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

[cmaier]

Sales tax is not the same as VAT.
VAT is the same for for the entire nation so And VAT is included in the price.
VAT=tax added upon the selling price.
100$+25% VAT= 125$
sales tax= percentage of the sails price
100%+25% TAX= 75$ after tax
if you sell an app for 10$ and the VAT is 25%, you would just sell it for 12.5$
This means if you sell your app for 12.5$ epic would take 1.25$, the customer would pay you 2.5$ in VAT that you collect on the states behaf.

And iAP mechanism isn’t complicated to implement in your app, most of the time it’s quite literally a copy paste of code that is connected to your account. No development needed

You got both sales tax and VAT wrong.

Sales tax is a percentage on top of the price, not a percentage of the final price. $100 product, 8% sales tax, price is $108.

VAT is a tax on the value added, so price minus cost of materials (which have already been taxed) is the base for the tax, and then you multiply it by the percentage. So, for a $100 product, you subtract cost of materials (say $80), leaving $20. Then you would apply the 25% to that $20. Final cost is $105.

 

[Analog Kid]

You got both sales tax and VAT wrong.

Sales tax is a percentage on top of the price, not a percentage of the final price. $100 product, 8% sales tax, price is $108.

VAT is a tax on the value added, so price minus cost of materials (which have already been taxed) is the base for the tax, and then you multiply it by the percentage. So, for a $100 product, you subtract cost of materials (say $80), leaving $20. Then you would apply the 25% to that $20. Final cost is $105.

“Inputs” might be a better word than materials. In many cases, the input will be an assembly or service rather than raw materials.

 

[cmaier]

“Inputs” might be a better word than materials. In many cases, the input will be an assembly or service rather than raw materials.

True, though i think it depends on the country. In some VAT systems only physical materials are deducted.

 

[ruka.snow]

Sales tax is not the same as VAT.
VAT is the same for for the entire nation so And VAT is included in the price.
VAT=tax added upon the selling price.
100$+25% VAT= 125$
sales tax= percentage of the sails price
100%+25% TAX= 75$ after tax
if you sell an app for 10$ and the VAT is 25%, you would just sell it for 12.5$
This means if you sell your app for 12.5$ epic would take 1.25$, the customer would pay you 2.5$ in VAT that you collect on the states behaf.

And iAP mechanism isn’t complicated to implement in your app, most of the time it’s quite literally a copy paste of code that is connected to your account. No development needed

You seem to want to try to explain something about how sales tax and VAT are calculate. This is irrelevant to my point as like most developers I let a API do the calculations for me. You actually haven't included anything to further my comment and you have completely missed how IAP work if you got it on your own. Stripe do not have a IAP mechanism. Please re-read my post where I am actually explaining how these things work and putting out the actual costs of business.

As an aside: VAT can be inclusive of the price, exclusive, or even exempt if the person you are selling to is VAT registered. Now if someone is VAT registered you have to pay another €20 a month or more to check if their VAT number is valid and registered to the correct person.

If I sell an app for £9.99 on the Epic store, 20% of that is VAT that I have to pay to the UK government. 12.5% goes to Epic. I got about £3.90.

On the Steam, Google Play, and The App Store I get £6.99 at the end of the day.
Before the Steam and the AppStore I got about £1-£2.

 

[bushman4]

Epics thoughts of $$$$ are much different than what the gamers are thinking
Most Gamers are more interested in continuing a game than going off site to save a dollar

 

[theotherphil]

One doesn't have to be a legal professional to conclude that my interpretation is correct.

If Apple were really entitled to a commission for every purchase made outside the app, what would be the use of the court forcing Apple to allow developers to link to alternate purchasing mechanisms for making purchases outside the app?

Anyway, it seems to be futile to try to explain legal matters to people who only parrot each other and only want to see what they want to see, even when provided with the facts on a silver platter.

From how I see it, so called legal professionals also can’t agree on what is said….and then criticise those with less education for a misinterpretation.

Then you tell us just trust your interpretation “that you’ve handed to us on a silver platter” and ignore other legal professionals, on the inference that your a specialist in anti-trust law and Richard Hoeg isn’t.

See how it gets confusing?

 

[Michael Scrip]

The App Store didn’t start out with IAP but once Apple realized how much money they were making off of micro transactions in games they were never going to give it up. In some ways it’s kind of gross how one of Apple’s biggest growth areas has come from addictive games that get people to spend lots of money buying coins and stuff. I don’t think that’s something to be proud of.

If you think it's gross that Apple gets 30% of every addictive microtransaction... isn't it more gross that game developers get 70% of every addictive microtransaction?

Why isn't anyone mad at game developers?

You'd think that if some big game developer stated selling single-purchase $30 games... they'd be labeled as a hero.

But that's clearly not happening.

