Judge Grills Tim Cook on App Store Policies as End of of Epic Games v. Apple Trial Approaches

[Michael Scrip]

That is all well and good, but this case is not about the percentage. Based on Epic's statement in court and their various public rants, they would not be satisfied if Apple reduced the fees to 0%. They want a store of their own with all rights and benefits of direct access to the OS, hardware, and customers.

I have never published anything on the App Store so I have no personal stake in the percentage, but looking at the services provided I see nothing wrong with an expectation of a percentage from every IAP. And, 30% is really not that unreasonable. If you look at the 30% as simple the swipe transaction then 30% is a tad high. But you also get the ongoing developer support. More importantly you get the sales tax payments and filings in every jurisdiction your app sells. You get the financial accounting that goes with that, and the reporting you needful compliance assurance. That service and reporting shield alone is enough to justify. Even for someone the size of Epic - if they are ever investigated they can point to Apple. Yes, they are ultimately responsible if they don't check and correct a mistake, but they are shielded quite a bit. Much like having a CPA sign your tax form. You may still get audited but and taxes, interest, and penalties due due to the error will be greatly lessened by the fact a tax professional provided that filing effort.

I don't have a dog in this fight either. I'd be fine if everything stayed the same.

But there's obviously something going on. Epic taking Apple to court in the US... Spotify taking Apple to court in the EU... etc.

Apple's business practices are being scrutinized... though I'm not sure it will change anything.

I was just pointing out some of the complaints from some of the developers.

You're right... Apple does offer a lot of services for their 30% cut. I've shared this link quite a few times in these topics.

Sadly... some developers don't see it that way.

¯\_(ツ)_/¯

 

[SuperMatt]

I didn't say "no fees"

I said "different fees"

Yes... it was certainly a lot easier when a developer sold a game for $10 and Apple kept $3.

But should that same 30% apply to all IAP? Should Apple get $3 from every $10 VBucks purchase? Or $30 from every $100 VBucks purchase?

Or $3 from every $10 Kindle book purchase? Or 30% every month from a subscription media service?

THAT'S what I was talking about.

I agree that 70%/30% for game or app purchases is a lot better than the bad ol' days of physical software distribution.

But 30% for IAP or external subscriptions needs to be re-examined.

And my point is: I disagree. If the fee is 30%, it’s 30%. It doesn’t matter if the developer charges the customer up-front or gives the game away free and charges the customer as they play. Free-to-start or pay-to-win is just a new way of charging the customer. It shouldn’t be a way to skirt platform distribution fees.

And let’s face it. If Apple did allow them to put a link in the game that went to external payment, it would interrupt the game, and customers would actually be less likely to buy the in-game stuff.

As for subscriptions, Apple takes 30% of the initial subscription and 15% for renewals. And Kindle doesn’t use IAP at all. Nobody is being forced to use IAP.

 

[Abazigal]

I was just pointing out some of the complaints from some of the developers.

You're right... Apple does offer a lot of services for their 30% cut. I've shared this link quite a few times in these topics.

Sadly... some developers don't see it that way.

¯\_(ツ)_/¯

It’s hard to make a person see something, when their salary depends on them not seeing it.

 

[gregmancuso]

It’s hard to make a person see something, when their salary depends on them not seeing it.

How does their salary depend on it? In so far as today is different from yesterday or from 2008? The fees have been in place with essentially the same guidelines since the beginning. In fact, the fees have gone down, not up, over the years. Developers still get to set their price with the full knowledge that the price they set includes the commission they will have pay.

No one developing today should be surprised by the fees. They were informed at the time they considered joining the develop program and many other times in their day-to-day operations.

 

[Michael Scrip]

And my point is: I disagree. If the fee is 30%, it’s 30%. It doesn’t matter if the developer charges the customer up-front or gives the game away free and charges the customer as they play. Free-to-start or pay-to-win is just a new way of charging the customer. It shouldn’t be a way to skirt platform distribution fees.

Yep... it's 30%... and it hopefully won't be forced to be changed.

Who knows what will happen from the results of these lawsuits, though.

As I said earlier... I don't have a dog in this fight. I'm just pointing out what is being said by some developers.

I agree... if the rules state 30%... then devs should be prepared to give 30%.

I'm not taking Apple to court. But others are.

 

[Abazigal]

How does their salary depend on it? In so far as today is different from yesterday or from 2008? The fees have been in place with essentially the same guidelines since the beginning. In fact, the fees have gone down, not up, over the years. Developers still get to set their price with the full knowledge that the price they set includes the commission they will have pay.

No one developing today should be surprised by the fees. They were informed at the time they considered joining the develop program and many other times in their day-to-day operations.

My point is that as long as developers see it as them paying Apple 30% of their money, that’s the only thing they will fixate on.

