Judge in Epic vs. Apple Case Floats Potential Compromise

[wirefire]

Two sides of the same coin. Here is what I see outside of the contractual law and Epic's clear failure to uphold their side of the contract with Apple.

Apple provides a service, the App Store to developers and iOS users alike. You as a customer are under no obligation to buy an iOS device and the developer is under no obligation to provide an application to the "App Store". both parts of this are done willingly by the associated parties. So in effect both sides "know what they are getting into" when they enter the system. the "walled garden"

The Judge's "compromise" is just another instance that highlights how little lawmakers and the court system understand technology and how quickly it changes. If Fortnite is offered for "free" on the App Store and then all virtual currency is purchased outside the App Store without Apple getting a cut then Fortnite (Epic Games) is getting access to the iOS user base for "free".

The real compromise could have been implemented by Epic themselves. Offer the currency in the app, but run special "promotions" on buying the currency through their website that would amount to approximately a 30% discount when buying it on their website. Competition would eventually win out and everyone would buy their virtual currency at epic's website. This would turn around and put pressure on Apple, either change the rates or the developer agreement at that time then Epic would have a much better case against Apple. (there are ways around Apple's rules here. you could offer an item exclusively through the website. or currency amounts, or buy X and get a bonus of Y for free....). Apple might bitch but it it is unlikely it would be a direct developer violation unless they offer the EXACT same thing for different prices.

 

[SactoGuy18]

I think it could be done on a case-by-case basis. For example, Amazon could get its own app and the Comixology app to start up a Safari session to buy digital goods such as ebooks and digital comics.

 

[ravenstar]

This "compromise" if imposed by the courts would be a huge loss for Apple. Its imposition would mean that Apple has lost the right to set the terms for using its platform. Would the judge next dictate the fees that could be charged for listing the App Store? This is not a good path to wander down.

 

[Arsenikdote]

For the benefit of users and developers let us pray Epic wins.

The judge may also suggest that if Apple does not want to pay for any of that they are free to let other companies to create alternative app stores. That should solve all problems.

Imagine being Target and prohibiting your customers from visiting any other store.

I don’t know which article you read, but the expert testimony highlighted here is pretty damning for Apple.

The statement from Epic’s expert implies a large degree of market power held by Apple. The judge‘s question probing for a potential solution was met with testimony that it would have no effect.

Apple’s expert, on the other hand, when asked by the judge how choice is bad for customers, responded with “because Apple gets let money”. Lol what? In other words, absolutely no response regarding customers. If you and I were making a bet, I ask how benefits me, and youre best repsense is just that the bet benefits you, then you have just proven that the bet is not in my best interest. Apple just played themselves.

Doesn’t even matter how this particular trial plays out - the writing is on the wall. There‘s way too many people looking at this now. Within five years, exclusive App Store distribution will not exist, it will be better for consumers overall, and all the doubters will move on.

You all are falling for the misdirection that EPIC is trying to use with its media messaging. This is an Anti-Trust lawsuit. (https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws)

The lawsuit is not about any of the things you all are going off about. EPIC is saying that Apple is using their power to control the industry. That is the LAW they are fighting about. Not 30% cut. Not whether you can or can't do something in the App Store. These are all FACTORS that talk about HOW Apple may or may not be controlling the whole INDUSTRY (hence monopoly).

So the court, at the end of the case even if EPIC wins, will not say "Apple's cut is too much" or anything like that. If it goes to EPIC then it would be decided that Apple has control and that needs to change. HOW it changes is now an ENTIRELY different situation that would again be worked through in the courts.

Apple of course is saying that since there are alternatives that do essentially the same thing, how could they have too much control. They are correct and will win this case UNLESS EPIC decides to lump all the major players together and claim they are working together to control the market. It is impossible for Apple to fit the criteria defined by the FTC since there is already the Google Play store and Google is a major player in the market. EPIC might lump them all together and claim they are co-controlling and if they do, then they actually have a case to fight. If they don't do this, then all of this is just a media stunt.

Y'all can continue to argue if you THINK Apple should or shouldn't do with percent cuts or IAP or whatever. Just remember that controlling an industry is what the court case is about and is what will be decided on, not any specific evidence item you are focusing on.

