Epic Games vs. Apple Judgment Allows App Store Developers to Link to Alternative Payment Methods

[CarlJ]

I tend to think most users will bypass the outside payment option, for a number of reasons, including the security in the Apple App Store model, and the simple convenience of using the built-in tools, along with the relative ease of managing a subscription right on the device, in the OS. This maybe more of a Pyrrhic victory for devs seeking to avoid paying apple a cut of subscription fees and the like. You won. Now, make it both cheaper for the user (because if you charge the same amount for whatever content, why would the consumer use your solution) AND at least as convenient.

The problem will be if some large developer - or maybe a small developer of a suddenly hot app - decides to only allow 3rd-party payment, with no Apple-sourced payment accepted. Then people will be faced with the choice of "use this necessary and/or desirable app, and give your details to some third party payment system", or stay in the walled garden and not use the app. And if it's, say, something you need for work, that could pose a pretty annoying problem.

I have friends/relatives who say they wouldn't pay through some 3rd-party source, as they trust Apple more.

The folks who keep asserting that "my ability to use a 3rd-party app store doesn't affect you, just keep using Apple" don't see to get this argument.

 

[vipergts2207]

Bad analogy. Better one would be Walmart distributing AppleTVs (without charging Apple for logistics etc.) to a huge customer base that Walmart has gathered over the years and demanding a portion of profits that Apple makes from AppleTV in return.

Using the logic of Apple and some here, retailers selling Apple products should be entitled to 30% of what Apple makes from the retailer’s customers on the App Store. If Walmart sells someone an iPad, they provided Apple a service by providing them shelf space, employees to stock the item, payment processing, and customer service to handle returns. What’s good for the goose is good for the gander right?

 

[Jeaz]

Stock is crashing.

About 2.6% down at the moment and been quite steady for last couple of hours, not exactly what I would call crashing. It can drop more after an Apple Event where everyone seems upset and surprised that Apple only launched rumoured products.

 

[Apple Knowledge Navigator]

Stock is crashing.

No, it isn't. It's down approximately 3.5% on an expected trajectory, and has currently levelled (above; 12-months)

 

[Jeaz]

It’s an interesting ruling where they both kinda lost. Yeah, Apple will have to allow links to outside stores, but still no side-loading or anything like that, which is what Epic wanted. And given how Apple responded to the South Korea law, there’s no letting Epic back onto the App Store any time soon. So in the bigger play, Epic gambled big here, and actually lost. Epic did pave the way for other devs, but for now at least, they won’t be able to reap any for themselves.

 

[StrongArmmed]

The problem will be if some large developer - or maybe a small developer of a suddenly hot app - decides to only allow 3rd-party payment, with no Apple-sourced payment accepted. Then people will be faced with the choice of "use this necessary and/or desirable app, and give your details to some third party payment system", or stay in the walled garden and not use the app. And if it's, say, something you need for work, that could pose a pretty annoying problem.

I have friends/relatives who say they wouldn't pay through some 3rd-party source, as they trust Apple more.

The folks who keep asserting that "my ability to use a 3rd-party app store doesn't affect you, just keep using Apple" don't see to get this argument.

Pretty much this. There's no way that for IAP I'm going to use 4-5 (or more) different services potentially, the probability of that happening is exactly zero. I suspect those people saying they would use different IAP processors will say the same thing after while.

 

[Stunning_Sense4712]

It think its a pretty fair ruling all in all. It's a win for consumers in the end

So wait. Epic crying foul and saying they'll appeal and Apple saying this is a 'big win' for them makes you think that Apple lost and Epic won?

I think Epic Games has a strong case for appeal since the judge said Apple could not force their payment system while in the same ruling making Epic pay Apple's fees for their forced payment system that the court said was not allowed.

 

[leman]

Using the logic of Apple and some here, retailers selling Apple products should be entitled to 30% of what Apple makes from the retailer’s customers on the App Store. If Walmart sells someone an iPad, they provided Apple a service by providing them shelf space, employees to stock the item, payment processing, and customer service to handle returns. What’s good for the goose is good for the gander right?

Yes, shops provide a service. Which is why they charge sellers a listing fee plus a markup fee. Ever sold something on eBay? Now, Apple could do the same (charge app devs for hosting space, server infrastructure, API usage etc.) but they decided for an alternative model, where you pay based on the revenue of the app. That model was revolutionary when it was first introduced, because it allowed small time developers to access a wide customer market for the first time in the history of personal computing. App store model gives less privileged devs full access to the ecosystem, with infrastructure being paid on a solitary basis (equal opportunity for all, paid by those who succeeded).