So yeah... I guess you can be mad at Apple for introducing the concept of IAP microtransactions...

But you should also be mad at developers for using IAP microtransactions.

¯\_(ツ)_/¯

 

[I7guy]

This is exactly the out come I was expecting as well as most people considering the subject matter.

Even posted about this possible solution in our conversations … considering the best outcome for Apple at the moment. It gives Apple plenty of leeway to address the actual issue. I think Apple will at least in the context of multi channel / platform digital services.

But if Apple proceeds chasing the control of Internet driven digital businesses using iOS users as leverage to markup the price higher as you think they should worst will come.

This was fundamentally a slap on the wrist from the Judge. Who ever thinks that it can be ignored and simply work around it procedurally is deluded.

As I’ve mentioned above, this is not merely a technical/procedural ruling as you seam to interpret MR poster.

It is exactly a procedural ruling and the court affirmed that what Apple doing is legal (and Epic failed to prove their points on a number of items)...with the one exception about the anti-compete rule as it applies to California. Now that doesn't mean the (US) government won't step in and design some laws to break this thing up -- which is an entirely different conversation.

 

[theotherphil]

I’m so confused about one detail that seems contrary to the rulings that are about to be put in place:

If the judge rules that links to external payment providers is permissible, then that means the laws should always have been that way to begin with.

So why, then, does Epic need to pay Apple a 30% commission on the transactions it made from the external payment provider?

That seems like punishing Epic for making the courts acknowledge that it should have been that way all along…

Why does Epic need to pay a cent? They literally gave Fortnight customers the choice to use Apple Pay or their own provider, which is what the judges ruling is forcing Apple to permit.

This seems like a bizarre contradiction.

Because the developer agreement states that if a developer takes payment for any enhanced functionality within the app, Apple is due it’s 30% commission. The only exception to this is reader apps or those in the small business program.

 

[theotherphil]

I don’t see any legal ground for Apple having the right to a percentage sales that occur outside of an iOS app. I’d argue it’s questionable whether they have that right with IAP because that transaction happens after an app is downloaded from the store to an individual’s device. No way would a court rule Apple is entitled to a cut of commerce that happens in the browser. That’s crazy.

Because it enables extra functionality within the app in exchange for a payment. This is already in the developer agreement. Apple is entitled to charge for the use of it’s IP. The judge stated that many times in the judgement.

 

[jlc1978]

Sales tax is not the same as VAT.

In theory no but in practices they have the same effect - charge the purchaser extra that goes to the government.

VAT is the same for for the entire nation so And VAT is included in the price.

Sometimes, but not always; just as sales tax can be included in the price and not broken out separately. The only reason it is often added on in the end is shoppers often look at price, not total costs when looking to purchase so if you include sales tax in price but competitors don't you are at a disadvantage.

 

[PlainBelliedSneetch]

I believe the court documents showed that in 2018 and 2019 98% of app store revenue came from games. Apple will do everything in it’s power to ensure that gravy train continues to exist.

I’m still skeptical with the argument that Apple deserves any percentage of sales of digital content that is cross platform. I watch Netflix using Roku on my smart TV. Why should Apple get a cut of my Netflix subscription just because I have an iOS device? Same with Spotify or Kindle books. Honestly I think the only thing Apple should get a cut of is digital content that is iOS only where one could make the argument it wouldn’t exist if not for Apple.

As a consumer, I like the convenience of having a single place that subscriptions are managed and billed from. I have paid for content that I would not have because of this convenience. It seems fair to me that Apple takes a cut.

 

[Maximara]

And? Sounds like a developer problem and not an apple problem. If it’s an apple problem they should incentivize them to use their way.

The developer likely has little money while Apple does. Who do you think anyone stung by a developer using a poorly secured website is going to blame and try and sue? Apple. After all Apple allowed that program on their website therefore they must be responsible somehow.

If you think that is stupid why do you think those sun shields have that little disclaimer that you shouldn't drive with it still in the windshield? Because companies know there are civil juries that will ignore the fact someone misused their product and give them a windfall.

Heck, the McDonald’s Hot Coffee Case is the poster child of that nonsense and not for the reason you think. If you made coffee in your house with a tea kettle how would you know it was ready? It would whistle. Why does it whistle? Because the water is boiling. At sea level water boils at 212 degrees — about 20 to 30 degree more than McDonald’s was serving its coffee.

The fact other courts threw out similar lawsuits - McMahon v. Bunn Matic Corporation (1998) and Bogle v. McDonald's Restaurants Ltd. (2002) showed that the public perception of there being a magic lottery aspect of the case was, in part, correct. Heck, Starbucks just lost a lawsuit regarding coffee burns and its coffee is at 150 and 170 degrees - far cooler than the industry norm.