That's not even remotely accurate. Fortnite players connect to Epic servers from which they can purchase virtual goods produced by Epic, which are hosted by Epic and distributed utilizing bandwidth paid for by Epic from said servers. Yet somehow Apple demands to be entitled to 30% of goods that are being created, hosted, maintained, and distributed by other parties from other properties? Um, no. That's ridiculous - it's like buying a cell phone at Target and then Target demanding a 30% cut of your phone bill from the carrier.

If Apple believes they are entitled to payment, then it should be for services that they are actually providing, namely hosting and distributing the App. And before you bemoan about how Apple created a platform and XYZ - Apple is not some benevolent entity sending blessings down to developer and making them millions. A software platform needs apps or it's a non-starter, as Microsoft knows all too well. Apple knows it too, which is why they sold iPhone on the back of "there's an app for that" for years.

All of these examples are sort of silly. They fall apart really quick and fail to make anyone's point better. For example when you mention the cell phone and Target, you should have stated that Target engineered, manufactured and sold the phone as well as sold it in their store. You should also have mentioned that the cell phone carrier only has access to those customers because of target and would be missing those customers entirely without Target.

It is not quite a "chicken or the egg" as you are making it. Apple started their ecosystem. App developers came and made money off of it. It didn't happen in any other order. Does Apple make money on this? Yes! As you mentioned they are not a benevolent entity, they are a business. They made a business decision, a good one, and it is paying off. EPIC is also a business and wants more money and wants to pay Apple less. EPIC would have access to ZERO iOS customers if iOS didn't allow apps to be installed on phones. So all iOS users are a net new add to their business, assuming their business existed outside of iOS gaming, which it does. You can't argue "but Apple needs those developers and apps or its a non-starter" because Apple DID start it without them. Apple however was smart and made an eco system where it benefited everyone. It benefitting everyone is WHY the App Store is awesome. It is why DayOne exists. It is why 1Password exists. EPIC, Netflix, and the companies who truly "pay the penalty" are just in an arm wrestling match for higher profit margins. I get it and don't bemoan those companies for fighting for more money. It is business.

It’s not free though, developers pay for annual membership.

I’m sure the judge, and developers, wouldn’t complain if the price of that was raised high enough to cover the Store’s upkeep. Especially if the new price was proportional to the number of app downloads, instead of charging a 14 year old kid playing with Xcode the same price as a hundred billion dollar corporation.

Also if purchases were possible outside of Apple’s system, it would force Apple to compete on price, which would likely lower the price substantially. It’s really not that difficult for developers or users to make payments via paypal or square. In fact it might actually be easier. Competition would be good.

This is an example of confusing the evidence for the case. If Apple changed their model to what you are suggesting, then they would still be in the lawsuit for control over the industry and instead of showing the evidence they are today, they would show how charging different annual membership rates is forcing people to "pay the overlord" an Apple is holding its control over the industry. It is not the mechanism that matters, it is whether or not Apple is controlling an industry. The mechanism, or evidence, is just another way of looking at HOW the business is currently pursuing revenue.

 

[LogicalApex]

While I am rooting for Apple to win, I suspect that this is one of those areas where Apple might be willing to capitulate on. I do agree that letting developers communicate more freely with users in apps stands to be a positive development for both parties. Being able to include language like “visit our website for additional ways of buying our service” wouldn’t hurt customers and would be viewed positively for developers.

The reality is that many services like spotify, Netflix and even Hey are already funnelling users to sign up via their website by not allowing users to subscribe within the app anyways. For games, they will still want people to buy IAPs within the app because the convenience of using iTunes more than outweighs any cost savings from trying to get users to visit their website in the middle of a game.

I wrestle with this a lot. I think the change only helps the larger scale developers and not the smaller ones which is the core of the complexity here.

If you're Netflix and you tell someone to head to your website to sign up they will without batting an eye as you're big enough and deemed trustworthy. The same would be true for something like Office 365 or the like where a larger app developer may even allow you to buy IAP unlocks or etc on their website at a cheaper cost (assuming they are even that much cheaper since a larger developer can win both ways here).

For smaller developers though consumers will trust you less. They would be worried that buying via your website might lead to payment details being hacked and stolen or that you'll "lose" their purchases and they have no real recourse in getting them back. For them buying via Apple's payment stream is a bit of a safety play. Similar to how people prefer to use PayPal on smaller sites than giving them their CC details directly.

