It should also solidly put down all of the arguments we were seeing about whether indie devs and lawsuits putting pressure on Apple and legislators are at all worthwhile. A drop in app fees by 15% is a substantial win, and the reason that drop happened is because Apple is now scared of critics, bad PR, and how that might impact future legislation against them.
The number of hot takes I was seeing about how the Apple/Epic fight benefited literally no one and it was just two companies arguing about who got to take all the money... it's very clear from this program that the overall pressure on Apple has been making a difference.
It's not so large a difference that devs should now stop fighting for better terms, but it's positive to see Apple at least partially show signs of cracking, or at least acknowledge on some level that they're frightened about the potential outcome of this fight. And there are a lot of small devs who are going to be making a lot more money just because of this minor victory.
Very true! This new change by Apple, although obviously a PR move, is still evidence that these legal fights against Apple are working.
This is a very clear example of why the lawsuit against Apple was a good thing, and why people should continue to put on more pressure against Apple. Because it forces them to make changes like this.
Most of the people I saw who I knew using these takes had a substantial vested interest in Apple prevailing, so I doubt it'll change their opinion.
It's good news unless it diffuses the momentum for more.
Tim Sweeney provides one of the most advanced game engine technologies in the world completely for free for all revenue under 1 million. After 1 million you pay 5% on revenue over that, if your game makes $1,200,000 you pay Tim Sweeney $10,000.
If you make 2 games and both games equally make 600K you pay Sweeney nothing.
It's definitely a business but not sure "greedy" describes this.
Most of that comes from selling in-game currency to children.
He wants a higher cut.
Does that make him greedy?
TenCent controls Epic’s access to the Chinese market.
Together, they decided to put Epic’s customers in harms way.
I don’t think Epic will prevail, but I respect the investors right to make a bet on Sweeney if they so choose. They can sell their stake if they like.
Not so the customers, who Epic could clearly have protected but chose not to for publicity reasons alone.
Apple just showed they care about their image. If they really cared about small devs, they can allow third-party app stores or platforms like Epic's, which would really help developers by bringing down processing costs.
Allowing multiple stores would increase costs doe small developers, because of the overhead of dealing with many stores and many sets of rules.
Any cost saving would disappear into one or two levels of middlemen, otherwise known as publishing companies.
Not really relevant to what we're talking about.
> Apple has made rev share changes in the past unprovoked (like 15% for sustained subs)
That wasn't an unprovoked change, it was an olive branch to companies like Amazon that were pressuring Apple for more attractive terms.
> But I would bet in that case Apple did it to take wind out of Epic’s sails around standing up for little devs.
Right, that's what I said. Apple is facing pressure from Epic, it's getting bad PR in press releases from other large companies like Microsoft, indie devs are starting to get mad, and legislators are starting to float ideas about antitrust.
Apple is in a position where they need a positive PR push about their app store policies; they need to be able to hit back at the negative press and claim that they're offering more attractive terms than the competition. They're in that position because the negative pressure is working; it's forcing them to respond.
> Zero proof this 15% reduction has anything to do with pressure from that legal battle.
Short of email leaks or Apple publicly admitting that they're doing this to take public pressure off of their store policies, what would convince you that these changes are related to the current legal battle(s) they're facing?
My take is that we've seen this happen multiple times with multiple companies. Steam went through the same process with Epic: they got slammed by publishers for doing very little work in courting them, and as a result, they changed some of their terms to be more attractive to large studios. Microsoft originally ported IE to Macs to help try and rein in suspicions that they were trying to turn the web into a Windows only platform. Apple's recent review process overhauls are minor concessions to try and get people to stop talking about the negative experiences that publishers like Basecamp have had with opaque rules and rejections.
At some point, when you look at the broader industry, you start to see patterns, and those patterns are that broad, uniform negative press and lawsuits are often (but not always) effective tools when it comes to forcing companies to at least make small concessions on their policies. I think it's very reasonable to look at this change as an indication that Apple is scared of antitrust and thinks that it is possible that further antitrust efforts might succeed.
Oh please.
Has it ever occurred in the history of the world that the selfish motives of two different parties aligned? i.e. Apple gets good press for helping smaller developers and the smaller developers get increased revenues. It happens all the times, and it's called "good business".
You can keep waiting for Apple's App Store executives to cover themselves with sackcloth and ashes and repent of their terrible policies. Let me know how that works out.
This announcement means Apple knows that neither public opinion nor the law is on their side and they're about to lose really, really big. And they're hoping if they can flip this around a bit and get control of the narrative, they can convince regulators they will self-regulate... while continuing to get a third of the revenue from all the most lucrative developers.
Google's new Gmail privacy settings fall in the same boat: They'd rather lose data from a small portion of their users if it might deter the government from taking away all of it.
Why not 50%? 75%? 100%? 150%?
It could also be that they are seeking the optimal rate of return, balancing developer incentives, bringing in new developers, etc.
I think many factors play into the decision, including lawsuits and public scrutiny.
I think it will be really interesting to watch and see if google mirrors the pricing.
The more damning implication is that Apple, one of the world's most highly valued brands, a brand name that has historically commanded 50%+ gross profit margins on commodity goods sold as luxury goods, is losing a 'popularity' contest to a video game company. Talk of changing times!
So what?
Seriously, who cares if Epic earns 14 bzillionty dollars this month, or 20 bzillionty dollars?
At that scale, the 30% is such a terrible thorn in your side?
Come on. Cry me a damn river.
The 'narrative' here is Epic pretending they care about anyone except themselves and that this ridiculous song and dance is about it being 'good for everyone'.
Let's try something positive instead:
What should they have done then to make you happy?
