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

[deevey]

One an app is installed on someone’s device are they still in Apple’s mall? Is Apple’s mall the iPhone or the App Store? One doesn’t have to go to the App Store to complete an IAP.

If you are using IAP's you are essentially going back to the mall to buy complimentary items to go with the App (30% cut).

If you do not use IAP's (e.g. direct website purchase) you are not going back to the mall and instead going somewhere else (no 30% cut).

 

[rkuo]

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?

You're welcome to mark the parts that you are wrong about and not fake your way out of it by claiming it was sarcasm.

 

[gregmancuso]

You're welcome to mark the parts that you are wrong about and not fake your way out of it by claiming it was sarcasm.

I never claimed sarcasm. I just pointed out that my use of the phrase “30% is a tad high” was obviously meant as tongue in cheek both in the context of the post it was written in and the rest on the posts in this topic.

you felt the need to take my point literally for some reason. No one seriously believes that 30% is reasonable for a transaction processor.

if you want to debate the merits, fine. I will be sure to use small words, short sentences, and show my work on any point I raise.

 

[Surfer13134]

I'm not in the loop on this, but can't apple set whatever regulations they want since it is their store?

 

[Michael Scrip]

I'm not in the loop on this, but can't Apple set whatever regulations they want since it is their store?

Apple can... and they did.

But 13 years later... some developers seem to have a problem with their rules...

 

[playtech1]

I am not sure how much we should read into Tim Cook's grilling - I would guess that she would do that to both sides. It would be odd if he didn't face some hard questions.

It makes me wonder where the ruling ends up on this. My thinking is that she might render void and unenforceable some of the developer agreement terms relating to advertising of alternative payment options - e.g. allowing a link to an external payment website. Although that would technically be 'winning' for Epic (and Epic would no doubt make more money as a result), in truth I think that would be a huge win for Apple if that's as far as it goes, since the 30% cut would remain intact for IAPs. For most apps, it will therefore stay business as usual for Apple. Apple will lose some revenue from big apps who have the clout to direct users elsewhere, but many of those big apps have already cut off IAP within iOS (e.g. Netflix, Kindle), so it leaves huge swathes of Apps unaffected.

Or... she might go further and strike out from the Ts&Cs the restrictions on other IAP payment providers within Apps. That would be a more meaningful loss for Apple and I would expect even smaller apps to take advantage. That would necessitate fairly big changes from Apple as Apple Pay would need to be at a competitive % to PayPal et al and I expect the charges to be reviewed/listed on the App Store might rise to somewhat offset the loss of IAP revenue.

Then there's the 'middle ground' of saying 30% is too high and it should be lower. But I am not sure that a judge will see themselves as being the appropriate person to rule on what % is appropriate. Striking out contract terms is easy, re-writing them is not. So I think it will be one of the other two routes. The EU might not be so shy though.

Finally, she might go so far as to order allowing alternative app stores. I guess that's something that could also be done via a striking out of the relevant developer Ts&Cs, but seems secondary to the payment issues (i.e. if the payment cut stays the same without any option to direct users elsewhere/use an alternative IAP provider, then even being allowed an App Store is irrelevant as it won't be economic to run if you hand Apple 30% of its revenue).

Or Apple might win totally of couse.

 

[UKitsme]

I do get impression judge doesn't understand, the app store provides a great service to customers and developers but it costs money to run, if Epic doesn't want to pay for it then simply don't use it and take web site purchases.

 

[Abazigal]

It makes me wonder where the ruling ends up on this.

I think it bears remembering that the judge is ultimately here to settle what is essentially a business dispute, not establish policy.

That and Apple as a private company is well within its rights to choose not to deal with another company (so long as this rule is applied evenly to everybody). Epic dug their own grave by breaking App Store rules, giving Apple the justification they need to boot them out of the App Store (and keep them out).

The judge is also limited in what sort of ruling she can impose on Apple. Like you said, it's not for her to decide whether 30% is too much (or even too little). I don't think she has the authority to tell Apple to open up the App Store and allow side loading either.

I feel that Apple still has the stronger arguments. We will just have to see.

 

[playtech1]

The judge is also limited in what sort of ruling she can impose on Apple. Like you said, it's not for her to decide whether 30% is too much (or even too little). I don't think she has the authority to tell Apple to open up the App Store and allow side loading either.

I feel that Apple still has the stronger arguments. We will just have to see.

On the 30% point, I don't have enough knowledge of US antitrust cases to know what is typical - perhaps she might strike out the relevant term but then leave it to Apple to pick a new number (maybe with some obiter hint as to what might be OK?). I would be interested to hear from US lawyers who know about such things - most articles don't seem to have any understanding about what exists in the reasonable range of possible outcomes from this case.

