"Under all models, Apple would be entitled to a commission or licensing fee, even if IAP was optional."
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Epic Games vs. Apple Judgment Allows App Store Developers to Link to Alternative Payment Methods
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Oh wow! I never thought about it that way.
Most people only focus on the 3% credit card fee.
But you're exactly right! It's the 30-cents per-transaction fee that would be quite a problem in selling those little $1 or $2 impulse buys.
Exactly.
Apple had a flat-fee for selling stuff in the App Store. Even if you disagreed with the exact percentage... no one should deny how simple it was to have an all-in-one solution that provided hosting, payments, worldwide tax collection and reporting, etc. Apple subtracted their cut... and the developer received the remainder. That's all theirs.
But you're right... Apple could start itemizing every App Store service and make life very difficult for some developers.
Stripe: "Thank you for using Stripe for app payments! Be aware that you're paying 3% plus 30 cents on every $1 purchase."
Apple: "And here's your bill for hosting, bandwidth, app review, push notifications, CloudKit, MapKit, TestFlight, etc..."
This probably wouldn't affect giant corporations like Epic. But it would be a hassle, and might be cost-prohibitive for small developers.
I have a feeling most small developers will stick with Apple's all-in-one percentage-based system.
I think that is a pretty big deal. It is also actually fair. If you stop considering whether the percentage itself is fair (although the ruling clearly states it is), it is quite reasonable that Apple gets SOME cut for hosting and promoting the app. Forcing Apple (and thus any competitors as well) to provide free apps with no way to monetize on them, would be very much not fair, regardless of how much money Apple has. And, the court just ruled that 30% is not unreasonable, so Apple can just set that percentage, and we are back to square one.
The ruling that Apple does not have a monopoly, has very big implications the way I see it.
Ummm…. They ruled Apple is not a monopoly under the current antitrust law.
It's funny how people forget how was life before App Store. Indie developers were basically non-existent, save for very few fortunate ones that had a niche. Apple's 30% have revolutionized market access for "poor" devs, allowing them to develop and ship software without having to deal with the complex logistics or paying high upfront listing fees.
Yep... I remember in 2008 hearing about developers were thrilled by the 30%
But now it has changed to "How dare they! I want everything for freeeee!!!!"
We are all just speculating here but it’s going to be interesting to see Apple’s next move.
I think if they attempt to keep the 30% somehow, it’ll force their relationships with devs to a new low.
And more importantly, the US gvt and the EU will probably act at this point.
It’ll be far more sensible for them to move to a 12% IAP cut for all $1m+ devs as this will defuse the situation.
Also - AVR & VR is going to be ‘the new smartphone’ very soon.
If you’re launching a new product like that you probably don’t want to have your 3rd party devs hating you.
Especially as Facebook, Google etc will all be launching similar products.
I think if they attempt to keep the 30% somehow, it’ll force their relationships with devs to a new low.
And more importantly, the US gvt and the EU will probably act at this point.
It’ll be far more sensible for them to move to a 12% IAP cut for all $1m+ devs as this will defuse the situation.
Also - AVR & VR is going to be ‘the new smartphone’ very soon.
If you’re launching a new product like that you probably don’t want to have your 3rd party devs hating you.
Especially as Facebook, Google etc will all be launching similar products.
Hmm, I don't think so. Epic's main goal is to have their own alternate app store on iOS. With this 3rd party payment compromise, regulators might no longer think Apple has as much as "anti-competitive" behaviors anymore, that they might drop any pursuance towards an alternative app store.
And as such imo it's wise for Apple to reach a compromise now, rather than be hard-headed and pushed regulators into opening up the platform entirely.
To validate your concern, we have to assume that whatever percentage from Epic's Fortnite IAPs is significant to Apple. The fact that Apple had no problem banning the app means it probably does not. In the end, whether Epic uses Apple's IAP or not, the amount might not be significant for Apple. However, having iOS opened up to allow alternative app store would be devastating. Thus better to come into terms now.
Wrong. To be able to read and understand legal rulings one requires decent legal education and knowledge. That’s why so many here cherry pick quotes from the ruling and take them out of context.
