Court issues permanent injunction in Epic vs. Apple case

The first sentence is true but incomplete, making the second wrong. For example, the Amazon app is highly likely to have people using their existing Amazon payment method. Companies like Stripe are going to offer their own SDKs just like they do for web payments. Apple’s offerings are quite polished so I don’t think they’ll fall out of favor but it’s going to reduce their profit margin and I’m sure the number of people who will use alternatives is much greater than zero.

the apple developer ecosystem (with regards to subscriptions and app purchases) in my experience has been quite awful for a multi trillion dollar company. really bad API docs, really poor experience around understanding what is even happening in their black box. i'm honestly astonished at how "unfinished" the whole experience feels. something like Stripe is on another level

I’m much more likely to subscribe to something via the Apple store than I am through any in-app service.

No. All Apple has to do is amplify a few horror stories, for example people using [any competitor]’s renewable subscriptions and not being able to unsubscribe. Or amplify a story of a virus/malware on, hopefully, Epic or Steam.

This is certainly what makes you choose a MORE expensive product, that’s certainly why I buy my fire extinguishers $200 instead of $50 for the same model (but a trusted source). Apple should be able to keep a more expensive margin based on reputation alone.

Speak for yourself. I am from India, and we already have much better payment systems then Apple's:

1. All our debit / credit card are chip-based.

2. No card transaction can happen without the PIN. Some online transactions require both a PIN and a password.

3. For any online transactions, the payment processors often support the following options to pay - using debit / credit card, directly from our bank account (Net Banking with 2FA), Unified Payments Interface (UPI) ( https://www.npci.org.in/what-we-do/upi/product-overview ) which is another online digital payment mode that even allows for easy peer to peer payment between parties and umpteen online / mobile digital wallets.

4. Best of all, using any of these payment modes won't allow Apple any access to my financial data.

(And naturally Apple supports none of these popular modes in India because otherwise Apple would come under closer scrutiny from indian regulators.)

As far as App Store commissions are considered, from a developer's perspective Apple can go screw themselves if they want anything more than what competing payment processors charge. (Like Epic, I am disappointed that consumer rights weren't considered at all - ultimately it is us owners / users of Apple devices that pay these 30%-50% or whatever commission!)

Payment processors and their networks are infinitely more complex and resource intensive than a mobile app distribution store, and their commissions tend to only be between 1% and 3% per transaction.

The silent majority – the users – will always prefer to go through Apple. But HN seems to be full of user-hostile devs (as you can tell by looking at all the downvoted comments here who speak from a user’s PoV) who only hear the companies that want to break down the garden’s walls to prey upon users.

I have been paying for things online for decades now and never once have I used Apple's payment system. I assure you, plenty of us will use payments not provided by the fruit company.

And to have to just through countless hoops to unsubscribe.

Looking at you, annoyingly hard to unsubscribe from, New-York Times.

cutting prices that drastically will most certainly not increase revenue. in a competitive market, pricing is near/at the price elasticity equilibrium. in a monopoly situation, pricing is much beyond that point, in the company's favor. you're suggesting they move prices in the opposite direction, which would most certainly impact revenue negatively. note that these are not nascent, high growth markets where the growth rate can overwhelm the price elasticity dynamics.

the court should be mandating broad, open, and honest competition, not dictating prices, which is will practically always get wrong in some way. price is a signal for how competitive a market is, not a lever to drive competition.

Most of the revenue Apple makes is from top apps and top brands, which is why they had no problem cutting the rates to 15% for the little guys already, the little guys are a tiny slice of the overall pie.

There is no way this will overall increase Apple's revenue, especially as companies concentrate on building solid 'Apple fee avoidance' funnels. Not to mention that many pay-for apps will very likely convert to free to download and then push the user to pay for the app externally to the app store as a 'one time lifetime subscription'.

This is going to cause a massive revenue loss for Apple if it stands.

The _buyer_ experience with Apple's IAP is mostly good, but I would argue that the developer experience is downright horrible. Working with subscriptions and IAP receipts is clunky. You can only use one of about 100 SKUs, which makes it difficult to offer discounts and customized pricing at the higher price tiers, where the gaps between amounts are quite large. Until recently, it wasn't even possible for developers to issue refunds!

Even if Stripe charged 30%, I would choose them every time over Apple's IAP.

There are externalities to each choice, of course, but the correct answer is, actually, the obvious one. Apple is not in the right on this one, from any perspective. If they care about their users and developers: they'd drop the commission. If they cared about their revenue and investors: they'd drop the commission.

