Judge in Epic vs. Apple Case Floats Potential Compromise

[threesixty360]

That is a very good point and it has crossed my mind.
Apple can only loose:

• Decides to allow URLs to some website? All apps are free now and no more revenue to Apple via AppStore
• Decides to allow 3rd Party Stores? How many stores are you gonna get? Still not revenue to Apple via AppStore
• Side loading? Still not revenue to Apple via AppStore
• Decides to shut down the App Store and to revert back to the first versions of iOS where there was no AppStore? Still not revenue to Apple via AppStore and a potential loss of clients to other phones - not even to EPIC because EPIC does not build phones.

EPIC can only hope to win some sort of special treatment with how much it gets charges - which will not be special treatment since all the other companies would want the same treatment.

Any other win would only damage Apple.

The only way that I can see any change to the IAP logic is by making those IAP free but to start charging the developer some sort of tier system where when they reach a certain number of IAP, Apple is due a fee - regardless of the amount that gets charged in the IAP.

There is sort of precedent for this when Google was sued for displaying new clips in their search feeds of some European newspapers (Spain?). The judge said Google had to pay so google said we'd rather just not list anything then. After a few weeks the newspapers were hurting so badly as no one was coming to their sites as without the google links their was no traffic anyway. I think they ended up begging google to reinstate and came up with a compromise that favoured google.

The point is that Apple could function without an App Store. It could even go the Nintendo route and just be the sole publisher of apps and have apps integrated into the OS or whatever (like a feature phone). It would lose money but it would survive.

The rest of the industry would be absolutely devastated though. How many companies are built on iOS revenue?
Is there any precedent for a private business to be forced to do business? Wouldn't that be illegal?

 

[Unregistered 4U]

What? That's the exact opposite of what's going on. Currently devs are marking up by 30% to cover costs and that directly affect the consumer.

30% is only ONE cost to consider. There’s the cost of the equipment they use, the cost of any other developers they have working with them, the cost of the place where the developers live, the cost of the food they eat, the cost of the power they use AND the internet. And the cost of any cloud services they’re utilizing. All of those affect the price they decide to charge way more than 30% per sale. I mean, I GUESS we could try to get government to make all those those things free for developers…

 

[bastoshaq]

There is sort of precedent for this when Google was sued for displaying new clips in their search feeds of some European newspapers (Spain?). The judge said Google had to pay so google said we'd rather just not list anything then. After a few weeks the newspapers were hurting so badly as no one was coming to their sites as without the google links their was no traffic anyway. I think they ended up begging google to reinstate and came up with a compromise that favoured google.

The point is that Apple could function without an App Store. It could even go the Nintendo route and just be the sole publisher of apps and have apps integrated into the OS or whatever (like a feature phone). It would lose money but it would survive.

The rest of the industry would be absolutely devastated though. How many companies are built on iOS revenue?
Is there any precedent for a private business to be forced to do business? Wouldn't that be illegal?

I don't think any company can be forced to do business. How absurd is company A wanting to use company's B services on terms of A. And if not allowed, go to court to force them... absurd. If EPIC wins I could see this going all the way to the supreme court. Because it would open the precedent that a party can sue the other party because they don't like the terms that they do do use their services.

But back to the survival of the phone without AppStore. Imagine new iPhones coming out without support for any of the 3rd party apps that you have. Who would buy the new phone? Granted that safari could be used but it would not have push notifications and it would not have the capabilities to run games or anything.

Which means that probably Apple would carry on with the AppStore but just with a new payment system. For example a fixed fee for every X IAP that the app does regardless of the value.

Hell this could even mean that Apple changes how it charges for the IAP but I cannot see a court pushing a company to do business in a way that it would hurt them when they don't have a monopoly (did not want to bring this word but I can see that the court could force some changes if indeed a company was in a monopoly)

 

[robbietop]

Compromise? Are you dumb? This is why Epic is suing! This is not a compromise, but a win for Epic. I get that some people have no clue what this case is about, but seriously. This is beyond clueless

 

[deevey]

That is a very good point and it has crossed my mind.
Apple can only loose:

• Decides to allow URLs to some website? All apps are free now and no more revenue to Apple via AppStore
• Decides to allow 3rd Party Stores? How many stores are you gonna get? Still not revenue to Apple via AppStore
• Side loading? Still not revenue to Apple via AppStore
• Decides to shut down the App Store and to revert back to the first versions of iOS where there was no AppStore? Still not revenue to Apple via AppStore and a potential loss of clients to other phones - not even to EPIC because EPIC does not build phones.