Personally I feel Apple is on shaky ground but I can see it going either way.

I think the case Apple has to worry about more is the Spotify / Apple Music complaint, as that reaches beyond IAPs and into Apple's own subscription services, as well as being in the EU.

 

[PC_tech]

I'm not in the loop on this, but can't apple set whatever regulations they want since it is their store?

No, they can't 🙄

 

[PC_tech]

Apple can... and they did.

But 13 years later... some developers seem to have a problem with their rules...

So does the government 🙄

 

[PC_tech]

I do get impression judge doesn't understand, the app store provides a great service to customers and developers but it costs money to run, if Epic doesn't want to pay for it then simply don't use it and take web site purchases.

I get the impression that the judge probably knows slightly more than you 🙄

 

[AdonisSMU]

Apple should say that they will just disable the App Store if they cannot “make a profit.”

THIS IS CAPITALISM! Apple is not doing charity work for poor developers. Apple PROVIDED A WAY TO MAKE MONEY! They CHOSE to make an app.

This is my concern. Now that Apple has most of the apps they could possibly want. They could use an adverse court ruling to say “we dont need an app store anymore”.

 

[AdonisSMU]

I have a feeling she's gonna rule Apple to allow developers to mention other payment options or maybe even link users to it.

And Apple will cave and do it but it’ll come at a cost. Itll probably screw the developer who makes free apps in some way or screw the consumer of free apps.

 

[AdonisSMU]

Well, Microsoft never broke any laws when they bundled Internet Explorer with Windows. Unlike Apple, they even allowed other rendering engines!

Um technically they had a monopoly and forced hardware vendors and sotware vendors into behavior that only benefitted them. Technically you could argue they still have a monopoly.

 

[Abazigal]

On the 30% point, I don't have enough knowledge of US antitrust cases to know what is typical - perhaps she might strike out the relevant term but then leave it to Apple to pick a new number (maybe with some obiter hint as to what might be OK?). I would be interested to hear from US lawyers who know about such things - most articles don't seem to have any understanding about what exists in the reasonable range of possible outcomes from this case.

Personally I feel Apple is on shaky ground but I can see it going either way.

I think the case Apple has to worry about more is the Spotify / Apple Music complaint, as that reaches beyond IAPs and into Apple's own subscription services, as well as being in the EU.

I find this article does a pretty good job of breaking down what's at stake for both parties, and it helps that the writer himself does have some legal background.

Epic Versus Apple: The MacStories Overview

Later today, Epic Games and Apple will square off in a high-stakes trial in US federal district court that’s nominally about money. However, if that were all that was at stake, the claims each company has made against the other would likely have been resolved by now. Companies the size of Apple...

www.macstories.net

I have a hard time seeing the Court siding with Epic’s definition of the relevant market. The wildcard here, though, is that platform-specific marketplaces like the App Store don’t fit neatly into traditional market definitions for antitrust law. That’s not something Epic, Apple, or even the judge has any control over, but on balance, I think it favors Apple. That doesn’t change the fact that the App Store could be run better. Many of the criticisms of the App Store are valid and should be addressed by Apple or perhaps through government regulation, but what Epic’s tortured arguments make clear is that antitrust is not the best way to address the App Store’s deficiencies.

 

[AdonisSMU]

They are not exerting anything. Developers "choose" to develop on the platform. They aren't forced to. They can choose to just develop on the PC/Mac/Xbox/PS/Nintendo/Linux/Android if they so choose too. Just like Apple can choose to not even have an AppStore, which in the beginning they did not have an AppStore.

Walmart gets a cut of every loaf of bread sold in Walmart. Same as Apple or any store gets a cut of anything they sell in their store. There is no difference just cause one is digital and one is physical. BestBuy and Walmart have both physical and digital stores. If you buy a vBUCKs gift card from any of those stores, they get a cut of the sale.

They don't have to spin anything off. Why do people thing there is a "have to" anything. They can create anything they want, it's a free world. They have to convince the consumer they are the best of the bunch, and work towards that end in order to PROFIT. That's what a business does. Again, they are not preventing anyone from buying outside of their platform. You just can't make them do what you want the way you want it. That's cause voting with your dollars and not buying anything they sell. Clearly, Apple has the customers to bring to the table for all these developers to sell stuff to. No Apple, no store, no business. You can still go to Google, and Microsoft, and Blackberry, and whatever else in the Asian market. Apple is not a monopoly. They don't even have the dominate marketshare to even be considered it.

