It all depends on what the new 'math' becomes when developers test an alternate payment in their apps and see how it works out. I've done a large amount of revenue in the App Store that I had to pay Apple 30% of. I can tell you, from a developers point of view, at least any of them that know what they're doing, run split-tests to see how different price points will affect Net Revenue; so testing prices to see affect on conversion. If using an alternate payment method, and saving on the App Store commission (whether it's 15% or 30%) creates a lot more Net Profit with the SAME prices then most Developers (depending on the increase) would switch to using the alternate payment methods AND they'd start testing lower prices to see how that would change the overall math with a 'gap' in not having to pay that commission. Any smart Developer is out to MAXIMIZE Net Profit. So if they can net more by lowering prices AND using an alternate payment method (and taking into account support or things they have to do by using a 3rd party processor) then they would.
Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Judge Says Apple Has Until December 9 to Make App Store Change Letting Developers Link to Alternate Payment Methods
- Thread starter MacRumors
- Start date
- Sort by reaction score
It all depends on what the new 'math' becomes when developers test an alternate payment in their apps and see how it works out. I've done a large amount of revenue in the App Store that I had to pay Apple 30% of. I can tell you, from a developers point of view, at least any of them that know what they're doing, run split-tests to see how different price points will affect Net Revenue; so testing prices to see affect on conversion. If using an alternate payment method, and saving on the App Store commission (whether it's 15% or 30%) creates a lot more Net Profit with the SAME prices then most Developers (depending on the increase) would switch to using the alternate payment methods AND they'd start testing lower prices to see how that would change the overall math with a 'gap' in not having to pay that commission. Any smart Developer is out to MAXIMIZE Net Profit. So if they can net more by lowering prices AND using an alternate payment method (and taking into account support or things they have to do by using a 3rd party processor) then they would.
I think he is saying apple can still charge a fee for developers using the App Store.
There's no maybe not... lower prices in 95% of cases will increase conversion rates. That doesn't mean it increases Net Profit because there are other factors involved. I.e. conversion rates may drop if a user has to click a button and go to an outside source for payment rather than the less friction process of clicking IAPs and ordering via Apple like people to do now.
Sure they can. By trying to charge a % of revenue generated by any outside payment processor defeats the purpose of using an outside payment processor and the court's reason for doing so to bypass the commission Apple is currently taking when users order through them.
Maybe or maybe not. Apple is still entitled to collects its fees. They may charge other fees (download fees, registration fees or who knows what) to compensate for the loss in revenue. Or they still could charge 20%, which could make it even more expensive for the developer on top of any other fees paid
The point is to give consumers and developers choice, not so much to give them a way of circumventing the App Store fees altogether. So you want to use PayPal or stripe, the option is there, but know that users will likely still be paying the same amount, and developers may not be earning any more at the end of the day.
And Apple still gets paid at the end of the day.
That is not true.
The way the credit card systems work, you usually have up to 3.5% in fees and often up to a $0.35 transaction fee.
But as far as risk is concerned, any dispute on the transaction requires the merchant to cover the refund. It doesn't matter if you are some indie developer or a major retail chain... in the case of fraud, the merchant gets the amount deducted from their account. This means that the bank is not required to cover the fees of fraud... all of that burden falls on the merchant. The bank puts systems in place to help protect the merchant including things like CVV numbers and billing address verification. And you are right in the sense that the overall cost could be 7% to 10% because of those loses (fraud/refunds), but that is not a requirement set by the bank as long as your bank account is in good standing.
In fact that is no different with Apple if there is an In-App purchase or a iTunes transaction that the user wants to refund. The developer gets the sale and also has a deduction for the refund. So with ADC at least there is no direct out of pocket cost and loss that needs to be covered compared to a physical item that was purchased with a stolen credit card.
