Epic: Fortnite Offline Worldwide 'Until Apple Unblocks It'

[AppliedMicro]

That’s an unserious answer. Any business run that way would go bankrupt

Apple wouldn’t.
You can the do math from their financial reporting.

Hardware and services are separate businesses and should be run that way

In fact, I‘d argue they’re not run separately enough.
There’s an argument to be made that Apple should be broken up into a hardware/OS and an app distribution business.

Hardware and services are separate businesses and should be run that way: Hardware prices recover hardware costs and generate contribution to profitability; and App Store pricing recovers App Store costs and generate contribution to profitability.

We can agree on that, as long as Apple apply non-discriminatory pricing 👍

 

[heretiq]

Given Apple’s market share and monopoly power, yes.
Apple are free to charge non-discriminatory fees for their infrastructure.

👉 Up until a downloaded app is delivered (downloaded) to a customers device.

But the enforced leeching off someone else’s revenue through a kind of (not competitively determined in rate) tax needs to stop. As does their discrimination of digital goods compared to physical goods.

👉 Does Apple have a right to leverage your internet service provider’s infrastructure to reach millions of customers for (basically) free, raking in billions through software purchases and media streaming. And avoid paying ISPs for use of their infrastructure?


Furthermore:

👉 Do you believe the postal service should be able to charge a 30% commission on all goods delivered to (instead of size/weight)

👉 Do you believe your bank should charge a 5% turnover commission on your bank account and payment card? Why should they provide your banking service for (almost) free, when you’re using it to receive a six figure amount of $ in salary/comprnsation every year?

This is nonsense. Here are some facts for consideration:

1. My ISP set the terms for use of their infrastructure by their customers. I am the customer and I pay the charges set by my ISP for use of it with my iPhone and other devices I choose or allow to use the services I pay for. This has nothing to do with Apple.

2. The provider gets to choose the pricing model that works for their business — not the buyer.

3. Banks charge account servicing and transaction fees to recover their costs and generate a profit. They set the structure and the rates.

Net-net: In a free market, providers determine pricing structure and amounts. Consumers get to decide which provider they choose — they don’t get to decide pricing.

 

[AppliedMicro]

My ISP set the terms for use of their infrastructure by their customers.

…just like Apple should do with their App Store.

The provider gets to choose the pricing model that works for their business — not the buyer.

Not if it’s a provider with monopoly power.
That’s undesirable and economically inefficient.

Banks charge account servicing and transaction fees to recover their costs and generate a profit. They set the structure and the rates.

…just like Apple should do with their App Store.

In a free market, providers determine pricing

But the market isn’t free - due to (technological) lock-in effects.

Once a developer wants to target users of Apple smartphones (a very large share of the overall market)…
…and once consumers are “locked into” an operating system platform through a hardware purchase…

They do not get to decide the provider of distribution.
Such choice, however, is necessary to keep pricing competitive.

 

[heretiq]

You think Apple would go bankrupt without the app store revenue? That is definitely unserious.

If everything has to have it's costs recovered within it's own business unit, what is covering this. 👇

Apple Is Losing Over $1 Billion per Year on Streaming Service, Has 45 Million Apple TV+ Subscribers (Report)

Apple TV+ is reportedly losing more than $1 billion per year as the company is spending $4.5 billion on content annually.

variety.com

Seriously? Virtually every resource intensive business operates at a loss until it achieves profitability. In the interim, the business is funded either internally or from investors or debtors. This is business 101. And yes, a mindset that a business unit doesn’t need to generate a profit will lead to bankruptcy.

 

[Mrkevinfinnerty]

Seriously? Virtually every resource intensive business operates at a loss until it achieves profitability. In the interim, the business is funded either internally or from investors or debtors. This is business 101. And yes, a mindset that a business unit doesn’t need to generate a profit will lead to bankruptcy.

I agree but you have just suggested that it unserious to say that profit from hardware sales can subsidise the services that drive those sales.