Seriously; if this is such a cynical, terrible move, what should they have done?
macOS has that; Apple will even certify third party developers so that the system can still validate software outside of the Mac App Store. That kind of security model would be perfect for iOS and would moot pretty much all the substantive parts of Epic's complaint.
That's a really good point. Why isn't the dev community talking about getting Apple to do this on iOS?
It would allow sideloading while maintaining security, and a somewhat more fair amount of control from Apple.
Opening up the platform to other app stores means they have less control over the experience on their platform it opens more avenues for malware.
If you want a more open platform use Android.
"Safer for kids" isn't a factor here; Apple already provides tools for parents to lock down their children's devices should that be necessary. This would also presumably have an option (or default) to disable third-party apps, in the same way parents can already disable specific App Store and built-in apps.
And let others use the Epic app store for Fortnight.
I value the customer's ability to install programs of their choosing on a phone they purchased. It seems strange that we see it as desirable to concentrate authority over billions of devices this way. Taking a step back, it's sort of a "what could possibly go wrong" scenario.
A single source of application signing will always be abused to entrench dangerous governments and prejudice. It is toxic, and needs to be outlawed.
It’s not as convenient as the main store, of course, but there are convenience tools (altstore.io) that make it close.
The narrative here is amazing, because you're not sympathizing with Epic because they're so big and have so much money... but they're still the little guy compared to Apple. The scale of Apple's monopoly profit makes Epic look like a corner pharmacy in Montana.
But separately, the only reason to root for ‘the little guy’ is if the little guy is somehow hard done by.
We dislike the fact that Apple makes some money by charging developers 30% for payment services, software delivery, and operating a storefront that users feel safe to buy from.
We say 30% is too much to change for that, because the margin is way too high. Fair enough.
Epic on the other hand makes its money from selling in game currency to children.
That practice needs to be banned altogether.
Sweeney may technically still have the majority vote, but he can’t do anything they seriously oppose, or not do anything they are strongly in favor of without facing serious consequences.
Epic didn't bow to China like other American companies did. And Epic didn't even stay silent. Epic made a clear statement in opposition to China.
That should've put to bed any of this silly "it's controlled by China" nonsense. Tencent just likes having a good stake in a company that prints money.
Support Hong Kong?
How is that in opposition to China? Hong Kong is part of China, and I’m pretty sure the Chinese government thinks of itself as supporting Hong Kong.
All Sweeney actually did was make some carefully worded statements about free speech and said that they wouldn’t filter messages on their platform.
He made no statement encouraging support of any particular political stance.
It’s a way to monetize addictive videogames without providing any additional value.
Do you think we should sell cigarettes to children? If not, why not?
If you buy in-game currency from epic, you have nothing except the memory of a dopamine hit.
Epic is fore casting earning something like 5 billion dollars this financial year.
You'll have to try a bit harder to get a bit of sympathy for them than 'they're smaller than apple'.
...
5 billion dollars.
...
And you want me to care that another company is shaking you down for a couple of million?
Boo hoo. Poor epic. I wonder how they pay the bills.
Oh, I know! They use some that 5 billion dollars they made to do it.
--
I think maybe there are some, you know, real people, who will get some tangible benefits from these rate cuts.
If Epic loses out.. or... you know, if they get them too? Really, it makes no difference to them at all. So.. I really. Do. Not. Care.
Epic's definitely not a little guy, but compared to Apple, it looks more like a respectable medium-sized company.
I find Apple's revenue numbers and market value truly staggering. Few companies seem to be able to compare.
[1] https://venturebeat.com/2020/06/15/epic-games-shareholders-s...
[2] https://appleinsider.com/articles/20/10/26/what-to-expect-fr...
Of course nobody ‘compares’.
But compared to almost any other iOS developer Epic is a giant.
Yes, Apple sells one of the most successful products in human history... and they also illegally use that power to control the market and extract revenue from thousands of other companies who have no choice but to do business with them.
False: Epic wants to pay less commission themselves, and to be able to take a cut of other developers work.
One big difference between Apple and Epic is that Epic didn’t do any work to create the platform.
As to those smaller developers. Apple just cut the commission for them in half. A lower level than Epic was promising. Apple seems to care about the smaller developers.
Epic is not fighting for anyone but themselves.
Let’s note that more than half of Epic’s profits belong to just one man.
Although, if we're going by how popular the apps are on the store...I could see how Epic would be considered a heavyweight on the App Store.
Except they have done exactly that in the past. In June 2016 Apple introduced a subscription billing model which reduces the fee to 15% after the first year a customer is subscribed.
Subscription revenue on Apple's store was $3.6B of ~$50B in 2019, so 7.2% of app store revenue overall.
It's absolutely true that Apple doesn't have a lot of pricing pressure on their 30% fee, since their platform is so compelling and especially since most competitor App Stores charge the same amount. But it's also absolutely false that they have never lowered their rate.
This program came in after more than decade after the app store was created and when Apple is finally under increased public scrutiny for anti-competitive behaviour. Apple made an estimated $20 billion from the app store last year alone with estimated profits from that revenue being around 90% [1]. Being able to afford to half the commission over night speaks to how disconnected the commission is to the costs in running the store.
Why were they able to take 30% and continue to take 15% commission off of all sales? Because the value of the app store is only created via continued practices of anti-competitive behaviour. Ex:
1) Banning competing app stores (restricting customers choice)
2) Banning the mention of alternate methods of payment (restricted customers harmed by paying higher fees)
The argument that the app store charged "market rate" is also not a fair comparison. Your comparing one completely closed market to other open markets that Microsoft and Google produced. Both main competitors allow for competing app stores from their own for example.
[1] https://www.fool.com/investing/2020/01/10/the-app-store-is-s...
