Apple says Epic is ‘putting the entire App Store model at risk’
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Epic could make their own platform to sell games on, but they want the market Apple has built and the devices Apple has created.
The courts will decide, and since for decades courts have sided with platform creators being allowed to police content and charge access fees (SEGA, Nintendo, and later Sony, all have such cases), I think Epic will lose.
Despite some claims Apple has some monopoly, their share of mobile is far too small to count as such. I expect the courts to tell Epic to sell Android only if they don’t like Apple terms.
logic also works the other way around. Without software smartphones are expensive scrap metal. Every popular piece of software that runs on the phone adds value to it.
As such, the contract between the companies is the legally binding method to access Apple hardware. Apparently Apple has designed the contract so millions of apps got developed for the phones. Epic wanted different terms, but has no legal right to unilaterally break contracts to do so.
The courts will likely side with Apple. There’s ample precedent for platform owners to have wide latitude on fees to publish.
It just means that the argument was terrible because Apple didn't 'built the market themselves'. Developers and third parties are what made smartphones so valuable, and Apple is a part of that, but not some sort of messiah, and not even the major contributor. the market value of everything that runs on the phone is much larger than the phone.
As to what should be the case, yes I think people should have the right to run on their phone whatever software they want. If they only want to run Apple software they can do that no problem, there is no downside here. What are you afraid of, too much competition and freedom? If the Apple experience is so great they've got nothing to lose.
Also applies to game consoles in my opinion. I'd love freely moddable console games and if developers could publish on a playstation without paying fees to sony or being limited by them. I'd love to see platforms unlocked so that there is a maximum amount of opportunity for everyone to do what they want with it. That's how creative things are made.
Not by any metric I can find.
Apple has a market cap of 2 trillion; half their revenue of 260B is phone. The market cap of all mobile companies is dwarfed by Apple.... Mobile app sales total 76B a year, including both iOS and Android. The iOS part is around half of that value.
So by one simple metric, Apple revenue on phones is around 130B a year, mobile revenue on iOS is around 38B.....
What metric did you base this "much larger" claim? Did you base it on market numbers or make it up?
>I'd love freely moddable console games and if developers could publish
There's plenty of such platforms. They don't take off. Ask yourself why. Conspiracy stuff like "the big men stop them" is not the answer.
Even huge players like Steam have tried - and they certainly have the resources to push such a thing. It failed.
Why didn't developers rush to these free to publish on platforms? Maybe you are missing important things about the value of the platform versus the value of the software.
>What are you afraid of, too much competition and freedom?
Competition is not breaking contracts as you see fit. Competition will not exist without rule of law - this is basic econ. You'll end up with chaos and theft when contracts cannot be enforced.
And you're welcome to do whatever you want. Buy other hardware if you don't like Apple's terms of service. Build a product and sell it if you think there's demand for a different product.
People buy Apple because they find more value in it, as is, than their other choices. The same as people who value freedom and openness are allowed to buy other products as they see fit.
I don't understand why people continually think they have some rights they simply don't historically, legally, or even morally. Just like I'd expect you to claim it's immoral for some other entity to force things you created to adhere to their whims, or hand over value to you because you demand it, you have no moral right to do that to others.
I guess we just see it differently on the morality of forcing others to bend their work to our whims.
You also forget that once Atari did let developers publish will nilly on Atari 2600, and there was such a deluge of crap, that the market and platform crashed. Nintendo and all following companies learned that lesson: everyday consumers don't have the skill to protect themselves from crap, so to make a solid consumer platform, the owner of the hardware should provide significant protection for users.
For all apple's flaws, having single app store is better for user security as you know who to trust, it also gives conveniently makes Apple monopoly that they exploit to make 50B+ a year.
The question is will Apple sacrifice revenu for user security or is security and privacy are only there when it makes Apple money.
Developers associate the freedom of open standards and protocol to these abuses. In the early GNU years, the same philosophy applied to source availability. Closed source does make similar abuse fare more easier.