They are not going to consider how Apple helps grow the overall pie by having aggregated the best customers in the world thanks to the iPhone.

They are not going to think about how the App Store largely cuts down on software piracy, and makes it easy to purchase apps thanks to biometric authentication.

They will not think about the power equalising force that the App Store is, which allows new developers to compete on an even footing with larger, more established companies.

They will not think about the tools that Apple provides to help them make great apps for us users.

All they will think about is that they are already paying $99 a year, think this settles their debt to Apple, and see any further commission as unfair and unjust.

Like I said, it’s hard to make them see the bigger picture, when their salary hinges on them not seeing it.

 

[rkuo]

I have never published anything on the App Store so I have no personal stake in the percentage, but looking at the services provided I see nothing wrong with an expectation of a percentage from every IAP. And, 30% is really not that unreasonable. If you look at the 30% as simple the swipe transaction then 30% is a tad high. But you also get the ongoing developer support. More importantly you get the sales tax payments and filings in every jurisdiction your app sells. You get the financial accounting that goes with that, and the reporting you need for compliance assurance. That service and reporting shield alone is enough to justify. Even for someone the size of Epic - if they are ever investigated they can point to Apple. Yes, they are ultimately responsible if they don't check and correct a mistake, but they are shielded quite a bit. Much like having a CPA sign your tax form. You may still get audited but and taxes, interest, and penalties due due to the error will be greatly lessened by the fact a tax professional provided that filing effort.

30% is a "tad high" for a swipe transaction? Do you have even the slightest idea of what payment processors charge? It's low single digit percentages up front and lower fees still at scale.

Hate to break it to you, but the rest of the stuff you are talking about isn't worth anywhere NEAR 30% either. You're obviously talking about something about which you have ZERO knowledge. It's a solved problem. If Apple's payment system is so damn good as to be worth 30%, then open up payments to everyone. Companies will run out the door faster than the Roadrunner does from Wile. E. Coyote.

 

[SuperMatt]

30% is a "tad high" for a swipe transaction? Do you have even the slightest idea of what payment processors charge? It's low single digit percentages up front and lower fees still at scale.

Hate to break it to you, but the rest of the stuff you are talking about isn't worth anywhere NEAR 30% either. You're obviously talking about something about which you have ZERO knowledge. It's a solved problem. If Apple's payment system is so damn good as to be worth 30%, then open up payments to everyone. Companies will run out the door faster than the Roadrunner does from Wile. E. Coyote.

Apple’s App Store is not just a payment system. And their system IS open to everyone. Their system is: build a platform: build the hardware and the OS and APIs and a storefront and sell enough hardware to make it worthwhile for a developer to make games and sell on the platform. Any other company is free to do the same. And a number of them are doing the same.

 

[rkuo]

Apple’s App Store is not just a payment system. And their system IS open to everyone. Their system is: build a platform: build the hardware and the OS and APIs and a storefront and sell enough hardware to make it worthwhile for a developer to make games and sell on the platform. Any other company is free to do the same. And a number of them are doing the same.

Market dominance. Until you acknowledge it, you have no credible arguments in play.

 

[ipponrg]

They are not going to consider how Apple helps grow the overall pie by having aggregated the best customers in the world thanks to the iPhone.

They are not going to think about how the App Store largely cuts down on software piracy, and makes it easy to purchase apps thanks to biometric authentication.

They will not think about the power equalising force that the App Store is, which allows new developers to compete on an even footing with larger, more established companies.

They will not think about the tools that Apple provides to help them make great apps for us users.

All they will think about is that they are already paying $99 a year, think this settles their debt to Apple, and see any further commission as unfair and unjust.

Like I said, it’s hard to make them see the bigger picture, when their salary hinges on them not seeing it

Would this matter at all if they don't even get traction with the app store? The app store does a pretty poor job for discovery unless you pay and partner with Apple.

Apple is not the only factor that corralled the best audience. You need to also really give a lot of credit to 3rd party developers. It's a known fact that Apple 1st party application software is pretty paltry in quality. Huge thanks to 3rd parties in making the ecosystem much more flourishing.

Regarding your debt comment, not all things are rosy with Apple's commission policies. I worked for a smaller company many years ago that rented out videos. For the longest time, they did not have an iOS app because they would lose money after paying the 30% IAP commission. Not saying their business model was great, but I thought it was a humorous example that is very contrary to your "Apple helps grow the overall pie by having aggregated the best customers." If all the customers rented videos via the iOS app, the company could've shuttered very quickly. Android wasn't an issue because it wasn't criminal to redirect users to the web for purchase.

 

[SuperMatt]

Market dominance. Until you acknowledge it, you have no credible arguments in play.