Also, because Apple created the most valuable mobile software market in the world, by creating the iPhone, continuing to release top-notch phones year after year, and by creating the App Store itself.
It remains true that iPhone users buy software at a rate that totally dwarfs Android. This could be traced to a number of reasons, but I wouldn't dismiss the App Store monopoly as one of them.
You can describe this as anti-competitive, just keep in mind that you're assuming your own conclusion. You could make the same argument for Apple's refusal to license their OSes for hardware they don't manufacture, I would be similarly unimpressed.
As a user, I would like a stress-free way to sideload apps which don't meet Apple's standards for inclusion on the App Store. Don't see why Apple would want to give away their competitive advantage by letting other stores sell software for their phones, but I could imagine them making side-loading less onerous, that would be nice.
No, they created the possibility for the most valuable mobile software market in the world. Third-party developers were the ones that created it into the most valuable mobile software market in the world.
> by creating the iPhone
Creating the iPhone does not explain the source of the App Store's value, only that one is "tied" to the other. Which leads to my next point.
> You can describe this as anti-competitive, just keep in mind that you're assuming your own conclusion.
It's anti-competitive according to the law. The practice of selling a service (ie: commissions from App Store) as a mandatory addition to the purchase of a different product (ie: iPhone) is called tying. In the United States, most states have laws against tying, which are enforced by state governments. In addition, the U.S. Department of Justice enforces federal laws against tying through its Antitrust Division [1].
No, they literally created the market. The products sold in my supermarket don't create the supermarket either.
Whether what Apple does meets the legal definition of tying is an open question. I doubt it, clearly you're convinced, which is to say, you're assuming your own conclusion.
I would have agreed with you if Apple had,
Paused and in any sort of PR, Marketing, or answer direct from the executive team that they are at least thinking about the issue. Except they double down on thinking they deserved that 30% if not more. ( Perfectly Fine )
Did not take hard stand against developers and thinking themselves as so righteous. ( Also Fine )
But then suddenly turn around and act like Santa to Help SME or smaller developers, when Apple are under pressure in multiple countries for their App Store policy.
May be Tim Cook did not realise, Apple has turned into hypocrite just like Google did in their Do No Evil era.
> Apple / Google’s 30% take is the anti-competitive elephant in the room here
No. They both built a distribution channel on which developers build, but they're not open markets. Those app stores are the property of their respective creators (this is a flaw of the app store paradigm in general, at least for those who want full control over their software).
Both Apple and Google are fully within their rights to charge whatever they want within their app store and enforce whatever capricious whims they like on apps that they distribute. It's the same as traditional book publishers writing their contracts with authors they publish. Which is why open platforms and device jailbreaking remain valuable for those of us who believe in personal ownership of our software.
Your comparisons with book publishers are specious: if I write a book today I can go to any of a number of publishers, none of whom have any kind of control over access to readers. Or I can even self-publish and sell direct.
Jailbreaking is a complete irrelevance in market terms: It’s effectively impossible to sell on Apple devices without paying Apple’s tax & very difficult to sell on Android devices (which Google controls via carefully written contracts with mobile phone manufacturers) without paying Google 30%. We have anti-monopoly + market collusion laws for good reasons. It’s about time they were enforced.
Both Google and especially Apple have also spent millions of resources and money, making sure they are the only app store in use (by default).
They could have spent some of those millions creating a set of rules for independent app marketplaces to be able to distribute content on their platform instead of locking everyone in to theirs'.
The whole problem with monopolies is that they actually harm the consumer by protecting their monopoly from encroachment by someone else. So yes people really think decisions are being made by a monopoly to protect their monopoly (and their profits). A chunk of those billions they have is actually money generated by these monopolistic practices.
It's juvenile to imagine them sitting at board meeting and discussing "How can we protect our monopoly?", that's like saying the NSA is discussing by board meetings "how can we further invade everyones privacy?". But they most definitely are discussing how they can protect their market share and how to edge out competition.
How is this any different?
Google and Apple spent Millions 'claiming' Patents/IP, monopolizing new discoveries, and 'earning' Billions.
"Place Silicon Valley in its proper historical context and you see that, despite its mythology, it’s far from unique. Rather, it fits into a pattern of rapid technological change which has shaped recent centuries. In this case, advances in information technology have unleashed a wave of new capabilities. Just as the internal combustion engine and the growth of the railroads created Rockefeller, and the telecommunications boom created AT&T, this breakthrough enabled a few well-placed corporations to reap the rewards. By capitalising on network effects, early mover advantage, and near-zero marginal costs of production, they have positioned themselves as gateways to information, giving them the power to extract rent from every transaction.
Undergirding this state of affairs is a set of intellectual property rights explicitly designed to favour corporations. This system — the flip side of globalisation — is propagated by various trade agreements and global institutions at the behest of the nation states who benefit from it the most. It’s no accident that Silicon Valley is a uniquely American phenomenon; not only does it owe its success to the United States’ exceptionally high defence spending — the source of its research funding and foundational technological breakthroughs — that very military might is itself what implicitly secures the intellectual property regime." [1]
Isn't that what a duopoly is, by definition?
I did a search on Google and nothing really came up. Did you just invent the term? I love the name. It might end up in Main Stream Media soon.
My Amazon income is less than 2% of the Google income.
If Google has 99% current market share for mobile OS, props to them. They deserve it for working like heck, delivering something amazing, and finding a model that allows them to distribute for free.
If Google has 99% market share, and ensures it keeps 99% market share in the future by setting up licensing deals to tie Google Apps + App Store together... that deserves a lot more scrutiny.
Amazon made a half-hearted effort to compete in the space and the result is “less than 2%” in your case.
That's... one way to look at it.
