Microsoft Supports Epic Games, Says Apple Blocking Access to Unreal Engine Would Harm Game Creators

[iMi]

I haven’t even read the whole thing because I couldn’t help but think that the whole issue was with Epic creating a sales channel that circumvented Apple’s commission, more or less, therefore violating Apple’s policies. How does a game engine play into this?

I’m with Apple on this one, unlike the non-sensical lawsuit they filed for trade mark infringement against a small company with a logo that looks nothing like Apple’s.

 

[pankajdoharey]

There are many options especially Unity, Unreal is not especially not required. For open source we have so many options anyway. Including Godot.

 

[brynsmith23]

The already have, it's called the Epic game store. Of course they can't open their own store on Apples platform due to the pathetic limitations. Apple can still be a walled garden but they just need to loosen their restrictions a bit.

Epic would have known about the limitations and cost structure before they agreed to it, they shouldn't complain when when they deliberately break the terms of their contract.

I don't always like the contracts i sign, but it is what it is and sometimes it the only way forward.

That fact they took this route, i'm with apple on this one and apple had no choice but to kick them off the platform, now Epic has closed harm for other developers using the Epic Engine.

 

[cuhulin]

Epic wanted Apple to overreact. The more the better, as it makes Epic's case for abusive behavior. Hence why they updated the app to push for the ban before filing the lawsuit.

Let's also realize that if Unreal Engine games break, Apple will directly lose billions of dollars in revenue. Unreal Engine games are everywhere on the App store.
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I believe the entire lawsuit means Epic doesn't agree to the deal? How is this shady?

It may be coincidence, but....a game I have with an Unreal engine driving it broke when I installed the latest beta for Big Sur this week.

 

[Cosmosent]

ALL it means, WRT Unreal, is that Epic won't be able to do further development.

I don't think it impacts any existing code or libraries used by other third-party Game Developers.

This situation does offer opportunity for others to jump in & fill the void, possibly multiple others !

NOT my area, but it does appear to be a Golden Opportunity for multiple others to jump in !

Epic is NOT fighting the same battle as most App Devs !

Their battle is on Pricing, while most others are battling for (improved) App Discovery, the BIGGER of the two issues, as if impacts far more Apps & far more App Devs !

 

[PickUrPoison]

Well then, Apple thinks it's fair so therefore it must be fair...right? The problem is fair or not is not exclusively defined by Apple. Epic doesn't seem to feel it's fair. Who's right?

All companies do exactly that. Epic sets the price of a dance move at $10, should it be 10¢ instead because that’s what I think is fair? What if they want to raise it to $20, is that “fair”?

 

[ToqQrrl]

The thing that people do not seem to realize in this whole thing is that the point of this "movement" is to show that Apple is being unfair to developers as of now ...

Not for the 30% vs 15% ... not because this guy is smaller or bigger than this other guy ...

Apple says ... developers abide by the same rules ... fine ... if that is true than why are there companies like the ones I’ll name below able to use their own stores (bypassing the 30% or 15% commission to Apple) to sell their products and bypassing the apple built-in store ?

It’s funny because the companies I’m going to name below all benefit from the same services provided by Apple to all the other developers on the apple store ... advertising, marketing reports, iCloud infrastructure and what ever else Apple provides.

Uber --> Pays 0% to Apple while operating their own store on iOS
Lyft --> Pays 0% to Apple while operating their own store on iOS
Target --> Pays 0% to Apple while operating their own store on iOS
Walmart --> Pays 0% to Apple while operating their own store on iOS
Burger King --> Pays 0% to Apple while operating their own store on iOS
McDonald's --> Pays 0% to Apple while operating their own store on iOS
Amazon --> Pays 0% to Apple while operating their own store on iOS

Must i name them all ... I hope Epic uses these examples to show that Apple decides who can bypass their commission strategy and who can not.

Like I said earlier ... all these companies benefit from Apple technologies to be on Apple's iOS Store ... so why wouldn’t they be required to also pay the 15% or 30 % cut to Apple ?

