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

[Nuno Lopes]

Yes, Apple must allow outside payments but still contractually demand their cut. It will be interesting to see how Apple reacts in the end.

Yes. The judge was clear in that Apple cannot control how lawfully devs communicate with their customers within their app neither act punitively if they provide alternate payment methods. Don’t think Apple can force developers to declare their in app revenue either to then bill them. How would that work, would the valued declared be exact? Also that would miss the point of the ruling. This is not merely a technical ruling.

 

[macjoshua]

Why should I be forced to have only one price? If I have a 100$ iAP( apple takes 30%) and my own button (apple wallet) with a 80$ price tag (apple takes 0%)

With the 99$ yearly development fee. Apple don’t need to earn a huge profit on the store. And I as a customer is not responsible to pay apple for a bad service.
The equivalent would be I bought a computer windows 10 home in your store, and at home I purchased a windows 10 Pro upgrade without giving you any revenue

Not at all. Or do you think people who pays Microsoft to upgrade their OS or using the Microsoft store should be forced to pay Walmart a cut of the profit? That’s ridiculous

Your arguments are faulty. Walmart’s business isn’t selling software - it’s in selling physical products. Their point was exactly right. If you buy an Xbox from Walmart or from Microsoft directly, you’ll pay the same price. Walmart makes a profit, meaning Microsoft sells it to them for a lower price. Apple runs a store for selling software. Why would you expect them to not expect a cut of what’s being sold on their platform?

 

[sideshowuniqueuser]

I always get a chuckle from the lack of reading comprehension by financial media. Many headlines are all contradictory or incorrect.

Apple won on 9 out of 10 counts and was ruled to not be a monopoly in this sub-category. Epic is forced to pay 30% commission/damages for around 12 months of specific revenue.

Apple is forced to do something in 90 days that they were already going to do for other "reader" categories. Apple will still likely appeal to push this off past 90 days.

This is what everyone watching the case assumed would be the ruling, is not surprising in any way, and doesn't appear to be materially impactful to Apple (depending on execution and other consumer habits we can't predict in advance.) It's pretty fair.

Why is anyone outraged or surprised or thinking this was a major win for Epic? Please enlighten me. Apple even just released a statement where they don't disagree with the ruling, lol.

The stock market disagrees w your summary.

 

[sideshowuniqueuser]

You must have missed the part where Apple is allowed to permanently ban Epic from the App Store, and now even terminate their subsidiary developer account used to develop Unreal Engine. Epic is basically out of business now. Page 180 of the ruling. I’ve attached it here for your convenience. Sorry for ruining your day.

The stock market disagrees with your gloat.

 

[LeadingHeat]

Your lack of understanding is because of your refusal to acknowledge reality or perhaps just your ignorance of it. Apple is the only store over 50% of consumers can download smartphone apps at. This is also entirely Apple’s doing, as they could allow app downloads from other sources. Conversely, you can buy a bottle of Heinz ketchup from Walmart, Target, and many, many other stores.

Or… and hear me out… you can download Microsoft word from the Mac App Store, the App Store, the Windows store, Google play store, etc. that argument is flawed.

It’s also not true that it’s the only place over (50% even) that you can download apps. Androids you can have multiple app stores. And the reason it’s not over 50% is because all of the Android stores are splitting that 45% (if we were to believe the statistic that came out earlier that iOS has 55% market share which I doubt). It’s like if a democrat and a republican were to run against each other that’s 50%, but if there are 3 or 4 democrats running and 1 republican the republican is going to have the majority vote. It’s just mathematics.

 

[sideshowuniqueuser]

It won't really. It's only a boon for the big players (Epic, Amazon etc…). Setting up a payment system and bypassing impulse purchases via IAP isn't going to be profitable for 95% of developers.

Very few people are going to be setting up their credit card on your dodgy website to purchase $5 of lives in a game to get past a level they're frustrated they almost beat.