Another way is that they'd be spending even more if there were more healthy competition in the alternative app store market.
Amazon is incentived to run an Android app store now, in the same way Microsoft was incentivized to maintain an ARM build of Windows: it's not a corporate priority, because it doesn't make business sense for it to be until the playing field changes.
Users don’t want an “alternative App Store market”. They want a place where they know the apps they download won’t steal their data or crash their device, where the billing policies are clear and predictable, where you can set parental controls and get refunds on accidental purchases.
Apple doesn’t have customers because they are the only one who you can buy water, electricity, or internet from at your home address. Apple has customers because people willingly and happily shovel their hard-earned money at them because their products are freaking amazing.
In no universe can anyone say that the progression / advancement of smartphones and smartphone applications indicates a stagnant market or one in need of forced government intervention.
From what I can see iPhone 1 with its 400MHz Samsung CPU and 320x480 display and its half dozen apps -> iPhone 12 with its 8 core 3GHz A14, 2532x1170 display, and millions of apps demonstrates conclusively that consumers are winning out tremendously over the last 13 years due to a highly competitive market driving truly massive R&D investment in this space.
I think the problem that people actually have with Apple is that they are so far ahead of the pack, and people don’t see where the inevitable disruption is going to come from just yet.
I.e. what would you look at and say "That's anti-competitive"?
IMO, as long as there are viable competitors to Apple, and as long as Apple is not colluding with its competitors, Apple should be able to implement any lawful policy on its own device that it chooses.
Apple can't violate its existing contracts with its customers or developers (e.g. threatening to kick off all Unreal Engine apps, e.g. lock customer data unless a ransom is paid). Apple can't use App Store policy to commit crimes, like extortion (e.g. offering to buy an app developer, and saying they will ban them from the store or increase their commissions to 50% if they don't accept the buyout).
As long as their policies have a justifiable and legal business purpose (whether you personally agree with the policy is irrelevant) that's applied consistently (within human limits of consistency) they should be free to make their own product however they want, and charge what they want for it.
What would one or both of these stores need to do, to qualify as 'anti-competitive' to you?
That's a good first step towards competition that would allow Apple to keep the AppStore exclusivity -- for now.
1) No need to re-enter billing information across apps
2) A centralized UI for the user to manage all their
subscriptions, enforce consistent billing policies,
request refunds, etc.
3) Enforce parental controls and family approval
policies which may be configured on the account
4) Prevent any surprise billings or unauthorized charges
5) Ability for Apple to force a refund even if the app dev won't
In the end, the payment processor is a red herring. Apple isn't charging 30% for the payment processing -- they probably pay less to run the charge than Stripe does. For example, for $0.99 charges, the app developer pays Apple less for their entire fee than Stripe would charge them just to run charge.
The 30% fee is Apple's share for creating the entire ecosystem. Everything from the programming language, the platform, the API's, the security framework / secure enclave, the app review, the distribution model, the billing system, the cloud services for software delivery/push notifications/updates/shared storage, all the way up to Apple's customer support lines. Actually running the payment gateway is perhaps the very least of it.
Not in the context of introducing competition.
My apps would have to be designed to comply with all of the rules of all of the stores.
No thanks.
This simply isn't true. Android is much more open yet app spend is way lower compared to the smaller marketshare iPhone.
An open app market means a flood of free apps which means less money spent. Good Devs will absolutely lose in this scenario. Outsourced sweatshop devs will do everything cheaper.
I'm sure you can release niche apps on these stores, but the general market isn't moving away from the Play Store any time soon, and that's where the money is.
What happens to a phone manufacturer who ships a phone with an alternate App store?
You get to be the best selling Android phone every year. Are we all forgetting that Samsung ships their own app store? Nobody uses it because it's garbage but that's not Google Play's fault.
If we look at market share for mobile app distribution, the vast, vast majority of it goes to the App Store and the Play Store. The competition isn't even a blip on the radar.
Well, not anymore they don't.
Kind of undermines your cartel argument, if you think about it. Clever on Apple's part...
If not, what's the difference with phones/tablets?
They probably did. The industry was small. Attracting developers in significant numbers meant convincing people to become developers. That is a huge hurdle. Platforms with entry fees didn't build app ecosystems that attracted end users.
By the time the iPhone was announced, developers were plenty and the software business model proven. Apple had resources to subsidize onboarding with a well-documented, rich API and good native apps.
The difference I see is more about Apple specifically, because unlike, say, Google with Android, they have full vertical integration. They make both the hardware and the OS. Everything about Apple is focused on complete corporate control over the experience.
If Apple decided to only permit apps distributed through App Store X on OS X, I wouldn't be at all surprised. That's Apple's MO. And there is a customer segment I think that serves, which is the consumer market which doesn't want to think about maintaining their own digital security, because Apple seems like a reasonably benevolent dictator in this respect, as much as developers dislike the cut they take. Requiring Apple to open their devices to third-party app stores would break this vice grip they have on the experience and, IMO, degrade the experience for Apple's end users (even if it might make things nicer for developers).
Hard to fault a business for realizing that they have a stupid amount of leverage because people have made themselves dependent on you and charging more.
What? If a business is causing a large negative externality, that's a bad thing.
Just because you can't "fault" people for pursuing profit doesn't mean they should be allowed to do it any way possible?
I just really don't understand this worldview.
> Both Apple and Google are fully within their rights to charge whatever they want within their app store and enforce whatever capricious whims they like on apps that they distribute.
actually isn't always true - especially when it hurts consumers. of course it isn't up to us here to decide if it does. remember that private doesn't mean unregulated.
“Hurting consumers” would be an almost Orwellian characterization of the smartphone technology revolution driven predominantly by the competition between Apple, Samsung, Google, Huawei, etc.
