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Judge Says Apple Has Until December 9 to Make App Store Change Letting Developers Link to Alternate Payment Methods
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You can tack that onto just about any sentence and it will be just as useful. Let’s not start panicking over hypotheticals.
They don't understand how coding works? Having done some coding myself and remembering the mess Copeland was I know it isn't as easy as many people think it is.
Epic lost on every count save one and that was limited to California law not Federal Law. Never mind the law in question is very very vague and amounts to allowing the courts to pull a 'if you come close then you are in violation' bunch of BS. Effectively the court was saying that getting a ticket for driving 34 MPH in a 35 MPH zone (ie under the limit) was still valid because you were close to going over. If that sounds a dumb as dirt that is what apple is asking an injunction on.
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Computer software already falls under high risk merchant account provisions so the developer is looking at 4% minimum and likely 7% or even as high as 10% if the bank is really uncertain about the viability of the account.
Also Apple can, like Unity, charge a fee for use of their software on top of what the high risk merchant account is charging. Apple could, as allowed by the other case, charge per transaction as if it was on the Apple store.
How did you qualify for a 2-3% for what is normally a high risk merchant account? Also Apple needs the extra money for server maintenance as well as other overhead.
Irrelevent as the other court stated "Having found the relevant product market to be that of mobile gaming transactions, the Court finds the area of effective competition in the geographic market to be global, with the exception of China." - Case 4:20-cv-05640-YGR Document 812 Filed 09/10/21 Page 134 of 185
The market is global, deal with it.
Except that is not how the Law defines a computer (48 CFR § 23.701):
"Computer means a device that performs logical operations and processes data. Computers are composed of, at a minimum:
(1) A central processing unit (CPU) to perform operations;
(2) User input devices such as a keyboard, mouse, digitizer, or game controller; and
(3) A computer display screen to output information. Computers include both stationary and portable units, including desktop computers, integrated desktop computers, notebook computers, thin clients, and workstations. (...) This definition does not include server computers, gaming consoles, mobile telephones, portable hand-held calculators, portable digital assistants (PDAs), MP3 players, or any other mobile computing device with displays less than 4 inches, measured diagonally."
Please see my earlier post here. I don't pretend that there is no such thing as judicial bias, but if you are saying 'the judge is biased because she didn't agree with Apple', just wow. The rule of law matters. Respect for the law matters. I don't know how to characterise your position other than as one of contempt.
The problem as I pointed out earlier is the one point Epic won is based on a very very vague California law not Federal Law. An actual Lawyer went over that in Epic v Apple: Judgment Day - Who Won? Who Lost? ...and Why? (VL538) at the 2:02:07 mark.
At the 2:04:07 the lawyer spells it out that the law the court is using allows one to pull a 'if you come close then you are in violation' bunch of BS (insipid is the actual term). "Hmm. you almost violated the law and we think there are comparative effects if you had." As the lawyer says you should have the law spell out where the line is.
Yes, "The rule of law matters" but this was not based on any "rule of law" but of an off the wall interpretation that is akin to 'Oh you were driving 34 MPH in a 35 MPH zone (ie under the speed limit) but we can give you a ticket for speeding anyway because that is close enough.'
If that sounds a dumb as dirt that is what Apple is asking an injunction on.
In fact, there is something called "Void for vagueness": " Under vagueness doctrine, a statute is also void for vagueness if a legislature's delegation of authority to judges and/or administrators is so extensive that it would lead to arbitrary prosecutions." - Cornell Law School
You 1,000,000% have no idea what you're talking about. Software does NOT primarily fall under a high risk category for merchant processors. I run a software company that has processed millions in revenue for many years (and have had different software products/projects for years) and I've never had any of these ventures had to pay more than the normal rate. I'm also good friends with other entrepreneurs that own software companies and NONE of them have to pay higher merchant account rates. In fact, Stripe, now one of the largest merchant processors in the world got it's start as a more friendly tech solution (API) to allow others to sell Web applications, downloadable software, SAAS, and all kinds of software online whether it was a one-time fee or recurring subscription. All for a flat-rate of 2.9% and that's a blended rate because it includes Amex which has always had a higher rate than Visa/MC for any bank processor.