Are you kidding? No developer has to "set up a payment system", they just have to plug in a 3rd party payment system, which is trivial to do, it's all plug'n'play, of which there are many to choose from, and they all take a cut of around 2-3%. Thus highlighting why Apple's 15/30% cut is so utterly ridiculous and greedy. Thus why Apple is in courts all over the world, as devs are sick of having to give up so much of their hard earned, to the richest and greediest company in the world.

 

[sideshowuniqueuser]

Bro - Epic wanted the ENTIRE Epic store on iOS and to get 100% of sales.

They lost really hard here and Apple doesn't even have to let them back on.

The stock market disagrees with your summary.

 

[Analog Kid]

The stock market disagrees w your summary.

AAPL since Epic announced their suit. The stock market agrees with @GizmoDVD ’s summary.

 

[AppliedMicro]

”621 The Court also notes that in the but-for world where developers could use an alternative processor, Apple would still be contractually entitled to its commission on any purchase made within apps distributed on the App Store. Thus, so long as the alternative processor charged a non-zero commission or fee for its services, no economically rational developer would choose to use the alternative processor, because on each transaction, they would still have to pay Apple its commission, and they would have to pay the alternative processor a commission for its services.”

Basically the court recognised and affirmed that Apple can still charge their commission on all IAP - even if the IAP is not through AppleIAP.

Basically, you grossly took a footnote out of context.

The quoted footnote is not in any way a ruling - it is, as I understand it, merely an argument in the context of whether Apple is illegally tying one distinct product to another (In-App-Purchases and app distribution).

 

[Michael Scrip]

Easy. Apple offer vbucks for $5. Epic offer vbucks for $4 if you set up a payment plan w/ them. They will let you pick.

But are both those choices inside the app?

The article headline says "Link to Alternative Payment Methods" which suggests you are going somewhere else.

 

[garylapointe]

Really bad outcome for Epic. They wanted to be able to add their own store and collect 100% off everything and now they get...nothing.

To buy an app or iAP, its a tap of the button through Apple. This new way means for Epic, people would have to click a link, get re-directed to a website, enter in their credit card info (setup an account?) all for maybe a small discount

Epic wanted it side-by-side.

Huge massive blow to Epic, who also now owes millions to Apple.

They really have a poor Epic Games store on the Mac. It's awful, it promotes the Windows software more. Shows windows specs before Mac specs.

They could stick an intern on there for a month and really have something just by tagging the Mac software (so it shows up in search) and having some Mac curated pages to start with.

They could have show that they have a good store option, but when your only showroom is crappy, it's hard to show people are interested in it.

 

[Sophisticatednut]

seriously dude you need to clearly look again

they owe apple back the amount of money due to they’re sneaky in app system, all of it

They failed to convince the judge to reinstate Fortnite back immediately on the App Store

even if the count which epic won against apple comes into effect, Epic will be banned from the App Store for a very long time so they don’t get the cash regarding that so another big loss for them

no unreal engine and access to Xcode for epic

no 3rd party app stores

they failed to prove apple is a monopoly

they failed to make iOS open

so yeah, keep on thinking they gained everything. Even Sweeney said they largely lost the case😂😂

Just imagine the PR nightmare if apple actually pulled any Ue made apps. It would permanently cripple developers trust in apple

 

[sideshowuniqueuser]

AAPL since Epic announced their suit. The stock market agrees with @GizmoDVD ’s summary.


View attachment 1829343

Yep, down 3% since the ruling. Day 1. Let's see what happens.

 

[AppliedMicro]

The court’s ruling says that Apple is entitled to a commission for every purchase, even for purchases made outside the App Store.

Where does it say so?

 

[Sophisticatednut]

Your arguments are faulty. Walmart’s business isn’t selling software - it’s in selling physical products. Their point was exactly right. If you buy an Xbox from Walmart or from Microsoft directly, you’ll pay the same price. Walmart makes a profit, meaning Microsoft sells it to them for a lower price. Apple runs a store for selling software. Why would you expect them to not expect a cut of what’s being sold on their platform?