 

[GizmoDVD]

The Fortnite dispute has nothing to do with the Unreal Engine. I doubt Epic anticipated that Apple would revoke their developer membership, but that move has really played nicely into Epic's hands. This is classic monopolist bullying behavior on Apple's part and it looks very very bad from the outside.

I don't like the idea of a single App Store (on any platform). Even more worrisome is the thought that some corporation can turn off access to the software I use, and maybe rely upon for my living, whenever they see fit. No one should have this kind of control over any platform. It's scary to think where this could lead.

Third party developers who use the Unreal Engine have absolutely nothing to do with Epic's Fortnite drama. Nothing. Zip. Zero. And Apple is going to punish them in order to punish Epic. No one should be cheering this kind of behavior. It's shocking that Apple would behave this way.

I like how Epic broke the ToS and Apple is doing exactly what happens when someone breaks the ToS.

Epic is at fault here. Apple is giving them a way back into the store - Remove their payment - and they are choosing not too. They can continue with their lawsuit if they like (which they will lose). Ball is in Epics court who will no doubt lose
Millions if the engine is “stopped”.

 

[rwxx]

Apple's practices are not monopolistic. What's the monopoly? When you walk into the Apple store, should Dell be able to say "we want to use that table to sell our products?" or Ford be able to sell parts for Jeeps and claim a right to have them covered under the Jeep warranty? There are competing platforms. If one wants to sell into a platform one follows the rules for that platform. That is not monopoly, it is free market competition.

Maybe not.

Monopolization Defined

The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power.

www.ftc.gov

This does a pretty good job of explaining what the courts consider a "monopoly". Read the paragraph at the bottom about the Microsoft case. The first sentence reads "Microsoft was found to have a monopoly over operating systems software for IBM-compatible personal computers." One could certainly argue that Apple has an even greater monopoly for iOS- and macOS-compatible personal computers, especially once the Mac moves to Apple Silicon. It's not that Microsoft had a monopoly in the industry, but in the IBM-compatible personal computer segment and they abused that position to benefit themselves. It seems to me that one can apply the same logic to Apple and the App Store, whether Android exists or not.

In an earlier paragraph, they write: "Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area." Clearly Apple does not have more than 50% of the sales in the mobile market. But in the iOS market, they have 100%.

It will be interesting to see how the courts handle this issue. It's obvious that we're headed in that direction and I think the scrutiny and oversight is warranted. For decades computer platforms have been more or less open. The Mac was always more locked down, but I could still go to a store and buy whatever program I wanted. It didn't have to be blessed by a corporate master. If that third party software company angered Apple, Apple didn't have a kill switch for their apps. No one told developers what kind of apps they could and could not write for the Mac. There was no corporate thumb on the scale. Personally I believe that all computer platforms should remain this way.

 

[xyion1]

This is a strawman argument. I don't think anyone is arguing that the services provided by Apple are worthless, including Epic. The question is whether they are allowing competition to exist on the app store so that a more accurate equilibrium price can arrive via market means.

In Epic's case, we're talking about hundreds of millions of dollars a quarter! The services you're talking about are not worth that much. In fact, I am willing to bet the $99 charged by Apple for the developer access to all developers is more than sufficient to cover all.

But if you want, we can be more generous. Look at development tools sold by Microsoft or pro tools sold by Adobe or even Apple itself. We're talking about thousands of dollars at most. Let's boost that number by a factor of 10 (!!), to include whatever else you may want to add, and we're still only talking about tens of thousands of dollars vs hundreds of million.

And let's not forget the tremendous benefits that Apple is receiving from having killer apps on the store. In this case, that's hundreds of millions a quarter in direct revenue. And then there are indirect benefits that boost sales and support the success of the iOS platform.

Epic is stating those services are worthless by requesting to pay nothing (except the $99/yr, I guess) and set up their own store with the same access & entitlements to iPhone hardware as the App Store.

I take it your position is that Epic is welcome to millions of revenue utilizing Apple's IP and technologies for $100/yr?

The question is: Are those other things considered a monopoly? It's my opinion Apple and the App Store are and therefore are subject to regulation.

