Epic Games Wins Major Victory as Apple is Ordered to Comply With App Store Anti-Steering Injunction [Updated]

[Earendil]

The analogy breaks down because shelf space is limited and roughly proportional to the products placed there.

I agree that’s true, which is why I restricted my analogy to unused shelf space. This way it’s not directly replacing some other product.

There is virtually no proportionality, on the other hand, between Apple's expenses for providing the service of the App Store (and of the whole iOS platform, if you want to count that), and what is being sold within apps. That is what is meant by "Apple's 30 percent commission [...] was not tied to the value of its intellectual property, and thus, was anticompetitive."

I’ll finally share a personal opinion and say I agree 30% is too high. But I also believe there is a too low. I do not know where that is. Sounds like the judge didn’t specify what the amount should be, only that it shouldn’t be at or above what it was when the lawsuit was filed?

What about all the apps that are free to download where users never spend any money in them, like Instagram and Facebook? It was Apple who chose the IAP commission model vs something like charging for app downloads/bandwith.

It does cost Apple a non-zero amount to try and make sure free apps are safe, and to host them. That’s a pretty good counter example, and I don’t know what Apple’s thinking is there.
For the big apps like Instagram I can guess: it’d be product suicide not to have them. I believe in the past Apple has even paid for apps to be developed for their platform.

At least in the US, there are unspoken (and legal) rules that are different between for profit and free products. I don’t think stores around here profit off Girl Scout cookies or free samples, for example. Maybe I’m wrong.

—

I think it’d be sad if the free apps started having to pay as a result of the profit generating apps only paying what it cost Apple to host them.

Maybe there is a good argument for Apple running the App Store at a loss? Besides verification and server costs, there are development costs for Apple.

Personally, I’m fine with Apple allowing 3rd party stores everywhere. Apple can provide their service, and charge what the consumer thinks that service is worth.
Now, if they do, I will be informing family and friends that I will NOT be providing tech support for an unregulated store, and my kids will not have access to them. But at least we’d all see the value provided more clearly.

 

[klasma]

Only responding to some parts…

I’ll finally share a personal opinion and say I agree 30% is too high. But I also believe there is a too low. I do not know where that is.

This is just my personal opinion, but I think that something like 5% on the price of the app itself, and in-app purchased app functions, would be fine. (And the present court order still allows that, I believe.) But Apple should be completely hands-off for any content purchased through the app (not to mention outside the app), because there is clearly no causal relation between the value of such content and the value Apple’s services provide. With app functions, at least some functions are arguably facilitated by iOS and related Apple services.

It does cost Apple a non-zero amount to try and make sure free apps are safe, and to host them.

Security should be implemented by technical means at the OS level, in my opinion. That’s part of what the users pay for, and shouldn’t need to be additionally compensated by the app developers, in particular since it’s primarily a user benefit. For malicious apps that try to deceive the user purely by regular UI means (i.e. not by technical security vulnerabilities), it should be sufficient to have a way to report that to Apple, and they can maintain a blacklist after review. The current app review process is hit and miss anyway, and significantly encumbers and frustrates legitimate app developers. It feels weird that developers should have to pay for that, given how much friction it causes them. Hosting costs as such are close to negligible on a per-app basis, probably something like 0.01% of the app price on average.

I think it’d be sad if the free apps started having to pay as a result of the profit generating apps only paying what it cost Apple to host them.

There is always a mixed calculation going on, and free apps are effectively subsidized by paid apps. Of course, there are many content-only apps like YouTube and streaming services that would count as free because the app itself is free. But those apps also make Apple devices more attractive to users. That should be taken into account with regard to the costs of operating the App Store.

In the end, it’s of course always the users who pay for everything. So I’m coming back to the point that it’s okay if Apple gets a small-ish cut of the actual app functionality for apps offered on Apple’s own App Store, to cover their expenses, but not a cut of the content offered via apps. Presently, it’s pretty clear that Apple makes much more money on app revenue than their development and operating costs for the App Store, and that is just rent-seeking.

 

[DaneLA]

This is such a fundamental change in interpretation of the laws regarding digital platforms, it’s hard to imagine this won’t have monumental effects that reverberate for a very long time.

Many of us strongly believe in open platforms and would like to see alternatives made available. Still, Apple took a huge risk spending billions creating, maintaining, and marketing a platform under an existing legal precedent that they could rent space on it for profit. Epic’s claim to have an equal right to use and profit from that investment is pretty unprecedented. And Epic plans to take commission from other developers to host their own store using Apple’s platform and resources doesn’t feel quite right.

Also, Apple’s regulation of third party apps on their platform (while often flawed and frustrating) has had an undeniable impact on public perception of their product and brand. So opposition to this well beyond protecting profit is perfectly understandable.