Fortnite's protest should have been the wake-up call for the people dead asleep at the wheel of their App Store division. Epic very likely would have stayed on the App Store indefinitely at 15%; the issue has metastasized, and now Tim Sweeny has taken the stance of "alternate payment frameworks or nothing", but I'd bet every dollar I've got that if Fortnite's IAPs were at 15% before they left, they'd still be on the App Store. Everything is about money at the end of the day; Apple doubled-down, so now Epic had to double-down.

Imagine a commission so reasonable that Netflix could sell its subscriptions there; that Amazon could sell books; that Fortnite could (maybe) return, and the next triple-A gaming hit that hadn't even considered mobile because of the commissions. That's the money Apple is leaving on the table. These companies WANT their products to be easy to buy; nothing makes that easier than App Store IAPs. There's a number that could work for everyone, but Apple comes to every negotiating table with their fingers plugged in their ears yelling "nah nah nah I can't hear you 30%"

Apple's App Store policies throughout the 2010s will go down in history as the biggest blunder big tech has ever made. I am absolutely certain of this. They're throwing away an empire that could last a hundred years, because they think they're invincible. Tim Cook literally said, under oath, "we don't know how profitable the App Store is". They've publicized proudly about how they employ five hundred whole people to do hundreds of thousands of App Reviews. This is not malice or greed; its complete and total incompetence. Why are investors not OUTRAGED at Apple's leadership?!

Including Apple's

They have this brilliant Apple Pay workflow that's almost completely unused in IAP — it bothered me that we couldn't just use Apple Pay to purchase a Spotify subscription directly in-app. Perhaps soon we'll see this.

Add to that the fact that App Store purchases are riddled with fake cards and usually draw a much higher MDR from merchant accounts. If people are rejoicing that they can just hook up their Stripe and world will be rainbows, they are in for a shut down email pretty soon.

Apple only takes credit card in most countries. This makes sense in countries where credit cards are the norm, but not in countries where credit cards are not the norm and far from ubiquitous.

OTOH, external payment providers (eg: stripe) often integrate with local payment mechanism.

In my case, local payment mechanisms are far simpler, easier, and secure. Using a credit card requires me moving money into my Wise account before I can pay anything, adding so many extra steps. Not to mention that I have to remember to transfer money every month before subscriptions get charged.

Plus, the whole online payment system with credit cards is utterly unsafe: share your "secret number" with all merchants and pray none of them leak it or overcharge you.

I have an app like that that's already done and in the app store. We would love to take advantage of Apple Pay for subscriptions, but the 30% tax means we literally can't. We'd have to jack our prices so much that the cost becomes prohibitive, and if we take the 30% hit ourselves we'd basically be giving things away for free.

If the cost would drop to somewhere in the 5-15% range it's a whole new ballgame.

EDIT: For anyone who's wondering – we basically use the same strategy as Netflix et al, the app is useless unless you already have an account and in order to get one you have to sign up elsewhere. We don't have links or information on how to sign up, you have to just magically end up on our site or have an account added through one of our partners.

There are also standards like Web Payments.

It's just another payment processor. It often shows up beside "add a credit card" in apps. I use it to order food, pay for rideshare, buy tickets, etc.

Besides, isn't the competition here what we want? Apple IAP are still easier, and probably will convert at a higher rate than pushing a user outside the app to do the payment on a website, so there's still incentives for developers to use them. If Apps switch away from IAP, then Apple is incentivised to actually compete (imagine that!!) and make something better that developers actively want to use.

It says something about the state of competition where Netflix can just say "no, we no longer want people to sign up on an iPhone and give us money". That says they don't think IAP is good, and Apple should actually work on building something that companies want to use.

Do you think the banks are going to foot that bill? Of course not: it's us, the consumers.

Are you willing to have everything be a bit more expensive, for everyone, so that you, apple users, can have something a tiny bit more convenient?

Also if people move away from giving Apple any money for the App Store, I expect the annual fee to increase to make up for it, and might Apple make you pay more if you don't use Apple's gateway? I don't see the ruling as forcing Apple to lose money.

If I were Apple, I would have gone nuclear early on, and eliminated all % fees but made the annual fee per app of $X to each developer (whatever $ makes sense) and then you can collect money however you want. This would likely kill a lot of small app developers, but the big ones would not care. The ruling makes Epic a big winner, but everyone else loses in the long run, because Apple (and Google) will find a way to recover lost revenue.

