Judge Says Apple Has Until December 9 to Make App Store Change Letting Developers Link to Alternate Payment Methods

[vipergts2207]

Setting new precedent is a way of creating new law without actually creating new law. What she did here was set new precedent that says "I can force a software company to make it convenient for developers to avoid paying to use the platform". This decision will be the first of many such decisions that refer back to it as precedent, and cross the lines into dictating what a company can do with their product and platform beyond any scope of anti-competitive law or consumer protection.


Fundamentally I agree with you, but I'm challenging you on this point because there is not enough thought has gone into this on your part. What makes it NPC speak is chanting "corporate bad, more laws good" without much thought into the specific situation.

Perhaps you're the one hasn't put much thought into this specific situation. For example, how is this beyond the scope of anti-competition laws or consumer protection? Apple is one half of a duopoly in the mobile OS market. They have the power to force devs to either agree to their terms or lose access to half of the market. Same situation with Google. A consequence of that is potentially higher prices. A would-be market with many mobile OS competitors could potentially force Apple to lower commissions from 30% to let's say 10%. Apple doesn't have to worry about that in the existing market because there's only one other place for devs to go and their terms are remarkably similar to Apple's. Artificially high commissions from Apple would have the effect of higher consumer prices as devs pass along that cost.

You can look at the ruling as "I can force a software company to make it convenient for developers to avoid paying to use the platform" if you wish. Others can look at it as "I can force a software company to stop using a dominant market position to extort other businesses."

 

[mrochester]

Perhaps you're the one hasn't put much thought into this specific situation. For example, how is this beyond the scope of anti-competition laws or consumer protection? Apple is one half of a duopoly in the mobile OS market. They have the power to force devs to either agree to their terms or lose access to half of the market. Same situation with Google. A consequence of that is potentially higher prices. A would-be market with many mobile OS competitors could potentially force Apple to lower commissions from 30% to let's say 10%. Apple doesn't have to worry about that in the existing market because there's only one other place for devs to go and their terms are remarkably similar to Apple's. Artificially high commissions from Apple have the effect of higher consumer prices as devs pass along that cost.

Having multiple competing ecosystems would bring a number of benefits to consumers including a downward pressure on App Store commissions as different ecosystems competed for developers.

But there’s one group of people for whom it would be a lot more effort as they attempt to target as many consumers as possible across different ecosystems… developers. The very people who are not happy with the current system either.

 

[Rogifan]

I wish people would stop talking about the cost of running the App Store. With the amount of money Apple is making off the App Store right now they’re clearly more than covering the cost of running the App Store (and all things associated with it like dev tools, developer relations etc). No, this is about Apple believing they’re responsible for the success of 3rd party developers and thus deserve to share in the developers success. Eddy Cue once said Uber wouldn’t exist if not for the iPhone. And I’m sure if Apple could get away with taking a cut of every Uber transaction they would.

 

[vipergts2207]

The same reason Apple does... to control the company destiny, differentiate your product and make a huge amount of money.

Sounds like we should just give up complaining then since it's a foregone conclusion that there's only ever gonna be iOS and android.

So why hasn't anyone done that then? Certainly MS, Samsung, Amazon, or FB would be in a better position that anyone else to do so. They don't want to make a huge amount of money I guess?? Or is it that they realize what I and others do, which is that the market will only bear two mobile OS's and that barriers to entry are nearly insurmountable at this point?

 

[vipergts2207]

I wish people would stop talking about the cost of running the App Store. With the amount of money Apple is making off the App Store right now they’re clearly more than covering the cost of running the App Store (and all things associated with it like dev tools, developer relations etc). No, this is about Apple believing they’re responsible for the success of 3rd party developers and thus deserve to share in the developers success. Eddy Cue once said Uber wouldn’t exist if not for the iPhone. And I’m sure if Apple could get away with taking a cut of every Uber transaction they would.

The App Store is clearly a massive profit center for Apple. That's why they care about this issue as well as sideloading so much. Apple's services category has gone up extraordinarily over the past several years and is now their second biggest category, behind the iPhone itself. And that's by revenue. By profit, I wouldn't be surprised if the iPhone and services categories were close to parity. There's a lot of overhead and input costs with manufacturing hardware. Not nearly as much so with "services".