The problem is when by "competing like hell", you compete so hard that you suppress your competition. The issue that anti-competition laws seek to redress is the suppression of other competition.
What we have is a pretty clear case of a minuscule minority of users bitterly complaining that a company isn’t making its products exactly the way they want them to.
A store is allowed to charge what it wants for its products. A store is allowed to set the policies that it wants for the goods that it sells in its own stores.
It just so happens that Apple’s customers absolutely love its products, and that Apple’s products are absolute technological leaders in their space.
Apple didn’t get there, e.g. like Facebook by buying up the competition any time it started to emerge as a threat. They got there through decades of focused development and investment.
A store is allowed to block you from using any other store? These aren't natural continuations or logical extensions of meatspace, stop pretending they are.
Apple doesn’t get to tell Google, Samsung, Huawei, LG, OnePlus, Fairphone, etc. how to build their devices.
The one device they do get to decide how it works is the iPhone. Because they created it, they own it, and they get to decide its future.
Their device, their decision. The consumer gets to decide if they like it or not. Overwhelmingly, they decide that they do.
The same exact argument could be used regarding the desktop PC.
Do you think that microsoft could prevent competing web browser from being installed on the PC, if it choose to do so?
I think not. They would lose that anti-trust lawsuit.
> Because they created it, they own it, and they get to decide its future.
No, actually they dont get to decide that. If they are breaking anti-trust law, via anti-competitive behavior, then there are certain actions that they cannot do.
> The consumer gets to decide if they like it or not.
The consumers, or other companies, can also sue them for breaking anti-trust law, which Apple is required by law to follow.
Once I buy an iPhone, I own it and it is my device.
Maybe the above is how you think things ought to be (I disagree), but anti-trust jurisprudence does not agree with your pseudo-libertarian worldview.
Anti-trust only applies if there’s a finding that Apple is a monopoly. The jury, so to speak, is still out.
If Apple was found to be a monopoly, then there may need to be some restrictions placed on how they operate.
But I think controlling how your own product works is the presumed default, even if that product is wildly successful, as long as that success is through actual product merit, and not done deceptively or through illegal collusion.
Wrong again, you can violate anti-competition law without being a monopoly. You're correct that it hasn't been decided in a court of law.
I'm saying that I think they are engaging in anti-competitive behavior, you are saying "actually it is okay because they haven't been judged to engage in anti-competitive behavior in a court of law", which does not seem contrary to my claim, which is that I think they should be judged to engage in anti-competitive behavior.
The case law on this is not as definitive as you are claiming. I don’t think their behavior is illegally anti-competitive.
Sure, you can say that not supporting a specific 3rd party application (e.g. an App Store) on your device is “anti-competitive” but obviously not illegally so for any business.
Behavior which is totally legal can become illegal in a monopoly situation.
> Their device, their decision. The consumer gets to decide if they like it or not.
and now you're telling me that the case law isn't definitive?
That's my whole point - you're making strong assertions as if they are the way the law works, when they are just your personal opinion on how things ought to work. Numerous decisions in the past have required companies to change how they do things on their devices. I'm not saying the case will be decided against Apple.
To somewhat oversimplify, you are allowed to not invite competitors to sell to your customers in your own backyard. Unless you are a monopoly. Because then that “backyard” isn’t rightfully yours to control.
At the moment I am inclined to believe the iPhone is Apple’s own backyard and they should have dominion over what happens there.
If you want to confiscate Apple’s backyard, you do it at the risk that you damage a company that has done a great service for the world, and a company that IMO deserves the benefit of controlling its own destiny and should be left to continue innovating on its own terms.
If someone thinks they can do better then there’s trillions of dollars in market cap on the line and I welcome them to try. Apple won’t stop them from trying, but will certainly compete fiercely on the merits.
I also think it shouldn't be up to courts. It should be up to the consumers themselves. They generally seem quite happy with Apple and Google.
On the other hand, if there is a consumer need that is not being met by Google or Apple, it is a prime opportunity to disrupt the market with a new offering that fulfills that need. If Google or Apple stamp that out or have done so in the past, then I will agree it's an anti-competition issue.
How would a consumer even know if they were happy given the lack of options? Are they actually happy, or do they just have bigger issues to worry about? That's why we hire experts to act as regulators for new industries.
Regardless of what you think "should" happen, the reality is that you massively understated the scope of the applicable law.
Who defines what those rights are? I don't agree with this dictatorial definition of rights. This mindset needs to change.
I don't want Microsoft "owning" Windows and banning Firefox and Chrome because its their "right".
They are within their right to charge what they want. But it is anti-competitive for them to use significant market power to leverage themselves in other markets.
The lawsuit is not about the 30% cut. Instead, the anti-competitive behavior is that Apple prevent competing Apple stores using its significant market power.
Thats how anti-trust law works.
But it also shows behavioral economics at work: developers have been so anchored to the 30% split that this change looks amazing, but why isn't the 15% the norm regardless of revenue size? Effectively Apple is "settling" or "bribing" small developers with this change, so they aren't compelled to join the antitrust movement led by bigger players.
From a business standpoint, Apple is trying to splinter the critics into various factions. A bit extreme analogy but it's akin to inciting conflict within the opposition - actually almost textbook monopolistic behavior. Segment the market by offering tiered incentives.
This reminds me a bit of the Netflix stance on net neutrality. They were for until they grew big enough and could pay off ISPs. ISPs essentially created the proverbial moat for Netflix.
And for any dev with more than 0% marginal cost the increase in profit is even higher.
(70% share of revenue -> 85% share of revenue)
It's already impossible on iOS, due to the fact that you cannot install any software except via the App Store, which requires an Apple ID.