Some people also want to have 1000 app stores allowed. Good luck with that one... imagine having to build an app store just for your app, or supporting 25 different app stores.

Apple will probably pivot quickly to allowing you to use Apple Pay for this. A small commission and metadata is better than nothing at all.

If App A requires you to use their payment gateway and App B uses apple pay, use App B.

I imagine this will cause a sort of race to the bottom where apple will lower its own fees to match.

this is not an unresolvable issue though. Apple could force developers to make their payment option as the default payment option similar to how they forced devs to use Sign in with Apple (when they have third party login). Big companies like PayPal could provide an SDK which can be used by devs to complete trasaction similar to web. I could think of many more ways to solve this issue.

When you sell something through Apple, depending on the location of your user, Apple will act as Agent or as a Commissionaire. This makes everything easy, even for a solo developer. Sold an in-game coins in France? Apple collected the money, paid the VAT to the French government. If you do this through your own means, you will need to establish a relationship with the French government so that you can pay them the VAT that you have to collect from your users.

This will ultimately benefit large companies who can jump through the hops of managing all this, putting the independent developers in a disadvantaged position due to the high barrier of entry into improved margin(compared to Apple Store where everyone gets the same cut) payments. In some places you can be required to send a printed receipt to the user.

It would not be fun to watch, let's say Zynga, collecting their low cost payments across all their portfolio by making users sign up once and having indie games instantly losing a payment or falling back to high commission options because users are tired of entering payment info for each game.

Sad day for the little guy. Do you see independent Devs cheering for the %2-%3 commission or is it Epic, Netflix, Spotify who will benefit from this? Unless you do low margin commission work (like platform where you take a cut, i.e. online tutoring) the %30 commission is a non issue.

Game crystals don't really have a cost, so %5 cut or %30 cut doesn't really matter that much. However, one company having access to the %5 and other not having access to it will change the landscape because the large company will be able to advertise more thanks to its better margins, wiping out the rest.

Then maybe Apple shouldn't have gotten greedy...

This is the problem with major companies that think they can just control everything. Then when the government steps in they say what they were doing is anti-competitive and suddenly the consumers now have to bear the brunt of the negative aspect of full on competition. Had Apple just been reasonable and not charged egregious fees from the get go, this wouldn't have been an issue.

https://www.apple.com/newsroom/2021/08/apple-us-developers-a...

"So, what did you do this quarter?"

"Oh, I reduced the revenue of the whole company by 7% to reduce future risk to our revenue stream."

There's only downside, and no upside to your career by doing this. Much better to wait for external forces to do it and then it's nobody's fault.

There is no guarantee that Apple wont be sued even with 10% cut so why not charge 30% and make money till the sun is shining.

From what I understand that Apple does do this. It's just not public information, and EPIC rejected the offer.

Not just mobile, but iPad Pro and iPads too.

Is this really an issue? I agree Apple has been pretty shady but this is a facet of any hardware you buy today from any manufacturer. Now, preventing/obfuscating the install of _other_ OS software, I agree, total bullshit.

What about bundling camera, speaker, screen, processors etc? They are selling a product. You don't complain about car companies bundling 4 wheels and a motor.

Is this anticompetitive if it's a fundament of old business model back from 80s?

And Microsoft was a signatory to this lawsuit arguing Apple should have to open up but their store is “different”…

(Should oil companies be penalised for the damage they have done to the environment just in terms of promoting plastic?)

So no, I don't think the flow will remain nearly as seamless as it is today, and that's disappointing to me. I don't pay for much IAP-wise (though I do order plenty of DoorDash), but I guess this will give me even less motivation to buy crap I don't need.

The only ones who can save money on third-party payments are big developers or apps that charge a lot of money. For usual $0.99-2.99 in-app buys, you won't be saving much, in fact, you are likely to pay more. And of course, you have to do VAT, refunds and other things yourself. I just don't see how a small dev is benefiting here. I'd rather pay Apple's 15% and be done with it.

https://www.bloomberg.com/news/articles/2021-05-12/epic-appl....

It's not a surprising outcome whatsoever if you followed the trial.

Apple's recent concession on this was reading the room and realising this is the likely outcome.

I had multiple discussions, with many commenters on hacker news, where people were way too certain about the court case, when clearly it could have gone many different ways (Thus, I agree with you that "it's tricky to guess what a judge will do during a contentious case" ).