The Court's interpretation of the Sherman Antitrust Act is that Apple and the App Store would not rise to the level of monopolies. Your opinion and my opinion don't really matter (unless you're a judge...I'm not.) I guess we'll need to see what happens.

How is 30% for all games fair compared to $1000/year+ in developer costs? You do realize that Epic alone is paying hundreds of millions of dollars a quarter right? If Apple offered them to pay $1000/year+ instead, they'll take it in a heartbeat. And you do realize that companies like Uber are not paying anything even though they're also offering in-app payment and making billions right?

Moreover, in another thread, I've analyzed the costs of providing the cloud services that Apple provides. And it is minuscule compared to the revenue they're generating. (For comparison, see entire platforms supported by ads only.) I'm willing to bet the $99 that Apple already charges is sufficient to cover all of these costs.

Again, 30% matters when it's a big revenue generator. I don't know app revenues per year, but for say a $1k cert, anybody making less than $3.3k and paying 30% comes out ahead if it was a hypothetical $1k.

I totally realize that Epic, and MS, and Spotify would take advantage in a heartbeat. To the detriment of the little guy. There would be no more free apps since everybody needs to recoup their $1000 (to your point, assuming its a "cheap" $1k and not $10k, or $100k, or $1m) + $100 for each test flight user, + $10k for each technology used (metal, whatever), etc. Apple is incurring those costs to allow the platform to flourish. Don't want to use them, roll your own - don't complain when they crash, though.

The indie developer would die off; they need to be subsidized by the giants making a ton of revenue. Apple does not publish (to my knowledge) the profit margin of the App store, just the revenue (22% as of June 2020 results).

So, as part of your calculation, you need to include the development cost of iOS 14, MacOS, iPad OS, TV OS, watchOS, and whatever else is in development (iPhone X, iPad X, glassOS, Car, whatever), not just the "cloud services", since there is only 1 P&L for the company. Apple's gross profit margin is 38% - the app store cut is 30%. Assuming the cost to maintain it is ZERO and all 30% is profit (100% of 30%), that is still 8 points below their overall gross profit margin. Their net margin as a company is 23%. An enviable position, for sure.

If developer's feel the cost is too steep, they are welcome to leave, or sue, or tweet, or otherwise voice their displeasure by taking out a full page ad in the San Jose Mercury.

But they can't break the licensing terms of their developer agreement without losing their cert and getting booted.

 

[yurc]

There are many options especially Unity, Unreal is not especially not required. For open source we have so many options anyway. Including Godot.

The problem is re-writing takes times, testing, not mentioned doing another optimizations. Might be easy for large team with large scale, for individual creators that huge hurdle. Easier said than done.

 

[cmaier]

Must i name them all ... I hope Epic uses these examples to show that Apple decides who can bypass their commission strategy and who can not.

Apple isn’t mommy and daddy. They are under no obligation to treat everyone equally.

 

[ToqQrrl]

Apple isn’t mommy and daddy. They are under no obligation to treat everyone equally.

ok ... so why do they argue that THEY DO treat everybody equally ? I'm just asking !

 

[xyion1]

In an earlier paragraph, they write: "Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area." Clearly Apple does not have more than 50% of the sales in the mobile market. But in the iOS market, they have 100%.

The Courts have already ruled that a “company does not violate the Sherman Act by virtue of the natural monopoly it holds over its own product". This could change, of course. But the precedent is already there saying 100% of iOS market is not a monopoly.

It will be interesting to see how the courts handle this issue. It's obvious that we're headed in that direction and I think the scrutiny and oversight is warranted. For decades computer platforms have been more or less open. The Mac was always more locked down, but I could still go to a store and buy whatever program I wanted. It didn't have to be blessed by a corporate master. If that third party software company angered Apple, Apple didn't have a kill switch for their apps. No one told developers what kind of apps they could and could not write for the Mac. There was no corporate thumb on the scale. Personally I believe that all computer platforms should remain this way.