Abuses can be prevented with well built regulation. Developers do not like to get into governance and policy so they want to solve it technically, Open Source or open protocols and standards etc, sometimes that opens up avenues vulnerabilities in design, which devs generally are tech savy enough to be immune to and come up with even more tech like https, adblockers hardware keys etc.
This cat and mouse game leaves rest of the population far behind and vulnerable, sometimes you just have to do governance than look for pure tech solutions.
No, Apple didn't make $50B in profit "a year" or last year or in ANY year from App Store fees. Takes about 30 seconds to look up Apple's financials and disprove that. And no, Apple doesn't have a "monopoly". Sony, Google, and Microsoft also get 30% of all revenue from their app stores. Claiming Apple has a "monopoly" is ludicrous and just shows that you don't know what a real monopoly is.
I did not say they made profit, I said they made , in my part of the world made means commonly revenue not profit.
The 50B is well established estimate of App Store revenue.
[1]https://www.cnbc.com/2020/01/07/apple-app-store-had-estimate...
> and generated about $15 billion in revenue for Apple
the 50 B is total gross sales.
However using GMV[1] as a proxy for revenue is fairly common practice in retail industry. Walmart's revenue in similar sense is not really $500B, while it bit more complicated as Walmart buys from producer/ wholesaler and sells to the consumer (less so by Amazon as significant chunk of their inventory is owned by the sellers directly however revenue numbers are counted the same way).
The revenue for their operations is only the difference between selling price and buying price, profit is after you remove the cost of operations from that number. Ecommerce / travel/ delivery startups etc have for long time used this as somewhat misleading metric.
This practice used to particularly annoy me few years back, during fundraise pre-series A especially angels used to somewhat blindly compare retail statups "revenue" with SaaS startup numbers.
Who gets to decide who is ok or not? The WTO?
Until the epic took this to court, nobody has the balls to challenge Apple. Epic has standing to sue and is ready to fight it.
This is going to be decided in U.S. courts.
WTO is unlikely to step in, they do not take disputes at a company level, usually betwwn country , unless another country sues the U.S. government for unfair trade practices over allowing this WTO has no standing to take the case. I don't see any country taking it to them , that country will need to show damage to their own app developers, this is difficult as Apple charges the same for U.S. devs too.
The EU anti trust and competition does have standing to take it up, and in the past they have fought Google and Microsoft over similar things (promoting own products and browser choice respectively), but I have not heard anything till now. Perhaps epic may also sue/ file complaint in europe and they may take on Apple in the future.
Mildly OT, but this applies to Lineage users as well.
I am not sure how much of EU's intervention helped Firefox however given Mozilla's connection to Netscape. Netscape being the reason MS was being investigated by EU in the first place, it is not implausible.
I am not saying EU did a good job of it, just that can and do fight large American tech companies, it is not unlikely they won't take this up.
[1] https://en.wikipedia.org/wiki/Browser_wars#/media/File:Layou...
https://www.visualcapitalist.com/internet-browser-market-sha...
Apple might lose distribution of some things, but they can justify higher commission rates with a market that has a reputation for security, versus newly competing markets. I can see this being very beneficial for consumers, with a series of choices that will have different costs associate with them.
Short-term, Apple will lose revenue, but this is also a good justification for Apple to open an App Store in the Android ecosystem and offer a "more secure" app store than Google.
Long-term, I don't see this as a negative shift for really anyone. If the App Store expands to other platforms, Apple might focus on exclusive distribution rights agreements which would probably give them a greater degree of competition.
They now have 50% market share in the US and there’s no sign of that stopping when 90% of the youth market only wants an Apple. They’re a monopoly through and through at this point. If this lawsuit doesn’t get them another one will. It’s just a matter of time.
https://www.statista.com/statistics/951537/worldwide-average...
They now have 50% market share.... They’re a monopoly through and through at this point
That’s not how monopolies work. Can you name one case in the past 50 years where a company was declared a monopoly with a 50% market share?