To be honest, I find it ludicrous that a bag of in-app gems costs $49.99. It is the developer setting those prices even if they offered the same number of gems for $39.99 (20% off) with their store, its still gouging consumers. Sure Apple takes their $15 happily enough, and the developer still is pocking more cash for impulse purchases. If anything is harming the consumer it is the insane prices for in game crap. And if you want to talk about monopoly, there is no free market for in-game stuff at all.
Interesting that you should raise speeding limits; this is a classic discussion point in critical legal studies. Imagine that a state or county operates a speed limit of 40mph, but also has a prosecutorial practice of declining to prosecute anyone doing less than 45mph. Is the speed limit 45 or 40? The statute might very clearly state 40, but the law is defined not only by statute, but by operation and precedent. Imagine that attorneys in the county have been advising clients for years that the local speed limit is in effect 45mph, and that they are safe to drive up to 44mph. Sometimes the law isn't always black and white, and despite the apparent certainty of the statute, a court in that hypothetical may be well inclined to conclude that the limit was in fact 45mph.
Lawyers don't always agree with each other (and if you missed it, I am one myself, though admittedly in a very different field), and they don't always agree with every decision. Judges absolutely can get the law wrong, and for any field of law there will be countless practitioners and academics who can identify cases where they are convinced that even the highest courts in the land have got the law wrong. But you can still respect that the current legal position is the law (at present), even if you disagree. I took issue with one user here alleging wilful bias against a judge without any evidence other than that she (unbeknownst to that user, who seemingly knew so much about her as to call her a 'him') disagreed with Apple, and I hope that you can at least agree there is no room for such contempt.
As for FARS you have cited, this is something I can help with.
1) Others here have been 100% correct to point out that courts frequently look at the words in the statute that surround a particular word or phrase, particularly as concerns lists (such as in this context MP3 players and PDAs), to gather from the general context what was intended to be included.
2) Regulations/statute often originate from previous regulations, statutes, or case law, often copying - word for word - sentences and paragraphs that were written years earlier.
Though in fairness I can't actually identify this paragraph in any earlier regulations and a check through Westlaw seems to suggest it did originate in 2014. So you would appear to have a point. However....
3) FARS are federal procurement regulations, governing what the federal government can buy with appropriations from Congress. 48 CFR § 23 defines a computer for the purposes of government purchases of 'Environmentally Preferable Products and Services' i.e. ensuring that the federal government buys products that are environmentally preferable. You may wish to look at 48 CFR § 23.700.
More specifically in 48 CFR § 23.703 the policy objective is clearly explained: energy efficiency, cost savings, and reduction of hazardous waste through buying environmentally preferable products and services. For this purpose, computers in the context of federal acquisitions exclude smartphones, MP3 players, etc.
This might be an argument used to persuade a court that a smartphone should not be considered to be a computer for an altogether different purpose, but that may be quite a stretch. What it most definitely is not is some firm legal authority that says "here, federal law says smartphones aren't computers". To that end, you have significantly misrepresented the law - I hope out of ignorance rather than any intent to deceive anyone here.
One could equally cite 18 U.S.C. § 1030(e)(1):
This has been interpreted across federal criminal law e.g. child trafficking committed 'by computer' (18 U.S.C.A. § 2251). E.g:
Of course, this relates to federal criminal law, and that purpose alone. Criminal law is also often broadly defined for the purposes of encompassing wrongdoing. Though it might be said that criminal law could be more persuasive when considering the definition of a computer for antitrust in the consumer context, than an exemption for smartphones from energy efficiency requirements to government acquisitions of computers. Both statutes are still only persuasive, nothing more.
Last edited:
Via a little thing called research.
The majority pf Gas stations are franchises; they are generally not owned by the actual fuel company. Yes, you have the independents but they generally have a hard time of it because the are not connected to a big company but it does give the independents flexibility..
"Of all the business types that accept credit cards, gas stations are some of the most negatively impacted by credit card processing fees. This is because their profit margins aren’t much larger than the interchange fees they pay for each transaction. Most petroleum franchisees will either inherit their pay-at-the-pump and in-store systems or have these systems chosen for them by their corporate supervisors, but independent fuel stations and convenience stores often have the freedom to choose the systems they prefer."