The quote mentioned is part of the ruling that deals with the question whether or not Apple’s In-App Purchasing system is a separate market in terms of federal anti trust law. It does not concern the claim based on Califoria’s state anti competition laws. The judge ruled Apple violates these laws and must allow developers to direct consumers to alternative payment mechanisms. Apple is not entitled to a commission fee of purchases made outside the In-App Purchasing system.
Oh yes. Apple can implement royalty based agreements common in the gaming industry and apply all kinds of digital businesses.
But here is the thing. It will help to clarify how much indeed Apple charges for the use of its APIs to make an App. People are thinking this still in terms of App / Software but in fact App Store polices, way way beyond that.
We will learn how much Apple charges a teacher for its tech to give online classes in his or hers app, a musician to send his music his app, a school to give online lessons, an author, a psycologist to provide family therapy online … to go through an App on iOS. Based on royalties or not.
At the moment all scenarios are stacked in something similar to a Collateralized Dept Obligation marked at 30% of ones gross revenue in app that no ones knows how much each component is actually worth by its own and to what end.
Oh yes. Who ever thought that having multiple App Stores in iOS or allowing digital service providers direct billing in app would imply maintaining things as they are, except that third parties would not eventually need to pay Apple for anything else but $99 a year … are imbeciles. That was never the point.
The point was to bring some more transparency to the scene over the value of each components on the stack. If it ends up being 30% of gross revenues in app regardless and profit margins of 70%+ for Apple in this context, ok.
This either for multi platform services (iOS, Android, Windows, macOS, …) or single platform services (iOS). The way I see it, what will be interesting is how Apple will interpret this in the context of multi platform services. These are the ones that are key to the future.
Cheers.
EDIT: I’m more interested in what measure will Apple apply to multiform digital services as technically there will no more stop gap between paying through the App Store or paying directly to these services. I always thought this to be an unfair practice, not to so much when applied strictly to buying an app or to iOS specific digital services.
In fact I believe if Apple simply applies to the ruling to the current practice it may be even for its benefit. The consumer benefit in using Apple payment, such as a consolidated list of all services subscribed is still evident, at least for me … not so much if it means a 30% price on top of the price practiced in other platforms. Honestly if it was 5% or so, I would just simply use the App Store payment for the convenience … yes that includes services like Microsoft Office 365 if available … $5 in $100 ok for the convenience ok … but $30 is rather too much as a consumer.
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Or how about the cost of the physical media? Shipping these to a distributor, who then shipped to retailers — more hands wanting a cut — developer share in those days had to have been much lower, and I’m sure the requirements were high depending on the developer (guaranteed sales, etc.). All in all — I agree that the App Store has been a gift to developers.
Times change. While I don’t personally have a problem with 30%, it’s not necessarily a good deal forever, just because it used to be.
Apple will lower the percentage if and when it makes finacially more sense to do so, not just measured by direct revenue, but also on the impact on image etc. In a parallel world where consumers refuse to pay money for hardware and then also pay a fee for downloding software, Apple would make app store free simply because it would make them more money totally. But we don’t live in that world.
While I don't know how significant Fortnite IAPs were to Apple, I believe they would have (and indeed did) ban the app anyway, so as not to allow a precedent.
A decision was reached today in the high-profile Epic Games v. Apple trial, with U.S. District Judge Yvonne Gonzalez Rogers ruling that Apple's anti-steering conduct is anti-competitive, and ruling in favor of Apple on all other counts.
In a 185-page ruling, Judge Rogers said "the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws," but she said the trial "did show that Apple is engaging in anticompetitive conduct under California's competition laws." Rogers concluded that "Apple's anti-steering provisions hide critical information from consumers and illegally stifle consumer choice":Judge Rogers thus issued a permanent injunction that requires Apple to let U.S. developers direct customers to payment options other than Apple's in-app purchase system:Apple already announced last week that, starting in early 2022, it would allow developers of "reader" apps like Netflix, Spotify, and the Amazon Kindle app to include an in-app link to their website for users to set up or manage an account. If this ruling is upheld, however, Apple will be required to extend this allowance to all types of apps. The ruling also ensures that developers would be able to explicitly mention alternative payment options.
