Elon Musk: Apple's App Store Fees Are a 'De Facto Global Tax on the Internet'

[Nuno Lopes]

Epic is getting 70%. Apple is getting 30%.

This is a lie. If people want to know more about Epic Game Store: https://en.wikipedia.org/wiki/Epic_Games_Store

Now Epic is also a producer & publisher. If Epic acts as a producer and publisher it may take 70%, because there is a significant investment on the creator. Now, if Apple just by permiting installing a game take 30%, Epic for producing and publishing 70%, the creator gets 0%.

Make no mistake, just for permiting iOS user to install a game on iOS users device Apple is charging 30%. Apple cost per unit in comparison is so small, not to mention the massive scalability, that it does take the lion share of the profits by locking the users device.

The economics are being totally flipped.

Elon, is not far of. If Apple modus operandi catches on, there will be others to follow and jurisprudence will not allow stopping the practice … at least in the US.

PS: Of course this is just not about games.

Anyway, for me its just a matter of these big companies, … all of them, remove themselves from the App Store, Facebook and Google block Safari. People may think … oh that is can’t be done, that is bad evil …. well that is what Apple is doing to everyone on the back of iPhone sales.

These companies should have the courage to do the same to Apple.But the fact that they aren’t willing collectively gives power to Apple to proceed.

 

[jlc1978]

If Apple wanted to be on the level on this, they'd have a developer payment scheme for access to iOS and development tools that would scale and have tiers ....and then also have payments for Apps and services within Apps be totally broken out. They could even compete using their own built in Apple Pay based methods.

That could stop a lot of small developers if tehy had to invest upfront before they even know if the app will be successful.

Epic wants Apple to allow them to run their own store on Apple’s system, so they can skip paying Apple and collect all the profit themselves. Epic is suggesting that Apple and their customer base that they worked hard to develop should be free to everyone to access like a public service, with Apple getting nothing from any resellers…because why exactly?

Exactly. They want access to Apple's user base and have Apple deliver the app for free. Apple could say, OK, we'll license the development tools (for an annual fee), sign your app (for a fee each time it is updated) and let you distribute it separately and drop it from the App Store, or charge per download.

Btw: yes, I do think Epic should collect "all the profit themselves" from their own sales.

They should also have to pay to access iOS customers.

The fee for that should not be 30% of all revenue.
That's... Insane.

Why? 30% is a lot less than what it was before app stores came into being. Apple could charge per download, but that could cost Epic far more than 30%, since every update would result in massive downloads and fees.

When there is only one way that way tends to be successful. It is not necessarily a measure of success but demand.

Demand is created by having a desirable product, which is a measure of success.

Tesla automobiles are the single American (or western) automobile upstart in at least five or six decades (10 decades for American auto companies). This is a market structure that Barrs entry.

Preston Tucker, Carroll Shelby, John Z DeLorean, Jerod Shelby and Malcolm Brickland would beg to differ.

Make no mistake, just for permiting iOS user to install a game on iOS users device Apple is charging 30%. Apple cost per unit in comparison is so small, not to mention the massive scalability,

EPIC's marginal costs for add-ons is also very small, so why should they charge anything near what they do for items, subscriptions, etc.? The same argument applies ti them you are making about Apple.

that it does take the lion share of the profits by locking the users device.

30% is hardly "the lion's share" and a significantly smaller percentage that distributers used to charge. if it was too onerous EPIC would drop iOS but they want to have access to Apple's user base and not pay Apple for it while Apple hosts their product. If I were Apple, as I pointed out above I'd offer to let them distribute it on their own, charge fees for developers tools and signing the app, but drop them from the App Stroe. I doubt EPIC would go for that.

 

[PVIllustration]

This is a lie. If people want to know more about Epic Game Store: https://en.wikipedia.org/wiki/Epic_Games_Store

Now Epic is also a producer & publisher. If Epic acts as a producer and publisher it may take 70%, because there is a significant investment on the creator. Now, if Apple just by permiting installing a game take 30%, Epic for producing and publishing 70%, the creator gets 0%.

Make no mistake, just for permiting iOS user to install a game on iOS users device Apple is charging 30%. Apple cost per unit in comparison is so small, not to mention the massive scalability, that it does take the lion share of the profits by locking the users device.

The economics are being totally flipped.

Elon, is not far of. If Apple modus operandi catches on, there will be others to follow and jurisprudence will not allow stopping the practice … at least in the US.

PS: Of course this is just not about games.

Anyway, for me its just a matter of these big companies, … all of them, remove themselves from the App Store, Facebook and Google block Safari. People may think … oh that is can’t be done, that is bad evil …. well that is what Apple is doing to everyone on the back of iPhone sales.

These companies should have the courage to do the same to Apple.But the fact that they aren’t willing collectively gives power to Apple to proceed.