The reality is software downloads are generally considered a high rick. I worked for more 10 years for a hotel that was part of a franchise going back to 1946 (the hotel itself was built in 1948) as an auditor and I can tell you we certainly weren't paying any 3% or lower on our credit card processing fee. Part of the problem was the bar we had; we got rid of it because it was more trouble than it was worth (tended to get too noisy) and costing us too much in fees.
Uh. What exactly is not true?
Key word there is usually.
Here is what one company says in its promotion: "the average rate is about 4.5% + 23 cents (USD) per transaction, but actual rates will depend on years in business, volume and other factors". If you could get "up to 3.5%" (ie 3.5% or less) why would anyone with any kind of business savvy use this company?
Here is what another company claims "Expect to pay as much as 10%-12% per transaction and 50% more for monthly fees with a high-risk merchant account compared to a standard one. (...) Don’t sulk at rates of 4.5%, 7.5%, 10% or even 12% if down deep in your heart you know this is the only option." Again, if you could get "up to 3.5%" (ie 3.5% or less) why would anyone with any kind of business savvy use this company?
More over according to Google "You can expect to pay on average ~$100 per month for a high risk merchant account, on top of a $500 credit card merchant fee to Visa and MasterCard, EACH, on top of potential sign up or start up credit card processing fees." (Nov 14, 2019)
Elsewhere "Computer Software" along with "IT Services" are labeled as "high risk". Yet another site has this:
Low risk:
*Average monthly sales volume less than $20,000
*Average credit card transaction less than $500
*One currency accepted
*Doesn't offer recurring (subscription) payments
*Not on on MATCH list/history of excessive chargebacks
*Main product offering: books, office supplies, clothing, home goods, etc
High Risk:
*Average monthly sales volume over $20,000
*Average credit card transaction over $500
*Multiple currencies accepted
*Offer recurring (subscription) payments
*Placed on MATCH list/history of excessive chargebacks
*Main product offering: software, digital, tickets, seasonal items, etc.
Right and if you go through the Apple store to sale your product, Apple not you is the merchant. By taking the risk they are able to offer 1.5% (with a minimum fee of $0.25 and a maximum fee of $15) for people to use Apple Pay. Basically a Peter and Paul situation.
Another factor is that "a business license is almost always required for a merchant account". Depending on the business this can be a pretty penny and may have to be renewed every year. Cab drivers for example pay a premium even if they are "independent".
It sounds like you are talking about a standard banking account while I am talking about a merchant account. As an auditor for over 10 years I can tell you merchant accounts (especially for bars) can be a totally different animal from standard personal bank accounts.
Last edited:
Not really. The MacLibel suit would have never passed muster in the US (it would have been DOA). France's non acceptance of panorama with regards to copywrite has no effect on US panorama rules. Many more examples can be found.
I think so too. If you want a view of the ruling from an actual Lawyer watch Epic v Apple: Judgment Day - Who Won? Who Lost? ...and Why? (VL538). If you don't feel like going through the 2:26:21 long video and want information on the one (and only) point Epic won on he starts talking about that at the 2:02:07 mark and explains exactly what it really means.
Nope.
Been in the industry for a very long time with multiple companies, and have experience in retail, direct download software sales and e-commerce merchant accounts. Sure there might be a few business markets which are harder to setup a merchant account with, but my experience as always been pretty straight forward. And the worst fee structure I had to deal with was 3.5% + $0.35 per transaction.
Apple is acting as the merchant in this case... you are technically right. But they also pass the wins or losses back to the developer. If a traditional retailer did that, it would be the equivalent of the merchant going to their distributer and say "we just had XYZ stolen via fraud... refund us the cost of XYZ" (that just doesn't happen). Instead Apple does not take the fall for any fraudulent In-App purchase. Since it is just a digital good, Apple can just revoke access to the item purchased with that In-App and then reverse the payout to the developer.