It's so funny how people like you are fighting so hard to 'try' and defend Apple's greed and exorbitant commission rates that they've been able to get away for years until it finally being challenged in court and now in other jurisdictions around the world. It's clearly anti-competitive behavior and leveraging their large position to try and make all the money and keep developers from having more competitive options. There's a reason the judge in the Epic case ruled this way. There's a reason South Korea law was recently changed. There's a reason the EU is going to be hearing multiple cases on the issue. There's a reason states like Arizona have proposed legislation to keep Apple from doing what they're doing.
If Apple was so "in the right" to do what they've been doing then why are all these companies, and now many different countries, taking action against them?
The 30% cut is total nonsense. It's exorbitant. They're subsidizing the App Store by hitting successful game companies and other App developers with an insane tax.
Their incremental costs to run the App Store at scale are not even close to being proportionate. As they've grown so has the profit margin on that 30% cut, most likely an astronomical amount. Their costs to provide "the tools" and other things they've created for their developers are a STATIC cost. It's the same cost to develop those tools for 100 developers or 100 million developers. So the "yeah, but they have to develop the tools and software they provide to developers!" argument does not hold water when it comes to the 30% commission on the App Store at scale.
Their server/data transfer and support costs don't cost BILLIONS of dollars. Hence the reason many estimate that 30% cut and the App Store has nearly a 90% profit margin. It's one of the most profitable products or services in the world.
It's COMMON SENSE really... you don't think there's a strategic reason why Apple doesn't break-out the App Store detailed costs & profits in their Quarterly Filings? It's not hard to figure out. They don't want to invite scrutiny of the insane profits they're making from the 30% commission.
Their "it's about security for the users!" doesn't hold water either. Anyone can use Safari on the iPhone and then make credit card purchases across independent web sites all over the world and millions do it everyday. Credit card banks guarantee full refunds on any fraud anyway.
You better "buckle up" because you're about to be very disappointed if you think Apple is going to continue with their 30% tax without developers being able to give their users other payment options. The momentum is building against Apple and it's only going to get bigger. It's only a matter of time before the anti-steering and lack of alternative payment option tactics that Apple uses are determined to be completely illegal and anti-competitive.
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The one thing I have learnt about law these past few years (especially when it comes to antitrust matter like this) is that the outcome is rarely ever about right or wrong in the conventional sense, but about power and leverage.
Also, countries are more likely to support their own citizens and homegrown companies for their own vested interests, even if they may not necessarily be in the right.
It’s sorta like watching Godzilla duke it out with King Kong.
I have also realised, following these tech trials, that lawmakers don’t always understand the nuances behind tech, and the end result is that they try to legislate a certain problem to solve a perceived problem, only to result in unintended consequences.
The South Korean case is probably the best example, with Google electing to charge a tax on purchases made outside the play store, meaning that developers don’t end up saving any money at the end of the day. The sweetest irony is that depending on the nature of the purchase, it may actually end up costing the devs more!
Companies like Spotify or Epic didn’t say a thing in the past. In fact, Epic even partnered with Apple to showcase their infinity blade series of games during iphone events. Likewise, Spotify could not have grown to the size that they did without the App Store making the whole process of downloading their app and signing up for an account so seamless.
It’s only now that these companies have grown to a certain size that they feel the iOS App Store no longer holds any benefit for them, that they are trying to attack the App Store model and wrest control of it for themselves. Epic wants to be able to offer its own App Store on iOS, host other apps and charge developers a commission. Spotify wants more power to do what they want with their apps than Apple will allow them.
That’s all there is to it. Not about right or wrong, but about power, and who ultimately is the one to hold it in the end. These companies are not doing this to benefit or empower smaller developers. They will gladly burn down the current App Store model if they have to.
And that’s what I abhor, and that’s why I continue to support Apple in this regard, because it’s clear that the other side is no angel itself.
Is that such a bad thing? This means that there are extremely low barriers to entry for small developers who are able to create free apps for users.
The main beneficiary to this are people like us, the end users, who stand to gain from a more vibrant App Store environment (because there are more apps available to download and use).
You are also forgetting one thing.
Apple only charges 15% or 30% from paid apps, but the majority of apps in the App Store are free (or otherwise do not generate Apple any money). This goes back to your earlier point where, while it is true that the bulk of App Store profits come from a small group of more lucrative apps, the costs are incurred by every single developer (and no, that $99 a year doesn’t come remotely close to paying for the support they get).
