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Comment by Hokusai | Hacker News Reader

We are not in 2001 anymore. App Stores are a growing part of the real economy and Apple 30% makes no sense. Big tech has been under the radar of many because it started small and had little impact on the economy. To let tech companies grow revolutionized the world. That revolution is over, tech companies are the new car companies. Apple is not a new innovative company, it is a monopoly that churns the same product year after year and profits from its dominance and the natural tendency of technology to create monopolies.

Many businesses cannot survive if you cut 10% of their income. 30% is mind-blowing and unsustainable.

I hope that the popularity of Epic brand helps on this fight. This level of legal battle is not only won in the court, but also in the public discussion domain.

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> Apple 30% makes no sense

Apple provides useful services with its App Store: filtration and curation. The degree to which this is effective is debatable. But that it has an effect is not.

Apple also extracts socially useless rents from its App Store. The degree to which this exists is debatable. But its existence, given Apple's dominance in app industry profits, is not.

The first costs Apple in terms of labor, tools and research. The second is a result of their independently-profitable devices business. These costs are roughly the same from app to app, review to review.

One solution might be to charge a fixed fee per review. This scales perfectly with Apple's costs. But it's prohibitive for small players. A scaling fee structure relative to revenues promotes first movers, thereby keeping the app ecosystem fresh. Apple came up with a 30% flat rate. This made sense when apps made hundreds of thousands of dollars. It does not make sense when they make hundreds of millions.

A simple answer is a sliding scale. 30% for the first $20mm in a year. 20% for the next $40mm. 10% after $60mm. This is more than generous to Apple. It beats Epic's request for a 12% flat fee at $400mm. And it continues letting Apple give new entrants, who are both more sensitive to costs and more needing filtration and curation, a field to play on. As a bonus to Apple, it reduces the incentive for developers to litigate as a function of their capacity to sue.

You are missing the point. App Store is a distribution channel.

And so the 30% isn't just for the upkeep of the store but also all of the work involved in maintaining/growing the tens of millions of iOS users at the other side of the channel. For example, Apple spends well over $2 billion a year on marketing which would need to be factored into your costs.

Also I don't understand how anyone could support Apple taking less money from big developers.

Apple markets its own products, not whatever is in their store (with some early exceptions).

Apple benefits from third party developers, third party developers benefit from Apple. Third party developers don't get a slice of iPhone sales revenue.

You wouldn't support Kitchenaid only allowing curated vegetables and charging their vendors 30% (or even 3%).

You should read about the diamonds industry and their marketing, from a marketing point of view this industry did great but from a user point of view you will be disgusted. After you read(or watch a vide) about diamonds ask yourself if something similar is happening under our noses today and we are not seeing it because the marketing is so clever that is invisible, there is a chance you will spot some parallels with other companies in present day.

I don't think the issue is the raw numbers, it's a question of market forces. Processing payments has costs and risks; if Apple solves that problem so well that a developer thinks their fee is worthwhile, that's all well and good regardless of what the fee is.

But by prohibiting apps from even telling the user about alternate payments, Apple is effectively trying to dictate how everyone on their platform can and can't do business. That seems problematic regardless of whether what numbers they dictate.

> by prohibiting apps from even telling the user about alternate payments, Apple is effectively trying to dictate how everyone on their platform can and can't do business

Agreed. The problem of leveraging their App Store dominance for payments dominance is the issue. I don’t think there is an issue with the App Store being the only store on iOS devices.

It’s also problematic when it means that Apple takes competitor revenues - for instance in the streaming audio market Apple is Spotify’s biggest competitor, while forcing Spotify to give them a bigger % of iOS revenues than their own margin. Apple ends up making more money out of Spotify on iOS than Spotify does, and then continues to spend money investing in a competing product.

If you look at the numbers Apple has a higher profit from Spotify revenue than Spotify itself. That makes one think.

Would it be feasible for Apple to discount their 30% developer/iap fees in app categories in which they compete with developers commensurate with Apple’s dominance in that category? As though they themselves had to pay the same 30% fees, but to developers in the category, rather than to themselves. Would that level the playing field?

It would be more straightforward if they waived fees in those categories.

> Apple provides useful services with its App Store: filtration and curation.