At the moment it is possible to continue to use a mac and download and run software without an Apple ID, but if the trend of only releasing software via the App Store continues, that will become more and more difficult.
Even totally free apps in the App Store require that you identify yourself to Apple to download and use them.
I was told this by the WireGuard team when I inquired why the WireGuard macOS VPN app is only available via MAS and not direct download (such as the Windows wg client).
I'm not 100% sure it's true, though, and am testing now. ProtonVPN claims to be working, with packet filtering for non-VPN traffic (kill switch) on 11.x, and they've a direct download, so it's possible that the wg devs are mistaken.
Apple leadership is answering in the implied context of "someone with an Apple ID". I'm never using my Apple ID again on a mac for any reason.
Fredaspaghetti!
Apple keeps trying to spin the app store as a way for users to discover apps, when in reality, the reason developers publish their apps there is that it's the only way onto the millions of iOS devices worldwide.
Your app/game won't be 24h on the play store without the apk popping up on some random site, ready to be downloaded.
I don't see a way to do proper sideloading without opening this avenue. Maybe a mac os style notarization scheme, but apple gets a lot of flack for that too.
That said, I'd choose to have control, even as an app developer. Piracy is a fact of life.
One benefit is that if an app is successful but expensive, it opens up for competitors to undercut by price. With piracy, many users would rather pirate the expensive #1 game than to run the lower cost #1938 game. With such a closed system, users will choose cheaper applications and it will help #1938 to rise to #45.This is very good for indie developers.
Another benefit is for the consumers. When developers overprice their software, and users can pirate - they might. Then the developer blames lack of sales on piracy. However, when piracy is impossible, the developer can't blame piracy and must seek the true cause of poor sales, be it a high price or lack of quality.
There's a lot of coverage already on the negatives with a closed store.
I mean, I've been making Android apps since 2011, and I think that the role of app stores themselves is vastly overrated too. They have their place and they're nice to have, sure, but it's silly that OS vendors are allowed to have their own ones and either demote or outright ban anything that doesn't go through them. The transition to "always-online" was supposed to be more empowering, not more limiting.
"But people would install malware..."
It's okay for new technology to require education before one can make use of it. It's about time we get over it and stop treating users like children.
In the old days, when telecommunications devices and networks were getting monopolized like this, we'd break the company up into smaller entities, and then regulate the hell out of them, especially on monopolized/duopolized prices.
In a just world, Apple would never be allowed to set the app store tax at all, a group of state or federal regulators would have strict price caps set by the public at large and enforced by state or federal law. (This is how many places still handle Electricity and Natural Gas. This is approximately what we did to AT&T, when they tried this same crap).
If you own a monopoly/duopoly, you should expect to be heavily regulated like one. If you don't like that, stop monopolizing that market. This isn't rocket science, it's the conservative position on this issue.
The FAANG are random assortment of companies that share little in common aside from being large. Facebook and Google monetize eyeballs but in very different ways. Amazon is a logistics and retail and PaaS powerhouse. Netflix streams movies. Apple sells hardware and services and, in stark contrast to Facebook and Google, temperamentally despises performance advertising. Google and Apple (and Microsoft and Salesforce and Nintendo and…) have walled garden marketplaces.
Apropos a dubious assertion the grandparent made, Google and Apple are also the driving forces behind the two most feature-filled web browsers that enable ever more sophisticated web apps to run on smartphones outside of their walled gardens at no charge.
So, what are the necessary and sufficient conditions to make a company a FAANG, aside for assisting with the construction of a snappy acronym, and what are the conclusions that flow from those conditions that justify your assuming every one of their acts is best assumed to have been done in bad faith?
It’s something I’ve been torn on for a while, on the one hand 30% seems way too high for most apps (maybe you could make an argument for a few that rely more heavily on apple infrastructure). But on the other app stores do provide a lot of benefits like auto-update, malware scanning, reviews, distribution, etc. that most apps couldn’t or wouldn’t do by themselves.
In other words, what should Apple have done here? What is the right cut, and how did you come to that figure?
This is a great question that assumes the responses here are mostly rational (not to minimize how anti-Apple folks feel, which is also legitimate). This is awesome news for small developers.
To me it seems like those comments are in the minority while the popular opinion is the cynical take.
It's not just the rate that's anti-competitive, it's that these two companies have stifled competition in mobile app distribution for over a decade now.
There is no viable competition in this space because Google and Apple never allowed for real competitors to the App Store and Play Store to exist. You have to use the App Store to distribute mobile apps on iPhones and iPads, and if you want automatic updates, background updates or batch installations/upgrades on Android, you have to use the Play Store.
These days, if you want to install an app whose developers didn't pay the Apple tax, macOS will make the app appear radioactive, and as if it is either broken or malicious. Same goes for Android, where apps distributed outside of the Play Store invoke scary warnings, and are hindered when it comes to automatic updates, background updates, or batch installs.
I don't see how this helps with antitrust though. Either way, it is an actual policy. Newsworthy, at least.
Also, a comment isn't necessarily positive or negative. This isn't a poll on Apple's HN approval rating. It's an announcement of a thing Apple is doing.
Apple and Google have a model where they make lots MORE money outside the system and if the price of software is ZERO they would be happy.
In Apple's case, even free software sells their phone.
In Google's case, even free software funnels users to their ad platform.
[1] "Smart companies try to commoditize their products’ complements."
1: https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/
(joel's a smart guy, he should write more often)
The app store sold about $50bln worth of stuff in 2019, Apple's 30% cut would therefore mean $15bln in revenue. If they operated the app store at a least a 70% margin (and really, if they didn't, then I'd be rather surprised), that would mean a good $10bln in net profit from the app store, or 17% of their total net profit.