Is Apple not entitled to a profit from running the App Store? Do we even know what the percentage cut for the App Store to break even is even? What this dynamic means is that the costs are static (because they are incurred per developer), while revenue would decrease very quickly as it is being derived from a small group of users - a very high tangent). My own internal math suggests that Apple needs to charge at least 20% for the App Store to break even, but at this point, I guess your numbers and mine are purely speculative.
Show me the particular piece of legislation which states that Apple is somehow obligated to operate the App Store at a loss and subsidise it via iphone profits.
"The most common high-risk merchants include:
- Phone services, particularly prepaid phone cards
- Multi-level marketing and direct sales
- Travel accommodations, airfare, or packages
- Discount memberships or gym memberships
- Software downloads
- Health and wellness products
- Electronic cigarettes"
This is offset by several factors including the years in the normally high risk field and as you noted you have been doing this for "many years" and likely now qualify for low rate but that is not going to be true of some Joe Schmoe developer next to no one had even heard of (which most of the small developers will be).
Another thing is that in addition the percentage for what most banks consider a high risk merchant account (new software developer using downloads for distribution) there is a flat fee per transaction. This is why brick and mortar stores will refuse transactions below a certain amount - they lose money on the sale.
Fun fact, gas stations on a good day make 1.4% net profit on their gas; grocery stores are 2.5% and car dealerships are 3.2% and two of those are considered high risk merchant accounts and so are paying 4% or higher for credit card transactions.
The reality is this is going to hurt the small developer as demonstrated by Google and South Korea. Odds are we are going to get some badly written law that does more damage than good.
My boss told me the story of the city where the people running it totally despised this old money family and tried to rezone them out of the city. Problem is they overcomplicated the law to the point they wrote eerybody but the old money family out of the city's borders. They had to eat crow and go hat in hand and go "Can we have our city back?"
That's my observation. The politicians pushing these cases have shown that they are not tech savvy in the least, and often have no idea about what it is they are even fighting for in the first place.
In a case like the recent App Store lawsuits, you would think that for an event that affects both developers and consumers, should we end users not be polled and interviewed on just what we think about all this? Maybe companies like Epic don't do this because they know that the end users don't actually hate walled gardens, and the reality is that the changes they are fighting for will probably not result in tangible benefits for us, the end users.
If enough people demonstrate that they legitimately prefer Apple's walled garden approach, should these developers not abide by our decision?
A lawyer could interpret that very dated-sounding language (PDAs? MP3 players?) to mean mobile telephones (of less than 4 inches) before the era of large-display smartphones that have ushered in a vast and all-encompassing app economy and ecosystem that gives any company that holds the keys to it absolute power and sway over an inordinate amount of people's data and how they are allowed to use it, which mobile telephones did not do before. With all that is going on in courts and legislative houses all over the planet, as well as the fierce public outcry and subsequent debate, do you really think we are finished defining this? Is anything ever truly finished being defined by law? My friend, we are in the embryonic stage of the smartphone era.
If the government sees too much power going in one direction, and the law in its primitively written state doesn't adequately include the language to correct this imbalance, you can bet your sweet bottom this will be rectified in due time. You would agree to this stance if it was Facebook, so don't be a hypocrite.
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The National Archives states "Title 48 was last amended 11/08/2021" so that "dated-sounding language" was updated this year not even a week ago (Being 11/14/2021 as I type this).
An interesting wrinkle is "Tablet PCs, which may use touch-sensitive screens along with, or instead of, other input devices, are considered notebook computers." The iPadOS is "a rebranded variant of iOS" and therefore can run iPhone programs. But that puts iOS along side MacOS and Windows as well as Android as a computer OS.
Again, you don't know what you're talking about. I Googled where you got that info from it and appears to be from "EMB" a merchant processor that charges higher rates and it's THEIR VIEW that software is higher risk. They're just justifying their higher rates.
Stripe is one of the biggest and most popular merchant account processors in the world. Anyone can go there right now even with a brand new business to sell software OR e-books and pay just 2.9%. In fact, they have specific integrations for Digital Download product businesses: https://stripe.com/accept-payments/easy-digital-downloads
So lower rates aren't just offered to software companies that have been around a long time. Again, a BRAND NEW software business can get Stripe's 2.9% automatically. You can also get a PayPal account for processing for a software business and pay 3% or whatever their primary rate is.
Not sure where you first heard that software was a high risk business. Maybe some sort of scammy "Spyware Remover" software which many of those types of software have been known to scam people, but the vast majority of software products are NOT considered high risk with banks or merchant processors.