The saga began in August 2020, when Apple removed Fortnite from the App Store after Epic Games introduced a direct payment option in the app, in defiance of the App Store rules. In an orchestrated move, Epic Games promptly filed a lawsuit against Apple, accusing Apple of having a monopoly over the sale of apps and in-app purchases through the App Store. (See our timeline of events surrounding the trial for more details.)
Judge Rogers ruled that Epic Games shall pay damages equal to 30% of the $12,167,719 in revenue that Epic Games collected from users in the Fortnite app on iOS through the direct payment option between August 2020 and October 2020, plus 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment, plus interest.
Apple is likely to appeal the decision. We've reached out to the company for comment and we will update this story if we hear back.
Update: Apple has issued the following statement, as shared by Nick Statt: The court documents associated with the ruling are embedded below.
Article Link: Epic Games vs. Apple Judgment Allows App Store Developers to Link to Alternative Payment Methods
Splendid ruling and one that all consumers - yes even the fanbois, will eventually benefit from.
To be fair, that quote was apparently made and cherry-picked by a trained legal professional:
Well I think this turned out fairly well for the consumer. Apple got a bit of a slap in terms of competition which I think can only be a good thing as a bit of linkage certainly wont go amiss, looks like epic got a right bitchslap well deserved after the sheer level of empty grandstanding.
Sure if apple is insane. Put yourself in apples shoes, do you seriously believe they want to make it easier for developers to abandon iOS? Or swallow the cost in order to be more competitive to android?Oh wow! I never thought about it that way.
Most people only focus on the 3% credit card fee.
But you're exactly right! It's the 30-cents per-transaction fee that would be quite a problem in selling those little $1 or $2 impulse buys.
Exactly.
Apple had a flat-fee for selling stuff in the App Store. Even if you disagreed with the exact percentage... no one should deny how simple it was to have an all-in-one solution that provided hosting, payments, worldwide tax collection and reporting, etc. Apple subtracted their cut... and the developer received the remainder. That's all theirs.
But you're right... Apple could start itemizing every App Store service and make life very difficult for some developers.
Stripe: "Thank you for using Stripe for app payments! Be aware that you're paying 3% plus 30 cents on every $1 purchase."
Apple: "And here's your bill for hosting, bandwidth, app review, push notifications, CloudKit, MapKit, TestFlight, etc..."
This probably wouldn't affect giant corporations like Epic. But it would be a hassle, and might be cost-prohibitive for small developers.
I have a feeling most small developers will stick with Apple's all-in-one percentage-based system.
Which part?
The part where there's no guarantee that prices will drop for the consumer? Instead developers will pocket any savings themselves?
Or the part where you'll now have type your credit card number into various websites for certain subscriptions?
One day later and 23 pages in this thread... but there's not much talk about all this being good for the consumer.
All snark aside... I am glad there are changes coming to the App Store. I just hope it doesn't radically affect the way some of us choose to use it.
Many of us here like Apple handling the payment... keeping our subscriptions in one place... offering easy cancellation... etc.
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I don’t see any benefit to the consumer. There might be a minor benefit for large companies such as Google or Spotify who can afford the overhead of doing payment processing. For small-time devs, Apples 15% deal is better than a third-party payment processor anyway.
I don't understand people that stick up for huge faceless mega corporations and not the low level consumer. Us. I support any measure that saves the consumer money and gives us more choice.
Some of you on here comment like you're sitting on the board. LOL.
Some of you on here comment like you're sitting on the board. LOL.
Well how about you watch the video linked above, by a contract lawyer, that breaks down the entire document over a not inconsiderable 2.5hrs. I’ve watched it all and I’ll save you the trouble…
1) Apple doesn’t have to allow Epic back on the Apple store and can in fact ban all subsidiaries and affiliates.
2) Apple only has to provide a link to an alternate payment processor. They do not have to allow external “in-app processing” to developers. They will likely do so however to make calculation of commissions easier.
3) Even if a developer chooses to use an alternate payment method, Apple is still entitled to collect it‘s commissions.
It’s all in the judgement and video. Read/ watch them both….I have.
Again, all answered in the 2.5hr video linked previously by a contract lawyer….and in fact within the first 10 mins.
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I think having the additional option of linking to an external page for profile/membership management will be a much bigger deal in the near future than it appears right now, more options can only be a good thing in this case; couple that with 15% for smaller developers and things are shaping up better than they were.