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Maybe Epic going up against the App Store is just warming up for going up against Sony's and Microsoft's stores, who ask for the same 30% cut like Apple does.

• ziml77 5y ago
  I doubt it. If you read the case they're making against Apple they actually do say why the iPhone and consoles are different. Their reasoning is that consoles are sold at a loss and the manufacturer needs to take those fees to support that sales model. If Epic tried to take on Microsoft or Sony, their own assertion in the Apple case would be used against them.
  • AlexandrB 5y ago
    To me, this is a really weird argument. Why is Sony's business model Epic's problem? They're still taking a 30% cut. If Apple started selling phones at a loss would they now be in the clear in Epic's mind? Is there a minimum "loss" required? Like is losing $0.01 per iPhone enough to make taking a 30% ok? Finally, what about Nintendo? They famously usually sell consoles at break-even or a small profit. Why isn't Epic suing them?
    • SmallDeadGuy 5y ago
      By selling consoles at a loss, more people can afford to buy them bringing in a larger audience. And even the people who could afford a more expensive console will simply have more money for games.
      • gillesjacobs 5y ago
        Audience capture is indeed the answer, and is probably why Epic doesn't mind.
      • zwily 5y ago
        But there are way more iPhones out there than consoles.
    • GuB-42 5y ago
      I think we just got the simple version and that in reality, there are hundreds of pages detailing as many points of contracts, agreements and precedents. But generally, publishing to consoles is a more involved process for both parties, and game consoles are not expected to be open platforms. So I guess the business model of console manufacturers is more tightly tied to publishing contracts.
      • spijdar 5y ago
        I think GP's point is, why are game consoles not expected to be open platforms, but the iPhone is? And who isn't to say Apple's business model isn't greatly tied to their closed platform? At least as far as public sentiment goes, the only difference seems to just be precedent. Game consoles have always been locked down, strongly DRM controlled machines, while PDAs/smartphones have ... existed in a strange grey area. For whatever reason, people think they should have rights to their phone, but not as much for the game console. Guessing it's because you can "just buy a PC" with greater performance and flexibility in essentially the same use domain as a console, but doesn't that apply to iPhones as well? "Just buy an android"?
        • ksec 5y ago
          >why are game consoles not expected to be open platforms, but the iPhone is? Modern Society does not require a console to function. Most would agree our Smartphone has become the central to many things in our modern society including but not limited to business from all industries. >"Just buy an android"? Today, the iPhone has 66% market share in the United States, 75% of U.S. App Store revenues, and over 80% of time spent on the mobile internet. It has a substantial market that puts their Anti- Competitiveness in question.
      • deleted 5y ago
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      • michaelbrave 5y ago
        I think that as game consoles become more multi purpose devices (as Xbox has been championing for a while now) that they will end up in a similar position as the app store.
    • masklinn 5y ago
      Because epic is lying their asses off, they want to extract more money from Apple but don’t want to antagonise Sony and MS.
    • argonaut 5y ago
      Because the legal system is not some mechanistic program that computes decisions over cases. The legal system is (for better or worse) based on human judges that look at the entire context and make judgments of what is reasonable or not. Given that this is an antitrust case, the business model is absolutely part of the context.
      • AlexandrB 5y ago
        Selling something at below cost to gain market share is a classic anti-competitive tactic. This aspect of Sony's business model vs. Apple's seems like it would be very unflattering for Sony if they had more market share. It's lucky that Sony still has strong competition in the form of Microsoft and Nintendo[1]. My personal take is that by saying "Sony is different though" Epic is trying to provide a fig leaf for a platform owner that could cause them real financial harm if they got on their bad side. Edit: [1] Isn't it interesting thought that the 3 console platforms don't compete on what percent cut they take from software published on their platforms. All 3 are 30%.
  • DHPersonal 5y ago
    I disagree. I think they’d be overjoyed if they could have free distribution on all platforms and that this case would set a precedent in Epic’s favor to pursue a similar outcome with the other platforms.
  • cochne 5y ago
    I think as soon as you start looking at this as a spectrum question and not a binary question, this argument falls apart. Lets say console charges 30% to increase profit from -a% to +b% Lets say Apple charges 30% to increase profit from +x% to +y% The argument boils down to "One should be allowed to charge if it makes something unprofitable profitable. Therefore consoles should be allowed to charge but Apple should not." But wouldn't this argument imply it is also wrong for consoles to charge in excess of what makes their profit greater than 0%? Or is there some fixed small amount of profit for which this is ok, say 5%, and Apple's profit from phones alone already exceeds this small number?
    • pydry 5y ago
      Extreme sustained profit margins are usually a signal that something fishy is going on.
      • tlholaday 5y ago
        > … profit margins … … are completely dependent on what expenses are attributed to the revenue by the cost accountant. Is producing WWDC an App Store cost?