Epic essentially wants Apple to provide them readily available infrastructure for free. They want to use Apples servers, distribution networks, R&D etc. and not pay a dime. If Apple decides to go back to the old „pay what you use“ system, it would be a massive hit to small time devs that don’t have the $$$ to pay for listing and hosting. I hope they will offer a hybrid solution where a dev can choose to continue paying 15/30% revenue cut and commit to using Apple payment system only, or implement their own systems but pay a listing and hosting fee. That could indeed be a good compromise to satisfy everyone. Except Epic of course, because they want to use stuff for free.

 

[jlc1978]

Huge L for Apple. If this stands after appeal, you can take tens of billions of future revenue off the table.

Not so sure about that. Epic has to pay Apple and is already complaining. If Epic hoped to keep 100% of its off app sales they may just have strenghtened Apple’s hand by finding Apple’s contract terms legal and enforceable. Apple could simply add in a contract term requiring companies offering off app sales to submit quarterly audit sales numbers and a check. Epic could very well made it harder to leave the app store for small developers who could not afford to due quarterly numbers.

 

[psingh01]

I’d say it likely isn’t good for consumers who will end up having headaches trying to reverse credit card charges etc. when they find out they are still being charged for stuff for months after trying to cancel whatever subscription.

It’s no different than dealing with credit cards for everything else. Customers have a choice now. Keep using apple pay, only use services with apple pay, use other service knowing there are different terms. Consumers make this type of choice all the time.

 

[Stunning_Sense4712]

Not so sure about that. Epic has to pay Apple and is already complaining. If Epic hoped to keep 100% of its off app sales they may just have strenghtened Apple’s hand by finding Apple’s contract terms legal and enforceable. Apple could simply add in a contract term requiring companies offering off app sales to submit quarterly audit sales numbers and a check. Epic could very well made it harder to leave the app store for small developers who could not afford to due quarterly numbers.

The judges ruling in my opinion is problematic due to the fact that the judge said Apple can not force their payment solution at the same time making Epic Games pay Apple's Payment fees for their forced payment solution that was ruled illegal by that judge. I suspect this case is getting appealed by both Epic Games and Apple.

 

[Michael Scrip]

Recommendation to Apple: Start offering two programs for developers:

A) Current app store rules and pricing, including free distribution

B) $1 / app/update download distribution fee, apps can use 3rd party payment systems

That won't really do anything with regards to Epic and Fortnite.

The issue is VBucks... and IAP in general.

I give them real dollars and they turn them into digital currency. There aren't any downloads for that transaction. It's literally an update to a database somewhere that increases the amount of my digital VBucks. Or gems or jewels or whatever.

 

[nylon]

I think Epic Games has a strong case for appeal since the judge said Apple could not force their payment system while in the same ruling making Epic pay Apple's fees for their forced payment system that the court said was not allowed.

I don't think so. Epic agreed to Apple's terms and signed a contract which they violated. The contract was valid.

The judge asking Apple to open up payments moving forward is a separate issue. I can see how these things might seem linked but logically they can be considered separate issues.

Keep in mind Epic had asked judge to declare App Store a monopoly which the judge rejected.

All in all a fair ruling I think.

 

[cmaier]

Which I suspect Epic Games will appeal since you can not say Apple was wrong for forcing their payment system while also saying Apple is allowed to force their payment system and force Epic to pay their fees.

Actually, yes you absolutely can. But the court did not say that apple was wrong for forcing their payment system. In fact, the court says apple can still do that. It just also has to allow additional payment systems.

So what you are going to see is that apps have to allow both AppStore payments, even if they also allow other payment systems.

 

[Stunning_Sense4712]

I don't think so. Epic agreed to Apple's terms and signed a contract which they violated. The contract was valid.

The judge asking Apple to open up payments moving forward is a separate issue. I can see how these things might seem linked but logically they can be considered separate issues.

Keep in mind Epic had asked judge to declare App Store a monopoly which the judge rejected.

All in all a fair ruling I think.

Epic agreed to terms that the judge declared was illegal and Apple could not force their payment solutions. The judge can not have it both ways either it was legal what Apple did which they are entitled to their money or it was illegal and they are not entitled to money from Epic Games.

