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Comment by scarface74 | Hacker News Reader

The simple fact is that Apple is injecting itself as an intermediary in the payment process and extracting a preposterously oversized commission for no meaningful added value.

You mean like every retail store - digital and physical?

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You're describing stores that exist in a competitive ecosystem with price variation. The analogy breaks down because "buyers of products" doesn't map one-to-one with "owners of iPhones" and because distribution of physical goods actually has significant costs.

Assuming you are in fact in the tech industry, you should know that near-zero marginal distribution cost is one of the core principles underpinning software economics.

I'm also not arguing that Apple shouldn't pass some of the costs it incurs to provide apps (e.g. APN, engineering costs, etc) on to developers and by extension on to consumers. But it should be priced fairly and transparently.

A flat 30% fee without the ability to itemize that for customers or signal the existence of alternative payment methods is just wanton, nefarious extortion.

The 'right' solution would be to charge a specific, itemized "Apple device usage fee" that's separate from and in addition to the primary fee for a service itself. Apple deserves to take a portion of revenue specific to the provision of a service to its users. I can't see an argument where it deserves to take a portion of all revenue developers receive.

But Apple is not permitting this because it would pull back the curtain on their rapacious practices and their customers, having already paid a significant amount of money for their devices, would almost certainly be quite angry about it.

Spotify is a good example of the distortion occurring because of this misguided system. They're charging customers $12.99 if they subscribe through the App Store instead of the $9.99 they would pay outside of it for exactly the same service. So, right now, some Spotify customers are being needlessly pillaged by Apple when, unbeknownst to them, they could get the same exact service at less cost. Spotify apparently had plans to email affected subscribers to alert them about this nonsense situation, but I don't know what became of that.

Let’s talk about console makers then.....

How many stores actually “transparently” tell you their markup?

I see the game console argument come up a a lot and I really don’t think it sticks.

Game consoles are not general purpose computers and have a much more narrow intended purpose. Apple themselves argue that the iPad is just as capable (or more so) than your typical computer, which means that we expect it to be capable of computer-y things which are inherently flexible and versatile, not hamstrung by Apple’s rent-seeking behavior.

This also isn’t about 100% transparency of Apple’s costs — saying it is misdirects. We don’t know their costs (though it certainly is below 30% of all revenue passing through in-app-purchases), that isn’t the issue. Requiring 30% of others’ revenue and being forbidden to even mention alternatives is another matter.

What makes a console less of a “General purpose computer” than a phone?

Again. Just like consoles and the Roku - the console makers get a cut of every game sold - even physical games. At one point, Nintendo limited the number of titles third party companies could publish and force them to use their manufacturing facilities.

No retailer just sells things at a markup that covers costs.

A video game console isn't used for programming, video production, writing, homework, etc. You know what I mean. The fact that they are specially packaged PC parts is beside the point.

You keep bringing up video game distribution though, so let's roll with it. Pretend all of software was like video game distribution. How much worse would software be for users? Imagine FOSS on that.

And a phone isn’t “specially packaged” and is used for “video production, writing and homework”?

Software would be better for the average user if PCs (and Macs) had tighter permission models - no viruses, spyware, adware, ransomware, surreptitiously reading your contacts without your permission, etc.

I think most can agree the OS should sandbox apps appropriately, and allow access via permissions and such. But like most things, it can be taken too far. The fact is you can't buy a console or iPhone of the shelf and easily (or legally) run your software on it without special permission from Apple or Sony etc.

The distinction is video game consoles are not general purpose. Just like nobody is going to write an essay on an Pinball machine, nobody will (ordinarily) do so on a console. If a game developer need to follow special rules to get into the console market, that's par for the course.

In contrast, on Windows/Linux/Mac/Android I can run whatever software I damn well like without talking to Microsoft/Canonical/Google/etc. It is truly 'general purpose'. There is no required gatekeeper for these systems (as much as they are try to make themselves one). iOS stands in contrast to these - it is not 'general purpose' if I can't run whatever. If Apple decides some software is not allowed on the store that is not 'general purpose'. That is something else - gatekeeping. So when they advertise 'general purpose' that is only true until they decide they don't like something. And they can change their rules anytime they want.

To the 30% thing, every retail store has markups they don't advertise and that's perfectly fine. If Apple or a retailer wants to charge me for access to their store, I'm happy to pay.

But when they force a change to a product and company in arbitrary ways to suite their whims that's pretty concerning because it's a sign they are abusing their power in a very historically been-done-before way. Think about it - 50-100% of a target market is controlled by them. You can do whatever you want - why not charge 50%? 70%? There is no competition - it's literally whatever the highest is you think your PR department can get away with. Not sure how you feel about anti-trust, but sure feels like abuse to me.

You mean how Walmart forced the music industry to edit CDs or they wouldn’t sell them or how they force manufacturers to sell crappier versions of their products to meet a price point?

Or do you mean again how Nintendo is infamous about the strict content controls they have on games and have since the 16 bit days and no blood in Mortal Kombat?

Also, see how movie theater chains are saying that they won’t show studio’s movies if they start releasing straight to consumers now even though most movie theaters are closed?

We could also mention GameStop threatening not to sell MS consoles this generation because of their original intention to make games harder to resell.

Why do you keep bringing up examples of other corporations acting like jerks to excuse Apple acting like a jerk?