I've in the games business for more than 20 years. Published more than 30 games on ios and android. And worked with many publishers.

you have zero idea about what you are talking about.

I rarely post on the forum- but this post just made me shake my head.

 

[I7guy]

[...] (and they are right)[...]

Well no, there is no right or wrong here. You may agree on one side or another, but there is no right. Now it may be that congress may pass laws 13 years after the fact to alter this business structure, but when government gets involved like this it rarely ends well for anybody.

[...]
Apple purposesly doesn't because they are printing money they have no right to with the blanket percentages[...]

And they should be able to. The app store provides no financial upfront risk to get started for a dev. Yeah, you have learn how to program, buy a mac and pay $99. Compare that to, going into business for yourself...learn how to program, buy the tools, buy a computer, get a website, pay a content delivery network and hope you get some sales.

 

[DanTSX]

Same as apple I suppose.

How so?

 

[thalegold]

Elon Musk needs to stay on his side of the fence and let Apple stay on their side of the fence. I'm tired of Musk. I'm so tired of seeing his name in the news.

 

[I7guy]

How so?

It’s not anticompetitive until it is.

 

[Black Magic]

So if folks are attacking Apple, why haven't Sony and Microsoft been hit with litigation? They both charge 30% to host games on the console stores. They also charge consumers to play games on the internet.

 

[ArtOfWarfare]

the answer is don't use apple devices if you dont like it.

Whether I personally use Apple devices or not does nothing to the fact that my customers are using Apple devices.

 

[imola.zhp]

Yet you still can't get CarPlay on a Tesla or have anyone EXCEPT a Tesla Service Center work on your Tesla vehicle. One man in a walled garden throwing trash into another man's walled garden. 🤣

Someone needs to tweet this to Elon. Spot on. Tesla is rumored to be opening its own App Store for its vehicles very soon. Does this mean every app will be free and that Tesla will not charge for managing the App Store?

 

[Lemon Olive]

It’s a tax. If you want to deliver an app to the 40% of the US that uses the iPhone, you must pay the tax.

Businesses have no choice. That’s anti-competitive, because they can’t go to someone else if they want to reach that portion of the population.

Walled gardens decrease competition, raise prices, and ultimately result in slower advancement of technology. They are not good and we shouldn’t defend them.

I agree with what you're saying but the counterpoint is: so what? Apple invented the iPhone. And the App Store. These are their products. So what if you can't make iPhone apps? So what if you can't sell to iPhones? You couldn't before the iPhone existed either. You can't at all if you violate terms and get banned from the App Store. I see no reason why Apple is under any obligation to let people do anything. They made this stuff from scratch, and put it out there, with rules and conditions. Is it not their prerogative (or anyones) to make such a thing put it out there on their own terms? We're basically saying, once you become so successful that we forget that iPhones didn't always exist, this is no longer your privately owned product anymore, somehow it is analogous to the internet and needs to open to everyone? WTF?

 

[Lemon Olive]

Whether I personally use Apple devices or not does nothing to the fact that my customers are using Apple devices.

"Your customers". Your customers of what? They are Apple's customers. And you want access to them. They are not your customers until you've sold them something.

 

[Nuno Lopes]

I've in the games business for more than 20 years. Published more than 30 games on ios and android. And worked with many publishers.

you have zero idea about what you are talking about.

I rarely post on the forum- but this post just made me shake my head.

Hehehe. Your publisher colleagues, your competition, seam not to agree with you though. It’s not just Epic … are digital services in general if this practice catchup and starts spreading …

An App Store is not a publisher, it’s just a sales channel … you seam to be a publisher. So in effect Epic is your competition.

Steam, Epic Game Store, Apple App Store, Google Play … GamseStop …. aren’t publishers … are sales channels for you use … negotiate with. The problem is when one or all of these sales channels effectively control what reaches users devices and what not at a very large scale.

As publisher how big is your share? Or do you self publish in which case the cost of bringing the product to market is on you … so 30%(App Store) + marketing expenses + your profit is your initial markup for your clients no?

 

[kaneda]

I refuse to listen to a man who calls his child “X Æ A-Xii” or take him seriously in general. He’s not mentally well and there need to stop being news articles every time he babbles out even more incoherence.

Yet you listen to a man fight for human rights, but supporting China.

 

[WiseAJ]

Forced service is tax.

Just like using your employment power over your subordinates for voluntary sexual favours is still sexual harassment, if not rape.

Apple doesn't force anyone to develop/sell apps for iOS. It's a choice.

Apple is also a company not a government so they have no power to "tax" anything anyway.

The fees are provided up front so people can make their own decision if it is worth it to do so or not.

Your example is completely wrong and irrelevant to Apple and their fees.