If it stands, this ruling will likely result in significant changes to how the App Store and Apple’s developer platform operates financially (thus the entire company) and how/what tools are offered to developers and their cost. It seems likely that those changes will have negative effects on smaller developers and their customers. Especially if there is a mass exodus of developers from Apple’s store and support and updates for apps (for which consumers have paid trillions for) suddenly or slowly become useless.

I certainly hope any negatives are offset or dwarfed by the positive effects of an open platform, but the implications here are huge. I would not be surprised to see new laws lobbied soon to change or make clearer the actual legal grounds underlaying this decision.

 

[bcortens]

This is such a fundamental change in interpretation of the laws regarding digital platforms, it’s hard to imagine this won’t have monumental effects that reverberate for a very long time.

Many of us strongly believe in open platforms and would like to see alternatives made available. Still, Apple took a huge risk spending billions creating, maintaining, and marketing a platform under an existing legal precedent that they could rent space on it for profit. Epic’s claim to have an equal right to use and profit from that investment is pretty unprecedented. And Epic plans to take commission from other developers to host their own store using Apple’s platform and resources doesn’t feel quite right.

Apple didn’t do this out of the goodness of their heart, they did all this to make sure it was as inexpensive (free tooling access) as possible to attract as many of the best developers as they could. If they hadn’t they would have suffered the same fate as Microsoft and blackberry and failed to build the network of developers that would make the platform viable long term. Apple owes as much of the success of the iPhone to its successful third party dev platform as it does to the hardware and software from apple themselves. That you and others (including apple) cannot see this is testament to how well apples propaganda about this has worked. They have worked very hard to flip the script, once, it was well known that you (as platform owner) worked hard and fought to keep devs on your platform. Now, when apple is in the position where they don’t have to work, they exploit that position. They are so big and have such large network lock in that they can convince the world that the state of affairs where devs owe apple gratitude and apple owes devs nothing is normal.

Also, Apple’s regulation of third party apps on their platform (while often flawed and frustrating) has had an undeniable impact on public perception of their product and brand. So opposition to this well beyond protecting profit is perfectly understandable.

I see you are another one that wants to be beholden to corporations and doesn’t like owning the devices you purchase.

If it stands, this ruling will likely result in significant changes to how the App Store and Apple’s developer platform operates financially (thus the entire company) and how/what tools are offered to developers and their cost. It seems likely that those changes will have negative effects on smaller developers and their customers. Especially if there is a mass exodus of developers from Apple’s store and support and updates for apps (for which consumers have paid trillions for) suddenly or slowly become useless.

If they had to run the App Store at a loss it would still likely be worth it because the value of third party apps is that high. I personally wouldn’t buy an iPhone that didn’t support third party apps, which would mean I was also not buying anything else in apples ecosystem like AirPods, iPads, Apple Watch etc…

I certainly hope any negatives are offset or dwarfed by the positive effects of an open platform, but the implications here are huge. I would not be surprised to see new laws lobbied soon to change or make clearer the actual legal grounds underlaying this decision.

 

[FriendlyMackle]

When you dig into the details here, it becomes more and more clear:

Tim Cook needs to retire (or be forced to)

This was a very poor decision on his part, to knowingly defy a court ruling. Though I don't know whether another CEO would have made a different decision when faced with the annual loss of hundreds of millions of dollars (not sure of the total they stand to lose).

 

[AppliedMicro]

Still, Apple took a huge risk spending billions creating, maintaining, and marketing a platform under an existing legal precedent that they could rent space on it for profit. Epic’s claim to have an equal right to use and profit from that investment is pretty unprecedented

If you or a single for-profit entity, own space that the half of the entire country's population has to to go to make their (digital) purchases, prepare for government regulation of your rental monopoly.

 

[Beautyspin]

Customers will lose in fact. Now Epic will just get the kids to put mommy’s credit card in the Epic website and refuse to remove it even after little Billy maxes it out to buy Tim’s fake currency. And they’ll refuse refunds saying that little Billy clicked “agree” on the TOS page and that parental controls aren’t their problem.

And this will soon be the case for everyone on the App Store. All because some judge with a room temp IQ decided she knew better.

So, you consider a company whose top executives colluded to commit perjury (lie under oath) with the sole intention of maximizing profits to be better than its rival? Strange logic.

 

[AppliedMicro]

Now Epic will just get the kids to put mommy’s credit card in the Epic website and refuse to remove it even after little Billy maxes it out to buy Tim’s fake currency

Quite the contrary.

I’d bet that more young kids have access to mommy’s Apple Account - than to their credit cards.

