But Apple should not take cut on every purchases made through the app. It makes no sense.
AWS does not take a "cut" on every Netflix subscription bought. They just charge for the storage and traffic. This is how App Store should function.
- AWS charge you on bandwidth used, Apple don't charge developers for the number of downloads
- AWS charge you on compute time, Apple don't charge you for ongoing use of their services beyond one initial charge for app submission
- AWS charge you for storage, Apple don't charge you for storing your app
I'm not a fan of Apple's App Store terms any more than the next person, but the GP's comparison to eBay is a hell of a lot more apt than your comparison with AWS.
Yes they do, the fee is yearly, and they make billions in revenue from this. Google charge one-time.
[1] https://techcrunch.com/2018/06/04/app-store-hits-20m-registe...
The figure available was "billions". For ease of calculation, say it was 7b. That means if each developer pays $100 and total revenue was 7b, 1% of the world must be a developer. (1% of 7b * $100 = $7b)
Also, by your own figure, 20 million is already ~0.25% of the world population.
https://9to5mac.com/2021/02/11/app-store-scam-apps-how-to-sp...
Their point is that Apple could charge based on bandwidth used, and that this could be more fair for some developers.
> AWS charge you for storage, Apple don't charge you for storing your app
I would be pretty happy with Apple charging for app storage if it was at S3 rates - it would amount to almost nothing.
We can scope out who those are likely to be: free applications which provide some useful educational service would lose; currently they provide no revenue (beyond the token developer fee). Banking, rewards, credit, etc. applications (applications which interface consumers with their pre-existing accounts for CRUD-style management purposes) would lose. They provide no revenue. Subscription products with very low conversion rates would lose if their free:pay user ratio exceeds, say, 10:1 -- or some other breakeven point with respect to money saved by ditching Apple's payment stuff.
It would also hurt applications like Facebook, Twitter, and Instagram where the product is completely free and monetized by advertising Apple currently doesn't take a cut of.
It's clear the winners are mostly extremely popular multi-billion dollar applications where the app portion is a pretty thin layer and they charge all or most users to subscribe on an ongoing basis. Fortnite doesn't exactly have a subscription, but it relies on fairly frequent impulse purchases and monetization of free users.
I don't think it's straightforward to imagine the world would be better or worse if the basis for billing changed to something like cost basis.
My overwhelming reaction to this trial is that it seems like both sides have fairly good reasons to prefer things the way they prefer things, but it's not clear to me why a court should essentially vacate a particular business model or contract. When courts intervene to strike broad classes of contract provisions (for example, to allow or disallow mandatory arbitration provisions), typically it's because there's an obvious public interest. Here the interests seem private on both sides, and it doesn't seem obvious to me that end consumers will either be harmed or helped by what's being asked for. Which seems like the kind of territory courts traditionally run away from.
Thank god our object isn't to design rules that would pick the winners and losers we want, but to design rules that prevent Apple from using their platform leverage in an anti-competitive way. It's fine if Facebook, Twitter, and Instagram lose, and "extremely popular multi-billion dollar" applications win. Being extremely popular and successful while using few Apple resources should give you some degree of control over your own application.
What equilibrium?
Equilibrium implies multiple forces balancing each other out. This doesn't seem to be the case here, because Apple are effectively dictating terms.
A better term would be "status quo".
I can understand that colloquially it could mean the latter, so I apologize for using a technical term.
It doesn't seem there really are any, other than to leave the app store entirely, which most would consider pretty extreme to the point where it's really hypotehtical. That's why I questioned whether the language of equilibria is appropriate in the first place: it just doesn't seem to be a pretty misleading framing of the situation.
Game order: Apple chooses a policy burden \omega ~ [0, 1] which stands in for the restrictions they place on developers or the cut of purchases they take. Apple takes \omega \beta in profit and incurs no costs.
Let's take you at your word that a developer's only choice is to leave or stay -- Developers choose whether to develop exclusively on Apple [reward (1 - \omega) \beta], on all platforms (1 - \omega) \beta + \theta, or not on Apple [reward \theta]. \beta and \theta are both constrained to be non-negative. Developers pay a cost of development -c where c is constrained to be non-negative. Developers all decide simultaneously.
You could model this as one developer choosing a fraction of effort. You could make costs variable. You could make developers decide sequentially. You could model Google, who is not an actor in this scenario. etc. etc.
Users observe the fraction of developers who opted in ||d||. Each user has a type [0, 1] which determines the threshold amount of developer support it will require for them to choose Apple over another platform. \beta and \theta both update to be higher or lower depending on user choices according to some update function you prefer.