It is truly astounding that people think they can make a business do something they want. They do what they want to do. So long as it is within the law to do so. Can a developer sell their stuff elsewhere? If that answer is YES, then we have no case here. Don't like Apples rules, don't play by them, don't sell there. And stop complaining. The market will decide if they should stay in business or not. If customers leave then it's game over. If they say, then EPIC is not the big money driver they think they are. People can play fort nite on any number of other platforms. Amazon will continue to sell direct, the world will still turn

The judges point is that Ape doesnt take a cit of every sale across the board. Its true they dont. Some businesses like say Uber eats or task rabbit Apple does not take a cut.

 

[AdonisSMU]

These WalMart, Best Buy, etc. analogies are all based on a flawed premise.

Apple does not operate like any of these stores. Once the product is purchased from a store, that is the end of the relationship between the customer and the store.
Say I want to buy a prepaid cell phone from WalMart. I can do that and WalMart gets a cut of that initial sale. From that point on, I can buy minute refills from ANYWHERE, including the carrier directly. I have no obligation to return to WalMart to purchase any refill cards.

In the App Store's case, Apple requires any purchases made after I've already downloaded the game, to be completed through them. Whether app is a paid app or free app is moot.
My relationship with Apple is no longer required once the app is installed on my phone. All the online components are hosted on the developers servers, not Apple's. Apple's requirement to be the middle man for future purchases unrelated to Apple is purely for their own profit and they can do so because they don't allow alternative stores.

If I don't like WalMart's store policies, I can go to another store to do my business. There is no such option for iPhone/iPad users.

The app updates are hosted on Apples app store cloud. Just thought I should point that out. So your argument doesnt hold up that well.

 

[ZombieZakk]

i really dont understand why apple wouldnt just allow sideloading its makes all of this go away it can be off by default like android and in a developer setting even. They can't cripple the method intentionally but apps through the app store could get access to certain API's or even be better optimized through the app store install process (not sure the legality of this aspect)

but to me seems like the easiest way to make this go away and i know plenty of android users and most of them don't know what sideloading is or that they can use other app stores. so sure there would be some drop off but these legal fees can't be that cheap.

 

[AdonisSMU]

Or the judge does understand all this but your explanation of why Apple does it completely contradicts the way things work on the Mac, where Apple has an App Store but consumers are still able to purchase apps from wherever they please.

Tim basically confirmed the only reason they do this is to get more money. If they were to lock down the Mac the same way as the iPhone, the majority of Mac users would leave the platform.

The answer is actually alot simpler than that.

One device is a computer. The other is a phone. There are different expectations of each device.

The phone needs the additional security and safety.

 

[AdonisSMU]

i really dont understand why apple wouldnt just allow sideloading its makes all of this go away it can be off by default like android and in a developer setting even. They can't cripple the method intentionally but apps through the app store could get access to certain API's or even be better optimized through the app store install process (not sure the legality of this aspect)

but to me seems like the easiest way to make this go away and i know plenty of android users and most of them don't know what sideloading is or that they can use other app stores. so sure there would be some drop off but these legal fees can't be that cheap.

You can already do side loading of apple apps.

The thing I always worried about with Tim Cook is that he was a bit too “efficient” with Apple resources and it would hurt Apple.

 

[AdonisSMU]

I think Apple is gonna start charging developers who dont use IAP for updates or something like that.

 

[AdonisSMU]

I am pretty sure the real number of APIs is many orders of magnitude lower but he is not a software designer so let's give him a slack. Although he might have been advised to use this ridiculous number by someone.

Its actually not lower. He got that number from his engineering team.

 

[Ethosik]

hehe building a software updater is one of the easiest thing to do for a dev, I already did it multiple times for clients.
And there are even free available open source solutions out there e.g. sparkle for the ones who can't or aren't in the mood, wouldn't be rocket science to mod and port it for iOS.

And this is why my computer has dozens of launchers/updaters whereas my iPhone only has one - App Store.

 

[Ethosik]

Exactly. There definitely needs to be a different set of fees for things like V-Bucks, in particular.

It's literally a currency exchange. You're turning your real dollars into virtual currency. There's not a lot of overhead in that. It happens in the blink of an eye.

I don't see why my $10 purchase of V-Bucks entitles Apple to get $3 from that.

And that goes for ALL the platforms who charge 30% for VBucks.

Like I said... there should be a different way to handle those types of transactions.

I'd say the same thing about Kindle e-books too. Apple isn't even delivering the Kindle book from their servers... Amazon is. All Apple is doing is handling the payment. But Apple thinks they deserve $3 from every $10 Kindle book. Fortunately Amazon said NO and was granted a special exception found a way around it.

Sure... Apple made the rules... but I think those rules need to be re-examined.

Yes... Apple should get something from digital In-App-Purchases... but there's wiggle room between "nothing" and "30%"

Maybe. This is why there is no tax when I go get ANY gift card at ANY store. I get a $15 Apple Card and its $15, and my Apple Balance will be $15. Target/Walmart gets $0