(due to account sharing, for intrafamiliar tech support etc.)

 

[cuhulin]

One can hope lower prices since Epic will be only paying 3% for a CC transaction instead of 30%.

One can hope to win a billion dollar lottery too. Your odds of winning the lottery are probably better than your odds that Tim Sweeney shares a penny with customers.

 

[turbineseaplane]

One can hope to win a billion dollar lottery too. Your odds of winning the lottery are probably better than your odds that Tim Sweeney shares a penny with customers.

Must be something with the name Tim because Cook is no better

 

[germanbeer007]

No, Apple is literally the third party.

Apple is the first party when the device is purchased. Apple is the third party when a transaction between Epic and the device user occurs.

nope. i am a user of the platform owned by Apple, therefore the first party of this device that i am using is Apple. Epic is the third party.

when you're on nintendo switch and nintendo handles billing for fortnite vbucks, nintendo is the first party.

ask any chatbot and they'll tell you the same.

 

[Mrkevinfinnerty]

Saw this on another site. This is a big part of Apple's approach here imo

Given all of the lawyers and accountants that Apple can afford, we must assume that Apple has done so because they've run the projections and believe that complying with this ruling would cost them more than continuing to fight it would.

Why would they do that? Why take the risk?


I suspect it's because Tim Cook really doesn't want investors to realize just how much their "Services" revenue is legally-dubious rent-seeking.

 

[Abazigal]

According to Ben Thompson, it may not yet be over for Apple.

From what I can see, Fortnite is still not coming back to iOS anytime soon, and Apple still has a chance to overturn said ruling. Before anyone here starts popping champagne prematurely.

 

[Mrkevinfinnerty]

According to Ben Thompson, it may not yet be over for Apple.

From what I can see, Fortnite is still not coming back to iOS anytime soon, and Apple still has a chance to overturn said ruling. Before anyone here starts popping champagne prematurely.

So in summary. Apple are dishonest, have behaved in way that make 90's Microsoft look benevolent but might weasel out of some of the consequences.

 

[hdidbehh]

I feel like two things can be true:

1. Apple charges more than they strictly need to for a service.
2. Apple shouldn’t be forced to provide services for free.

I don’t know where that line is, nor do I think everyone will agree with one or both premises.

To use an imperfect analogy, it would seem weird to me if a store with an open shelf spot was forced to allow me to place my wares on that shelf without me compensating them in some way. Especially if my product competed with other products the store was offering. Now, I’d *want* it to be free, and the store would *want* it to not be free, of course!

If there was a universe where Apple could be held in contempt for not allowing enough links or a low enough price, why wasn’t that set by the judge? Can someone explain that?
I know parenting is simpler, but I’d never tell my kids to “eat less candy” and then punish them for eating less, but not as little as I expected them to.

Anyone want to try and explain to me where my analogies break down?

Something worth keeping in mind here is that Apple is not just putting your product on their shelf and now you can get exposure to customers for
free without Apple being compensated in any way for the increased marketability. Apple charges consumers just to get into the store in the first place, so before they ever even see your app on their shelves Apple has already gotten what’s probably the lion’s share of this business relationship.

It is in their best interest to have high quality apps on their shelves. They profit indirectly from having these quality apps accessible to users way before any app commission system even becomes applicable. They profit because it is one of the reasons people turn to *smart* phones (FOR THE APPS).

They’re not making these apps — for the overwhelming majority of cases. Just providing a way to use them. Take away the apps and we might as well go back to flip phones.

The commission is gross, and had it been like 5-10% I imagine it’s a lot less likely that we would have gotten to this point because developers value the opportunity that Apple has provided. But 30%?!!? What I want to say is “Go **** yourselves”.

I’m not even saying it’s injustice, but you’ve now highly incentivized developers to FIND ANOTHER WAY. These are smart, rich people and they’ve now found that way through the court system.

Apple made their bed and now they’re sleeping in it; for however long it takes to get this overturned.. if it should be. And that’s assuming their greed doesn’t alienate everyone from hearing their case objectively.

 

[I7guy]

According to Ben Thompson, it may not yet be over for Apple.

From what I can see, Fortnite is still not coming back to iOS anytime soon, and Apple still has a chance to overturn said ruling. Before anyone here starts popping champagne prematurely.

Said another way: “it’s not over until it’s over”.

 

[turbineseaplane]

ask any chatbot and they'll tell you the same.

Given how all over the place the accuracy of these has been so far, this is genuinely humorous, I have to admit.

 

[germanbeer007]

Given how all over the place the accuracy of these has been so far, this is genuinely humorous, I have to admit.

Why am I not surprised you'd take the other side, no matter how wrong you are?

