more compelling and thus drive more hardware sales. Once hardware growth started to slow Cook & Co. decided to pivot towards “services” revenue (the bulk of which comes from the App Store tax/commission) to make up for declining hardware revenue. It’s pretty clear now Apple doesn’t need 30% to run the App Store. It‘s no longer about the cost of running the App Store it’s about ensuring the App Store is very profitable.

I miss Steve Jobs on so many levels.

 

[jav6454]

The idea of an App Store is very obvious, and not just in retrospect. They already had iTunes as a centralized, Apple controlled place to purchase and download third party music. Shifting that model to applications doesn't take any great insight.

Though it is true that many within Apple were very opposed to third party native applications, regardless of distribution/installation method.

No it wasn't. Apple did not have an idea of a centralized store for apps. They did have a similar idea with iTunes. However, the organization, the idea of in-app purchases, how different apps access several aspects of the OS was something the Installer and the jailbreak community did on there own thru their own version of the SDK.

In a sense, the jailbreak community gave Apple everything to create the App Store (and its environment) we know.

 

[Yoshimura]

Their jobs are whatever Apple tells them to do. They are not developing Apple products during that period but they are helping developers built apps that Apple takes a 30% cut from. So they are still making money for Apple.

So by your reasoning, it costs Apple nothing to develop their products.

 

[Altivec88]

It’s not just the rent, the probably figure out that if they have 1000 apple engineers there, they are paying the engineers to stop doing what they normally do. Those engineers are being paid even though they aren’t doing their jobs, they are helping developers.

On top of that, the courses they provide don't just magically appear when they show up. All this engineering time could be spent on creating other products and software rather than teaching and providing support to developers. Don't get me wrong, I do think its important but I am not one that's saying Apple should do all of this for free. Not too long ago, the developers were applauding and giving standing ovations to how good this was for them. My, how greed changes things.

 

[sw1tcher]

Phil Schiller just showed that Tim Cook is a liar when Cook said "Apple treats all developers the same way."

Apple exec explains the story behind the video-streaming deal cut with Amazon

Ex-Apple marketing chief Phil Schiller testified Apple cuts its App Store fees for some companies from 30% to 15% if they support its TV app and other features.

www.cnbc.com

​

On Monday, former Apple marketing senior vice president and current Apple fellow Phil Schiller testified that Apple does reduce its App Store fees for certain companies from 30% to 15% in exchange for them supporting Apple’s TV app.​

​

Schiller said that a few years back, the Apple TV department was working on a way to gather video streams from various apps and integrate them all into one experience for users.​

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The result was the Apple Video Partner Program, which allows members to take 85% of sales they make through in-app purchases, instead of paying Apple’s typical 30% fee.​

​

Schiller also said that the program allowed participants to charge users directly, without using Apple’s in-app purchase feature.​

​

Apple let Amazon avoid Apple's in-app purchase feature, but when Netflix wanted to bypass it as well, Apple said no, forcing Netflix to drop in-app purchases. Then Apple considered retaliating against Netflix for do so.

 

[fhall1]

There’s no way it costs $50 MILLION to put on a developers conference. Apple could rent out the whole convention center for a month for that much $$$. It’s also driving distance from Apple campus so it’s not like they’re flying their engineers in from halfway across the world.

If they didn't have the itemized costs to back up that statement, he wouldn't have said it. This isn't "The People's Court".

 

[9927036]

Agreed, calculate everyone's salaries and it quickly adds up. Tim Cook makes $1500/hour before stock options, and about $7200/hour if you add in the stocks. If he spends an entire week dedicated to planning and interacting with WWDC, that's between $60 - $288K right there. Add in a couple more Apple Executives and you're already looking at a few million.

Wow... I just realized Tim Cook makes more in one day than most people make in an entire year 😂

Yeah that's social justice right there.

 

[9927036]

AppleInsider is reporting that Apple gives our email addresses to app developers. WTF? So much for Privacy is a human right.

 

[I7guy]

AppleInsider is reporting that Apple gives our email addresses to app developers. WTF? So much for Privacy is a human right.

On the subject of anti-steering rules, or the guidelines that prohibit App Store developers from advertising outside services, Schiller said that Apple doesn't give customer emails to developers automatically. However, developers can request customer emails from Apple. Once they have the contact information, developers can communicate generally with their customers about buying in-app items from outside the App Store. This cannot be targeted though, so single customers won't receive personalized email ads.

Apple's Phil Schiller talks App Store commission, Amazon streaming deal, more in trial | AppleInsider

Apple Fellow and former marketing chief Phil Schiller took the stand in the Epic Games v. Apple trial Monday, revealing a variety of details about the App Store and developer policies.

appleinsider.com

I’m sure it’s in the TOS that wasn’t read.