Apple's Services Achieve All-Time Quarterly Revenue Record

Apple today reported services revenue of $18.27 billion in the fourth quarter of its 2021 fiscal year, which is an all-time quarterly revenue...

www.macrumors.com

If this profit center goes away, Apple's stock price takes a big hit. That's what they really care about. The statements of concern about consumers is secondary at best and a farce at worst.

 

[Onelifenofear]

The App Store is clearly a massive profit center for Apple. That's why they care about this issue as well as sideloading so much. Apple's services category has gone up extraordinarily over the past several years and is now their second biggest category, behind the iPhone itself. And that's by revenue. By profit, I wouldn't be surprised if the iPhone and services categories were close to parity. There's a lot of overhead and input costs with hardware. Not nearly as much so with "services".

Apple's Services Achieve All-Time Quarterly Revenue Record

Apple today reported services revenue of $18.27 billion in the fourth quarter of its 2021 fiscal year, which is an all-time quarterly revenue...

www.macrumors.com

If this profit center goes away, Apple's stock price takes a big hit. That's what they really care about. The statements of concern about consumers is secondary at best and a farce at worst.

Well Sideloading and allowing IAP are completely different things. The Point is the IAP will still have to be there in the Apple system for people to Pay for it that way... they just have to have an alternative. which will be a link to a webpage. Apple don't have to allow direct payment IN the app.

Apple still has to sign off and Allow IAP - they COULD also charge the Developer the cost for storing and Servicing that IAP as in no way could the Dev host it off site and add it into the game. That way malicious code lies.

Sideloading is just a terrible idea for the most part. Apple could allow it if forced in the future... doesn't mean they would be allowed to use ANY of apple APIs - or access to any part of the system like photos, contacts, hardware even like the camera / microphone. Hey they could only allow access to 1 CPU+GPU core if they wanted - "Fine open up a store you can't use anything we programmed to help you"

I don't see why any legal entity can be forced to make a company do anything like this. Apple made the phone and OS, we as customers bought them happily knowing we are in a locked in safe environment. Epic want IOS to be open so they can set up their own store and give NOTHING to apple for the development time, client base etc.

 

[vipergts2207]

Well Sideloading and allowing IAP are completely different things.

Yes, and not allowing the former and forcing the inclusion of the latter both serve the same purpose of increasing profits.

I don't see why any legal entity can be forced to make a company do anything like this.

Because thankfully our system of government doesn't allow companies carte blanche to do as they please. Operating a company in any given country is not an inalienable right. Much like companies have to follow Apple's rules if they want to do business on Apple's platform, Apple has to follow a country's laws if they want to do business there. Apple is not a deity.

 

[WiseAJ]

Why do you care if apple gets a cut from everything they don't make? are you apple?

I’m a shareholder and an iOS user.

Apple is entitled to compensation for use of their platform (iOS) to gain subscribers that Spotify (or others) would not have otherwise had access to.

This compensation allows Apple to continue developing and innovating iOS for everyone, consumers and developers, and keep major updates free. This also allows the tools themselves for developing apps to be free. (Anyone can download Xcode for free).

Take away the compensation and everyone loses. Apple loses money, so has to start charging developers for access to tools and/or drastically slows down development/innovation of iOS, developers have to start charging customers more to make up for the increased costs, and users will be stuck with a device that isn’t being updated with new and exciting features, or will have to start paying again.

 

[AdonisSMU]

Well, Google already showed how it could be done, by mandating that developers who use third party payment options still have to pay them a percentage of their earnings. So developers and users get their “choice”, while Apple still gets their cut.

That’s a worse experience for the user.

 

[pacalis]

lol 30% commision rate isnt fair by any means.

Yes, the processing fees are what, normally around 2% or less. The rest is going to the developer, which gives me a better app, a cheaper app or more content.

Another poster on here suggested they were likely closer to 5-7%.

When many distributors take 30%-60%, the app store fees seem more than reasonable. And given that MS and google also charge the same rate as Apple it hardly seems like Apple is out of step.