Not at all, some stores has a higher price, some have a lower price, but they are all free to put whatever price they want.
I already gave apple a cut when I payed my hosting fees. If Netflix doesn’t need to pay then I don’t need to pay. Apple don’t take any profit from my ad revenue.
I think apple should only be allowed to take a literal processing fee and perhaps a fixed fee like a development fee for every year. Small developer= 99$. Medium= 199$ and large=399$ a year etc

 

[Analog Kid]

Yep, down 3% since the ruling. Day 1. Let's see what happens.

Up 50% since the suit was filed. The 3% in a down market is very literally in the noise.

 

[VoxzeyWoxzey]

The judge did not say they weren’t a monopoly, she made no such comment 🙄

Ummm

“the court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws”

 

[vipergts2207]

No it doesn’t. The court’s ruling says that Apple is entitled to a commission for every purchase, even for purchases made outside the App Store.

You're missing an important fact.

"The Court also notes that in the but-for world where developers could use an alternative processor, Apple would still be contractually entitled to its commission on any purchase made within apps distributed on the App Store."

Consider Netflix or Spotify where they pay no commissions (or almost none in the case of Spotify) because transactions are made outside of the app itself. With the judge slapping Apple down on their anti-steering practices, developers will be able to use IAP to offer consumers services or products at higher prices while also informing them of the ability to make a purchase on the dev's own website outside of the app store for a discounted price. The judge even notes the uselessness of using another IAP service provider.

"Thus, so long as the alternative processor charged a non-zero commission or fee for its services, no economically rational developer would choose to use the alternative processor, because on each transaction, they would still have to pay Apple its commission, and they would have to pay the alternative processor a commission for its services."

Where devs and consumers win is really with the anti-steering ruling. Apple makes 70% of their app store revenue from 10% of app store users. That means those 10% are spending a lot of money and if they can get a 15%-20% discount by purchasing outside of the app, many will.

The Epic v. Apple ruling could put a serious dent in Apple’s $19 billion App Store business

Who gets paid for the App Store’s biggest games going forward?

www.theverge.com

 

[vipergts2207]

AAPL since Epic announced their suit. The stock market agrees with @GizmoDVD ’s summary.


View attachment 1829343

Are you under the impression that the market knew the outcome of the case before today? Apple won 9 of 10 rulings, but still ended down over 3%. If this ruling was good for Apple they would at least be inline with the rest of the tech sector, but they're not. Out of all the big tech names, they're down the most.

FB: +0.18%
NFLX: +0.20%
SPOT: +0.71
MSFT: -0.52%
GOOG: -1.86%
AAPL: -3.31%

Interesting how the two smartphone platforms are down, while major app makers are up. Wall Street understands. That said, this certainly this certainly wasn't a lashing.

 

[bradman83]

You would be perfectly OK that HP printer can only use HP cartridges?

IMHO these analogies are pointless. All these are different business models that operates within the confines of the law. Nobody is forced to do business with anybody.

I use first-party ink cartridges because they deliver the best results (back when I actually printed things) but I 100% believe that third party cartridges should not be blocked, though they don’t need to be officially supported. Same with Keurig coffeemakers - they tried adding a chip that would only accept Keurig-branded K-cups years ago and it backfired on them.

If Apple wanted to restrict the iPhone to only first-party apps they’d be perfectly within their right to do so. But apps are a huge part of the iPhone’s marketing appeal and if Apple made such a move then iPhone sales would tank.

 

[sideshowuniqueuser]

Up 50% since the suit was filed. The 3% in a down market is very literally in the noise.

My point is, if it was such a win for Apple, then why did the stock drop, and not rise? Conclusion: it wasn't such an epic win for Apple as you make out.