Why would it? The court basically dodged the question, so we still don't have an answer provided by the court system. Until that happens, we can discuss it to death if we want!

Edit: excerpt from the ruling is: "Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. (...) The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist."

The current definition of a monopoly.

Whether the current definition of a monopoly needs to change.

If you are mixing the two arguments discourse can go nowhere because you're substantively discussing cause and effect. The current definition of a monopoly needs to change, imo, then we can talk about whether Apple is a monopoly.

I'm also interested in discussing conglomerates and whether they are good or bad, and how to control them similar to monopolies, but that discourse can't be had until we can agree on something like the definition of a monopoly.

Famgopolies [1] behave different than monopolies. But they're every bit, if not more, dangerous.

They use their incredible market power and cash piles to enter new markets with ease and put price pressure on the incumbents. It's hard to compete with free. Then all the other famgopolies enter the space too, and it's just a famgopoly watering hole.

Their objective: capturing attention and keeping their users on their platforms longer. They use their platform bubbles to capture a large group of users that will never leave their services. Like Apple users. They're all in a bubble, and if you want access, you have to pay a steep tax and jump to the beat of the their whims.

And this isn't a new kind of monopoly? It's a monopolization in a new sense: they wrap their shroud over individuals and companies and keep them attached at the hip. Switching costs become incredible.

Apple, Google, and Amazon are turning us into serfs. They have a quasi republic going on that they tax and control. You can't start new businesses. You can't escape. If they target your small market, you're screwed.

The DOJ needs to break these companies up into twenty or so smaller ones that don't form a cobweb of entrapment.

Apple/Google/etc fans and shareholders will disagree, but these companies are hurting our industry and soaking up all the innovation.

[1] FAAMG companies with supremely anticompetitive behavior

The actual ruling is something more like "Epic failed to prove that Apple is a monopoly in the market the judge decided is the relevant market: digital mobile gaming transactions".

Here are the relevant sections of the ruling:

> The Court disagrees with both parties’ definition of the relevant market.

> Ultimately, after evaluating the trial evidence, the Court finds that the relevant market here is digital mobile gaming transactions, not gaming generally and not Apple’s own internal operating systems related to the App Store. The mobile gaming market itself is a $100 billion industry. The size of this market explains Epic Games’ motive in bringing this action. Having penetrated all other video game markets, the mobile gaming market was Epic Games’ next target and it views Apple as an impediment.

> Further, the evidence demonstrates that most App Store revenue is generated by mobile gaming apps, not all apps. Thus, defining the market to focus on gaming apps is appropriate. Generally speaking, on a revenue basis, gaming apps account for approximately 70% of all App Store revenues. This 70% of revenue is generated by less than 10% of all App Store consumers. These gaming-app consumers are primarily making in-app purchases which is the focus of Epic Games’ claims. By contrast, over 80% of all consumer accounts generate virtually no revenue, as 80% of all apps on the App Store are free.

> Having defined the relevant market as digital mobile gaming transactions, the Court next evaluated Apple’s conduct in that market. Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrustconduct. Success is not illegal. The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist. Case Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.

> Nonetheless, the trial did show that Apple is engaging in anticompetitive conduct under California’s competition laws. The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice. When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted.

Unlikely. While there may now be a legal decision in place it will still be argued whether or not it was the correct one.

Can someone ELI5 why Apple is considered to be anti-competitive for not dedicating resources to assisting another business in creating a competitor to a market for a platform they and they alone created?

If Epic wants to have their game on a phone, it makes sense they abide by the rules enforced by the company that allows the whole ecosystem to exist. If they don’t like it, they can go and create their own phone hardware and app ecosystem.

Maybe I’m just naive.

At the end of the day, who cares if they are a monopoly or not - you don't have to be a monopoly to be in a position to do Bad Stuff to The Market.

They make a call about whether a company has monopoly power in a specific market defined in a specific case.

In this case, the court does not believe Apple is a monopolist in a specifically defined digital gaming market.

That has no bearing or relevance on whether they are a monopolist in some other defined market (or even on a different day in the same market!)

We need strong federal antitrust enforcement. This only worked because Apple is based in California, which has stricter rules.

Are those threads arguing about a legal definition, because if not then this would have little impact on them. Even if they are arguing form a legal perspective, it would have to be within the same legal system as this court and thus could be argued for other legal systems. And even then one can argue the judge is wrong, look at how many judges end up being wrong based on appeal results. Technically you can't be sure which judge is actually wrong, you know which one is in the court that overrules the other, but you can still point out that the disagreement means one of them is wrong even if you can't say definitely which one is.