And that's still not accounting for the network effect the app store creates, or the business intelligence.
It might not be the biggest elephant ever, but it's not what I'd call a tiny baby elephant either.
That 30% matters to them a lot.
Increasing prices on top-of-the-line iPhones beg to differ.
Naturally, the 30% take from the app store is bigger, but that's a matter of overall volume, not growth. The app store is a cash cow and will remain so even if its numbers start trending down.
Moreover, I expect that this announcement is mostly paving the way for Apple to force all Mac OS apps to be distributed via the Mac App Store (as they do on iOS).
The optimist in me doesn't want to believe it. But this is probably consistent with Apple's economic incentives. Especially because the major role of Macs in the world is to provide a platform for developing iOS apps.
This week I ordered an M1 Macbook Air. Not because I really need it, but because a couple years from now I will be happy I have a machine that can run Big Sur, which will be remembered as the least restrictive OS of the Apple Silicon era.
Apple is the biggest corporation in the world. We can like their products, but we shouldn't give them more credit than, say, ExxonMobil or Foxconn or Goldman Sachs. They will make choices based on what creates the most profit, nothing more. That's not cynicism; it's why corporations exist at all.
And if the Mac software scene stagnates, Apple eventually loses their core constituency.
The noise around the app store reminds me of all the complaints when Adobe said it would move its apps into the Creative Cloud on a subscription basis. Yes, a certain percentage of customers left. But the extra revenue more than made up for the loss.
It also reduces their anti-competitive effect on new entrants. Now they have a beachhead. Sounds like a win-win.
There should be an additional tier between e.g. $1mm and $25mm. Though that still wouldn't satisfy an absolutist constituency. So maybe this is the most efficient compromise.
> This has nothing to do with “doing the right thing”
Who cares? I'll take effective solutions from self-interested actors over well-intentioned bumbling.
> everything to do with limiting the number of outraged letters to senators from devs
Sounds like a responsive political system.
If your concern is the App Store's 30% take from large developers, good news: they have the resources to find recourse in courts. Small developers don't. Given this has zero effect on Epic, it has zero effect on their case. (Just, perhaps, its lobbying effect in Congress.)
Well, this is a big change to a core part of their App Store business model.
It’s hard to reduce that to a PR move.
Consider the revenue at stake here.
Indeed, that's small potatoes for Apple. But then, everything is small potatoes compared to iPhone sales.
But far, far bigger than even a big PR stunt. Orders of magnitude bigger.
[1] https://www.theverge.com/2020/11/18/21572302/apple-app-store...
Steam reduced it for publishers with bargaining power. No one has real bargaining power on the App Store.
Considering their volume fifteen percent should still allow them to rake in ridiculous amounts of money. However one area I still support Apple is selling of additional product within the store should still be subject to a charge; as in the Epic store selling additional games should be subject to the same rules as selling any content on the store yet you should be able to purchase outside the store and redeem codes within apps to use them; similar to how Steam allows developers to sell keys outside of Steam
This percentage is something that small businesses feel, but is not really what makes the marketplace for apps “anti-competitive”, and personally I think it’s a distraction from the main issue:
Is the total addressable market for “apps” defined by and exclusive to a single platform (iOS, Android, etc.) or not?
How you answer this makes the percentage either a number arrived at through a competitive market or a “tax”.
The 30% is really not the elephant in the room.
What makes it so hard to make money on the App Store is the speed at which knock offs can appear.
The App Store supports deep work that is hard to copy and work where there is a backend with network effects.
For everything else it’s just a lottery.
30% isn’t the issue.
A lot of people complain about how hard it is to make money on the App Store. Typically we hear only about the 30% as if that is the cause of people’s woes.
Clearly the 30% is a factor, but there are other more significant factors that determine success.
When you put it like that, it sounds pretty good!
Correct. True Character is what you do when nobody is watching. :)
Captive platforms are not new. iOS devices are consoles.
Nintendo also takes a 30% cut, although it used to be 35% for WiiWare games. This does NOT include the cost of acquiring development hardware, which usually sets you back $1000 at most. 30% is actually the industry standard; Steam takes 30% and Epic Games takes 30% for smaller titles.
Regarding your comment on captive platforms, I think there's a bit of a difference between a home console and a smartphone. A home console is considered a luxury item, while a smartphone has quickly become a necessity in today's connected world.
For home consoles, market competition is fierce. Not only is there Nintendo, Sony, and Microsoft, but there's also the PC gaming market, which includes devices in a variety of form factors. There's also multiple storefronts. You can buy console games from physical stores, in which case physical retailers take a cut, purchase Steam keys from other vendors, trade physical games, etc. In summary, there's a lot of ways to acquire your games.
In contrast, smartphones are seen as a necessity by many, and there are really only two options: Android or iOS. Each has a dedicated storefront that captures almost their entire user base. This gives Apple and Google a LOT of power over what people can run on their devices, and it practically gives them a guaranteed source of income. I can see why people's attitudes are different towards the Apple/Google duopoly, and that few people are complaining about Nintendo's monopoly on the eShop.
Now, you subtly moved the goalposts here. I'm not even saying you did it on purpose, just drawing attention to it.
Nintendo, Sony, and Microsoft, are hardware manufacturers with integrated, proprietary software stacks, just like Apple. Androids are made by dozens of manufacturers, and you can side load, use the App Store of your choice, and so on.
The fact that Play Store does the lions share of business is the sum of: doing a great job, and nudging users in that direction through various defaults. Fact is, you can load what you want on an Android, and to me that undermines the case for forcing Apple to do likewise.