EPIC can only hope to win some sort of special treatment with how much it gets charges - which will not be special treatment since all the other companies would want the same treatment.

Any other win would only damage Apple.

The only way that I can see any change to the IAP logic is by making those IAP free but to start charging the developer some sort of tier system where when they reach a certain number of IAP, Apple is due a fee - regardless of the amount that gets charged in the IAP.

Special treatment may be put in place for some Apps, but the judge does not seem impressed with Epic's business model of basically allowing impulse sales to kids.

If any kind of ruling regards special treatment that is put in place (e.g 30% of initial sale, but not ongoing payments) it may not benefit micro-transaction IAP's at all.

What? That's the exact opposite of what's going on. Currently devs are marking up by 30% to cover costs and that directly affect the consumer.

I haven't noticed the price of subscriptions going down by 15% after the first year.

Epic also only reduced the price of their v-bucks by 10% for those couple of days when they sold them directly.

There is no guarantee that the price of Apps will come down by 30% even if the sale is directly to customers rather than IAP's.

 

[James Godfrey]

However, eBay still gets a commission based on the sales price. The point of the Epic lawsuit is to avoid paying any commission to Apple.

Yeah but with eBay they don’t earn off the products themselves, only a commission, whereas, epic earn money as it’s their product that’s being sold…

But my main point is that what epic are doing is like an eBay user or PayPal user asking said companies to not take any commission off their sales… which is absolutely absurd because without eBay/PayPal that user probably wouldn’t sell their item for either as much or at all.

What epic are requesting is ridiculous for three main reasons:

1. Without apple and the App Store, Epic wouldn’t earn anything off iOS users at all, as their app would not be available on the platform.

2. If apple didn’t take a commission, they wouldn’t bother having third party apps and an App Store at all, how would it benefit apple if they earn nothing out of it.

3. Epic are targeting apple even though every other App Store in the world takes a commission and from what I know it’s about 30% in all the others, so why make a big deal with apple, when it’s ok for Xbox, PlayStation etc to do the exact same thing.

Epic will 100% loose this case.

 

[jdawgnoonan]

These arguments are almost good to present but then it misses the point. Apple is not forcing anything.
What they are doing is not allowing advertisement in how to spend money outside of the store.
Using your argument, Target sells the TV and the customer asks to someone at the store "How can I watch movies in here?". Target then shows them their packages where it puts Netflix and so on with a price. It never says "But if you go right to their website is cheaper".
Apple is not stopping Epic from selling - they just don't want apps to tell the customer that they can spend their money anywhere else.

Point in case is Netflix.

I disagree with your implication that once the app is installed on a user's device that it is still in the store. The software is on the phone, not in the store. I feel that this is a reach to justify Apple forbidding a business from communicating with their own customer, but in the Apple world, a person using a third party app is still primarily Apple's customer, not the app developer's customer. Which, to me, is simply goofy. I like Apple's devices and sometimes their software, but I disagree with some of their policies.

 

[bastoshaq]

I disagree with your implication that once the app is installed on a user's device that it is still in the store. The software is on the phone, not in the store. I feel that this is a reach to justify Apple forbidding a business from communicating with their own customer, but in the Apple world, a person using a third party app is still primarily Apple's customer, not the app developer's customer. Which, to me, is simply goofy. I like Apple's devices and sometimes their software, but I disagree with some of their policies.

That is a fair point to be honest. The main difference would be that Target (the store) gets some sort of fee for selling the TV because it only stores and sells the TV.
While the AppStore (Apple) has a whole system to maintain for its apps. And because apps can be free, if the whole IAP was to be taken away from Apple, they would most likely get very little to nothing.

Maybe there will be a change in how an App is paid to apple (number of downloads/number of IAP regardless of its value). Apple should be paid for what it does with the system/App Store. No?

 

[DeepWebinar]

This is reasonable, it doesn’t address the underlying issues, but the people in these comments licking Apple’s boots are just wrong. This should absolutely happen.

 

[I7guy]

This is reasonable, it doesn’t address the underlying issues, but the people in these comments licking Apple’s boots are just wrong. This should absolutely happen.