Pretty sure you'd find "ask chatbot if they can name the capital of California" humorous if the guy who said it have said things you don't like.

I've noticed you refuse to defend your own position and the positions you've liked. I just assume you can't at this point.

 

[HiVolt]

Question is, how does Apple get away for ignoring a decision made 4 years ago?

 

[surferfb]

Said another way: “it’s not over until it’s over”.

Not only that, but Thompson puts out a pretty compelling case that the judge made a big mistake that will actually lead to her order getting overturned.

 

[surferfb]

Question is, how does Apple get away for ignoring a decision made 4 years ago?

In large part it took so long because it was stayed until the Supreme Court decided in 2024. So Apple wasn't legally required to implement the judge's order until 2024, and then had to be given time to implement a solution, then have Epic file a motion to the judge that the Apple solution Apple implemented wasn't complying with the judge's order, then let Apple respond to that motion, etc.

Nothing about the justice system in America moves quickly.

 

[HiVolt]

I always maintained that devs should have two options on the Apple App Store. Pay the commission fee, or pay a hostingfee on the App Store, with the ability to use your own payment systems. It could be based on the amount of downloads or other factors, but it would have to be fair.

Of course Apple would have to charge reasonable hosting fee, not something that equals its commission pay structure.

But I also feel like Apple should be forced to allow alternative app stores worldwide, for the customers to make their own decisions on their own devices. The world hasn't ended because EU now has alternative stores. And those who don't want them, simply don't use them!

 

[surferfb]

I always maintained that devs should have two options on the Apple App Store. Pay the commission fee, or pay a hostingfee on the App Store, with the ability to use your own payment systems. It could be based on the amount of downloads or other factors, but it would have to be fair.

Of course Apple would have to charge reasonable hosting fee, not something that equals its commission pay structure.

But I also feel like Apple should be forced to allow alternative app stores worldwide, for the customers to make their own decisions on their own devices. The world hasn't ended because EU now has alternative stores. And those who don't want them, simply don't use them!

I agree. I really think what Apple should do is:

• App Store: if you want to be on the App Store, you follow Apple's rules, or sign some sort of deal with Apple.
• Sideloading/Alternate stores: Allow sideloading/alternate stores, developers can do what they want. Apple can perform security/API checks, but otherwise have at it. Apple should be allowed to throw up "You're installing an app from an unknown source and we can't vouch for its safety or security"

To be clear I am convinced this will be worse for most users, and will lead to malware and scams. I personally think it's ridiculous Apple is being forced to do so, but the horse is out of the barn and we're not going back to the "one App Store to rule them all" AND have Apple be properly compensated. So Apple should get in front of it. I suspect the benefit of being in the App Store will result in most everyone staying there.

 

[HighwaySnowman]

I agree. I really think what Apple should do is:

• App Store: if you want to be on the App Store, you follow Apple's rules, or sign some sort of deal with Apple.
• Sideloading/Alternate stores: Allow sideloading/alternate stores, developers can do what they want. Apple can perform security/API checks, but otherwise have at it. Apple should be allowed to throw up "You're installing an app from an unknown source and we can't vouch for its safety or security"

To be clear I am convinced this will be worse for most users, and will lead to malware and scams. I personally think it's ridiculous Apple is being forced to do so, but the horse is out of the barn and we're not going back to the "one App Store to rule them all" AND have Apple be properly compensated. So Apple should get in front of it. I suspect the benefit of being in the App Store will result in most everyone staying there.

I don't think Apple should be allowed to throw up scare screens.

I also don't really want app stores at all. I'd much rather just install software myself rather than dealing with a third party.

 

[surferfb]

I don't think Apple should be allowed to throw up scare screens.

I would be in support of those who know what they're doing being able to turn them off. I'd also like parental controls to only allow stuff from the App Store (or maybe selected App Stores if multiple exist).

The number of people who don't realize what they're doing when it comes to iPhones and software in general is a lot higher than people who post on MacRumors realize; my mother in a law (who is a very smart person who worked in the White House before she had kids) originally thought Apple made all the apps on the App Store. She just doesn't care about this stuff and has no reason to pay attention.

Informing people who aren't technical that "Hey, that safety and security you're used to on iPhone may not apply on this app" is perfectly reasonable. There's a strong argument to be made that mobile apps are such a big thing BECAUSE Apple got everyone used to apps being safe and secure again after the virus hell that was late 1990s/early 2000s.

I also don't really want app stores at all. I'd much rather just install software myself rather than dealing with a third party.

Sideloading would accomplish that. Personally, I prefer going through the App Store (to the point that I have a couple of subscriptions that I pay more money for through the App Store than I would if I went through the company's website).