        • pydry 5y ago
          It's certainly accounted as a cost by Apple when it calculates its 37.8% gross profit margin.
      • AnIdiotOnTheNet 5y ago
        A lot of brands have extreme profit margins on what they sell, but this is not considered illegal. Hell, a lot of brands are just reselling the same cheap goods as everyone else and charging more simply for having their name on it, but this is considered a perfectly valid business model.
        • pydry 5y ago
          >reselling the same cheap goods as everyone else and charging more simply for having their name on it I've always seen this as slightly shady even if it is considered a valid business model. It's often unclear if consumers are fooled about the true quality of goods, whether they are Veblen goods. If it's a Veblen good or if they genuinely do value the brand name alone then I guess it's fine but it's not too exactly ethical to fool consumers about the quality of your products or what the brand actually represents (which is what consumers always say they value about brands - not the name itself). I'm likewise not very sympathetic to the idea that these brands deserve government protection from knock offs. If consumers genuinely aren't bothered about whether their Nike shirt is "real" why does the government need to be?
  • deleted 5y ago
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• kwanbix 5y ago
  One difference, if I am not mistaken, is that Sony and Microsoft loose money on each console sold, at least on the first years, so they make money by the % to developers. Apple makes lots of money on each iPhone sold.
  • CharlesW 5y ago
    Sincere question because I can't connect the dots: How is that relevant? If Apple went to a razor/blades model, would everyone on HN be fine with that? Why?
    • toolz 5y ago
      Personally I'd be fine with apple taking any percentage they want if they just opened their phone up to competing app stores.
    • ksec 5y ago
      > How is that relevant? It really isn't. Apple could charge as much as they want as long as there are competition. Without it ( As in current App Store ) then the practice of 30% will be in question. The problem then becomes if App Store is part of the total iPhone package, as lot of people and Apple are arguing that to be the case. Today, the iPhone has 66% market share in the United States, 75% of U.S. App Store revenues, and over 80% of time spent on the mobile internet If App Store is inseparable to iPhone, as per Apple's view, with today's Apple market share, will App Store; being part of iPhone cause Anti-Competitive practices to all business that requires for digital access? Since the Apps are solely approved at Apple's discretion. And there are written evidence that Apple could hold or reject Apps that are in direct competition with them. Basically the current model is not sustainable. ( Benedict Evans has written about this since 2016 ) Judging form the new Apple Quarterly Report I would not be surprised if Apple reach 70%+ of US Smartphone Market shares by 2022. At that point whether the App Store has a monopoly on Apps ( so to speak as people often like to say this ) may no long be important. Because Apple will have close to a monopoly on Smartphone in US.
  • Spivak 5y ago
    Would you be okay with Apple taking a 30% cut if they sold iOS devices at a loss? This seems like a really odd argument since it means that you think some fixed per-unit loss is enough to justify taking 30% of all 3rd-party sales in perpetuity.
• manigandham 5y ago
  Other platforms have multiple stores (or physical disks). Apple does not. That's the fundamental problem.
  • periheli0n 5y ago
    Microsoft doesn’t, Sony doesn’t, and IIRC Nintendo doesn’t, either. Epic might have chosen the App Store and Google Play as low-risk targets to gauge their chances going up against other stores, where a lot more money is to be earned.
    • manigandham 5y ago
      Game consoles have physical disks like I said. You can buy those anywhere, and even resell them.
      • periheli0n 5y ago
        Didn’t catch that part with the disks. But AFAIK even physical disks incur a royalty fee payable to the console maker. Not sure how much that is though. That being said, only the top notch console models come with disk slots these days. Entry models don’t. Does the Switch have disks or cartridges, actually?
        • lesuorac 5y ago
          The Switch has cartridges, a SD Card slot, and internal (unupgradable ~32GB) storage. Afaik, not every game is sold on a cartridge but I think every single Nintendo produced game is and anything you get from like Target is. I personally install games to an SD Card but other family members are very big on cartridges since they're not effectively locked to a specific Switch.
• johnnyanmac 5y ago
  Big caveat: in 10 years, the PS5 store and the XSX store will likely start to be superceeded by the gen 10 consoles. Epic would need to port their stores each generation, as well as ensure every game they host works (IF they are allowed to work). Making a storefront takes a considerable time and they'd need to make huge jumps every generation to port that work. an IOS or android Epic Games Store will likely exist in a decade (of if not, it won't be because Apple/Google go bankrupt so much as Epic themself pulls out). it's a much more worthwhile endeavor, because they aren't tied to a single piece of hardware. Paying 30% for the console makers to handle their generational leap for them is likely worth it, so I doubt Epic will see much follow up here. Now for other companies, who knows? As we see with Android, just because other store exist doesn't mean the native store doesn't have a massive advantadge. So it may not be worth the work even if competitors were allowed.