That leaves you with a solution that only helps companies that don't really need the help IMHO.

 

[thomas040]

Don't know why people haven't drawn the parallel to the increase in Bot calls in the past 6 years to when Facebook allowed game apps like FarmVille to download user's iPhone/Andriod contact list for prizes, and what happens when someone with your info on their phone downloads an infected app.

You yourself may have never have had Facebook (or side loaded apps) on your phone but someone in your contacts list did and download FarmVille, now FarmVille has your contact info, and is selling it to the highest and lowest bidder.

Now imagine someone in your contacts list downloads apps from shady App Store, now that shady app has all your info too.

Seriously can't understand how people aren't seeing this.

it requires too much critical thinking to get to that level of understanding. people are too paralyzed by social media to think anymore.

 

[Unregistered 4U]

Its imposition would mean that Apple has lost the right to set the terms for using its platform.

Not JUST Apple, this would send ripples through many industries inexorably. That downstream impact is one very big reason why Epic won’t be able to win this.

 

[MikeVarney]

Allowing outside payments will cause EVERY app to go the freemium model - - app installs for free with little or no function, activated by a web purchase elsewhere.

 

[SoN1NjA]

If they allow apps to redirect to the web there’s going to be a lot of scams and phishing sites inserted into that link.

How? From everything people say here, the Apple App Store is a well regulated place free of scams, poor quality apps, and privacy concerns

 

[Nuno Lopes]

It doesn't solve Apple's problem of maintaining security on the devices.

Maybe you can elaborate specifically the dynamics of in-app-purchase policy and this.

For instance when buying an eBook, streaming video on Netflix, webinars … heck how the recent a App Store demands on the xCloud and Stadia kinds of services play with it?

Not saying that App review, hosting m, heck sale, should not be payed, after all is an App Store. The rest the policy dip in to charge.

How does free apps play with security?

In terms of security how far is included in the price of the device and OS licensing, where does it stop? Requiring further payments after that.

All this is muddled to me.

Oh, for “security reasons” doesn’t really apply to this context.

 

[I7guy]

[…]All this is muddled to me.

It’s muddled because the objective is to take a working system, one that has evolved over the years, and disassemble it so that Apple earns little revenue and it’s a race to the bottom for apps and security.

Now if the courts and governments around the world want that to happen, who am I to stand in the way of “progress”. But it doesn't mean the ecosystem after such a realignment may happen will be better for all concerned.

 

[Press22]

Allowing outside payments will cause EVERY app to go the freemium model - - app installs for free with little or no function, activated by a web purchase elsewhere.

As opposed to the current app installs for free, in app purchases to unlock features, remove app crippling ads? 😂

 

[arlomedia]

Let me correct that for you...

Imagine being Target and prohibiting your vendors from displaying advertisements to another store.

You misunderstood the analogy. The "other store" here isn't a developer's website, it's a competing app store or any other way to install apps. Without that, there are no checks on Apple's ability to impose whatever rules or charge whatever fees it wants.

On that note, it's funny that Apple has been arguing lately that the 30% cut is an industry standard, when it's obvious they created that standard and the other platforms are copying it. When Apple lowered some fees to 15% and Google quickly followed, that indicated that 1) Apple is setting the standard, and 2) where competition exists, prices come down.

The audacity of their business model is actually breathtaking. Platform owners usually have to work to entice developers to create applications, which attract users. But Apple's mobile hardware is so popular that it flips the script, allowing Apple to demand a large portion of a developer's income for the privilege of building for their platform. They're not charging a reasonable fee to cover store costs, they're taking what they can get away with due to their unique position.

 

[GizmoDVD]

On that note, it's funny that Apple has been arguing lately that the 30% cut is an industry standard, when it's obvious they created that standard and the other platforms are copying it.

Bro, 30% was around during the Xbox and Wii days long before the iPhone even launched. The % was even higher for mobile phone with ****** apps.

Cute try.

 

[deevey]

All these big developers want is to let people buy digital subscriptions inside the app without having to pay 30%. Or let them advertise their website or whatever. I think that is where the compromise needs to be made.

Why should they be allowed to advertise in-app for free though ?