That is how monopolies work. You don’t need 50% market share to be a monopoly, but having that certainly grants you monopoly power. Here's an example of 2 things that Apple can currently do, straight from justice.gov:
"Market power and monopoly power are related but not the same. The Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market,"(8) and monopoly power as "the power to control prices or exclude competition."(9)" [1]
You can't have a very successful app business without being in Apple's app store in the US, which would exclude you from half the population.
[1] https://www.justice.gov/atr/competition-and-monopoly-single-...
Have you seen the phones sold at the MVNO’s like MetroPCS, Boost Mobile, and whoever Walmart uses? You’re in a bubble if you don’t see all of the people with less income who don’t go to the major carriers.
And you can quote websites, but is there precedent in the last 50 years that the government has ever gone after a company with 50% market share?
The Department is not aware, however, of any court that has found that a defendant possessed monopoly power when its market share was less than fifty percent.(30) Thus, as a practical matter, a market share of greater than fifty percent has been necessary for courts to find the existence of monopoly power.(31)
Apple currently has 46% market share in the smartphone market (https://www.counterpointresearch.com/us-market-smartphone-sh...) and is below this threshold.
Also those numbers you linked to are quarterly sales, not current active users. Not sure if that makes a big difference.
I’ve seen other comments saying that it’s 50% but like I said, 90% of the youth market wants an iPhone so it’s just a matter of time. If this lawsuit doesn’t get them then another one will soon.
It's like if Apple built houses, it would make no sense for them to force house owners to only buy furniture/services from Apple verified entities and take 30% of the cut. The most it should be able to do is just provide a list of services it thinks are safe to use.
I would ask why can't Apple just allow other app stores, and just say any apps not from "the" app store may not be secure. But ultimately it's probably just because Apple doesn't want to let go of the ridiculous 30% cut, since if other app stores had a lower cut, why would developers release on the official app store.
Imagine if we had grown up like this let alone anyone defending it
Example: Wordpress sends you a letter with an activation code. Then it's a physical good you're paying for.
Kind of like how people sell coupons on eBay, but you aren't paying for the coupon, but for the lister's time/effort to list it.
Apple's fee is draconian and people are happy to manage these things via plain web applications. There is nothing special about apps. If anything, with all the extra special access they get (contacts, camera, gyroscope) they're a liability.
I'm okay with Apple's vision of intermediating my digital relationships with regards to the iOS platform, most especially for summarizing all ongoing app subscriptions.
When you leave big problems unsolved, then you're also leaving power on the table. Credit card companies are leaving a lot of power on the table.
Where there was one choice now there are two — the choice to deal directly with Hey or to have Apple intermediate.
People are generally supportive of gamedev workers getting better deals and paid more - let me tell you the quickest way that could happen is if all these platform commissions were lowered.
Could you host your own webstore and implement a cheap key system. That way you need to a lot less for the transactions.
If you follow all of that logically enough - you start to wonder, why even work in game development?
Indie development right now is basically a mirage, because the only people making sustainably good profits are those with access to lower commissions by owning their own platforms or by getting better deals from platform owners due to their size. There is a huge survivor bias.
I am only still operational because I am in Ukraine. It would be impossible in a 1st world country.
What are some examples of this? What do you mean by "platform"?
All publish their own games and either own their own platforms or are big enough to negotiate lower commissions from other platforms.
Perhaps then what we miss now is the possibility to unionize businesses with respect to the tech/ internet giants. Form providers unions (e.g. restaurants, app developers, etc.). Force every single web or internet store to provide a switch to allow each provider to stop and restart their sales/ deliveries at will and display messages explaining why. Organise coordinated strikes in which those businesses halt their sales en masse until their demands have been met.
Granted, it might not work. But it could be tried, and it would need to be enforced by regulation as workers right were. Where's the right to strike and to let the reasons for the strike be known, in these environments? Can I force Apple to stop and restart the sales of my app at will, without consequences? Can I inform my customers of the reasons I did it? Can the restaurants of a city organize and stop deliveries in a coordinated way for a week?