 

[urnotl33t]

Ma Bell was broken up into Bellsouth, AT&T Corp., Ameritech, Pacific Telesis, Southwestern Bell (all part of the modern AT&T), Bell Atlantic, NYNEX (both part of Verizon) and US West. It's almost like the massive consolidation of allowing the AT&T breakup to be nearly entirely undone was a bad thing or something..

Yup. The comedy of it is that ATT designed and engineered their own breakup. They offered that as an option/alternative to them having to dispose of Western Electric. This particular antitrust case is quite the case study for "unintended consequences", etc. In the end, it was their breakup that allowed them to be reformed when SBC bought the remains of AT&T long distance and wireless.

Wicked stuff when the child eats the parent! ?

 

[Hunter5117]

Take away the compensation and everyone loses. Apple loses money, so has to start charging developers for access to tools and/or drastically slows down development/innovation of iOS, developers have to start charging customers more to make up for the increased costs, and users will be stuck with a device that isn’t being updated with new and exciting features, or will have to start paying again.

Apple certainly has lots of options. They own the development environment. Nothing says they have to continue to provide it for free to everyone, although Swift is open source now so that might complicate things. Certainly Xcode could be put under license to those developers who sign an app store contract. None of this would be positive for customers or the market in general.

 

[Chrjy]

Apple is not the only company with a Apps Store, Google and MS have it too. So it is not something innovating or exclusive to Apple.

I agree but where did the App Store originate from in the first place?

 

[bigsnake49]

I don't agree. What would be the point of linking outside the App Store if Apple can still demand a cut?

The judge did not prohibit Apple from monetizing their IP. All she wanted them to do is not prohibit the developers from offering an alternative IAP.

 

[2true]

I agree with you on that, lots of activist judges take it upon themselves to write laws from the bench. That's why we have appeal courts and Supreme courts to fix these when warranted.

I'm a long time browser of these forums though I've always stopped shy of posting. As a recovering lawyer I just had to post when I saw this one, so here we go...

It's easy to brand particular decisions from judges as political simply because they have social or political consequences but this does not mean that judges are 'writing new law' from the bench per se, but rather determining how existing law answers specific questions that haven't been asked before, when those answers are not always clear or easy to determine. Or at least that's the idea along the lines of Dworkin's 'right answer' thesis.

I've never been a great fan of that viewpoint (preferring Griffith's view that judges do sometimes make new law, that this is and always has been their function, and that the law is often appropriately defined by its operation in practice). But even if there is one definitive 'right answer' to a new question about old law, and judges manage to determine it definitively and correctly, there will always be those who cry 'activism' simply because the answer had been declared. Precedent is a completely legitimate source and function of law.

Moving away from legal philosophy and back to the case at hand, if Apple wants to appeal it can do so. The current known position is - like it or not - that Apple cannot have a blanket prohibition on apps that link to third party payment processors. If Apple were ultimately successful on appealing this point, it could seek relief at that stage for the inconvenience it had suffered, but until then the law is settled, and Apple must follow the law of today, not tomorrow.

When Epic was defying Apple's policies and - as it has since been determined - breaching their contract, they evidently did so because they thought the law would eventually side with them. Some praised Epic for taking a stand, while others complained Epic were defying their legal obligations (as they were then understood). It's interesting (to say the least) to see some users here now imploring Apple to take a similar approach to Epic. Apple can appeal if they so wish, but for now they must follow their legal obligations. You can't have it both ways.

 

[bigsnake49]

Perhaps you're the one hasn't put much thought into this specific situation. For example, how is this beyond the scope of anti-competition laws or consumer protection? Apple is one half of a duopoly in the mobile OS market. They have the power to force devs to either agree to their terms or lose access to half of the market. Same situation with Google. A consequence of that is potentially higher prices. A would-be market with many mobile OS competitors could potentially force Apple to lower commissions from 30% to let's say 10%. Apple doesn't have to worry about that in the existing market because there's only one other place for devs to go and their terms are remarkably similar to Apple's. Artificially high commissions from Apple would have the effect of higher consumer prices as devs pass along that cost.

You can look at the ruling as "I can force a software company to make it convenient for developers to avoid paying to use the platform" if you wish. Others can look at it as "I can force a software company to stop using a dominant market position to extort other businesses."