But given a developers ability to use their own payment processor it gets a lot messier in terms of refunds and fraud. Assume someone purchased an In-App item using 3rd party and then disputed the charge on their credit card. The developer receives and responses to the chargeback by revoking access. The entire situation causes the user to complain to Apple and/or write a review that developer ABC was cheating them even if it was initially a legitimate charge.
Ultimately Apple is doing a WHOLE lot more than just doing a credit card transaction fee. Apple services cannot even compare to what a company like Stripe, AuthorizeNet or Square does... and people forget about that fact. Is Apple charging too much or are they doing enough service for that 15%/30% cut?... maybe not depending on which developer you ask.
Apple launched this entire program to mirror brick-n-mortar retail shops like BestBuy and Target... you buy physical product of software there and good luck to any Indie trying to get something on the shelf. For any AAA studio, how much of that $50 game do you think they get for a sale within the retail store... at most they would get 70%, but for most manufacturers and suppliers they only get 50% of the list price for the item.
The Apple App Store is fantastic for Indie developers even if some complain about the 30% cut (most did not even before the "small business adjustment to 15% for <1 million per year").
For the big studios and developers, the App Store is not that great of a deal. In fact the burden of approving apps, developing frameworks and updating OS is not benefiting the major developers much at all... pretty much all of the benefit is going to the Indie developers that would have no other way to compete in the market.
Take Rovio for example. They were an indie developer of 3 or 4 guys with an idea... funny thing was that AngryBirds was the 52th game they released with only minor wins beforehand, but AngryBirds was the first title that gave them a major success. There are tons of other examples like that.
Your research is TERRIBLE.
You keep saying this "software downloads are generally considered high risk" and I'm calling "NONSENSE!" on that statement. Let's see multiple links that support this claim and links from High-Rate Processors trying to justify their rates don't count.
ANYWAY, regardless of that... and this destroys your argument even further... an App, having been fully reviewed by Apple and all their strict guidelines, and having the code fully reviewed, all before it would be available on the App Store, would NOT qualify in any way as "high risk" software. Apple is NOT paying high merchant processing rates for their App Store IAP activity, it's been proven by their public filings. So NONE of your argument holds water. N-O-N-E.
And what does you having worked for a hotel franchise have anything to do with the price of ice cream on Sundays?
BLAH, BLAH, BLAH. This has nothing do with...
WAIT FOR IT...
ALMOST THERE...
WAIT FOR IT...
A LITTLE BIT LONGER...
...WHAT *APPLE* IS PAYING FOR MERCHANT PROCESSING.
This DESTROYS you even trying to make this argument at all. Your facts are off about software being generally considered high risk anyway, and I got sucked into that debate, but as this all pertains to APPLE, they're NOT paying 4%+ merchant process rates for IAP activity inside their Apps.
Your entire "position" on using the high merchant rate nonsense is trying to defend Apple's 'need' to charge such high commissions on App Revenue.
No merchant bank in the world is going to charge Apple some high rate for merchant processing. They're one of the largest volume marketplaces ON PLANET EARTH. If anything, Apple probably has super low rates that barely have much profit in them at all, rates far lower than the 2.2% or so that most "low risk" businesses can instantly qualify for. Any bank would be happy to provide merchant services for Apple with a tiny margin based on the massive volume that Apple produces.
NOW... if you continue "holding onto" this merchant processing element, then you're trying to state that APPLE is paying these high rates and that's why it matters at all. But they're NOT paying high rates as evidenced in their public filings.
#checkmate
It only doesn’t make sense because that’s not the outcome you envisioned, and because it runs counter to the popular narrative that the sustained legal assaults will eventually result in the Apple walled garden crumbling and spell the end of Apple’s dominance.
The ruling is pretty clear. Developers are allowed to link to other payment options, but this does not mean they get to use the App Store infrastructure completely rent free.