Advertising and marketing is one of the most expensive aspects of any product. Netflix have managed to circumnavigate IAP's by doing a great job with their marketing. Spotify could do the same as could Fortnight.

Epic however relies on multiple small dollar impulse purchase IAP's. It's not a "normal" subscription, it's run like a casino.

Now, perhaps Apple could allow links to external payments for certain media apps e.g. video / music players where there could (in theory) be a benefit to Artists on these platforms as well.

But small dollar impulse purchases like Epic's currency exchange IMHO should continue to be locked into IAP's.

 

[GizmoDVD]

Someone failed economics

How do you expect game consoles to survive if they are forced to allow competing stores in their eco-system?

 

[ravenstar]

The audacity of their business model is actually breathtaking. Platform owners usually have to work to entice developers to create applications, which attract users. But Apple's mobile hardware is so popular that it flips the script, allowing Apple to demand a large portion of a developer's income for the privilege of building for their platform. They're not charging a reasonable fee to cover store costs, they're taking what they can get away with due to their unique position.

And yet, the fee has been in place since the beginning. So there must be something that attracted developers.

 

[PlayUltimate]

I just feel like this situation is similar to sellers using PayPal on eBay…

Someone has a lamp available on eBay for £50, but it advertises if you pay by bank transfer you can have it for £40… they have now incentivised that customer to pay them by a method which is not secure for them and for the savings of £10 they are now at risk of being scammed.

At the end of the day, we could argue what gives PayPal the right to monopolise on the sales of peoples items items by charging them a percentage of what they sell their item for… they have that right because they offer any potential buyers a more secure method of payment where they are guaranteed their item or their money back and in return the seller is more likely to sell their item for a higher price.

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.

 

[arlomedia]

But this has to be in a universe where to access the Target store and experience, you need to buy a key for the building in which Target is in. This key is specifically made only by Target, and is the only one able to open the door.

Target owns this building and only wants it's own Target store to be in there, rather than a competing store which could sell potentially dangerous products.

The user knows about the restrictions of the building when they're deciding to buy the key, and they appreciate the quality standards provided by Target and they don't have to worry about potentially buying dangerous products.

You make a good point and I wouldn't argue that this doesn't have benefits for consumers. What's more troubling is how "Target" in this analogy treats its suppliers, taking a larger cut than any similar distributor has ever collected before, then imposing confusing rules about what else the supplier can do with their products, and using an opaque process to make the final judgements about what appears in the store.

(To leave the analogy now) It's just so mixed up. An elegant business model would pretty much work on its own and most people would accept it as fair and appropriate. When you have to hold your business model together through pages of rules, monopolistic behavior, a team of reviewers trying to catch workarounds, developers having to modify apps to meet confusing requirements, and fending off lawsuits, that indicates the business model isn't really sound. Apple wants a secure platform for its users, which is great -- but it also wants to skim billions in revenue from developers, which is much harder to justify and creates a lot of extra trouble.

As an example, I'm considering a change to one of my apps and I honestly can't tell whether it would fit with the App Review guidelines or not. I used the Contact Us link to send a message to the review team explaining what I wanted to do and asking whether it would be okay. The response was that they can't comment on proposed changes and the only option is to do all the work, submit it and see if it gets approved. How inefficient is that as a development process?

 

[PlayUltimate]

A "better" compromise would be to create a separate hosting alternative for those apps that wish to bypass the system. They would be sufficiently charged for hosting and development. They would also not be included in any general category or name searches. The only way that the app could be found is via a specific name search. Thus all of the marketing for the app would need to take place outside of the Apple Store and normal in-store discovery would not take place.

 

[arlomedia]

And yet, the fee has been in place since the beginning. So there must be something that attracted developers.

Obviously it is an important platform to support. But the argument "it must not be too expensive since people are paying it" isn't meaningful in a monopoly situation.

In any case, the use of apps and mobile platforms has evolved significantly in 13 years, and the role the App Store plays for many developers no longer has any relationship to the fees Apple is collecting. For developers with their own marketing and payment systems, it is merely a very expensive download site.

 

[TheSynchronizer]

You make a good point and I wouldn't argue that this doesn't have benefits for consumers. What's more troubling is how "Target" in this analogy treats its suppliers, taking a larger cut than any similar distributor has ever collected before, then imposing confusing rules about what else the supplier can do with their products, and using an opaque process to make the final judgements about what appears in the store.