That's not what the judge said, all the judge said was that Apple cannot prohibit the developers from providing an outside link for an alternative IAP. In the same decision she did not prohibit Apple from monetizing their IP in a different way. If for example you are one of those devs that have an alternative IAP there is nothing prohibiting Apple from requiring them to pay 30% of the revenue from the App Store on a monthly basis or quarterly basis with the right to audit, etc. Or to charge you every time you use one of their APIs. Or charge your app in order to download it. So now the app is free and you get charged for IAP purchases. Now they might charge you $9.99 per app download before you even made a dime.

 

[djphat2000]

Having multiple competing ecosystems would bring a number of benefits to consumers including a downward pressure on App Store commissions as different ecosystems competed for developers.

But there’s one group of people for whom it would be a lot more effort as they attempt to target as many consumers as possible across different ecosystems… developers. The very people who are not happy with the current system either.

Tell me a retail store, and we have many. That has lower commissions than the AppStore? We have had retail stores for what, ever. For this to be fair. Each retail store needs to allow the makers of the stuff they sell in that store. Allow them to advertise "other" means of payment that can bypass the register in that store.

 

[sideshowuniqueuser]

How do they expect Apple to code this so quickly?

It should be a 2 hour job. Maybe 2 days if they have to rewrite a bit of code to get it in. Maybe even a week or 2 if they really have to mess about. Testing should then take half a day or so, but Apple doesn't really do testing, so probably will take 10 mins.

 

[vipergts2207]

That's not what the judge said, all the judge said was that Apple cannot prohibit the developers from providing an outside link for an alternative IAP. In the same decision she did not prohibit Apple from monetizing their IP in a different way. If for example you are one of those devs that have an alternative IAP there is nothing prohibiting Apple from requiring them to pay 30% of the revenue from the App Store on a monthly basis or quarterly basis with the right to audit, etc. Or to charge you every time you use one of their APIs. Or charge your app in order to download it. So now the app is free and you get charged for IAP purchases. Now they might charge you $9.99 per app download before you even made a dime.

It was broader than that. Apple can no longer prevent devs from including links outside of the app or app store itself. Devs can now link consumers to payment methods outside of IAPs, Apple's implementation or otherwise. Apple can certainly begin to monetize their IP in a different way. Nobody said the status quo was the only way to run things.

 

[Abazigal]

As long as I can still pay through Apple, and the developers don’t make it cheaper only if you do it through their platform.. who cares. Doesn’t change anything for anyone, and gives people more options.

Frankly speaking, I suspect most developers will simply opt to keep the difference for themselves; apps are not going to be noticeably cheaper even if you pay with other payment options. I will likely stick with iTunes for the convenience at the end of the day.

 

[Ceed]

Try better next time. Not playing that game. You made an incorrect statement, I called you out on it and now you’re backpeddling and attempting to redefine the term “Computer” again.

Pick another sucker - I’m not your mark.

Next time write what you mean and quit playing games.

You truly assumed someone didn't know a Kindle and Xbox were devices capable of computing software? What are they made out of, steam pipes? ?

Alright, you feel whatever you need to feel. I wrote it poorly and offered no formal definition (I was talking about device class, not device makeup), I'll admit that, how's that.

 

[vipergts2207]

Tell me a retail store, and we have many. That has lower commissions than the AppStore? We have had retail stores for what, ever. For this to be fair. Each retail store needs to allow the makers of the stuff they sell in that store.

There in bold is why your comparison doesn't hold up to scrutiny. A purveyor of goods has many stores they could do business with. Competition among the many stores prevents any one of them from extorting purveyors with one-sided, self-serving terms. Walmart has conditions that are too onerous? Target, Costco, Amazon, eBay, Etsy, others, or even running your own store (digital or physical, doesn't matter) are options. Of course since Walmart wants to stock goods that are in-demand, they won't set terms that are too far outside of what the market will bear anyway. Otherwise customers that would otherwise go Walmart to make that purchase will make that purchase at one of the many other stores. Conversely, a purveyor who doesn't like Apple's terms has just one other place where they can sell their goods, Android. There's no competition to keep the duopoly in check when it comes to settings terms for devs.