 

[vipergts2207]

Yes, shops provide a service. Which is why they charge sellers a listing fee plus a markup fee. Ever sold something on eBay? Now, Apple could do the same (charge app devs for hosting space, server infrastructure, API usage etc.) but they decided for an alternative model, where you pay based on the revenue of the app. That model was revolutionary when it was first introduced, because it allowed small time developers to access a wide customer market for the first time in the history of personal computing. App store model gives less privileged devs full access to the ecosystem, with infrastructure being paid on a solitary basis (equal opportunity for all, paid by those who succeeded).

Epic essentially wants Apple to provide them readily available infrastructure for free. They want to use Apples servers, distribution networks, R&D etc. and not pay a dime. If Apple decides to go back to the old „pay what you use“ system, it would be a massive hit to small time devs that don’t have the $$$ to pay for listing and hosting. I hope they will offer a hybrid solution where a dev can choose to continue paying 15/30% revenue cut and commit to using Apple payment system only, or implement their own systems but pay a listing and hosting fee. That could indeed be a good compromise to satisfy everyone. Except Epic of course, because they want to use stuff for free.

And if developers don’t like the terms of that shop they can go somewhere else, yes? There are loads of places to sell your wares. You can’t do that with Apple though. They prevent doing business with potential customers unless you go through them and accept their terms. There’s no pressure on Apple because devs either accept their terms or lose access to over 50% of the US customer base.

 

[Appleman3546]

Surprised nobody is reporting that Apple is permitted to terminate Epic’s primary and subsidiary developer accounts. No more Fortnite on the App Store, no more development of Unreal Engine. Love it! See page 180 of the ruling, attached here.

Yeah, but Epic will probably appeal this because the judge granted an injunction on preventing other payment systems, which was what the judge found Epic in violation for breach of contract here (another payment system). It's inconsistent with the judge's ruling.

 

[Stunning_Sense4712]

Yeah, but Epic will probably appeal this because the judge granted an injunction on preventing other payment systems, which was what the judge found Epic in violation for breach of contract here (another payment system).

correct the judge decision's is very problematic and is certainly going to be successfully appealed.

 

[cmaier]

correct the judge decision's is very problematic and is certainly going to be successfully appealed.

No it won’t

 

[cmaier]

Yeah, but Epic will probably appeal this because the judge granted an injunction on preventing other payment systems, which was what the judge found Epic in violation for breach of contract here (another payment system). It's inconsistent with the judge's ruling.

No, it was a breach of contract. Talk to a lawyer.

 

[passatgt]

Developers could implement an external payment method that supports Apple Pay. When you tap to buy an IAP, a popup shows up(which is a safari window in the app itself), you tap to pay with Apple Pay, authenticate(face id, fingerprint), popup gets hidden and you are good to go. It's basically the same UX as a regular IAP purchase through Apple, the user won't even see a difference. One thing that needs to be figured out is billing, taxes, different VAT rates / countries, this can be tricky. I think Stripe or Fastspring for example will release a feature that handles all of this, they could aggregate the payments in bulk too(to lower the microtransaction fees by the credit card providers), but offer this service as a lower rate, like 5% for example, so the dev's revenue will increase. And maybe Apple will be forced to compete with that so they will lower the "apple tax" too.

 

[Nuno Lopes]

Common sense has prevailed. It seams to be similar to the South Koreans conclusion.
PS: If this came from the EU would be equated by some as an attack to American companies as I’ve read in another thread. 😞

 

[Stunning_Sense4712]

No, it was a breach of contract. Talk to a lawyer.

Apple's contract was found to be illegal and yet Epic was still forced to pay Apple. This decision is going to be successfully appealed. I can not tell you which side will be successful, we will have to wait for this to work it's way through the appeal process.

 

[PC_tech]

Wow this is a blow for Apple.

I wonder what Steve Jobs would do - would he buy Epic, then fire everyone, and then close the business? That lad had some spite to him!

That you think that would be a good idea is unsettling…

 

[mi7chy]

By Epic’s logic I could go into Wal-mart and buy some chocolate but pay the manufacturer directly and walk away with the product from Walmart.

Flawed logic and analogy when in reality you can shop at Walmart and use different payment options instead being forced to only use Walmart Pay.

https://www.walmart.com/help/article/accepted-payment-methods/5127976080e14c1db45131afa23415f2