(To leave the analogy now) It's just so mixed up. An elegant business model would pretty much work on its own and most people would accept it as fair and appropriate. When you have to hold your business model together through pages of rules, monopolistic behavior, a team of reviewers trying to catch workarounds, developers having to modify apps to meet confusing requirements, and fending off lawsuits, that indicates the business model isn't really sound. Apple wants a secure platform for its users, which is great -- but it also wants to skim billions in revenue from developers, which is much harder to justify and creates a lot of extra trouble.

As an example, I'm considering a change to one of my apps and I honestly can't tell whether it would fit with the App Review guidelines or not. I used the Contact Us link to send a message to the review team explaining what I wanted to do and asking whether it would be okay. The response was that they can't comment on proposed changes and the only option is to do all the work, submit it and see if it gets approved. How inefficient is that as a development process?

I completely agree with what you're saying. I like Apple's approach but it is far from perfect, and there are many things that should be changed and improved for the better, and I can definitely see how frustrating the app store policies can be for an iOS developer, especially when accidentally breaching them can lead to your app being taken off the store completely.

I welcome the idea of developer friendly changes to be made to the app store as a result of this lawsuit.

On a sidenote, as a long time veteran of jailbreaking I personally wouldn't even have an issue with alternative stores being allowed on iOS. Cydia probably had various malicious tweaks among all the majority of good ones, but I always knew to always use reputable sources and so I've never had any issues with any tweaks I got. But the problem is, I know plenty of people that are not familiar at all with the idea of unsafe software. These people would download something without knowing the risks and completely wreck their devices, have their data stolen and maybe even deleted within mere months of alternative stores being allowed on iOS.

I think this case ending in a true compromise with beneficial changes for developers as a whole, and not just Epic and their selfish desires, would be the best outcome.

 

[arlomedia]

How do you expect game consoles to survive if they are forced to allow competing stores in their eco-system?

Slippery slope: this isn't about game consoles.

As they've discussed in the court case, this isn't a problem with a single-purpose device like a game console. It is a problem with a multi-purpose platform, when the owner of the platform uses its popularity in one area to privilege its own services in another area.

 

[Unregistered 4U]

Slippery slope: this isn't about game consoles.

As they've discussed in the court case, this isn't a problem with a single-purpose device like a game console. It is a problem with a multi-purpose platform, when the owner of the platform uses its popularity in one area to privilege its own services in another area.

Single purpose? Single purpose is a microwave. Single purpose is a Game and Watch. A game console can
1) Play games (MORE than one, so that’s way more than single purpose right there)
2) Capture video
3) Edit video
4) Access video streaming services…

That’s 4 purposes and I’m not even including the Switch’s calculator, yet

 

[Michael Scrip]

Why should they be allowed to advertise in-app for free though?

Advertising and marketing is one of the most expensive aspects of any product. Netflix have managed to circumnavigate IAP's by doing a great job with their marketing. Spotify could do the same as could Fortnight.

Epic however relies on multiple small dollar impulse purchase IAP's. It's not a "normal" subscription, it's run like a casino.

Now, perhaps Apple could allow links to external payments for certain media apps e.g. video / music players where there could (in theory) be a benefit to Artists on these platforms as well.

But small dollar impulse purchases like Epic's currency exchange IMHO should continue to be locked into IAP's.

Well they can't advertise in-app right now. And that's been a big issue since the App Store started. That's why you see a "we know it sucks" banner inside the Netflix and Spotify apps. Luckily people have figured out how to sign-up for Netflix and Spotify on their own. Netflix and Spotify seem to have adapted to Apple's rules.

You're right about Epic. They are just selling digital currency. That absolutely should be subject to Apple's 30% cut per the agreement. And it was! Epic was in the App Store for years and they knew the rules and obeyed the rules.

Until they didn't. And Epic got kicked out. And then they sued Apple?!?!?

All I was saying was... companies have a problem with the 30% rule. So maybe there's some wiggle-room there?

I know it's Apple's rules... but should Apple get 30% or 15% of every monthly transaction for life? Or every time someone wants to turn $20 into a bunch of fake V-Bucks?

I guess that's what these lawsuits and trials are all about! We're all watching and we've got our popcorn ready.