I'd still like the ability to sideload apps on my iPhone, and think it's worth pushing on Apple to get there. But as long as there are general-purpose phones available for purchase, and there are, I don't see the anticompetitive argument in the iPhone being a console: either put up with it or don't buy one.
I'm drawing a distinction between a bad business decision which customers should push Apple to change, and anticompetitive behavior which governments should force Apple to stop engaging in. I don't see the case for the latter.
I'm just struggling to figure out why the PERCEPTION is very different between iOS and the home console market. It feels like many iPhone users do not believe their smartphone can be substituted with one from another manufacturer. Those same users also complain that they're locked into the App Store. (I think there's a few people in the comments here that have done exactly that.)
At the same time, the majority of mobile app revenue is coming from iOS, which is pushing app developers to the platform, even though they dislike the terms of the App Store.
I'm not sure what the solution is here, but an ecosystem with a large number of members who are unhappy with the status quo doesn't seem very sustainable.
I think a lot of it is the Hacker News effect. Folks around here take free-as-in-free-software seriously, and good for them (us). I'm confident the median iPhone user just downloads apps and uses them; they haven't thought much about alternate app stores and probably wouldn't use them if they were available. I'm pretty sure that iPhone users who complain about software freedom are a tiny minority of all users, especially since the wild world of rooted Android phones is out there for people who feel strongly about such things.
I do get your point, though: consoles are luxury playthings if you're not in professional esports, and phones are a de facto necessity of modern life. It doesn't follow that most, or even many, iPhone users, are discontented with Apple's policies: I figure the bulk of them haven't thought about it once, quite sure my mother and brother haven't.
First, most Apple devs don't care about alternate app stores. Those provide nearly zero additional revenues to devs on every platform they are available.
Second, most Apple devs don't want the Apple App Store to lose it's primacy, they realize that it's hugely beneficial to their revenues. The security, the app vetting, the single sign on, single purchase account, and easy subscription management and refund features, is a huge reason that we make far more from the App Store than Google Play, despite Androids SIX TIMES larger installed base. Apple attracts the best app customers and makes them super comfortable with buying and subscribing to apps.
Most Apple developers by far largest concern was the large percentage of revenues Apple took. And they addressed that today.
At 15% we can use App Store purchasing for far more things, and I'm already having those discussions with clients today.
Meanwhile, Apple continues to use their dominant position to extract 30% of the revenue of the most profitable Apps, whilst people like you go out to bat for them. Must be great to be in Apple PR :)
Locking in developers to only use their AppStore and not anything else, taking %15 of small businesses revenue for payment processing, and all this in the middle of a pandemic and still taking credit for being "generous" and "industry leading". All this while the average payment processor take around %3.
And don't forget the reason they're doing it is to diffuse criticism of their monopolistic restrictions, to help them in their fight against Epic, which is actually fighting for the same rights that these small time developers really need.
If you sell 100 installs on the App Store as a small developer. How many would you sell if there wasn’t an App Store? You’d have to advertise — people just don’t show up at your website. PPC is expensive. And you have to learn how to do it. It’s hard for someone that doesn’t spend their time learning about PPC. It’s hard to get good ROIs even when you do know what you are doing. If you spend $0.50 per click and you sell your app for $3, and you have a 25% conversion rate (which is extremely high,) how much did it cost you to get that sale?
Then once they do get to your website, they have to pay. Ok, 2.9% + $0.30. Now they have to securely download the app. Where is your app hosted? Apparently that’s free and doesn’t cost you anything? Who maintains that system? How pays for that electricity? And updates? And security? Apparently all of that is free and takes zero time?
Chargeback? Uh oh. That’s a $20 fee while you have to fight and document the dispute. Maybe that takes 20 minutes, but more like 45 minutes by the time you write the challenge letter. Digital products, especially games, have a high rate of fraud compared to many industries.
Then there are sales taxes. Are you collecting and remitting the precise amounts to the various jurisdictions where you are selling? How about a sales tax permit? Do you have that?
And trust? I’ll buy an App Store app, but installing an app from some random developer without any assurances I am not installing something nefarious?
If you sold 200 downloads from your website but 300 downloads from the App Store but pay the 15-30%. What makes you more money?
Have you ever sold a product to a retail store? A $10 product in a retail store is purchased from the manufacturer at $5. If there is a distributor involved, that $10 product is purchased from the manufacturer at $2.50. Physical products are obviously different than digital, but the product distribution model for any product has markup across the chain. A manufacturer selling DTC has to have the infrastructure to sell to consumers, thus they aren’t selling at $2.50 anymore. Shipping 100 cases of a product to a distributor is a lot less work than shipping that same volume to individual customers. If you think of the App Store as a distributor — 30% is a bargain.
I think that many app developers don’t realize what things actually cost — when they do, they’d quickly realize they make far more money from the App Store than they would make selling it directly.
Your comment shows the glaringly obvious problem. We don't need two monopolized appstores to "decide" how much of a cut should go to appstore maintainers for all the (real) work they do. Opening u the ecosystem for more appstores or more venues to get apps will keep the prices to a market-driven norm as opposed to a monopolized fixed percentage.
They hope to significantly reduce the pressure on politicians to take a close look at their App store practices by significantly reducing the absolute number of developers suffering the full impact whilst taking the minimum possible hit to their revenue. This has nothing to do with “doing the right thing” or “accelerating innovation” and everything to do with limiting the number of outraged letters to senators from devs, the number of newspaper interviews with prominent indie developers & so on.
Indie devs have an outsize PR impact relative to their revenue contribution, so buy them off with a smaller revenue tax that delivers outsize returns if it prevents the 30% house rake on the majority of Apple’s App Store income coming under scrutiny.
Apple / Google’s 30% take is the anti-competitive elephant in the room here, not a few crumbs thrown to small developers.