Let each player have either an individual or shared discount parameter \delta.
This is clearly a well-specified game. I am not going to solve it for the equilibriums; it may well be the case for any practice \beta, \theta, c, etc. that Apple's incentive is to choose a very high \omega and developers best response is to choose "develop for Apple anyway". That would still be an equilibrium. Most games have degenerate equilibria.
It seems to me that if you adjust developers to be sequential rather than simultaneous this is very nearly the Chain Store Game; if you make it a single developer this probably gets close to something like divide the dollar; if you want to model the lawsuit, it's a costly signalling game (Epic burning cash to establish type)
All of this is very traditional game theory. I get that your point is that Apple is mean and the government should do something about it, but there's nothing wrong with me describing the current arrangement of winners and losers as an equilibrium, or to describe the shock a lawsuit could induce via policy change as something that will establish a new equilibrium by exogenously changing or constraining parameters. I left all this out because I didn't think anyone would require this effort to accept the use of a very uncontroversial term.
Now imagine your app is free. Yet you have to pay for all these downloads. There wouldn’t be any free apps anymore.
Although lets be honest here, free apps could easily continue to be subsidised by Apple in any future model. We are talking about far less than a dollar per iPhone in terms of hosting/bandwidth costs for all the apps, so this really is something that Apple could easily just swallow.
Let's not forget that the availability, quality and abundance of apps, made by developers, is a key driver of success of the iPhone, and Apple makes plenty money from hardware sales. I won't lose sleep over the thought that they might have to pay for some hosting.
That's including AWS's insane profit margin, though. I have my cloud deployments with Hetzner, where extra traffic costs € 1.19 per TiB, so that 100 MiB app download would not be half cent, it would be 1/100th of a cent. (And that's before we consider that Hetzner gives 20 TiB per month free traffic with every VM.)
That is what the 30% cut is meant to cover (amongst other things too). Like with a high street retail store, the mark up is intended to cover the running costs of the store. Which brings us full circle to why Apple deduct it from transactions.
Sure you "could" have an App Store that calculates the operational costs and then charges it to the developer, but you then potentially destroy the free app market (and contrary to what people often say about the App Store, there are a lot of decent free apps on there).
Having a split payment and billing system also adds complexity to invoicing. Did you know that AWS and other cloud providers don't provide credits and refunds as payments into the customers bank accounts? No, what they do is they offset your costs against your credits and invoice the difference if owed to AWS. If Apple were to adopt that then we'd basically be back at deducting $n from transactions again. And once again we've come full circle.
There is so many arguments about what Apple "could" do but when you start to distil the requirements down to a workable operation you almost always end up right back at the status quo.
Now I'm not saying that Apple aren't taking advantage of developers either. The cost of development on a Apples ecosystem is ridiculously high and Apple are notoriously hostile towards their developers too. But charging a percentage of transactions is a reasonable approach to the problems outlined above and limiting transactions outside of Apple's payment channel does at least solve the problem of developers cheating by funnelling funds in via a side channel (as exampled in an earlier comment which discussed people selling items on eBay for $1 but with a $49 shipping fee before eBay clamped down on exaggerated shipping fees).
Sure, the App Store "could" follow AWS's pricing model, but it makes more sense for it not to given the App Store is more analogous to a shop like eBay or even a physical store like Argos than it is a cloud computing data centre.
This is why I said the AWS/App Store comparison isn't apt.
It'd be like if Apple took all of the developers who testified against Apple, reduced their commission to 0% in perpetuity, and then asked the judge to throw out their testimony because the complaints were moot.
(That being said, I do think there are conditions where stores would/should allow other stores, and I think those conditions could be more permissive than the Roblox example. Apple should, medium term, resolve the GeForce Now/XCloud objections.)
After playing that game, I saw promotions for Assassin's Creed Odyssey on Uplay, and purchased it. I later went on to purchase many other games on Uplay.
In short, Epic allows Ubisoft to sell games on its store, for which they presumably pay a cut - for those sales. But Epic has no problems letting Ubisoft require their store be installed for those games, and if you buy something there - even though the Epic Launcher installed it - they don't get a cut.
This is more akin to the App Store installing Fortnite - which Apple could get a cut out of, but not getting a cut for purchases in the app.
On the Apple side, it's ok for applications to require the user make an account on services like Uplay (I believe several Ubisoft games require this; and Fortnite requires the Epic equivalent). You can then use that account to buy stuff on the stores. It's not an exact parallel because there are no (non-jailbreak) external app stores on the iPhone, but it's a close parallel.
And Valve allows you to sell steam keys on your own website also without paying the cut, so long as you don't undercut the steam store.
https://www.reddit.com/r/pathofexile/comments/1ogbo7/will_mo...
Do you have any sources on how restrictive valve are or have been with that, or is that just speculation? Can developers default to their own payment systems and bypass valve's, or is theirs required to take a secondary, less-accessible option (when it's even allowed)?
From the same thread, the mtx cut taken was a dealbreaker for redfall studios, so it certainly sounds like they didnt get the option for their own mtx transaction service: https://www.reddit.com/r/pathofexile/comments/1ogbo7/will_mo...
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But once you buy a phone from them, it's your phone, not theirs. You shouldn't have to use their store exclusively on your phone, but since you do, it should be subject to way stricter rules regarding anticompetitiveness and unfairness than non-exclusive stores that other platforms have.
When someone uses an app downloaded from the App Store, the compute is provided by the device owned and paid for by the user. Apple does not own it or maintain it anymore.
And the compute is either completely provided by the device or is shared by the app vendor.
Apple does not give anything in this scenario. They only take.
Apple keeps you from doing that.
I agree with you that I wish they would allow it. I agree that I should be able to put windows 10 on my iPhone. Thanks for the back and forth, and we may not be able to get past our starting assumptions about the nature of trade/commerce, but I still wouldn’t want to legally force apple to do anything. People should definitely make a big stink about it, though. Thanks for the back and forth, but I’ll leave it there.
That’s the real magic of AWS and is the reason S3 was the mother service. Pre-AWS, colo at scale meant circuits and high friction networking. With the modern cloud providers, there’s less friction, but a tollbooth.
If Apple adopted the same model as AWS, people would still moan.
Of course individual situations can be different, but this is discussion about the "generic situation".
And this is the best app on the store, a less costly and freer competitor hasn't emerged.
And I can't even sideload my own apps.
This is because it's much easier to earn money on the long-tail dedicated fans than the masses. Especially when those masses are likely to hate advertising based models with a passion.
iOS has more paid apps, for one because people that can afford a high end phone are more willing to pay for $99 for an app.
Look at the pricing for the same app on Android vs iOS.
The cost of sending your app through automated processing and serving it to 99 people needed to make back your fee is probably on net less than a penny.
Offering this service to small time developers would still be 99.99% profit so there would be no reason to make up for lost profits.
I don't think there's nothing getting in the way of Apple charging a very high rent for Amazon's app and a very low one for a random vegan recipe app.
If someone buys something, even like a physical good, you do not believe that the person who bought it, actually owns its, and the seller can put whatever restrictions that they want on the thing that was purchased?
For example, if someone sells a book, you think it would be OK for the book writer to prevent someone from reselling it, or reading the book in a way that the writer does not like.
And even more so, it seems like you do not believe in any form of anti trust laws at all. And you think that all anti trust laws are just illegitimate?
This is an odd position to take, because most people support the first sale doctrine, and also support some form of anti-trust law.
Antitrust laws _can_ be good, but like I said elsewhere, we are a country swimming neck deep in regulation and seem to like our particular hammer. It has a cooling effect on innovation, and China in some ways has a freer economy than we do.
I think it odd that many people rush to strongarm companies through law when there is a perfectly good alternative in Android. Even Microsoft and Amazon have been in the phone business and could get back in, offering you a phone with multiple app stores. Epic could even do it. There doesn’t seem to be enough people who care. You apparently do, and actually I agree with you that Apple should allow alternative app stores. But voluntarily because the people demand it or are leaving for Android, not because the hammer came down on them.
There is very little cost in simply preventing Apple from taking so many intentionally anti-competitive actions.
It is not about forcing Apple to write software. Instead it is about preventing them from spending so much effort and trying to remove other people's ability to install other app stores.
Allowing other app stores, really would not be a huge burden on Apple, and it would give people a lot of choice.
> should be able to put whatever OS you want on it
That is not really very possible when Apple spends so much effort engaging in illegal anti-competitive practices, to prevent other app stores from being installed.
Finally, even if it were possible/easy to provide jailbreaking software, I think that Apple would almost certainly make serious efforts to prevent people from doing that.
But sure, I agree that game companies, and major tech companies should absolutely take action to provide people with very easy ways of jailbreaking people's phone.
Perhaps if Fortnite was available through Epic provided jailbreaking software, then that would be enough to kickstart things, and cause a bunch of other companies to move off of Apple's app store, and move to the jailbreak only version.
EX: imagine if fortnite provide incentives, like "free vbucks" to a large number of people, in order to get a large amount of people to jailbreak their phone, and then imagine if other companies, like Facebook, worked together on that, until almost everyone had a jailbroken phone.
That could certainly work. But I doubt Apple would just let that happen.
> Instead it is about preventing them from spending so much effort and trying to remove other people's ability to install other app stores.
I think we are coming at this from 2 separate sets of foundational assumptions. I’m of the camp that companies are free to make devices and we are free to buy or not buy them. If we don’t like how they operate, we buy a competitor who does what we want. Hopefully enough people agree with us that a competitor will cater to us, or we can start our own. I know that some people start from a different set of assumptions that assumes we can just force the seller to sell us what we want. I don’t know that we can bridge that divide easily, but I wish you well. Thanks for the back and forth.
I agree that there are some other "free market solutions" that could work.
The example that I gave, which would absolutely be a free market solution, would be if Fortnite, and other major companies, like facebook, banded together to build easy to use jailbreaking software, and to use their companies to try and convince a large critical mass of people to jailbreak their phone.
That could work. But I am worried about the government intervention, that Apple would try to engage in, to stop this free market solution, via lawsuits that they would inevitably use against this free market answer.
But lots of companies, acting together, to help everyone jailbreak their phone, so that, hopely half, or a large amount of users, now are in a position where they can easily install other app stores, would be a reasonably free market way of solving all of this.
When there is enough critical mass of users doing this, those major companies could then remove/ban their app from the Apple app store, so that basically everyone else has to follow along as well, and then basically everyone is outside of Apple's control.
Because it is much easier to write jailbreaking software, than it is to build an entirely new phone.
> since apple could release a new firmware to block your OS
People have been jailbreaking phones for years. That is always the game of cat and mouse. And people have continue to get around it, even though they don't have large amount of resources, like big companies would.
But, furthermore, if there is a large enough userbase, that is jailbreaking their phone, then it would cause Apple a large amount of economic damage, if they decide to screw over this critical mass of users.
If 30% of Apple's users, would get their phone bricked after an Apple update, then Apple would probably be cautious about doing that.
But I guess it is hypothetically possible that Apple would be willing to brick 30% of their customers phones (if that was the critical mass). That would certainly hurt their customer friendly image though, and it would cause Apple billions of dollars in damages.
> but the market solution would be for people
Putting lots of resources into jailbreaking phones, and convincing a lot of users to do it, such that it would cause Apple a lot of damage, if they stopped it, is also a free market solution.
That is a free market solution that is much easier to do, than building a new phone.
The contract that would be enforced by aggressive government regulation?
Yeah no. I thought you did not like government regulation, and supported people's ability to do what they want with things that they own? And in this case, such a contract, is enforced by government regulation, and we should work to invalidate it, if it prevents people from doing what they want with the phone that they bought.
Thats the point. I support the free market solution here, and apparently you want to use the government, to take away people's ability to do what they want, with their own phone, if you think that such a contract should prevent this.
I want to get rid of Apple's ability to use the government, to stop people from doing what they want with their own phone. The government regulations that prevent people from doing this is the problem.
You make a recommendation for how they run their platform, they can say yes or no. You can go or you can stay.
It’s that simple.
But I think we’ve run this well dry.
If I walk in to Best Buy and get an iPhone, I'm not signing any contract with Apple. All I'm agreeing to is "I give Best Buy money, and Best Buy gives me this physical product." The reason we're upset with Apple is that they're imposing terms on us as if we signed a contract with them, but we didn't.
You may say that you bought the phone and so you can do with it what you want —- ok. Hack/root it to run another OS. It’s your device in that sense. But they are under no obligation (nor should be forced to be) to make it easy.
I agree with you that I wish they would make it easy, but alas. Buy a librephone.
Instead, it is other people, who want to get the government out of our phones, and not have the coercive, government force, under threat of violence, preventing us from doing things with phones that we purchased.
If you want to say that you support the government, using force and coercion, and government intervention, into people's lives, fine. But that is your position. And it is extremely anti-free market.
But, if your position, is that you support this government coercion, then I am not sure why you would get upset about other forms for laws, and government coercion, given that you want the government to forcibly prevent other people from doing things with phones.
Because you absolutely support government coercion, that would be government force on people, who are doing things with phones that they own.
Nobody is preventing you. Who is preventing you? There’s no government action here. You buy the phone or you buy a librephone. Let’s leave the government out altogether.
You’re the one pushing for some kind of regulation against free agents interacting. No need to contact the federals on this.
You were advocating in favor of using the government to "enforce a contract" or whatever, on people doing what they want with the phone that they own.
> You buy the phone or you buy a librephone.
And if someone buys an iPhone they should have the full right to do whatever they want with it, and the government should absolutely not be preventing people from doing so.
> Let’s leave the government out altogether.
Yes, lets ensure that the government never prevents anyone from doing what they want with the phone that they purchased.
So if you take back your previous statements, and instead agree with me that the government should not prevent people from doing what they want with their phone, then cool.
But otherwise, if you disagree, then you would be the one advocating in favor of using government coercion here against people.
That’s one reason why we are regulation drunk in this country. Instead if having a simple rule that says you live up to contracts that you agree to, now we have to have a million rules for exceptions to contracts people sign.
I do t thing we can get anywhere if you don’t agree with contract law.
I am merely commenting on how it sounds like you want to use government coercion to force people to do or not do things with a phone that they own.
You can support government coercion if you want. But that is your position.
Don't go around pretending like you want to get the government out of stuff, when you want the government to come in, and prevent people from doing things with their own property.
> why we are regulation drunk in this country
It seems like you are the person who is pro regulation, as you want the government to come in, and require certain things about a phone that they own.
> I dont thing we can get anywhere
I just want you to stop pretending like you are some anti government regulation and anti coercion person. You support lots of coercion.
You support a pretty darn coercive thing, which is that you government force to be enacted on people, merely because of what they are doing with a phone that they own.
Whatever attack you are making against other people, regarding government coercion, on this issue, you are much worse than those other people, because you are the one who wants to come in, and force people to do things or not do things with their phones.
Whereas, other people, instead want the government to not stop people from doing things with their own phone.
On this specific issue, you are the pro government coercion person, and everyone else, who wants people to control their own phones, are the anti-coercion people.
Well, because it is illegally anti-competitive, and the courts already ruled against microsoft, regarding web browsers.
So thats why. It is because of anti-trust law.
The problem is Apple has greater negotiating power, because they don't need any one developer and it is difficult for all the app developers to organize to negotiate together. But imagine if they did organize, and threatened to remove their apps from the app store unless Apple gave them more favorable terms.
No developer in their right mind would let Apple take a 30% cut of anything.
Most developers would pay Apple a 3% cut in order to use Apple's built in-payment mechanism, and not force their users to leave the app and type their credit card information into a browser.
30% is exploitive, and not at all proportional to the value provided. People pay it because they have to, not because it's fair.
So I think we can agree that a realistic number for Apple is definitely above 3% for the service they provide.
We can argue about 30%, and that’s a good discussion, but 3% is no way comparable.
The minimum purchase price on iOS is $0.99, so at worst you'd be paying basically the same rate (~30%).
But most payment processors offer separate pricing for micro-transactions (e.g. Paypal is 5% + $0.05 IIRC). Which works out at around 10% for a $0.99 transaction.
And actually - Adyen offer much better pricing than the "Stripe rate" of $0.30 + 2.9% in the first place.
Meaning you couldn’t segregate low tickets from high tickets and get the most optimal fee - your whole merchant account was one fee or the other.
‘Twas quite a PITA
If Apple’s cut were 12% and Epic and Microsoft now charged 6%, would you claim “The 12% that Apple charges seems about right IMO”?
Also, Apple will claim they have a better product that warrants higher margins. Data from independent parties shows that they attract more users willing to pay for apps, and developers aren’t leaving en masse for Android.
And this argument is fine in the hardware market because they have competition, it's efficiency monopoly - that's why I said it's not always bad.
However their app store controlls access to 50% of US market (even more by revenue) simply because it comes as the only option and the consumers can't unbundle it. If they had competition on the platform (different stores/distribution methods) - you wouldn't have to say what % is right, the market would decide the value added by their app store/payment methods.
That's an odd way to put it. Approximately 0.001% of developers would complain if instead they were allowed to use the language and IDE they prefer.
To “play” on Xbox or PlayStation, they take a 30% cut.
Steam also takes a 30% cut.
It’s pretty standard, certainly not “exploitative” (at least not on apples part, if not others), though obviously as a game developer I’d prefer it be much less.
For Steam there are many viable alternatives, which allows for user/developer choice and fair competition in the long run. Epic Store is about half as popular now (31.3m vs 62.6m daily active users), but it's growing fast. I don't think what Steam is offering is worth the 30% cut, and I imagine we'll either see them reduce that cut or get overtaken by Epic in another few years.
I don't like what the other stores are doing, but to me it's a smaller concern on game consoles/stores than on every application for general purpose computers and smartphones. I'd fight the fight on the latter first.
I also disagree with the implication that something is "certainly not exploitative" because of it being an industry standard - in fact I'd say that can be a contributing factor to it being exploitative in many cases (price fixing/oligopolies). To me it's exploitative if the only reason they're getting away with charging so much is because they're hindering competition in that particular area (e.g: can't change app store without buying a whole new phone).
1. Steam's cut isn't 30%; it's 30% on keys sold through Steam and 0% on keys generated to be sold elsewhere. Most games sell about 1/3rd of their Steam copies via external keys on sites like Humble, GreenManGaming, Nuuvem, WinGameStore, directly on their websites, etc. Valve's implied cut would be from 15-20% for most of these games. Of course, publishers and developers voluntarily give up some of the cut Valve doesn't take to those intermediaries, which is another knock against the claim that Valve is an exploiter. It seems hard to argue that in a world where a game is sold for $60 and GreenManGaming takes $6, passes on a $12 discount to the consumer, Valve takes $0, and the publisher takes $42, that Valve is the one exploiting the publisher, despite giving the publisher free keys.
Why does Valve do this? To maximize lock-in in their ecosystem and make money on in-app purchases. They have selfish interests at mind, but those manifest through giving away some of their cut on purchases.
2. Valve also has a fee reduction program that's the exact opposite of Apple/Google. Apple/Google charges 15% up to $1 million revenue and then charge you the full amount. Valve charges progressively less after $1 million revenue (down as low as 20%). I think this reflects closed/open systems;
Valve is worried about publishers like EA (who left Steam and then came back hat in hand because their own service was an expensive and technically poor failure), Ubisoft (who left Steam and are currently bilking Epic for upfront cash while pushing their own UPlay service), Bethesda/MS (who flirt with Beth.net/Microsoft Games Store but both ultimately returned to Steam in the end), Activision (have abandoned Steam for Battle.net). So they want to make it easier for big publishers to come back to them. Whereas Apple wants to maximize revenue off big clients and maximize the PR benefits of helping small businesses. But the point is that Apple, Google, and Valve alike actually do have flexibility in the % they take.
3. Finally, I think the Epic active user numbers are really not super useful. The vast majority of those Epic users are simply Fortnite players (and it's actually a little unclear whether Epic is counting non-PC Fortnite players who sign it under Epic accounts). Having acquired Rocket League, they now can use Rocket League players in the same way. Having acquired Fall Guys, they will likely do the same there in the coming years.
The actual number of users of the Epic Games Store are not trivial, it'd definitely be a strong second having overtaken GOG and Itch and other competitors. But they're likely in the single digit millions.
This in part reflects that the Epic Games Store is not very good. The client does not support basic features, nor does the store interface. Their onboarding process is entirely manual, which they characterize as giving them a "curated" game library but actually it means there's just not that much variety on the store and almost nothing at the low end. They have sales where they eat huge losses to give users discounts, but these are not appreciably better than the kinds of sales that occur on Steam and in the broader ecosystem.
Crucially, to your point that Steam might be over "overtaken" by Epic is that it's not clear there's any competition at all. Every game that released on Epic and not Steam did so because Epic signed exclusivity contracts with the game (typically 12 month exclusivity contracts). It's predictable that all of these exclusives, bar one -- World War Z, have released on Steam within a month or so of their exclusivity expiring. Most seem to report doing better on Steam. Most developers that release on Epic and Steam, without a formal exclusivity deal, are developers who signed "free game" deals with Epic where Epic bulk-pays developers upfront in exchange for allowing every Epic user to redeem the game for free. Epic reports a relatively low conversion rate from free game redeemers to buyers.
All of this suggests that the Epic Game Store, while putting up impressive numbers, isn't really peeling off developers or users because of its lowers cut. I could imagine a world where Valve/Steam are materially hurt if Epic greatly extends their exclusivity contracts, losing billions of dollars specifically to destroy Steam. But I don't see Epic organically overtaking Steam.
My main point here is that the complexities of what's being offered and what's being charged here are obscured when we just say "You ate one third of my pizza! But I wanted that pizza!"
Microsoft store on PC is not a closed platform like Xbox is, ergo it is not what I was claiming.
It’s cool that Epic is taking on Steam. But they’re doing so at a large loss right now, we’ll see how it goes.
I mostly mentioned that to make the point about Xbox 12% cut. But you also mentioned Steam, so it doesn't look like you're solely talking about closed platforms.
> I just mean that if we’re penalising one platform it seems fair to penalise the others.
If that's your point then I'd agree. Though it matters less for game consoles, and by "penalize" I'd mostly just want them to stop the active suppression of alternate app stores. It looked more like you were defending the practice as non-exploitative.
So they would sell it to us for $22.50 and set the retail price at $29. So in that sense it was a 22% cut, because we only kept 22% of the sale price.
But in most cases the publisher didn't make the game. They were a middleman who took a game from a studio and sold it to us. I have no idea what their cut was between them and the actual maker of the game, but I'll bet it was more than 8%.
So in that regard, the app store is a really good deal because it lets developers publish directly to consumers without a middleman.
App store, on the other hand, is a digital distributor. Making a digital copy is so cheap it could as well be free. And even then, not all app developers publish on the app store because they want or need its distribution services. There are many developers who would happily arrange the distribution of their apps themselves, with their own infrastructure they already have anyway, but they have to publish on the app store because that's the only way onto millions of iOS devices.
I'll say it again: it should not be legal for a hardware manufacturer to retain any kind of control over hardware after it's been sold.
Every part of application distribution has become cheaper, so you lock down every platform and charge the same percentage.
I was just answering the question about what the cut used to be in the packaged software world.
Users should be given the option of using Apple's system if they want to.
After all, It's Apples' argument that their payment system is light-years better for consumers. If true, then users will naturally gravitate towards Apples' payment system. Right? This would result in a cycle where Apple (and other payment systems) are incentivised to continuously improve. What's wrong with that? Why not let the consumers decide what is best?
Let Apple's payment system compete on its actual merits. Apple says it's a much better system after all. I say - let them prove it. They should "put up or shut up", so to speak.
For example, I can pay $0.99 to buy a game using Square or Apple, but Apple takes a 30% cut and will give me a full refund if I don't like the game. I chose Apple every time, but not because it's "better", it's just better for me and I'm not the one paying for it.
Actually now that I think about it the difference is the walled garden. I think pretty much the only compromise I can accept is something like Apple and Google must be required to add something like F-Droid that is run at arms length from Apple and Google and accepts third party software repositories.
This way users can download and use any software they like from any repository anywhere. The benefit for Apple and Google is we won't shut them down and really they have inertia behind them so many if not most people will stick to the default stores, and Google can forbid OEMs from adding applications or repositories. A user must do so deliberately and manually.
The benefit for users is applications installed from F-Droid will be able to auto update.
The benefit for independent software vendors is they can publish their stuff outside of app store and play store and not have to adhere to any policy by the app store or play store and not have to pay any money to the default stores.
Anything less and we are basically at status quo.
The Durbin amendment allows merchants to offer lower prices to customers who choose a payment option that incurs lower fees (such as cash or debit card) at the point of sale: https://en.wikipedia.org/wiki/Durbin_amendment
Compare this to Apple, which takes a 30% cut. Developers must raise their prices by 42.9% to compensate for that 30% cut. Apple does not allow developers to offer alternative payment options for most categories of in-app purchases.
For a long time, the standard rate for payment processing for small businesses has been 2.9% + $0.30 for credit cards. Larger businesses with higher transaction volumes are able to negotiate lower rates. If Apple allows developers to offer payment processing options that take smaller cuts, and allows developers to offer lower prices when customers choose those options, I'm certain that most developers and customers would prefer the third-party payment processors.
Are you suggesting other vendors would be unable to compete with that for some reason?
As an aside: I don't think the same pricing among different vendors is necessarily a requirement. If one entity offers more security or other benefits, then their pricing should reflect that.
Apple “puts up or shuts up” with the phone itself. Thats the product and the consumer choice they focus on.
The playing field remains tilted heavily in Apples favor. But they (apparently) wanted even more - extensive compensation for economic activity that happens far from the App Store even when the link to the App Store is secondary.
The economic history of this sort of activity is well documented, and the extent to which it distorts markets well established. It’s plainly an antitrust violation, and both society and the software market would be free-er and more prosperous if our laws were enforced here.
This is trivial to deal with. Apple already has rules on apps, they could go from banning fremium apps, to disallowing apps without a substantial free version to enforcing a reporting API on payments.
What they can't do is use their position in one market to force marketshare in another market (payment processors). That's classic anticompetitive behaviour.
(Aside, freemium apps have a low reputation, and that's why other stores without that rule aren't overrun with such apps)
The inability to install outside the store is what makes disallowing outside payment an issue.
The combination means that you can't sell to a customer without going through apple because they have used their control of the hardware to take the decision of whom to do business with from you in order to stand there with their hand out.
https://arstechnica.com/gadgets/2019/01/facebook-and-google-...
that is the true red-line from a user perspective. go on and have your spat about whether 30% is fair or not, but the app-review process is the keystone on which the permissions system rests, allowing sideloading is tantamount to allowing all major apps full-permissions overnight and essentially making the permissions system meaningless.
the only viable solution I can see that allows third-party app stores would be to require that Apple still review all apps on third-party app stores to enforce the requirements surrounding permissioning (i.e. having a valid reason to request the permissions you're requesting) and they would still need to charge for that.
"third party app stores without any review, but Apple still gets a cut" would be the worst of all possible outcomes.
If Facebook is chomping at the bit to do this on iOS as soon as they can, then why haven't they done it on Android where they already can?
Nobody who doesn't opt in for privacy shredding will have their privacy shredded.
If you don't opt-in to privacy shredding then you will be locked out of being able to use facebook, whatsapp, and other "network effect" things that you more or less don't have a choice about without cutting out communication with large parts of your social network, so this is not really a "free choice" at all.
Right now those companies don't have the leverage to lock out Apple users. This immediately gives them that leverage and they will use it, just like they already have tried (and gotten their hands slapped for).
App store review is the only thing standing between you and Facebook demanding full permissions for everything, and allowing third-party app stores or sideloading is a mortal blow to app store review.
I understand that you don't personally care but the Apple customer base does, a large number of them specifically choose that because Apple is using their leverage in favor of the customer here. You can get the experience you desire on the dominant smartphone platform (with 85% of the global smartphone marketshare), just leave us the freedom to choose this experience as well. You're arguing that we should be explicitly denied this because it's not convenient for Facebook.
We don't need to sacrifice general purpose computing and user freedom on any platform so you can protect your false impression that your privacy is protected while actually giving it away cheap.
I believe Zuckerberg said it wwll years back when he called people who trusted him suckers.
App store policies were not handed down on stone tablets on Mount Sinai. Charges that better track the incremental costs are not a logical contradiction.
If the decision goes against Apple, I'd be surprised if they didn't just 'charge rent' to be on the App Store, just like a retail mall charges stores. Apple would have to take on the additional work of negotiating with each App, which would likely be "take it or leave it" pricing for all except the big ones, but I can't imagine it being illegal.
That doesn't cut to the core claim of lack of competition, though, and that's why the choice of remedy here will be interesting.
Of course, as we all know, rent in a retail mall often includes a percentage cut of monthly revenue, so we would be right back where we started.
The Windows store has plenty of applications despite having fees (5%).
As an aside- to me that seems like an important differentiating factor. Apps must pay a fee to be on these platforms. Who do they pay the fee to? Whoever they pay a fee to shouldn't be allowed to also have apps on there since this is unfair and anti competitive. Fees do not negatively affect Apple but they negatively affect competition.
immoral? Its subjective. I disagree and apple likely don't think its immoral
illegal? isn't that what the trial is for ? to decide whether this is illegal.
Yes, I’m suggesting that people leave if they are unhappy with Apple. Go to Google; or maybe MS or Amazon will see how hated apple is and start a new phone division. That’s how markets work.
Companies that have seemed on top and undefeatable before have fallen due to customer unhappiness, and can fall quite quickly, too.
Not necessarily. Apple would likely be unable to extract the rents it currently does, but if a dev has the choice of paying a 5% fee using an rarely-used payment system, or paying a 15% fee using a payment system that most users already have set up and that has very little friction, the latter is likely more profitable.
Source: https://www.ebay.com/help/selling/shipping-items/labels-pack...
That's fine. Apple have this amazing review system that is really thorough and that is funded by every single developer paying into it. That's the main reason Apple considers their store to be so safe and useful for customers.
This is not a "general rule". I can't think of any examples other than Apple's app store.
Think it through: free apps would not be able to afford the rent, so they would need a discount.
Then in the limit all apps would become free, so as to get the discount.
But some apps would be making a killing with external payment methods, while other apps would be making nothing.
Meantime Apple would also be making nothing.
I would think Apple has thought about this.
Not if the AppStore is to offer competitive processing fees.
Remember when eBay charged a commission on the sale price but not shipping? Suddenly $50 items became $1 with $49 shipping -- so eBay had to charge the commission on the shipping too even though it didn't seem "fair".
Same here -- every app would turn free, and charge to unlock features within using their own payment mechanism. Apple's App Store revenue would drop to zero. No developer in their right mind would let Apple take a cut of anything.
As a general rule, app stores simply don't allow third-party payment in apps that don't go through the store, for this exact reason. It's not just Apple with this policy.