 

[9927036]

Apple's Phil Schiller talks App Store commission, Amazon streaming deal, more in trial | AppleInsider

Apple Fellow and former marketing chief Phil Schiller took the stand in the Epic Games v. Apple trial Monday, revealing a variety of details about the App Store and developer policies.

appleinsider.com

I’m sure it’s in the TOS that wasn’t read.

Sure. Who reads the TOS that was written by very well paid lawyers. Did you read the TOS?

I hope this makes the headlines because it is an example of Apple's hypocrisy.

 

[KonaBlend]

>On the topic of physical goods, Schiller said that in 2019, the App Store drove $400 billion+ in transactions like food delivery, Amazon purchases, Uber, and more, which are not subject to a 30 percent cut. According to Schiller, Apple does not take a cut of physical purchases because Apple can't guarantee they will actually arrive.

Schiller just gave it away! What's the difference if a book doesn't arrive or a Fortnite skin doesn't show up? Both don't "arrive". Apple will be told either they charge Amazon too or allow Epic to use their own payment system, just like Amazon.

Thirty-Percent, Thirty-Percent, Hey Hey Good Bye

 

[ss2cire]

Sure. Who reads the TOS that was written by very well paid lawyers. Did you read the TOS?

I hope this makes the headlines because it is an example of Apple's hypocrisy.

That’s not what he said. He said developers can **request** user emails. The system (iOS) doesn’t just blindly give the info…

 

[Stewie]

>On the topic of physical goods, Schiller said that in 2019, the App Store drove $400 billion+ in transactions like food delivery, Amazon purchases, Uber, and more, which are not subject to a 30 percent cut. According to Schiller, Apple does not take a cut of physical purchases because Apple can't guarantee they will actually arrive.

Schiller just gave it away! What's the difference if a book doesn't arrive or a Fortnite skin doesn't show up? Both don't "arrive". Apple will be told either they charge Amazon too or allow Epic to use their own payment system, just like Amazon.

Thirty-Percent, Thirty-Percent, Hey Hey Good Bye

I assumed this was pretty easy to figure out, but I guess I was wrong.

The difference is that if my book doesn't show up, I have to reach out to Amazon to get my money back. If the skin doesn't show up Apple has to give me my money back.

 

[v3rlon]

Used to be the platform was the product, and the developers applications were the lock-in / incentive to keep buying new versions of the platform. Microsoft and Apple never made a % off what you sold at Egghead or Best Buy or CDW.


With Apple giving away iPhones, I guess they really need that 30% forever revenue on every app you buy. Which lets be clear, while its less money the developer is getting out of the sale price, is 30% coming out of your pocket.

Wait, ....no, Apple has industry leading profit margins on iPhone..... they don't need that 30% at all to subsidize the iPhone business. Face it, Apple is greedy, and want as much of the pie as they can have without crossing any line that gets them in legal trouble.

Its such a scam to say Apple deserves 30% of digital subscription revenues. If you go to any brick and mortar store and you buy a game off the shelf, or any other software package.... that store makes nothing on your recurring subscriptions. And that makes sense, they aren't facilitating any part of it. Same thing if you took a magazine off the shelf, filled out the subscription card and started getting magazines. The store had nothing to do with that sale, it didn't deserve or take any of it.

Apple too, isn't facilitating anything of importance. They aren't designing the content, they aren't hosting it, they aren't distributing it, they aren't advertising the DLC/streaming content. The only reason Apple in a lot of these cases is handling the subscription is because for most things they pretty much force you to use them. On the open market, Stripe and other payment processors with recurring billing charge around 3%, not 30. Google does it too you say, ok. Your friend shot someone in the face, does that mean its right?

At least Playstation and Xbox market places are based on subsidized hardware... let me know when Apple decides to subsidize theirs, I'll upgrade more often.

No, Apple didn't make a % off what you sold at Best Buy because Apple doesn't OWN Best Buy. Best Buy, however, does make a % off of everything sold at Best Buy. Given their financials, it probably would keep them in the black if they made a larger %.

Apple owns the App store. Apple pays for the servers, the network, and everything that keeps the App store as safe and secure as it is. 15% sounds reasonable to me, and it is 15% unless you are making a lot more money than 95% of developers on the store.

As more apps have gone to subscription / microtransactions, the market has to adapt. Apple can't make money off a free game that is $9.99 a month to play, or even a "free" Adobe suite that is $99 a month to use. If app makers want to go back to the 'buy it and it is yours," model, you won't hear me object, but that seems unlikely right now.

And you can always keep your killer app 'android only' until Apple caves to your demands.

 

[I7guy]

Sure. Who reads the TOS that was written by very well paid lawyers. Did you read the TOS?

I hope this makes the headlines because it is an example of Apple's hypocrisy.

I didn't read the TOS. It's not a pain point if my email address is given to the developer of an app that I downloaded.

Did you ever get any emails from any devs from apps you downloaded? I didn't...not a one in 11 years.

But we all have our own views on this.