They could market it as Trusted by Apple and if you’re not in the Apple App Store, you don’t get that mark. Heck, make it such that software not from the Apple store doesn’t get the digital signature that allows apps to start up with one touch. Require user consent before starting a non-approved app.
Then charge 10% for all the apps that are on the App Store at most.
i.e. if you don't want to pay their normal rates, you can get lower rates, but you are not discoverable in the app store. i.e. you are in the app store, there is a way for companies to directly link to it, and open in store (or perhaps itunes, and perhaps only itunes if apple really wants to make it difficult). So you lose all the advertising value of the app store, but you get to pay apple lower rates.
For companies like Epic with fortnite, perhaps that would be a reasonable tradeoff, but I'd imagine its not a tradeoff most app makers would be willing to make.
I wonder how much revenue apple would lose from apps that are willing to opt out of discoverability.
You can't direct your customers to sign-up via your website, circumventing apple to receive a 30% discount. Ultimately the customer suffers. They should have consumer awareness and choice, it's their right.
Then they give Netflix special sweetheart treatment, why?
I find these examples both deceptive and anti-competitive.
Netflix also fills a very broad niche, so big that it can’t really be called a niche. Giving them some leeway makes sense.
If Apple accepts this, it has to apply it for all apps. This means a very serious loss of income.
So I mean, I know Apple charges a lot of commission. But Apple has to apply his own rules too.
If Epic wants to dent the walled garden app store model, more power to them.
Main reason, I think, is the same in both industries: more people have the ability for the craft than are needed to satisfy demand, and they’re willing to do it for peanuts and/or tricking themselves to think success and, with it, monetary compensation, will eventually come their way.
And compared to the music industry, 30% doesn’t seem that bad. https://www.rollingstone.com/pro/news/music-artists-make-12-...: “Musicians Get Only 12 Percent of the Money the Music Industry Makes”
So, are musicians being preyed upon by the music industry, or is selling music harder work than making music? I would think it’s a bit of both. I also think that applies to apps, too.
I don't really think pointing that other professions have it worse is a justification for abuses in our own.
What are hosting/bandwidth fees like for an app this size anyway?
Apple's situation is more like if Windows decided that all apps running on windows need to pay a 30% cut. The term "App Store" is misleading: it's not a store, if your application isn't in the app store there is no legitimate way of running the app on an iPhone or iPad.
You're also ignoring that not every copy of a game on steam was actually acquired by paying the 30%. You can kiss Humble Bundle and their Humble Store goodbye because they are using Steam infrastructure without paying for it.
It's not really black and white. You can't say that lower fees are better in every case because they involve different trade offs. The cheapest product on the market is rarely the best.
I'd have thought it would be self-evident from the phrasing that that two separate possible scenarios were being described.
> "Since the developers get to pick they will just keep that portion."
Being that HN is mostly developers, few here will regard that as anything other than a good thing. It's a particularly good thing among indie games developers, the majority nowadays, where the risk is high and the rewards usually slim.
https://www.polygon.com/2018/9/26/17905770/fortnite-cross-pl...
It sucks being big. Being big carries with it a whole bunch of nasty implications because suddenly the number of people nor okay with you doing whatever you want starts to out pace the organized efforts you can muster to make everyone agree you should be able to do whatever you want.
Hell, Google does the same stuff with Google Play. Just not with as much of a parasitic model as the Apple Store. Enough I think they'd squeak by a bit longer without notice, but Apple has absolutely gone off the deep end.
You are allowed to charge more to make up for the fees. But you cannot tell your users this. If you say "sign up on our website to save" you will be banned from the store. Tons of people pay 30% more for subscriptions because they bought them through apple store.