 

[jlc1978]

Hehehe. Your publisher colleagues, your competition, seam not to agree with you though. It’s not just Epic … are digital services in general if this practice catchup and starts spreading …

Of course not - they want more of the money for themselves. It's not like they'll cut their prices 30% if Apple dropped their fees. They want acces to Apple's user base essentially for free. Which is why I said if Apple has to all they need to do is charge other fees, such as per download or for signing, etc. My guess is EPIC would scream bloody murder if Apple did that.

An App Store is not a publisher, it’s just a sales channel …

And all sales channels take a cut, and 30% is not bad for software; plus you actually can get into teh store and infront of a large customer pool, as opposed to doing it yourself.

EPIC no doubt thinks they are big enough to break free, but why didn't they try to do this years ago? Maybe becasue they knew they would never achieve the return without access to Apple's customer base.

The problem is when one or all of these sales channels effectively control what reaches users devices and what not at a very large scale.

EPIC has a large market base as well, yet the thier terms include:

1.1.c Products must not direct customers to other online stores, unless allowed by Epic.

Seems a bit hypocritical to me.

 

[Hoo Doo Dude]

One greedy guy complaining that Apple could be as greedy as he is.

 

[theotherphil]

So if folks are attacking Apple, why haven't Sony and Microsoft been hit with litigation? They both charge 30% to host games on the console stores. They also charge consumers to play games on the internet.

Indeed….and they’ll be next. Mobile is the future and Epic knows this. Mobile has been taking larger and larger amounts of the gaming market share and consoles will soon end up the niche products. Epic is aiming for where the market is going with this lawsuit in order to try and cement their future earnings at a cost of the current earnings.

Smart play, but I not sold on them litigating to change a competitors business model. They don’t want competition, they want a free ride.

 

[JronMasteR]

Well, the app store is a platform for distributing your software. So its normal to pay a fee per sale.
The problem is, that there is no other platform than apples.
30% is ridiculous actually. But apple can do it. Because they are attractive while being complete garbage

 

[jlc1978]

30% is ridiculous actually.

30% is a bargain, even before you factor in the low cost to get onto the store, compared to what developers used to have to give up to get distribution.

 

[OnawaAfrica]

Surprise, surprise--the guy who can't seem to figure out QC on his own products thinks he can run Apple better than Apple can. I guarantee you that if/when Apple ever does create a car, they will not use cheap-o paper thin paint or forget to bolt things together. For example--like, the entire top of the car, Elon. You forgot to screw on the entire top of the car.

It's much more intertwined and complicated than that.

Apple uses the control to drive hardware sales (with huge margins, even more control, large upgrade markups -- and the cycle feeds itself).

I don’t think so. Apple supports older hardware way longer than any other company *android powered phones*

 

[Nuno Lopes]

They want acces to Apple's user base essentially for free.

Yes. Like Apple has access to the Internet user base fo free. To all user bases for free actually.

 

[jlc1978]

Yes. Like Apple has access to the Internet user base fo free. To all user bases for free actually.

Your analogy is way off base for many reasons:
1. Apple no doubt pays someone for their connection and bandwidth
2. ISPs enable connectivity in exchange for your money, and as pointed out in 1 Apple pays for access
3. Apple developed and created its App Store and user base, just like any other company; no one outside of DARPA and a few universities years ago, created and owns the internet.

 

[Nuno Lopes]

1. So does everyone else

2. Irrelevent. None irrelevant is if ISP demanded 30% of Apple revenue for iPhones devices to work on their network and access their user base. They cannot, they are regulated … that is why Apple can even exist has a company. If this happened I would be here arguing against ISP policies in favor of Apple.

3. So did everyone else … but everyone else does not charge Apple to simply have access to their customers as you described. It is almost ridiculous … companies pay Apple for Apple to have access to their customers / user base … incredible.

 

[jlc1978]

1. So does everyone else

Exactly. Apple is not getting a free ride.

2. Irrelevent. None irrelevant is if ISP demanded 30% of Apple revenue for iPhones devices to work on their network and access their user base. They cannot, they are regulated … that is why Apple can even exist has a company. If this happened I would be here arguing against ISP policies in favor of Apple.

Your logic is flawed. You keep wanting to conflate two different business models in a failed attempt to argue that it's unfair that Apple charges for being on the App Store. ISP sell bandwidth. ISP get paid by their customers, in exchange for providing access to the internet. How the charge varys, in some cases it's a blanket fee, per data usage, or by device. Either way they still charge. Of course, there are other fees ISPs pay for interconnects, etc.

BTW, some do charge for access to their user base if you call a mobile phone.

Apple did quite nice before the internet as well.

3. So did everyone else … but everyone else does not charge Apple to simply have access to their customers as you described. It is almost ridiculous … companies pay Apple for Apple to have access to their customers / user base … incredible.

Uh, last time I checked stores take a markup for whatever they sell, and it can vary form a few % points to several hundred percent. So yes, everyone is doing what Apple does.