The subject was whether Apple’s system is worth the 30% they charge. My post addressed that question, and in response the above post changed the subject without addressing my post at all.

As for market dominance, there were posts addressing that already, such as this one below.

That seems to be the question in this case. Does Apple have market dominance in smartphone apps? To me, saying such a thing is completely ignoring the Google play store. Maybe others will say they have market dominance in iPhone apps, but that is a narrow market. Lemonheads have market dominance in the round yellow candy market, but they aren’t a monopoly in the candy market overall.

 

[rkuo]

The subject was whether Apple’s system is worth the 30% they charge. My post addressed that question, and in response the above post changed the subject without addressing my post at all.

As for market dominance, there were posts addressing that already, such as this one below.

Your post completely ignored dominance, and the fact you think it didn't simply reveals you don't understand the concept of market dominance.

The assertion that any old company can just pick up, create their own phone and app ecosystem, and then sell it and bring Epic along for the ride DOES NOT APPLY when one company (Apple) is in a dominant position. The entire concept of market dominance implies that normal competitive forces are extremely weakened or non-existent by virtue of that dominance.

 

[SuperMatt]

Your post completely ignored dominance, and the fact you think it didn't simply reveals you don't understand the concept of market dominance.

The assertion that any old company can just pick up, create their own phone and app ecosystem, and then sell it and bring Epic along for the ride DOES NOT APPLY when one company (Apple) is in a dominant position. The entire concept of market dominance implies that normal competitive forces are extremely weakened or non-existent by virtue of that dominance.

Are iPhones the only kinds of phones available for purchase? I could almost swear there was another phone and app ecosystem out there with hundreds of millions of customers.

 

[RedRage]

I really wish you guys would stop saying Apple isn’t a monopoly, that’s simply your opinion, the courts are who matters and if they say they are, what are you going to say next? The judge is a Apple hater? 🙄

They'll tell the judge to get an Android.

 

[RFNB]

The whole lawsuit is frivolous in my opinion. In principle, this lawsuit does not exist to benefit the consumer. It exists to only profit Epic.

The very first time I heard of Fortnite on PC I thought it sounded really neat. The details didn't indicate that it was a multiplayer only game and you had to pay $60 to buy the game to play. I bought it, realized it had no single player and requested a refund, only to be told, sorry that $60 was a "donation"

I had to request a refund through PayPal, including the details for the advertisement that made no mention of multiplayer only in order to get my refund.

Epic is just as dishonest and deceitful as every other company is out there.

This is why it makes no sense for the lawsuit because Apple set their terms, it was there product, you either want that or you don't.

Who cares what analogy is used to make it understandable? There's literally a plethora of arguments to both sides but it doesn't change the fact that it's IP owned by Apple.

Is it fair? Maybe not, but why should it be? The burden should be on Epic to negotiate better deals with it's partners, not to breach their agreement and then sue for better terms.

I wish that same logic would apply to us consumers who are the ones who ultimately feel the sting on these lawsuits once they're all said and done.

Wish we could stop paying our agreed upon loans/credit cards because 26% interest is too high and somehow sue to not have to pay anything to use the credit card.

Just seems like a waste of everyone's time and does nothing but showcase greed

 

[PC_tech]

Saying that Apple *is* a monopoly is also just an opinion. We can all express our opinions here. IMHO, saying that Apple has a monopoly in smart phones is pretending that Samsung, Google, et al do not exist.

Good thing I never said either way if they were or not

 

[PC_tech]

They'll tell the judge to get an Android.

Right? I'm sure she'd appreciate being told that.

 

[Mike Reed]

I find arguments for the App Store needing to be a profit center fundamentally misjudge how valuable an iPhone or iPad would be without one. By developing the public APIs, developer tools (which they need themselves anyway), App Store backend, etc. they are justifying iOS devices at the price points they sell at. Modern Apple devices without any 3rd party apps would simply not be worth $1000+ - the extra hardware that inflates the price would just be expensive overkill if all that could run were Apple‘s built in apps.

 

[RFNB]

Also, what is Epic's argument here? Apple App Store is a monopoly so, they would like to compete with the Apple App Store so that there is an Epic App Store?

If that's the argument, does that not make Epic's App Store a monopoly because I'd only be able to purchase Epic products on it?

This is why I struggle to find the App Store argument as a monopoly like comparing Apples and Oranges on the basis that they're both fruit and it's not fair that you can slice an apple and make a pie but slicing an orange and trying to make a pie is unpalatable.

 

[thejadedmonkey]

I don't have a dog in this fight either. I'd be fine if everything stayed the same.

But there's obviously something going on. Epic taking Apple to court in the US... Spotify taking Apple to court in the EU... etc.

Apple's business practices are being scrutinized... though I'm not sure it will change anything.