Why does it need to happen? Nothing “needs” to happen. It could be the end result is that Epic gets kicked out of the App Store, or it could be that Apple gets handed a judgement and they go on to appeal.

 

[jdawgnoonan]

That is a fair point to be honest. The main difference would be that Target (the store) gets some sort of fee for selling the TV because it only stores and sells the TV.
While the AppStore (Apple) has a whole system to maintain for its apps. And because apps can be free, if the whole IAP was to be taken away from Apple, they would most likely get very little to nothing.

Maybe there will be a change in how an App is paid to apple (number of downloads/number of IAP regardless of its value). Apple should be paid for what it does with the system/App Store. No?

I agree that they should be paid, and I don't know how they resolve that. Unless, maybe, otherwise free apps that advertise for alternate methods of payment are no longer allowed to be free? If they even cost a dollar, I would assume Apple would probably get as much money as they get from ad supported apps. But maybe a one time 5 dollar fee would be fair?

 

[DeepWebinar]

Why does it need to happen? Nothing “needs” to happen. It could be the end result is that Epic gets kicked out of the App Store, or it could be that Apple gets handed a judgement and they go on to appeal.

Wow you’re blowing my mind. Nothing “needs” to happen, wow so smart and not pedantic and obnoxious wow and not the most basic, knee-jerk, thoughtless response ever. Wow I never saw it that way wow an actual genius wow teach me everything wow. 😒

 

[I7guy]

Wow you’re blowing my mind. Nothing “needs” to happen, wow so smart and not pedantic and obnoxious wow and not the most basic, knee-jerk, thoughtless response ever. Wow I never saw it that way wow an actual genius wow teach me everything wow. 😒

And your opinion is what? (Do you have some insight as to where things will go? Aside from the ad-hom)

 

[DeepWebinar]

And your opinion is what? (Do you have some insight as to where things will go? Aside from the ad-hom)

Nope, no insights. I said my opinion in my first post. Never said anything needed to happen either, the word I used was “should”.

 

[spicymints]

This should force Apple to do what every other company that provides web services does: Charge for them.

If Epic, Netflix, or anyone else wants to offer a free app with off-site purchases, then Apple can charge them a reasonable fee to cover App Store maintenance costs.

Bandwidth fee is better than a 30% cut that's deducted always from expenses(each time a consumer makes a purchase) from a business standpoint. As long as the bandwidth fee is reasonable like AWS.

 

[AussieSimon]

That would really get the EU and Australian competition authorities annoyed with them (and the others) for not trying to compete in that one market segment.

Since when is Apple legally obligated to compete? There's plenty of competition for video games already. If the competition regulators get annoyed at the lack of competition, they ought to slap down the entire market segment, not just one middling player in it.

 

[Philip_S]

Since when is Apple legally obligated to compete? There's plenty of competition for video games already. If the competition regulators get annoyed at the lack of competition, they ought to slap down the entire market segment, not just one middling player in it.

When everyone in an industry is trying to make itself into an exclusive storefront for a subset of the market, and they're all charging about the same despite very different costs, it has exactly the same anti-consumer effect as if they formally agree to form a cartel.The EU and Australia are somewhat stricter about unspoken gentlemen's agreements, whereas the USA will only convict if there's proof of an explicit formal agreement, thought unfortunately neither of them allow arguments based on economic theory to be used to prove collusion.

 

[PlayUltimate]

The point is that Apple could function without an App Store. It could even go the Nintendo route and just be the sole publisher of apps and have apps integrated into the OS or whatever (like a feature phone). It would lose money but it would survive.

The rest of the industry would be absolutely devastated though. How many companies are built on iOS revenue?
Is there any precedent for a private business to be forced to do business? Wouldn't that be illegal?

Apple could more just as easily change the model from a "commission" model to a markup/retail model. This would allow a multitude of apps to still exist but each would be purchased and priced based on what Apple thought. Unlike the current situation where apps can be sold at what ever price the developer wishes to charge, a retail model would require individual contracts to be drawn up. You would likely see better apps; just far fewer apps of them.

 

[quarkysg]

Apple could more just as easily change the model from a "commission" model to a markup/retail model. This would allow a multitude of apps to still exist but each would be purchased and priced based on what Apple thought. Unlike the current situation where apps can be sold at what ever price the developer wishes to charge, a retail model would require individual contracts to be drawn up. You would likely see better apps; just far fewer apps of them.