Also, if you look at the chart in log scale (which you always should, and if you don't know why, you should research that), you will see that comparatively, Apple stock has stagnated since the trial began. Before that it was on a meteoric rise. Since then, not even close. And not just compared with itself, but compared with most other tech stocks, which have kept on rising at a meteoric pace. This is much much bigger than you think, as market analysts know that Apple makes a massive profit from the 15/30% cut, and that cut is under huge threat. How much this ruling will affect that cut, is hard to say quite yet, but the drop in stock price instead of a rise shows that analysts sure aren't immediately celebrating it as a win for Apple.

Also keep in mind that during this "stagnation", Apple has released the first M1 devices, which blew everyone away with how awesome they are, and yet the stock price still stagnated. That is huge.

 

[vipergts2207]

Or… and hear me out… you can download Microsoft word from the Mac App Store, the App Store, the Windows store, Google play store, etc. that argument is flawed.

It’s also not true that it’s the only place over (50% even) that you can download apps. Androids you can have multiple app stores. And the reason it’s not over 50% is because all of the Android stores are splitting that 45% (if we were to believe the statistic that came out earlier that iOS has 55% market share which I doubt). It’s like if a democrat and a republican were to run against each other that’s 50%, but if there are 3 or 4 democrats running and 1 republican the republican is going to have the majority vote. It’s just mathematics.

You're not listening. The iOS app store is only place that over 50% of the market can download smartphone apps. Apple has over 50% of the US smartphone market and as such can only get smartphone apps from one source. You can continue to ignore that reality, but you will also continue to "not understand."

Of course, this ruling wasn't even about Apple's storefront. It's the developer's. Nobody is making Apple advertise other stores or cheaper prices on their store front, which is the app store. They're being told that they can't keep devs from advertising to consumers within their own apps. If HP sells printers at Walmart, they're allowed to include literature and coupons inside the box informing the consumer of discounts when buying ink directly from the printer manufacturer's website.

 

[Analog Kid]

Are you under the impression that the market knew the outcome of the case before today? Apple won 9 of 10 rulings, but still ended down over 3%. If this ruling was good for Apple they would at least be inline with the rest of the tech sector, but they're not. Out of all the big tech names, they're down the most.

FB: +0.18%
NFLX: +0.20%
SPOT: +0.71
MSFT: -0.52%
GOOG: -1.86%
AAPL: -3.31%

Interesting how the two smartphone platforms are down, while major app makers are up. Wall Street understands. That said, this certainly this certainly wasn't a lashing.

No, I’m under the impression that the market was aware the case was pending before today, along with many others, and with that information the stock has risen 50%. Today’s minor blip, against the background of a declining market, shows that the market doesn’t feel they misjudged the situation.

I pretty clearly said what I meant. Today’s change was quite literally in the noise. Look at the stock chart over the past year— this weeks change is no different than dozens of other weeks over the past year. Epic is private, but Tencent owns 40% of Epic along with a variety if other game makers and they’re down 1.41%. Shouldn’t Spotify be up significantly more if they were a major winner?

I don’t personally put a lot of value in daily changes in the stock market, but the person I was replying do tried to. If you back up and look at what the overall impact of the Epic suit has been on Apple’s share price— it’s hard to come to a conclusion other than essentially none.

 

[Abazigal]

My point is, if it was such a win for Apple, then why did the stock drop, and not rise? Conclusion: it wasn't such an epic win for Apple as you make out.

The most straightforward explanation is that the fluctuation in stock price has nothing to do with the outcome of the lawsuit at all.

Share price rise and fall throughout the day, and I feel it’s pointless to try and attribute this to any one specific event.

 

[jlc1978]

Yes. The judge was clear in that Apple cannot control how lawfully devs communicate with their customers within their app neither act punitively if they provide alternate payment methods. Don’t think Apple can force developers to declare their in app revenue either to then bill them. How would that work, would the valued declared be exact?

It would be done through the licensing agreement for developer tools, much as Epic does when licensing the unreal engine. Developers would have to report total IAP sales and send a check.

Also that would miss the point of the ruling. This is not merely a technical ruling.

No, but the judge said Apple is entitled to being paid, the question was how much; but that question was not at issue in this trial.