I don't feel this is Apple telling developers what kind of apps are allowable (hello 500 fart apps), and they aren't "blessed" (but are reviewed, so - I can se your point). I welcome the kill switch, especially for my mobile phone - it needs to be useable in many more cases than my personal computer. I wish it offered me MORE privacy and protection (drives me nuts that my parents can share my contact info, address, personal info etc to whatever app they download by giving it access to contacts database - that info is MINE, not theirs.)

Maybe the 30% is high, I'm not an iOS developer, bur I do make things for mass production and deployment, and have a keen insight to the costs or doing so. It isn't low, even for software.

 

[cmaier]

ok ... so why do they argue that THEY DO treat everybody equally ? I'm just asking !

Marketing? And they mostly do.

If you sell digital goods (as opposed to real world goods and services), you must give apple a cut if you provide any way to buy the goods in your app (or direct people on how to buy the goods in your app).

Real world goods and services - they don’t get a cut.

One counterexample appears to be amazon, where they took a different Percentage, and made up the difference in other ways.

 

[pratikindia]

Apple should allow third part payment along with Apple. Let the customer decide how thy will pay.

 

[ToqQrrl]

Marketing? And they mostly do.

If you sell digital goods (as opposed to real world goods and services), you must give apple a cut if you provide any way to buy the goods in your app (or direct people on how to buy the goods in your app).

Real world goods and services - they don’t get a cut.

One counterexample appears to be amazon, where they took a different Percentage, and made up the difference in other ways.

No disrespect my friend ... but I feel that you are making up this explanation that you put forward ...

As far as I know ... Apple doesn't differentiate in the nature of goods that are sold by a developer's application.

And they didn't use that as an argument in their court documents made public to this day.

All these companies benefit from Apple technologies to be on Apple's iOS Store ... so why wouldn’t they ALL be required to pay the 15% or 30 % cut to Apple ?

I think this is the argument that is being done here.

 

[Seanz]

The thing that people do not seem to realize in this whole thing is that the point of this "movement" is to show that Apple is being unfair to developers as of now ...

Not for the 30% vs 15% ... not because this guy is smaller or bigger than this other guy ...

Apple says ... developers abide by the same rules ... fine ... if that is true than why are there companies like the ones I’ll name below able to use their own stores (bypassing the 30% or 15% commission to Apple) to sell their products and bypassing the apple built-in store ?

It’s funny because the companies I’m going to name below all benefit from the same services provided by Apple to all the other developers on the apple store ... advertising, marketing reports, iCloud infrastructure and what ever else Apple provides.

Uber --> Pays 0% to Apple while operating their own store on iOS
Lyft --> Pays 0% to Apple while operating their own store on iOS
Target --> Pays 0% to Apple while operating their own store on iOS
Walmart --> Pays 0% to Apple while operating their own store on iOS
Burger King --> Pays 0% to Apple while operating their own store on iOS
McDonald's --> Pays 0% to Apple while operating their own store on iOS
Amazon --> Pays 0% to Apple while operating their own store on iOS

Must i name them all ... I hope Epic uses these examples to show that Apple decides who can bypass their commission strategy and who can not.

Like I said earlier ... all these companies benefit from Apple technologies to be on Apple's iOS Store ... so why wouldn’t they be required to also pay the 15% or 30 % cut to Apple ?

None of those mentioned in your list is a digital service or a digital product, thus they barely use Apple's provided services to function. You don't need iCloud to sell a quarter pounder.

 

[ToqQrrl]

None of those mentioned in your list is a digital service or a digital product, thus they barely use Apple's provided services to function. You don't need iCloud to sell a quarter pounder.

Hmmm ... I was a developer for about 10 years on iOS and I've never came across a rule in the documentation that stated that the nature of a developer's services would change the cut that must be provided to Apple.

I find it a weak argument (in court) ... especially when Apple states that they treat every developer the same ... never mentioning the nature of what the developer is selling would change the % of the cut and in this case ... make it 0% ... at least in what I've seen so far in the documentation.

 

[DummyFool]

I understand Epic as 2 Apps, Fortnite and the Unreal Engine and they do not want to resubmit Fortnite for approval so Apple punish them by removing the developer account.