100% Apple Music was subsidised initially, TV+ is being heavily subsidised, why should the App Store be different?

 

[heretiq]

…just like Apple should do with their App Store.

I don’t get this. This entire conversation is based on the fact that Apple set pricing and terms for AppStore services. Epic agreed to those terms then tried to cheat to avoid paying the pricing they agreed to. Are you saying that Apple should change their entire pricing structure because Epic doesn’t want to pay what they agreed to pay?

 

[heretiq]

I agree but you have just suggested that it unserious to say that profit from hardware sales can subsidise the services that drive those sales.

100% Apple Music was subsidised initially, TV+ is being heavily subsidised, why should the App Store be different?

This is tangential, but how do you know that the App Store isn’t being subsidized? Regardless it doesn’t matter because in a free market the provider gets to determine pricing and the extent of subsidization based on their own considerations — not buyers or grifters.

 

[Mrkevinfinnerty]

This is tangential, but how do you know that the App Store isn’t being subsidized? Regardless it doesn’t matter because in a free market the provider gets to determine pricing and the extent of subsidization based on their own considerations — not buyers or grifters.

Several independent analysts consulted in the Epic trial put it at 70-80% margin for the app store.

The best Apple could come up with response was that they didn't know.

 

[AppliedMicro]

Are you saying that Apple should change their entire pricing structure because Epic doesn’t want to pay what they agreed to pay?

No - but I’ll elaborate…

Hardware and services are separate businesses and should be run that way: Hardware prices recover hardware costs and generate contribution to profitability; and App Store pricing recovers App Store costs and generate contribution to profitability.

I said above that I’d agree - if Apple’s pricing weren’t discriminatory.

But it is.
Here’s the thing:

Apple have (de facto) segregated their App Store business into two segments:

1. Apps that are paid and or sell (or would like to) digital goods or services, whose developers depend on their apps to deliver them to consumers.
2. All other apps that sell only physical goods/services or are free to download and use (including banking apps, food delivery and ride-sharing apps. TV streaming apps that stream public broadcasting or ad-supported content).

It’s important to note that there’s nothing inherently more costly in “paid” apps vs. “free” ones. And Uber app with its push notification is most probably not less expensive for Apple to provide service (and APIs to) than a rather simp,r music streaming apps (Spotify). Yet Apple’s fee structure differs dramatically.

The 2nd segment of apps contributes basically nothing to the costs and profitability of running the App Store (except the developer fee - though that’s basically negligible at least for very popular apps). It is subsidised by the 1st segment of “paid” apps.

And that is exactly what Apple has leveraged to obtain monopoly power: giving away so many apps for free - while charging developers of “paid” apps that depend on them - and very often can’t deliver their content otherwise.

👉 That is (or is akin to) predatory pricing.


What I’m arguing is this:

👉 “Free” apps and apps that make “tangible” sales should (in relative terms) contribute just as much to covering the costs and profitability as paid apps/apps providing digital goods & services.

Discriminating the two is unjustified and anticompetitive.

 

[andycarver]

I’m not a fan of Fortnite; their business model has its own flaws, but I’m wholeheartedly for consumer choice. Consumers should have the choice to use any software they like on any platform they use and use any payment system of their choosing. Apple's decision is once again regrettable.

Apple is not the one making the choice here. Epic are. They are choosing to disobey a policy that they signed up to and that everyone else obeys. It’s business. Google does the same thing.

 

[andycarver]

No - but I’ll elaborate…

I said above that I’d agree - if Apple’s pricing weren’t discriminatory.

But it is.
Here’s the thing:

Apple have (de facto) segregated their App Store business into two segments:

1. Apps that are paid and or sell (or would like to) digital goods or services, whose developers depend on their apps to deliver them to consumers.
2. All other apps that sell only physical goods/services or are free to download and use (including banking apps, food delivery and ride-sharing apps. TV streaming apps that stream public broadcasting or ad-supported content).

It’s important to note that there’s nothing inherently more costly in “paid” apps vs. “free” ones. And Uber app with its push notification is most probably not less expensive for Apple to provide service (and APIs to) than a rather simp,r music streaming apps (Spotify). Yet Apple’s fee structure differs dramatically.

The 2nd segment of apps contributes basically nothing to the costs and profitability of running the App Store (except the developer fee - though that’s basically negligible at least for very popular apps). It is subsidised by the 1st segment of “paid” apps.

And that is exactly what Apple has leveraged to obtain monopoly power: giving away so many apps for free - while charging developers of “paid” apps that depend on them - and very often can’t deliver their content otherwise.

👉 That is (or is akin to) predatory pricing.


What I’m arguing is this:

👉 “Free” apps and apps that make “tangible” sales should (in relative terms) contribute just as much to covering the costs and profitability as paid apps/apps providing digital goods & services.

Discriminating the two is unjustified and anticompetitive.

This is not about development costs. It’s purely about in-app purchases.

 

[Arsenikdote]

We are talking about In-App purchases, for which Apple does nothing at all. We are not talking about alternative App stores. In the Apple App Store, for App purchases, they can obviously use their own payment system.

In-App purchases for a FREE game is the only way Epic would pay Apple more than the $100/yr developer fee. If the bulk of the transaction cost was a purchase of a game then MAYBE there might be an argument there, but especially for subscription and micro-transaction apps, this is the only revenue source for Apple and their App Store

Serious answer: they’re making truckloads of money from iOS hardware purchases.
That they wouldn’t without their ecosystems of third-party apps.

While they do make money it is not nearly as much money as they make by providing an operating system and platform for millions of developers to utilize.

And conversely where lenders like epic who made millions of dollar be without the iOS App Store. Chicken and egg?

This is not chicken or egg. Application developers have no way to develop unless someone first develops a platform. That platform could be Windows, iOS, Android or even the systems that allow console games to run on. In each of those cases those companies get compensated (Microsoft, Apple, Google, Sony, Nintendo) for their platform. Just because Apple doesn't charge for its operating system and instead setup a system by which they share app revenue doesn't make it a different principle of chicken or egg. Platforms come first and take the risk for a potential future reward.

 

[Naraxus]

Edit: Answered by others

 

[Stuwil]

You invent it, you design it, and you build it, and it's yours. Regulators come along later, screaming blue murder, because you've created something that others have their knickers in the twist about it. The irony with Apple, is they are often not the first, but end up being the best.

Or you could say that as a company that they wait to see what works with the competition and they they implement it
Or they buy companies to them 1 to years 2 later then incorporate into the OS

 

[Stuwil]

In-App purchases for a FREE game is the only way Epic would pay Apple more than the $100/yr developer fee. If the bulk of the transaction cost was a purchase of a game then MAYBE there might be an argument there, but especially for subscription and micro-transaction apps, this is the only revenue source for Apple and their App Store


While they do make money it is not nearly as much money as they make by providing an operating system and platform for millions of developers to utilize.



This is not chicken or egg. Application developers have no way to develop unless someone first develops a platform. That platform could be Windows, iOS, Android or even the systems that allow console games to run on. In each of those cases those companies get compensated (Microsoft, Apple, Google, Sony, Nintendo) for their platform. Just because Apple doesn't charge for its operating system and instead setup a system by which they share app revenue doesn't make it a different principle of chicken or egg. Platforms come first and take the risk for a potential future reward.

Developers take risks by being on your platform because if they don’t believe that people will user or purchase their app then they won’t make one for said platform

 

[Stuwil]

I find it hard to believe that Epic thought that this would not have been the final outcome,

You think this is the final outcome
Because we all know more or less in what is coming next

 

[Stuwil]

I didn't buy "MY" Apple device to play Fortnite. I'm going to assume many others did not buy any Apple device to play Fortnite. EPIC was banned for good reason. Apple is not required to allow EPIC back on the store or its platform. JUST, mind you. As ANY DEVELOPER IS NOT REQUIRED TO DEVELOP FOR ANY APPLE HARDWARE. It goes both ways.

If you want to play Fortnite. There are many other means to do so. I myself have an Xbox, a PC, and an older iMac Pro (Intel) that can and does play Fortnite via bootcamp. None of them was purchased with the intention of playing Fortnite. But to play any game I wish. Tim Sweeny needs to stop thinking he runs the show.

The difference is buddy in terms of mobile apps you ONLY have two choices in the west

 

[Stuwil]

This laughable.

Tim Sweeny been playing the victim too long...

While I don't agree with everything Apple does... I wholeheartedly support Apple in their stance on this;

Apple spent decades and Billions
developing;

1. iOS
2. the iPhone(s)
3. the iPad(s)
4. App Store.

This takes billions and billions of investment. Why is it the world thinks that Apple should be forced to just give access to that for free. Whilst the 30% fee may well be on the hefty side, I do believe Apple have a right to levy a fee to their platform. Amazon, eBay and many stores alike charge people (business sellers) to sell on their Marketplaces, why does the world think Apple isn't permitted to do this, and if they do they're being anti competitive? what about all the smaller App and Game developers who would never have had a platform if it weren't for the App Store?

Fortnight were quite happy to play by the rules when it was going their way and while they were getting what they wanted. but then they decided they didn't want to stick to the rules because they no longer suited them. I wouldn't enter into a contract with someone and then choose to not obey the terms of that contract, 3 years after signing the agreement.

Furthermore, Sweeny may want to play this like Fortnight are the victim and that they are fighting for all developers. They are building their own App Store AND they plan to charge developers a fee to use it. Yes, they're going to have a less of a percentage cut than Apple. but everything they're calling Apple out on, it's abundantly clear Sweeny plans to do exactly the same as Apple. he's just sour that Apple came up with the App Store and made it a billion dollar industry before he did.

Furthermore, I choose to do my purchases through Apple on the App Store and my Subscritpions through Apple, because I know they will be handled properly and I can manage them all in one convenient place. Who are the EUY and other governing bodies to tell me to go outside that ecosystem that in my opinion protects me sufficiently and makes it easy to manage everything simply and easily.

Are the EU and other governing bodies coming after eBay and Amazon for the fees they levy on business sellers using their platform? No. Are they coming after the Google App Store? I personally believe they are unfairly targeting Apple and will ultimately degrade user experience on the iPhone. I chose Apple because of how they gatekeep to my satisfaction. Now the EU and other governing bodies are ruining that!

Whilst I don't deny Apple could lower their fees, AND I feel Apple have somewhat lost their way, I do not agree AT ALL with the witch hunt against Apple over things like this.

Classic example - all the governing bodies getting out of their prams over USB-C ports and cables to "save the environment". For something so small, even waste cables don't take up much space in comparison to other things... for EXAMPLE.... all these power tools the world over...Einhell, Ryobi, Black and Decker, Makita, Ferrex, Parkside and more. They ALL have different batteries and I can bet you most people have at least 3 different brand power tools at home. I have 5, so thats 5 batter types, five charges. Those batteries ultimately fail or come to end of life. These batteries all going to waste are far more harmful than USB-C cables, So why isn't the EU and other governing bodies insisting that these batteries all fit a universal dock, charger. So that they can be used with ALL brands.

Thats in my mind, is clear proof the EU and other governing bodies are unfairly going after Apple while turning a blind eye to far more important wastage and incompatibility issues.

Ok
So how do you pay or subscribe to other things you use in life that apple don’t provide
Because then surely they are not safe then are they if only apple can provide payment tools

 

[Stuwil]

I don’t think Apple has done anything (yet).

It seems Epic thinks it has found a loophole, and it will argue that it shouldn’t have to support two different versions of Fortnite for iOS, one for side loading in the EU and the other for the App Store elsewhere. So this stunt is an illustration of that.

No what is getting setup is this if you challenge apple then they can wreck your business

 

[davide_eu]

Have you played Fortnite? The game is free to play, but it is designed for you to give them money, endlessly.

Not at all. This is not true. It seems you have never played it.

You can buy skin whatever you want but they don't impact your game. They are only estethic. You cannot buy more weapons, items, ...

Try it! You will love it!

 

[AppliedMicro]

In-App purchases for a FREE game is the only way Epic would pay Apple more than the $100/yr developer fee. If the bulk of the transaction cost was a purchase of a game then MAYBE there might be an argument there, but especially for subscription and micro-transaction apps, this is the only revenue source for Apple and their App Store

👉 They should go on and update their pricing to reflect the real value and service.

But giving away their service for (basically) free to obtain duopoly market share and power and then cry when government regulation sets in?

No, thanks.
It’s up to Apple to charge a reasonable amount for their service.

 

[Stuwil]

👉 They should go on and update their pricing to reflect the real value.

But giving away their service for (basically) free to obtain duopoly market share and power and then crywhen government regulation sets in?

No, thanks.
It’s up to Apple to charge a reasonable amount for their service.

Is that not what google does with android
Hence why you now get regulation
That then leads to situations like this

 

[AppliedMicro]

Is that not what google does with android
Hence why you now get regulation

Of course.
And Microsoft did with Windows.

 

[heretiq]

👉 They should go on and update their pricing to reflect the real value and service.

But giving away their service for (basically) free to obtain duopoly market share and power and then cry when government regulation sets in?

No, thanks.
It’s up to Apple to charge a reasonable amount for their service.

Do the math and you will see that the 15%/30% cut of revenue is commensurate with what a company would have to build to replece the services provided by the App Store. Did it occur to you that there are thousands of developers who offer free apps with in-app purchases and are happy to give Apple a 15% or 30% cut of revenue in exchange for all they get?

Here’s some of what developers get for a 15/30% cut of revenue:

• world-class development frameworks that unlock sophisticated app capabilities,
• professional development tools, documentation, sample code and dev support,
• access to and use of a secure, global distribution infrastructure,
• easy access to a marketplace with hundreds of millions of buyers,
• frictionless payment processing and billing lifecycle capabilities,
• expertise to build and maintain the above,
• minimized capital investment,
• risk avoidance

The vast majority of iOS and Mac developers are incapable of and/or cannot afford to replace these enablers, and would not exist or will cease to exist without them. Many of those who are capable of doing this themselves would be hard pressed to do this for 15/30% of revenue.

Why should a model that works well for the vast majority of developers be changed because a scumbag company and CEO is willing to destroy a system that works for many to avoid paying fair compensation for services rendered?

 

[AppliedMicro]

Do the math and you will see that the 15%/30% cut of revenue is commensurate with what a company would have to build to replece the services provided by the App Store

It's not. Apple's services and competitors' pricing are indicative of the contrary.

We could argue - but definitely not put an exact price tag - about the value visibility and promotion for smaller developers on Apple's App Store. But large developers just don't require it. At all.

Kindle, Netflix, Spotify don't require App Store services at all. They'd all be fine if their app store listing was revoked tomorrow. If only they could offer their apps for download from their own web site, and have customers install them just like on macOS.

Why should a model that works well for the vast majority of developers be changed because a scumbag company and CEO is willing to destroy a system that works for many to avoid paying fair compensation for services rendered.

30% for merely processing in-app payment transactions is not fair compensation.
That's why no big large streaming service has been doing it. Nor Amazon with their Kindle app.

It does not cost 30% to process a payment transaction in an app (at large scale). It costs 3% or less.
A bit more when you factor in the VAT/sales admin & reporting and customer service.

Neither is 30% of revenue a fair share for mere payment transaction processing when someone else provides a music streaming service - and that someone else licenses all the music and provides all the infrastructure.

And that's also why Apple disallowed any external linking. They know their services are priced way above competitive levels. That's why they're fighting it all so much.