 

[theotherphil]

😂 good luck as apple would be sued to the ground in EU for breaking the law of every contract law in the union. A new contract must be negotiated and signed by both parties

You misunderstand what the developer agreement is. It’s not mutually negotiated. Apple state you must agree to these terms to use our services and they can change them at any time for any reason. If you fail to agree to the terms, your service will be ended.

It’s an agreement, not a mutually negotiated business contract.

 

[Natrium]

But the Court did say this explicitly (page 150):

"First, and most significant, as discussed in the findings of facts, IAP is the method by which Apple collects its licensing fee from developers for the use of Apple’s intellectual property. Even in the absence of IAP, Apple could still charge a commission on developers. It would simply be more difficult for Apple to collect that commission.”

In addition, the Court found that Epic had to pay 30% commission on its Epic Direct Payment transactions, which is outside Apple’s IAP system (page 179):

“(1) damages in an amount equal to (i) 30% of the $12,167,719 in revenue Epic Games collected from users in the Fortnite app on iOS through Epic Direct Payment between August and October 2020, plus (ii) 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment;

How else do you explain this?

Again, read my previous posts. People keep repeating the same quotes without the context. Context is crucial in reading and understanding legal rulings and any legal document for that matter.

The quotes apply NOT purchases outside apps, ONLY in-app purchases!

RE quote 1

The first quote relates ONLY to in-app purchases. Apple is allowed to restrict developers to use Apple’s In-App Purchasing system for in-app purchases. Said conduct has not been found in violation of the law.

My detailed explanation: https://forums.macrumors.com/thread...rnative-payment-methods.2310292/post-30253609

RE quote 2

The second quote also relates to in-app purchases. Epic used their own purchasing system for in-app purchases instead of Apple’s In-App Purchasing system. That constitutes a breach of contract.

See my detailed explanation: https://forums.macrumors.com/thread...s.2310292/page-25?post=30253823#post-30253823

 

[theotherphil]

Correct. The court ruled Apple does not violate the law by restricting developers to use Apple’s In-App Purchasing system for in-app purchases. However, the court ruled that Apple violates the law by prohibiting developers from directing customers to purchasing systems for purchases outside apps.

And the developer agreement states that Apple can take commission on any purchase from an end user that enables any extra functionality within the app. This is regardless of the method used to enable such functionality.

The exception to this is reader apps which is a seperate category.

 

[chatin]

One of the last Jobsian closed loops falls to an Epic win for consumers. The walled garden has one more open door.

 

[PlainBelliedSneetch]

We will just get an PayPal button, Apple Pay, button, credit card field and apples expensive iAP option. You must be insane to believe a payment system will be built. Why make a new tire from scratch when stores already sell them finished for you…
Better developers keep the apple tax than apple having their tax

I have just started writing a new game that I am going to call “All your credit card info are belong to us”. It will have a custom button made from scratch.

 

[Maximara]

Epic Game's Next Target is going to be Sony, Microsoft and Nintendo to force alternative payment options as well.

I went ever further and said if we take Epic's silly argument no one can have an "exclusive" because by Epic's loopy logic that would be a "monopoly".

 

[Maximara]

Despite what people are arguing, just because you created a business that dominates a market doesn't mean you can do whatever you want.

But Apple does not "dominates a market" - Android has a greater marketshare and iOS. Apple has the same right to restrict its own store just like Ford is not required to sale Toyota.

 

[Maximara]

if i were apple, i would charge yearly developer fee based on developer revenue like many other business that offer software licensing based on usage/company size/employees or any other figure that would be fair for every body. And offer a free license for apps that stay within apple payment system

I think that may be where this ends up going.

 

[Maximara]

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.

Likely because in an earlier ruling the Judge said Apple could not close Epic's development account.

 

[cmaier]

I think that may be where this ends up going.

Could be. Charge a revenue-based IP license fee. See how much Epic enjoys that.

 

[cmaier]

Likely because in an earlier ruling the Judge said Apple could not close Epic's development account.

No, the judge said that only with respect to the Unreal account, but that injunction is now lifted and Apple can ban any account related to Epic that it wants.

 

[Michael Scrip]

if i were apple, i would charge yearly developer fee based on developer revenue like many other business that offer software licensing based on usage/company size/employees or any other figure that would be fair for every body. And offer a free license for apps that stay within apple payment system

Hmmm... a fee based on developer revenue... that sounds familiar...

Wait... isn't Apple's 30% fee exactly that?

I know what you're saying though. You're talking about the yearly $99 Developer Fee.

But in practical terms... the 30% cut is the fee based on revenue.

Maybe Apple should change the name of the yearly $99 fee to "Application Fee"

And the 15% and 30% cut would be the "Developer Fee" or "Sales Fee"

I think that would go a long way to clear up expectations.

Too many times we hear people saying "but I already pay Apple $99 a year... why do they want a cut of my sales too? Those greedy jerks!"