While i understand why Apple removed Fortnite can someone explain to me what it is in the developer agreement that force a developer to submit an App if he does not wish to make it available anymore ?

 

[dguisinger]

None of those mentioned in your list is a digital service or a digital product, thus they barely use Apple's provided services to function. You don't need iCloud to sell a quarter pounder.

I don't need iCloud to sell Fortnite or Kindle either.

.... Some people.....

 

[xyion1]

Hmmm ... I was a developer for about 10 years on iOS and I've never came across a rule in the documentation that stated that the nature of a developer's services would change the cut that must be provided to Apple.

I find it a weak argument (in court) ... especially when Apple states that they treat every developer the same ... never mentioning the nature of what the developer is selling would change the % of the cut and in this case ... make it 0% ... at least in what I've seen so far in the documentation.

Right from App Store Review Guidelines, section 3.1.5(a) (from March 2020, before hey.app, Epic, Wordpress and this whole nonsense started).

3.1.5(a) Goods and Services Outside of the App: If your app enables people to purchase goods or services that will be consumed outside of the app, you must use purchase methods other than in-app purchase to collect those payments, such as Apple Pay or traditional credit card entry.

No IAP, no 30%/15% - if you sell physical goods, you CANNOT use IAP.

If you consume inside the app (kindle, Fortnite) then you do need IAP, except for the "reader" provision

3.1.3(a) “Reader” Apps: Apps may allow a user to access previously purchased content or content subscriptions (specifically: magazines, newspapers, books, audio, music, video, access to professional databases, VoIP, cloud storage, and approved services such as classroom management apps), provided that you agree not to directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods are not designed to discourage use of in-app purchase.

Seriously - its all right there in the Guidelines and agreement, posted online to be read by all before accepting a single thing.

It even has a method of appealing:

Rejections: Our goal is to apply these guidelines fairly and consistently, but nobody’s perfect. If your app has been rejected and you have questions or would like to provide additional information, please use the Resolution Center to communicate directly with the App Review team. This may help get your app on the store, and it can help us improve the App Review process or identify a need for clarity in our policies. If you still disagree with the outcome, please submit an appeal.

 

[alchemistmuffin]

Easy fix: Epic revert their change. Done. Don't put this on Apple.

Yep. Simple as that. Epic did this to themselves ultimately and ended up potentially risking other devs. They have to follow Apple’s guidelines like all other devs. It’s not fair that big guys have exception. Apple allows big gaming guys like Epic bypass the 30% cut (which is very VERY much fair in all honesty) it hurts indie gaming devs more.

Microsoft should have nothing to say about this or any matter concerning fair operating practices.

Seems that M$ is still sour about Windows Mobile and the potential millions, if not billions they lost out on.

Yep. Microsoft, Spotify and Facebook NEEDS TO STAY OUT OF IT. THEIR ARGUMENT HAS NOTHING TO DO WITH IT.


I think ultimately the judge is going to find this in favor of Apple after all the evidence is brought against it. Even if you have enough backing, too much evidence Epic left behind that they shot themselves in the foot and crying foul. And it’s going to cost Epic millions, because Apple will likely ban Epic from Apple ecosystem for LIFE after this is done. (Including them owning any Apple devices)

 

[ToqQrrl]

Right from App Store Review Guidelines, section 3.1.5(a)



No IAP, no 30%/15% - if you sell physical goods, you CANNOT use IAP.

If you consume inside the app (kindle, fortnight) then you do need IAP, except for the "reader" provision



Seriously - its all right there in the Guidelines and agreement, posted online to be read by all before accepting a single thing.

I stand corrected, thank you for highlighting the sections of the rules ... I will read them carefully.

 

[xyion1]

I stand corrected, thank you for highlighting the sections of the rules ... I will read them carefully.

Happy to help!

I know I come off defensive and standing up for Apple. This is partially true - I work in development and am constantly told that "you're too expensive!", but nobody will take a reduction in services to go along with desired the reduction in cost. Everybody wants something for nothing (me included - come on iCloud storage! give me a capacity and price tier between 200GB and 2TB! Or a bundle, or something!)

This in particular touches upon a nerve, that's all.