"The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist."

Edit: Note that this a descriptive statement regarding the ruling, not a normative statement of my opinion.

Judges in the US certainly have varying political persuasions and values, but you would be hard-pressed to find a federal court judge who isn't trying to faithfully decide each case on its merits. It's part of their oath or affirmation.

Judges are professionals and can express preliminary views on issues without being 'biased'.

At the time Fortnite was available on the App Store, the Apple In-App Purchase mechanism was the only contractually allowed method of purchase, and for the short time Fortnite enabled purchases via other methods, their contract with Apple was breached. As a result, the judge ruled that Apple is owed 30% of that revenue - money they would have gotten had those purchases been made via Apple IAP.

In addition, the judge ruled that Apple was well within their power to terminate Epic's developer relationship and App Store access, because of this breach of contract.

This new injunction only takes place in 90 days time, and doesn't nullify any power Apple has to determine who they wish to allow on their App Store. As a result, they are seemingly choosing to not permit Epic back on the App Store, again, due to their initial breach of contract.

My interpretation of this this new ruling is that Apple isn't entitled to money raised through other payment methods going forward, as likely the App Store developer terms of service will be revised to reflect the new state of the law. However I'm sure this will become clear in due course when we see the new terms.

> Under all models, Apple would be entitled to a commission or licensing fee, even if IAP was optional.

> Turning to the intellectual property justification, the Court agrees with the general proposition that Apple is entitled to be paid for its intellectual property.

> As established in the prior sections, see supra Facts §§ II.C., V.A.2.b., V.B.2.c., Apple is entitled to license its intellectual property for a fee, and to further guard against the uncompensated use of its intellectual property.

> The Court also notes that in the but-for world where developers could use an alternative processor, Apple would still be contractually entitled to its commission on any purchase made within apps distributed on the App Store.

In other words, even if developers are allowed to link to alternative payment processors inside their app, Apple may very well still be entitled to some sort of commission/licensing fee for the use of their IP.

Epic are more motivated by transferring the excess profits of Apple into modest profits for developers, who then redistribute 5% of their revenues (as part of the Unreal Engine license) back to Epic.

I wonder if Epic will sue Steam and console developers next...

Epic sells Unreal to Sony and Microsoft, so suing them is probably unlikely. But Valve could definitely be the next target.

OTOH it doesnt force apple to allow any link, they can still filter which payment providers are allowed

So apps will be able to redirect you to a website but users won't be able to make the payment in the app itself?

> Apple [must not] be compelled to allow third-party app stores or alternative third-party payment systems inside the app itself

It sounds like Apple cannot legally sanction a developer account when their apps open their own self-hosted payment page in a WebView instead of going-through iOS' IAP system - while Apple is under no obligation to allow iOS's IAP system to use a different payment back-end.

...shat's the effective difference here, as far as a regular punter's experience is concerned, though?

What would be swell is an open device you fully control which doesn't spy on you. Turns out that cuts off most of the ways to make big bucks.

Apple's concession also limited to one link, whereas this refers to links in the plural, and also metadata (eg app store descriptions).

So instead of 2 silos, you now have 3. How does that improve anything?

The whole point is to move away from this idea that developers are apple's "ecosystem", like cows in a cow farm. They are not cattle, but independent people with the right to compete in a fair market, much like how apple is competing in a fair market, which is provided by general market state regulations.

I believe the judge did this (just a slap) because Epic was right and Apple was anti-competitive.

I could be wrong though. I have very little knowledge of anti-competitive laws.

So consider instead that Epic and Apple were both penalized an identical amount rather than neither side being penalized at all.

There are still a lot of kinks to work out, such as how to handle court decorum & technological disparities such as low availability of high speed internet and good quality camera systems/lighting/privacy.

Personally I think the federal government should contract for an app other than Zoom because if I had to go to trial I wouldn't feel very comfortable knowing it was all being hosted by a private company, but that's a minor gripe.

Of course, what really makes court cases take very long is when they get appealed to hell and back -- see Google v Oracle for an example of such a case.

(And this is a final order, so it can get appealed).

The rate at which court cases proceed really depends a lot on the complexity of the case, the length of the discovery phase, etc. Both Apple and Epic didn't want to have a jury trial, so there also wasn't the matter of empaneling a jury.