Shopify, a $209 BILLION dollar market cap publicly traded company also only charges 2.4% to 2.9% (depends on account type) for Digital Downloads like software. They specifically promote that they're for digital downloadable products: https://help.shopify.com/en/manual/...-product/selling-services-or-digital-products
Who said Apple shouldn't make a profit operating the App Store? I sure didn't say that. Of course, they deserve to make a profit, and even a handsome one at that. But the 30% commission is egregious. 20% commission needed to break-even? LOL. It's not even close to that. That would be implying that nearly 2/3rds of the commissions they take is needed for break-even. You really think it costs Apple $14.75 BILLION PER YEAR to run the App Store? Because that's what 67% of their commissions would come out to.
Experts have done a deep analysis on the $20 BILLION+ in commissions Apple makes per year from the App Store and the margin is estimated to be closer to 80% after all costs but that margin goes UP as the App Store continues to grow in overall revenue.
How much does Apple make from the App Store? Even a landmark antitrust trial couldn't reveal it
During the trial of Epic Games Inc.'s antitrust lawsuit against Apple Inc., investors got a glimpse of how profitable the App Store may possibly be, even...
www.marketwatch.com
The article explains how an analysis was done but no one knows exactly because Apple strategically doesn't want anyone to know.
In my opinion, Apple should be charging something more like 10-12% commission which would be more than fair. They'd still be making an annual profit of $6-$10 Billion a year from the App Store, which alone is more profit than the majority of Fortune 500 companies make each year. Developers could offer an alternative payment processor option to their users (even like Stripe at 2.9%) but Apple's built-in IAP system, and many users preferring just to buy via Apple, would easily yield a much higher conversion rate on purchases (i.e. an app would Net more using Apple and paying 10-12% instead of using Stripe at 2.9% etc.) and most developers would be more than happy to pay 10-12% commission. But the 30% commission really is outrageous. Just like the judge said in the Epic trial, it seems 'off' that successful gaming companies are being charged 30% commission and they're subsidizing multi-billion dollar companies like Wells Fargo's free iOS banking app.
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Incredibly well said!
Anyone that can't actually admit that Apple & Google now have a monster DUOPOLY in the smartphone market isn't being honest. The argument that "there are plenty of other types of smartphones people have the option to buy!" doesn't hold water.
The reality is, if you're building a Tech company today that has a Mobile App as the core of their business model (and many companies do) then you HAVE TO have your App available for iOS or you're basically not going to survive.
Do you think TikTok, Snapchat, or Instagram (before FB bought them) would be anywhere near as big as they are today if their App wasn't available for iOS? Of course, not. That just goes to show that companies DON'T REALLY HAVE A CHOICE. They HAVE TO develop for iOS. This is yet another illustration of how Apple is part of that Duopoly and controlling the market along with Google - yet iOS is even more valuable. I bring that up because so many defending Apple love to say, "Well, those companies don't have to develop for iOS, they can just develop for other smartphones if they don't like Apple's commission rates." That realistically is a failed argument due to the massive user base of iOS. That's like saying, "You don't have to make your product in English, German is still a pretty big market."
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Where do you come up with this nonsense that you claim to be facts?? The vast majority of gas stations in the US are huge companies. They're not paying 4% merchant fees or higher. That's ridiculous. They're paying something closer to 2.0% to 2.2% due to volume. Gas stations also make big margins from people coming inside to buy other products. So that 1.4% net profit figure (on gas alone) is misleading because that's not the only way a gas station makes money.
Car dealerships don't even take credit cards for payments, at least not the big ones which that 3% profit margin is from. The ones that do take credit cards typically only allow a portion of the car price to be paid for that way.
Whole Foods has a 30% profit margin. Albertson's has a 29% profit margin. Safeway has a 27% profit margin. Kroger has a 23% profit margin. Those are some of the biggest grocery store chains in America. NONE of those companies are paying 4%+ in merchant fees. They're also paying 2.0% to 2.2% due to massive volume. Heck, some may be paying sub-2% rates as some companies do.
It's like all your 'facts' are from some poorly written Quora answer from some random person or a Wikipedia entry written in 1995.
If Apple has to greatly reduce their 30% commission (to like 12%) it's NOT going to hurt smaller developers at all, Apple will just go from making $20 Billion+ in profit per year from the App Store to something more like $6-$8 Billion a year in profit from the App Store which is still a HUGE amount of profit.
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