I was just pointing out some of the complaints from some of the developers.

You're right... Apple does offer a lot of services for their 30% cut. I've shared this link quite a few times in these topics.

Sadly... some developers don't see it that way.

¯\_(ツ)_/¯

Because most of the things in that list, developers can do for free, or for very little, and they all know it. The only reason they use Apple's services instead of rolling their own is because Apple forces developers to do so.

As a developer, I can update an app 2000 times a year if I want to, if I self host.
As a developer, I can use the latest version of any IDE on any other platorm for free, to use new APIs.
As a developer, I don't pay for APIs, ever, on any OS platform. APIs are provided as a way to get me to program for that platform.
As a developer, I can create a build script that generates multiple apps, each one optimized for a different platform.
As a developer, etc...

 

[PC_tech]

The whole lawsuit is frivolous in my opinion. In principle, this lawsuit does not exist to benefit the consumer. It exists to only profit Epic.

The very first time I heard of Fortnite on PC I thought it sounded really neat. The details didn't indicate that it was a multiplayer only game and you had to pay $60 to buy the game to play. I bought it, realized it had no single player and requested a refund, only to be told, sorry that $60 was a "donation"

I had to request a refund through PayPal, including the details for the advertisement that made no mention of multiplayer only in order to get my refund.

Epic is just as dishonest and deceitful as every other company is out there.

This is why it makes no sense for the lawsuit because Apple set their terms, it was there product, you either want that or you don't.

Who cares what analogy is used to make it understandable? There's literally a plethora of arguments to both sides but it doesn't change the fact that it's IP owned by Apple.

Is it fair? Maybe not, but why should it be? The burden should be on Epic to negotiate better deals with it's partners, not to breach their agreement and then sue for better terms.

I wish that same logic would apply to us consumers who are the ones who ultimately feel the sting on these lawsuits once they're all said and done.

Wish we could stop paying our agreed upon loans/credit cards because 26% interest is too high and somehow sue to not have to pay anything to use the credit card.

Just seems like a waste of everyone's time and does nothing but showcase greed

A two second search would show there is no single player.... That's not on Epic.

 

[RFNB]

The only reason they use Apple's services instead of rolling their own is because Apple forces developers to do so.

I disagree with this statement. Epic has plenty of capital to invest in their own hardware and platform if they would like to.

What is preventing Epic from reaching out to another manufacturer that is not part of the major competition, such as maybe Blackberry or Microsoft, acquiring their mobile phone division, and making their own phone and App store to compete?

Apple is not forcing them to use the Apple platform. Epic chose to use Apple's platform because they want to make money using Apple's successful product. They are not choosing to litigate because they want to avoid paying for the privilege to use Apple's platform as they would be more profitable!

They could also choose to compete by doing what every other competitor has done thus far such as negotiate better deals and acquire companies in that space to develop their own platform with their own rules and in fact, if that was their true motive, in doing so, could prompt Apple and other owners of an App Store to compete harder for that space.

This illustrates to me that their true motive is not competition but profit.

 

[RFNB]

A two second search would show there is no single player.... That's not on Epic.

It'd probably be to your benefit to read the entire post. Had you read the post, you would have known that I also stated it cost $60 as a "donation" to play which was back when the game was not officially released. Otherwise, I might agree with you.

The advertisements for the game have significantly changed and yes, Epic IP advertisements are Epic responsibility to ensure they are clear and accurate. Omitting details and leaving information out of an advertisement, in hopes that the consumer "assumes" something is a deceptive practice.

 

[gregmancuso]

30% is a "tad high" for a swipe transaction? Do you have even the slightest idea of what payment processors charge? It's low single digit percentages up front and lower fees still at scale.

Hate to break it to you, but the rest of the stuff you are talking about isn't worth anywhere NEAR 30% either. You're obviously talking about something about which you have ZERO knowledge. It's a solved problem. If Apple's payment system is so damn good as to be worth 30%, then open up payments to everyone. Companies will run out the door faster than the Roadrunner does from Wile. E. Coyote.

If you are so stuck on Apple being nothing more than a payment processor nothing will open your mind to the facts. I know the value of the services provided - and the 2-5% of a swipe transaction fee is not where the value is. The rest of the package is worth much more than the Tx fees. I am not debating the 15 - 30%. Frankly I don’t care what it is. But is is more than 3.5% and less than 100. I’ll leave it to people like yourself who obviously know all there is to know about this business to determine that.

Oh, and if you cannot read context, “30% is a tad high” was obviously a facetious comment in the overall post. Do i need to mark sarcastic or tongue-in-cheek comments in red for you?

 

[deevey]

Bingo.

Wells Fargo do not sell you a product from the App Store. Their app is simply a Companion to the product you already bought (a bank account).