Your scenario also ignores that customers are also capable of shopping at multiple retailers. If a purveyor doesn't like Walmart's terms, they're still capable of reaching those typical Walmart customers through other stores. Even if all of Walmart's customers do 90% of their shopping there, if the purveyor has something desirable, the Walmart customers will still shop elsewhere 10% of the time to get that product that Walmart doesn't carry. That situation doesn't exist in the mobile OS world. If I don't like Apple's terms and so only develop for Android, I have no possible way of reaching those iPhone users anymore because there's only one route to those consumers. A typical Walmart shopper may still buy goods from Target occasionally. An iPhone user cannot buy goods from the Google Play Store occasionally. Apple is making their consumers the product, a criticism frequently leveled at Google by Apple diehards.

Allow them to advertise "other" means of payment that can bypass the register in that store.

They can advertise other means of payment inside the product that was purchased. If I buy a video game at a retailer, the developer can include literature in their product that advertises in-game enhancements (skins, currency, etc.) and can even tell me where to get them. If I do buy those enhancements, the retailer doesn't get a cut even though I bought the original product there.

 

[Hunter5117]

I'm a long time browser of these forums though I've always stopped shy of posting. As a recovering lawyer I just had to post when I saw this one, so here we go...

It's easy to brand particular decisions from judges as political simply because they have social or political consequences but this does not mean that judges are 'writing new law' from the bench per se, but rather determining how existing law answers specific questions that haven't been asked before, when those answers are not always clear or easy to determine. Or at least that's the idea along the lines of Dworkin's 'right answer' thesis.

I've never been a great fan of that viewpoint (preferring Griffith's view that judges do sometimes make new law, that this is and always has been their function, and that the law is often appropriately defined by its operation in practice). But even if there is one definitive 'right answer' to a new question about old law, and judges manage to determine it definitively and correctly, there will always be those who cry 'activism' simply because the answer had been declared. Precedent is a completely legitimate source and function of law.

Moving away from legal philosophy and back to the case at hand, if Apple wants to appeal it can do so. The current known position is - like it or not - that Apple cannot have a blanket prohibition on apps that link to third party payment processors. If Apple were ultimately successful on appealing this point, it could seek relief at that stage for the inconvenience it had suffered, but until then the law is settled, and Apple must follow the law of today, not tomorrow.

When Epic was defying Apple's policies and - as it has since been determined - breaching their contract, they evidently did so because they thought the law would eventually side with them. Some praised Epic for taking a stand, while others complained Epic were defying their legal obligations (as they were then understood). It's interesting (to say the least) to see some users here now imploring Apple to take a similar approach to Epic. Apple can appeal if they so wish, but for now they must follow their legal obligations. You can't have it both ways.

That one reply you picked out was my general response to that question about judges legislating from the bench, not specific to this case. I actually thought the judges overall response back in September was pretty reasonable, all 185 pages of it which I have at least skimmed through. If you read though this very long thread you will see I have been pretty complimentary of her ruling in regard to Epics responsibility to Apple.

Obviously Apple has to comply with the court order while they decide how they want to respond. I have commented a couple of times that this puts Apple in a precarious situation; keeping the payment in their control makes other situations much simpler such as apps that only generate income from in-app purchases aka they are free to download. Apple can certainly contract with all app store developers that commissions are due on all in-app purchases regardless of how they are paid. However, that may then add fuel to the public opinion that Apple is being too aggressive vs developers. I am sure this and many more less obvious issues are why Apple asked for the stay.

It will be interesting to see how Apple moves forward.

 

[I7guy]

It was broader than that. Apple can no longer prevent devs from including links outside of the app or app store itself. Devs can now link consumers to payment methods outside of IAPs, Apple's implementation or otherwise. Apple can certainly begin to monetize their IP in a different way. Nobody said the status quo was the only way to run things.

Sure for now. Nobody knows what the appeals process holds. And apple can certainly monetize it's IP by charging on outside payment methods as the ruling apple was entitled to.

 

[vipergts2207]

Sure for now. Nobody knows what the appeals process holds. And apple can certainly monetize it's IP by charging on outside payment methods as the ruling apple was entitled to.

Right, we're talking about facts as they exist today.