I'm tired of all the locked down bullshit and you should be too. It's my device, I should be able to install whatever I want
Apple takes no risk and does none of the above, so not remotely the same. Sure if Apple is willing to buy apps from Epic in bulk and speculate in addition to distribute, Epic or any other dev is not going to say no.
Fulfilled by Amazon is much better comparison, you get paid only if the customer actually buys, you get penalized for returns etc. Providing the market place, the customer, the delivery service, storage service and payment gateway. Amazon does not charge even close to 30% in most SKUs.
You think Naughty Dog or Bethesda will pay 30% and also do exclusive releases etc? Sometimes MS or Sony will even pay developers to support their platform, there is always room to negotiate unlike Apple.
[1] Streaming services being the exception in virtual goods, if Apple charges Hulu or Prime 30%, the studios which also license content to Apple TV will not be happy. It could get Apple TV locked out or deals will become expensive.
Back catalogue is really, really valuable in Music and TV, Michael Jackson ownership of ATV is famous example of this Syndication and streaming now is where the money is Apple cannot afford to antagonize the content industry .
Streaming services being the exception in virtual goods, if Apple charges Hulu or Prime 30%, the studios which also license content to Apple TV will not be happy. It could get Apple TV locked out or deals will become expensive.
One has nothing to do with the other. The studios deal with Apple TV because Apple gives them a boatload of money to produce shows for AppleTV. The studios also license content to be sold via iTunes. This was the case before the iPhone was released.
Apple doesn’t pay for syndication rights for older TV shows but for one or two exceptions.
No third party is counting on syndication. Not Netflix or Apple. All of the studios are taking their ball and going home. That’s why there is such a push for original content.
In Arcade of course Apple is paying money now to get enough content on the platform to make subscribers come, same MS did with Windows phone etc. Market place always need boosting either on supply or demand side to get started, it is unlikely Apple or anyone else starting a market place will continue to pay once the market is large enough.
Xbox/ PS keep paying since they know that marquee games are reason many times one the console is bought. For android and iOS market to be considered as one market there should be that level of competition at least.
While streaming has reduced privacy to large extent, the streaming business model whether subscription or micro-purchases (rent/ buy or song / album etc) have been always a threat to studios. Everyone is rushing to do original content yes , Netflix, Prime and Apple are already able to produce similar quantity and quality to studio in new content or will soon enough, however streaming companies cannot compete with the back catalogue for next 20-30 years.
Disney+ and is pulling out of other streaming services today. 5 years from now, Netflix may be ready to multiples than they were paying, just for non exclusive access to that back catalogue of Disney.
Disney will not care whether Prime or Netflix is also showing older disney back catalogues as long they have enough people paying for disney+ , where newer and some exclusive content is available. Their ownership of Disney+ means they can always negotiate from a position of strength. Studios are distribution companies first, content producers second. If you control distribution you control the price.
While the studios are taking the ball home today, I am not sure they will not be back later . I am not saying any of this why Apple is why they charge differently for streaming, just that the industry is in flux currently.
P.S. Had Jobs been alive, things would have turned out differently, I think Apple would have likely acquired Disney, it is a good fit, Jobs owned substantial stake in both.
This is a good thing. I hope Apple Arcade completely turns people against games with in app purchases and ads. Just like Netflix has turned people against ads and encouraged people to pay for content. This may also make room for non slimy indy developers.
it is unlikely Apple or anyone else starting a market place will continue to pay once the market is large enough
If the market grows large enough that developers can convince people to pay for content one time and no ads or in game purchases - that sounds like a win.
I do think the 30% is a bit absurd on reflection. I think OP properly framing it as 30% of our money is an important insight.
1. Can I go into Fortnite and set up a virtual shop to sell items within their platform?
2. Name one store where I can advertise within the store to potential customers that they can buy cheaper somewhere else?
How is it under the table? Apple's secret 15% deal with Amazon can go unnoticed, but everyone in the world would notice if Epic suddenly came out with an alternative app store on iOS.
It's long been rumored, but public proof came only a few weeks ago.