That's true, but that sort of sandboxing and permission models do not require a gatekeeping corporation to seek rent from everyone who wants to build for the platform. In fact it requires no interaction from the corporation at all.

iOS's app sandboxing and permissions model would work just as well if apps could be sideloaded.

Sandboxing won’t stop shady and illegal developers. Neither will review. The story of what happens to a platform when you allow any crap on it goes back as far as the original Atari 2600 to Android that has four times the market share but still less revenue for developers.

And yet the Google Play Store is fine. Is there more malware on it than Apple's App Store? Sure. But people use it every day, and the world hasn't fallen apart. They could certainly do more to root out malware, but that doesn't mean full-on gatekeeper with draconian rules like Apple has done.

Well, taking in account that a console is a computer, running an OS, I would call it a general computer. Just because people don't port emacs to it doesn't make it less than a computer.

And in effect, I did create a editor for scripts to run on the Xbox 360 many years ago so QA could tweak things, so it is possible, but developers just publish games. If the only 'apps' developed for the iPhone were games, would it stop being a general purpose computer then?

Also, didn't the PS3 have an official linux bistro for a while? Blue something?

The difference is that the video game developer has priced the console-maker's cut into the cost of the product, and that's the only way it can be sold.

Spotify charges a lower monthly price if you sign up on their website (and then go and sign in on iOS) than if you sign up through the iOS app.

Whether or not this hurts Spotify isn't at issue here; there are Spotify customers who are paying more than they have to because Apple refuses to let Spotify tell them about the lower price.

I think this is the only reasonable way to deal with this. You can't expect Spotify to take the hit. Apple demands extra money for users who sign up through the iOS app, so it's only reasonable to let the users who choose to sign up that way, pay the additional cost that comes with it.

Of course this would be entirely reasonable if it was a conscious choice by those users, but Apple is intentionally keeping the market non-transparent, screwing their own most loyal users.

And that’s what Spotify did when they allowed in app purchases. They charged more for going through the App Store. Do physical retailers go out of their way to say that you can get a product cheaper somewhere else? Can manufacturers advertise in Walmart that consumers can get the item cheaper if they go to Amazon?

Just throwing this idea out here, but maybe game consoles and retail stores are also operating unethically?

Wow so now retail stores that have literally been around in one form or another for thousands of years are unethical?

For what it's worth, retail stores have been consolidating over the last several decades (and longer, but much less than thousands of years). If you want to sell your product at Walmart or Best Buy they're going to squeeze you on the wholesale price. Sometimes the savings get passed on to consumers, sometimes they don't.

It's not the concept of retail is somehow unethical, but certain stores are certainly less ethical (in how they treat employees, customers, environment, etc) than others, and some of those stores are very widespread.

Also the thousands-of-years argument holds up pretty poorly for a lot of things.

Tim Sweeny [1]:

> “There’s a rationale for this on console where there’s enormous investment in hardware, often sold below cost, and marketing campaigns in broad partnership with publishers.”

I guess it really just comes down to console makers acting like a partner whereas Apple acts more like a mobster running a protection racket.

1) https://www.theverge.com/2018/8/3/17645982/epic-games-fortni...

Apple invests an enormous amount into R&D to make their devices. For example, they make their own CPUs, which happen to be some of the fastest ARM chips you can get.

I don’t think it’s any different from consoles. The main difference is that with a console you know what the deal is.

With an App Store app, the problem is you don’t know if Apple is going to deny your app on an inconsistently applied rule after spending 2 years making it.

They sell their devices at a healthy margin. Their financial interest in the device should stop at the till. If they want to sell additional software and services then they can prove their value on a competitive level playing field.

Right now they are double-dipping, not because of value they are adding, but because of the power they have given themselves over the consumer/developer relationship.

So is Amazon “double dipping” on the Kindle are the console makers? Are grocery stores for marking up products and having slotting fees?

The App Store is a service.

I disagree, it's a market.

If you allow 3rd parties to sell something, you create a market. That market should be free and competitive.

If you want to keep it a service, don't allow 3rd parties in.

So Amazon, EBay, the console makers, FaceBook should all offer their markets freely?

Not offer their market freely, but make it competitive, yes.

But the Android ecosystem also invests hugely in R&D, it's just spread over more companies.

With consoles the primary justification was always that the hardware is sold below cost. This is purely to the benefit of the game developers, all the risk falls on the console maker, so they accept it for that reason. The iPhone is not only not sold below cost but its price has never fallen in the entire lifetime of the product, from what I recall.

Then perhaps laws should be updated to reflect the digital age?

I wouldn't mind one bit if there would be a general inquiry for practices of all app stores.

So we want government price controls.....

Do you know the margins of retail stores?

Last time I checked it was not close to 30%

You’re right. It’s 25%.

https://www.quora.com/How-much-do-game-companies-make-from-e...

You may be surprised to learn that retail stores pay the manufacturers for their products (at "wholesale" prices), and are free to sell them at whatever markup they wish.

Thus, retailer margin can vary anywhere from negative (doorbusters) to 1000% (i.e., alcoholic beverages).

We are talking about software in particular - I cited software sells.

An app developer is free to charge 43% more to still get their desired amount.

I think it's safe to say that game retailers are not representative of all retail.

I worked at Radio Shack in high school. It was about that for electronics.

But since we are talking about software. How is all retail more relevant.

Ok, if you want to narrow it to software, then it's even more ridiculous, since putting something on a physical store shelf has a lot more real cost than processing a payment or copying a piece of software that has no physical presence.

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