Actually, mark up is essentially the same as the 15%/30% cut of revenue, unless you are suggesting a fix markup instead of % markup. My understanding of markup is always based on %. Developer just need to calculate their cut taking into account Apple’s cut.

Apple should just stop all IAP. That should shut everyone up.

 

[deevey]

Apple could more just as easily change the model from a "commission" model to a markup/retail model. This would allow a multitude of apps to still exist but each would be purchased and priced based on what Apple thought. Unlike the current situation where apps can be sold at what ever price the developer wishes to charge, a retail model would require individual contracts to be drawn up. You would likely see better apps; just far fewer apps of them.

Rename the cut from subscriptions from commission to "consignment sales" where Apple charges a fixed % from all sales from within their store across the board and the developer sets the RRP on their apps sales or subscriptions.

Oh wait ....

 

[PlayUltimate]

Rename the cut from subscriptions from commission to "consignment sales" where Apple charges a fixed % from all sales from within their store across the board and the developer sets the RRP on their apps sales or subscriptions.

Oh wait ....

That has been my argument (and I have stated) from the beginning . . . . the iOS App store is akin to a consignment store. If people are fighting against the openness and costs of the consignment store, then Apple, rather than opening the store, as some here are arguing for, would just change the model to one that looks more like a retail store.

 

[LordVic]

There is sort of precedent for this when Google was sued for displaying new clips in their search feeds of some European newspapers (Spain?). The judge said Google had to pay so google said we'd rather just not list anything then. After a few weeks the newspapers were hurting so badly as no one was coming to their sites as without the google links their was no traffic anyway. I think they ended up begging google to reinstate and came up with a compromise that favoured google.

The point is that Apple could function without an App Store. It could even go the Nintendo route and just be the sole publisher of apps and have apps integrated into the OS or whatever (like a feature phone). It would lose money but it would survive.

The rest of the industry would be absolutely devastated though. How many companies are built on iOS revenue?
Is there any precedent for a private business to be forced to do business? Wouldn't that be illegal?

in this day of age, if Apple went that route, all the dev's would just focus exclusively on Android.

it would be an absolute massive burden on Apple to have little to no 3rd party developers if they get upset enough. as is, last year was the first year that Android got more new App developers and Apps for it than iOS. Indicating a lot of dev's have moved to an Android first development mindset.

that's not good for iOS users. and if there were a massive exodus of app available on iOS, you can sure bet a lot of users will move to follow the Apps. This is one truth we've seen in smart phones since the BlackBerry days. Those who have the Apps people want, will tend to do better.

The last thing we as iOS users should ever want is for Developers to just get too frustrated with Apple's iOS business gatekeeping that they go elsewehere.

 

[PlayUltimate]

Actually, mark up is essentially the same as the 15%/30% cut of revenue, unless you are suggesting a fix markup instead of % markup. My understanding of markup is always based on %. Developer just need to calculate their cut taking into account Apple’s cut.

Apple should just stop all IAP. That should shut everyone up.

This would cause issues of diversion of revenue. Should a developer charge a one-time $20 or $1.99/mo? If one of those options were the consignment fee, then all apps would convert to that model.
Now, if you are arguing no apps should be subscription of have IAPs that is how the store started. However, it caused issues for developers because there was no way to fund updates to the application. Developers had wanted, for a long time, a way to charge for major application updates without having to create a new app. Charging for an update was not something that the App Store has ever supported. IAPs (vs subscription) also enabled devs to create test/trial apps without having to create a separate application for the App Store.
It can get complicated and is not best for everyone. But the current iteration of the store, IMO, works pretty good overall.

 

[m2m2k]

Sorry, this is not correct. Apple is not forcing EPIC to only have their money through Apple. You can go to EPIC's website and charge your account and carry on playing.

Like Netflix - you download the app via AppStore (apple), go to Netflix's website and setup your account (outside apple) and consume the product in your device (apple)

We are selling this Sony TV, but it costs 30% more at our cashier in Target. Sure you can walk to Sonys office and pay there directly.

 

[PlayUltimate]

We are selling this Sony TV, but it costs 30% more at our cashier in Target. Sure you can walk to Sonys office and pay there directly.

More often than not the exact opposite is true; if I go to Target, I can usually get it cheaper than if I go to the manufacturer’s website. The other day I was looking at a Delta faucet. The price on the Delta website was 50% more than Home Depot