Yes it does as that was a point tangentially brought up in the Epic vs Apple case. All Epic showed was when Jobs felt 30% would lose the Apple store money (ie between credit card fees, maintenance, and other costs) was a "hugely profitable" "miscalculation" but was "not evidence consumers lock-in with iOS devices."
Last edited:
Right. If you go through Case 4:20-cv-05640-YGR Document 812 Filed 09/10/21 the court itself noted "Epic Games’ reliance on a 2007 statement from Steve Jobs when he announced the 70-30 split that Apple did not intend to make a profit, much less an unpublicized, internal 2011 comment by Phil Schiller regarding a reduction of the 70-30 after a billion dollars in profit, do not change the analysis. As discussed above, these statements do not create a policy shift sufficient to show lock-in. At best, these statements reflect Apple’s initial expectation that the App Store was not projected to be profitable for Apple.[584] Apple’s miscalculation, while hugely profitable, does not evidence consumers lock-in with iOS devices. While Apple’s calculated risk returned incredible profits, the reality is that Apple has maintained the same general rules with both consumers and developers since the inception of the iOS devices"
Apple didn't expect to make a profit on its 30% ie even with 30% between credit card fees, maintenance, and the rest Jobs felt Apple would lose money on the App story. That Apple didn't just happened to be a happy accident and to parphrase on old saying "If it isn't broke don't dork with it."
"Generally, plaintiff must pay 30% across most platforms. Indeed, for example, Epic Games has agreed to such a rate on all Fortnite transactions via the Microsoft (Xbox) Store, the PlayStation Store, the Nintendo eShop, and Google Play."
Regarding Epic's "expert", Mr. Barnes, the court was unimpressed: "However, when Mr. Barnes extended the analysis to compare his findings to other online stores, he chose poorly. (...) he did not compare Apple with the Google Play app store, Sony Play Station Store, Microsoft Store, Samsung Galaxy Store, and Nintendo eShop"
Last edited:
I, nor anyone I've seen in this discussion, has stated Apple shouldn't make money from the App Store or that developers should get to use the infrastructure for free. Where did you get that from?
BUT... even if I had felt that way... outside of a $99/year fee, 90%+ or so of Developers in the App Store DO use the App Store infrastructure complete rent free and outside of any additional commission.
Last edited:
Dude, you're so funny with your "research" and how you attempt to present evidence to support your argument.
I like you how fail to quote this important context from the judge, "However, the Court does agree that the comments confirm that the 30% is not tied to anything in particular and can be changed. Moreover, it shows that Apple used other provisions to hide information on those commission rates from the consumers."
Regardless of the reference to Jobs stating the intent wasn't to make a profit from the App Store, they knew most likely at scale it would be very profitable. Hence the reason Schiller stated if they should lower the commission rate once they do hit a certain level of profitability. Those comments by Jobs & Schiller were in the very early stages of the App Store but they knew the true costs of running it. Regardless of Jobs' statement, they knew it wasn't going to require a 30% commission to "breakeven" running the App Store. They're not stupid.
As far as how the 30% relates to other App stores, that's because Apple established the initial market rate that other companies could also get away with charging. It has nothing to do with the COSTS to do it.
There's a reason Apple and others have started lowering commissions due to these legal issues and blowback. It wasn't just out of the goodness of their heart.
Regardless of this, it's now nowhere near the 30% commission cost to run the App Store. THIS IS THE ENTIRE POINT. As has been proven in an estimated 'range' (by more than one analyst, not only the guy in the Epic case) based on quarterly filings and public data, the App Store margins are MASSIVE. They'd still make billions in profit if they only charged a 10% commission. THE MATH DOESN'T LIE.
So enough with this nonsense that Apple is paying some "high risk" merchant processing rate and has these other huge costs to run the App Store that they really can't reduce the commission by much or they'd be losing money. That's 1,000,000% NONSENSE. It's not supported by any of their own actual accounting data.
Therefore, your entire argument that you've making for many posts is completely MOOT. It's just not true that they have these costs that you state are probably 10X higher than reality.
Last edited: