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My guess is that this is a gambit to force Apple’s hand during a time when there is the most intense antitrust pressure over the App Store since it’s launch. I

by ary 6y ago

My guess is that this is a gambit to force Apple’s hand during a time when there is the most intense antitrust pressure over the App Store since it’s launch. If Apple cracks down then it’s just more fuel for the antitrust fire, and potentially evidence in court. If they allow it then it’s precedent that others can use to employ the same tactic. Either way it seems to me Epic is taking a calculated risk to induce change.

sylens 6y ago
Exactly my take on it as well. Very interested to see what happens.
Wowfunhappy 6y ago
Also, the legal standard in the US is laser-focused on whether consumer prices have gone up as a result of a company's practices. What better demonstration could Epic possibly create of how the App Store leads to price increases?
- jsnell 6y ago
  Except that Epic is using the cheaper prices on consoles, where the platform owner is taking a 30% cut. Clearly Epic's pricing isn't actually driven by the app store costs on mobile platforms.
  - gamblor956 6y ago
    Epic doesn't pay Sony and MS 30% for console purchases, as both companies negotiate arrangements with big studios that lowers the rate.
    - Wowfunhappy 6y ago
      Still, it does create a bit of a contradiction. We don't know what Sony and Microsoft charge, but we can reasonably assume it isn't zero, and it's also probably more than whatever Epic pays for their internal payment processing. Epic could still turn around and say "well, the price would be even lower if not for Sony and Microsoft," but I'm not sure how much they want to piss off the console manufacturers, who—all things considered—probably have more power as far as Epic is concerned. The other elephant in the room, IMO, is that V-Bucks don't actually cost Epic anything. They're just bits, and Epic could set the price to whatever they want without much consequence. More than anything else, I see Epic's stunt as a wake-up call. It doesn't quite stand up under scrutiny—but, once you've scrutinized the situation, you can also find better demonstrations of the problem, such as Spotify.
      - meheleventyone 6y ago
        AFAIK Sweeney isn’t against stores taking a cut he just sees the 30% as egregious. V-Bucks whilst costing nothing to create are exchanged for things that did cost money to create and as a means to fund the existence of the game itself.
        Wowfunhappy 6y ago
        > V-Bucks whilst costing nothing to create are exchanged for things that did cost money to create and as a means to fund the existence of the game itself. Right, but the only scarcity of the "good" is that which Epic creates. If more people have V-Bucks, then current skins are less exclusive and become less valuable. I don't think the cost of V-Bucks has an impact on consumer buying power, except in the most pedantic sense. I don't mean to imply that The Emperor Has No Clothes; the less revenue Epic gives to Apple, the more revenue Epic has to improve Fortnite for their customers. Rather, I think this all speaks to the paucity of the US's current antitrust standard. As long as Facebook is "free", they can be as anti-competitive as they like, and prices will not increase. But consumers pay in other ways—with their data, with their eyeballs, and by missing out on products that never had the chance to exist.
        makomk 6y ago
        Epic are not Costco and the amount they charge for items is not simply designed to repay what it costs to create the items and the game - in fact by all accounts they're raking it in. I'd be very surprised if they hadn't carefully tried to optimize their pricing based on what they expected to give the most revenue, which of course would lead to a pricing model very much like the one they actually had prior to this PR stunt where the pricing is independent of whether Google or Apple or Sony are taking a cut, and the amount taken by the platform only affects how much of that price Epic get to keep.
      - axlee 6y ago
        > The other elephant in the room, IMO, is that V-Bucks don't actually cost Epic anything. They're just bits, and Epic could set the price to whatever they want without much consequence. Can't you argue this about any software? A copy of an expensive, downloadable software is always "just bits", and the marginal cost of selling one more copy is ridiculously low, but that doesn't mean the software itself is free. In order to sell those V-Bucks, Epic had to spend millions in order to develop, market, run and support a game that people actually want to play.
- strbean 6y ago
  In the US we have such a lame standard of anti-trust. For example, you could have two businesses with 100% market share in an industry, and have a contract between the two stating "we will not provide benefits, or salaries exceeding $X, to employees in this sector" and you have zero anti-trust issues because it doesn't increase consumer prices. Abysmal.
  - hansvm 6y ago
    Really? I think what happens in practice is a bit more nuanced and includes wage fixing. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
umvi 6y ago
I love it when big companies play abstract strategic games with each other like this. Competition at its finest.
- amsilprotag 6y ago
  Tim Sweeney is really interesting. He coded Unreal Engine 1 and is controlling shareholder of Epic. He gave a speech[0] January at a game conference arguing against the App/Play store 30% mark. I think he has internalized Ben Thompson's FAANG strategy concepts and created the best denunciation of the mindset, in this speech attacking the concept of "owning the customer." He joins Shopify in trying to create platforms in the Gates sense where most of the money goes to consumer and 3rd party. And a lot of his actions, in the short term, are against Epic's financial interests, commodifying and cannibalizing their own dominant market position for the sake of growing game industry TAM and a vision of future interoperability[1]. [0] https://www.youtube.com/watch?v=CJFO2k1-tyg https://www.youtube.com/watch?v=CJFO2k1-tyg [1] https://www.matthewball.vc/all/epicprimer1 https://www.matthewball.vc/all/epicprimer1
  - mercer 6y ago
    He also made ZZT! As far as 'getting into programming' goes, Sweeney is probably second only to Anders Heljsberg. Where the latter got me into 'proper' programming, until well into my late teens I was more interested in level editing and modding and whatnot. In the same way that it was amazing to find out that the same guy was behind Turbo Pascal, Delphi and Typescript, it was amazing to discover that ZZT and UnrealED, years apart, were also just one guy. I spent so much time with these tools!
legohead 6y ago
Apple has to move against Epic here. If they are acting fairly with all developers (which was one of the questions to Tim Cook), then letting this be would be showing favoritism towards Epic. Or...make a sudden update to their TOS
- ocdtrekkie 6y ago
  If they take Fortnite down though, it's an open and shut antitrust case: Because even our broken antitrust law in the US understands consumers getting higher prices because of monopolies. This is why Epic is so loudly showcasing the price savings of bypassing Apple. If Apple takes down Fortnite here, the DOJ takes down the App Store.
  - legohead 6y ago
    I think Apple's argument would be it's industry standard. Steam, Apple, Google all do this. Even the Epic store takes a cut, although much lower, but that's a case in Apple's favor (market competition).
    - ocdtrekkie 6y ago
      Apple has, in fact, used that argument. However, it also defeated that argument in the hearing: It set the "standard" to begin with, everyone is following them. The entire point of competition is so that other players can choose to come in at a lower price, which is good for consumers. And if Apple prevents Epic from selling direct with a much lower processing fee (note the 20% price cut is similar to the 30%/12% difference between their store fees), Apple is directly preventing competition that would lower prices for consumers.
      - jaegerpicker 6y ago
        How in the world is Apple preventing Epic from doing anything besides not following the rules of the App Store? If Epic wants to sell at a lower price they are free to do so in their own app store. Apple does not have to allow anyone on their platform. They built it, they own it, and they have the right to set it's rules. If Apple was the only mobile phone OS available then sure there is a case but iOS isn't even the most popular OS.

by ary 6y ago

sylens 6y ago

Exactly my take on it as well. Very interested to see what happens.

Wowfunhappy 6y ago

Also, the legal standard in the US is laser-focused on whether consumer prices have gone up as a result of a company's practices. What better demonstration could Epic possibly create of how the App Store leads to price increases?

jsnell 6y ago
Except that Epic is using the cheaper prices on consoles, where the platform owner is taking a 30% cut. Clearly Epic's pricing isn't actually driven by the app store costs on mobile platforms.
- gamblor956 6y ago
  Epic doesn't pay Sony and MS 30% for console purchases, as both companies negotiate arrangements with big studios that lowers the rate.
  - Wowfunhappy 6y ago
    Still, it does create a bit of a contradiction. We don't know what Sony and Microsoft charge, but we can reasonably assume it isn't zero, and it's also probably more than whatever Epic pays for their internal payment processing. Epic could still turn around and say "well, the price would be even lower if not for Sony and Microsoft," but I'm not sure how much they want to piss off the console manufacturers, who—all things considered—probably have more power as far as Epic is concerned. The other elephant in the room, IMO, is that V-Bucks don't actually cost Epic anything. They're just bits, and Epic could set the price to whatever they want without much consequence. More than anything else, I see Epic's stunt as a wake-up call. It doesn't quite stand up under scrutiny—but, once you've scrutinized the situation, you can also find better demonstrations of the problem, such as Spotify.
    - meheleventyone 6y ago
      AFAIK Sweeney isn’t against stores taking a cut he just sees the 30% as egregious. V-Bucks whilst costing nothing to create are exchanged for things that did cost money to create and as a means to fund the existence of the game itself.
      - Wowfunhappy 6y ago
        > V-Bucks whilst costing nothing to create are exchanged for things that did cost money to create and as a means to fund the existence of the game itself. Right, but the only scarcity of the "good" is that which Epic creates. If more people have V-Bucks, then current skins are less exclusive and become less valuable. I don't think the cost of V-Bucks has an impact on consumer buying power, except in the most pedantic sense. I don't mean to imply that The Emperor Has No Clothes; the less revenue Epic gives to Apple, the more revenue Epic has to improve Fortnite for their customers. Rather, I think this all speaks to the paucity of the US's current antitrust standard. As long as Facebook is "free", they can be as anti-competitive as they like, and prices will not increase. But consumers pay in other ways—with their data, with their eyeballs, and by missing out on products that never had the chance to exist.
      - makomk 6y ago
        Epic are not Costco and the amount they charge for items is not simply designed to repay what it costs to create the items and the game - in fact by all accounts they're raking it in. I'd be very surprised if they hadn't carefully tried to optimize their pricing based on what they expected to give the most revenue, which of course would lead to a pricing model very much like the one they actually had prior to this PR stunt where the pricing is independent of whether Google or Apple or Sony are taking a cut, and the amount taken by the platform only affects how much of that price Epic get to keep.
    - axlee 6y ago
      > The other elephant in the room, IMO, is that V-Bucks don't actually cost Epic anything. They're just bits, and Epic could set the price to whatever they want without much consequence. Can't you argue this about any software? A copy of an expensive, downloadable software is always "just bits", and the marginal cost of selling one more copy is ridiculously low, but that doesn't mean the software itself is free. In order to sell those V-Bucks, Epic had to spend millions in order to develop, market, run and support a game that people actually want to play.
strbean 6y ago
In the US we have such a lame standard of anti-trust. For example, you could have two businesses with 100% market share in an industry, and have a contract between the two stating "we will not provide benefits, or salaries exceeding $X, to employees in this sector" and you have zero anti-trust issues because it doesn't increase consumer prices. Abysmal.
- hansvm 6y ago
  Really? I think what happens in practice is a bit more nuanced and includes wage fixing. https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...

umvi 6y ago

I love it when big companies play abstract strategic games with each other like this. Competition at its finest.

amsilprotag 6y ago
Tim Sweeney is really interesting. He coded Unreal Engine 1 and is controlling shareholder of Epic. He gave a speech[0] January at a game conference arguing against the App/Play store 30% mark. I think he has internalized Ben Thompson's FAANG strategy concepts and created the best denunciation of the mindset, in this speech attacking the concept of "owning the customer." He joins Shopify in trying to create platforms in the Gates sense where most of the money goes to consumer and 3rd party. And a lot of his actions, in the short term, are against Epic's financial interests, commodifying and cannibalizing their own dominant market position for the sake of growing game industry TAM and a vision of future interoperability[1]. [0] https://www.youtube.com/watch?v=CJFO2k1-tyg https://www.youtube.com/watch?v=CJFO2k1-tyg [1] https://www.matthewball.vc/all/epicprimer1 https://www.matthewball.vc/all/epicprimer1
- mercer 6y ago
  He also made ZZT! As far as 'getting into programming' goes, Sweeney is probably second only to Anders Heljsberg. Where the latter got me into 'proper' programming, until well into my late teens I was more interested in level editing and modding and whatnot. In the same way that it was amazing to find out that the same guy was behind Turbo Pascal, Delphi and Typescript, it was amazing to discover that ZZT and UnrealED, years apart, were also just one guy. I spent so much time with these tools!

legohead 6y ago

Apple has to move against Epic here. If they are acting fairly with all developers (which was one of the questions to Tim Cook), then letting this be would be showing favoritism towards Epic. Or...make a sudden update to their TOS

ocdtrekkie 6y ago
If they take Fortnite down though, it's an open and shut antitrust case: Because even our broken antitrust law in the US understands consumers getting higher prices because of monopolies. This is why Epic is so loudly showcasing the price savings of bypassing Apple. If Apple takes down Fortnite here, the DOJ takes down the App Store.
- legohead 6y ago
  I think Apple's argument would be it's industry standard. Steam, Apple, Google all do this. Even the Epic store takes a cut, although much lower, but that's a case in Apple's favor (market competition).
  - ocdtrekkie 6y ago
    Apple has, in fact, used that argument. However, it also defeated that argument in the hearing: It set the "standard" to begin with, everyone is following them. The entire point of competition is so that other players can choose to come in at a lower price, which is good for consumers. And if Apple prevents Epic from selling direct with a much lower processing fee (note the 20% price cut is similar to the 30%/12% difference between their store fees), Apple is directly preventing competition that would lower prices for consumers.
    - jaegerpicker 6y ago
      How in the world is Apple preventing Epic from doing anything besides not following the rules of the App Store? If Epic wants to sell at a lower price they are free to do so in their own app store. Apple does not have to allow anyone on their platform. They built it, they own it, and they have the right to set it's rules. If Apple was the only mobile phone OS available then sure there is a case but iOS isn't even the most popular OS.