Yes, App Store does provide value and it can charge a cut. Having said that, Apple should equally provide a way to host different independent app stores just like Windows does.

Imagine on Windows/Linux/MacOS you could install software only from one corporate controlled store. Would you be fine with that?

> Would you be fine with that?

Yes. I don’t need work requiring I install a Google App Store on my iOS device. I have a general-purpose computer already. One shouldn’t buy an iOS device if these restrictions are an issue.

For the next majority of population which gets connected to Internet, a smartphone would be the only computer they own.

When that happens having the power to dictate which apps are allowed (censorship, exclusive browser engines etc) along with taking a part of income from the apps, makes it unfair.

I come back to my Desktop example. Imagine Adobe had to pay 30% of their revenue to be on Windows, and Windows could dictate which browser engine all browsers must employ.

Does it hurt UX a bit to install a different app store? Maybe. But it's an inconvenience only for those who use their smartphones as a secondary computer.

If they actually provide value at a competitive rate then they should have no issue allowing competition with alternative stores. Market forces can decide the worth of the App Store.

The simple answer is allowing users to install their own applications on their devices.

If the App Store is worth the 30% cut, let them compete for it.

I don't think it's worth the cut. I think the overwhelming majority of people download apps they already trust directly from the source (like they do on computers), and the App Store provides exactly zero value in that use case.

Funny, it's the same punch line they've been using to stick it to Steam for a while now. I wonder if there will be a day of reckoning when they see fit to raise their own rates to something similar?

The difference with Steam is that there is an alternative - there wouldn’t be a problem if Apple let you sideload apps or alternative app stores that could compete.

I was working in the office, where next doors we had a company that was doing English language learning software that was sold on CDs in book stores. Once I was talking with the owner of that company, he was investigating options to move beyond CDs, which were starting to decline (all this was like 10 or 11 years ago).

So I've told him about applications, app stores as a new kid on the block, but I've warned him about that 30% cut. The guy started to laugh and said that comparing to that what bookstores want this 30% is nothing.

Appstore has a lot of convenience, paying 30% for distribution, accounting (you just deal with a single invoice, not tones of invoices), return policy, automatic updates of applications it not that bad in the world of software.

It's not the number that matters, it's the fact that apple doesn't allow competition. Everyone is fine with the app store taking a cut. They can make that cut whatever they want. But consumers should be able to choose an alternative if they're unhappy with the app store.

30% isn’t unsustainable if every business has to pay the same thing. It’s no different than a tax at that point.

Apple though is competing in these same spaces (game store, music store, video on demand, etc) and not only they don't have to pay 30%, they take 30% from the competition, making this unhealthy.

I think their cut should follow some logarithmic falloff per app download of a particular app.

How much do you think Walmart, Amazon, Best Buy and friends mark up the products they sell?

Would you sell your iPhone and get a Best Buy phone every time you saw a dishwasher cheaper at Best Buy?

These are wholly different "stores" and the comparison makes no sense.

Well, let me be the first to say I won't be shedding anguished tears for a multi-billion dollar Chinese tech giant known for it's close ties to the CCP.

> Well, let me be the first to say I won't be shedding anguished tears for a multi-billion dollar Chinese tech giant known for it's close ties to the CCP.

Me neither nor for a USA backed company owned by one of the richest mans on Earth.

I am rooting for a healthier economy that helps everybody. Apple takes 30% cut of small developers, that are the ones that depend on that 30% to break-even. I want apps to be cheaper for consumers as they do not need to add a 30% as a fixed cost. It is not about Epic.

Absent that healthier economy it seems smart to at least root for the side which is not running concentration camps, USA's and Apple's sins considered.

I am going to assume that you don't know much about business.

Because Apple's 30% is their charge for selling a product using their distribution channel. It is no different to how Facebook/Google/Twitter etc have a CPC for ads. Or how a brick/mortar store would charge to put your product on their shelves. Or as was discovered how Nintendo charges 40-60% as a publisher fee for the Switch. Or even the percentage for most affiliate or influencer programs.

Perfectly legitimate to argue that it's unfair that you're forced to use their channel. But it's simply ridiculous to say that it's an excessive or unsustainable percentage.

As the CEO of a SaaS startup I would kill to have such a cheap and profitable channel.

You should consider quitting your job before killing anyone.

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