6 ms·

I honestly have sympathy for the case he makes. I don't take issue with the way that Apple has restricted the ability to get apps on an iPhone. The problem is t

by iandev 5y ago

I honestly have sympathy for the case he makes. I don't take issue with the way that Apple has restricted the ability to get apps on an iPhone. The problem is the 30% cut that they take in the app store. I think the system can largely stay the same, but they're clearly profiting from the cut they take. It's not simply recovering operating costs. edit: I'm not saying that they're not allowed to profit. I just wanted to point out that the 30% isn't strictly necessary to run the app store.

mattgreenrocks 5y ago
Smaller shops/indie devs can qualify for the Small Business Program, which reduces Apple's cut to 15%.
- ulimn 5y ago
  I think something like 15% default and 5% for small companies would be much better for the services they provide. App Store compared to Play Store regarding discovering apps is still much worse in my opinion. I think it’s one of the biggest gripes I have after I switched to iPhone.
  - bagacrap 5y ago
    Without robust* competition, how can you put a value on the services they provide? They wrote an entire, very successful, platform, upon which someone's business depends. They employ an army of engineers that are probably more highly skilled than the average app developer to keep this going. They've even done the hard work of attracting almost all the consumers who spend money freely to their platform. Auction houses such as Christie's take up to 25% for a similar service (connecting sellers with affluent buyers), although one that's probably far easier to replicate. *robust meaning low switching costs, but it's hard to imagine how one could have low switching costs on smart phone platforms
    - IncRnd 5y ago
      > Auction houses such as Christie's take up to 25% for a similar service (connecting sellers with affluent buyers), although one that's probably far easier to replicate. When you want to place an item up for auction, there are more auction houses to use than only Christie's. That might be why their price fixing scandal was discovered in 2000.
    - ChrisLTD 5y ago
      Imagine also having to buy a $1,000+ ticket to be able to bid in a Christie's auction.
    - ulimn 5y ago
      I understand all that and if I wouldn't like the core of the concept, I wouldn't have switched to the Apple ecosystem. But they also get money if the software for their hardware is easy to find and browsing the App Store is a fun experience instead of getting the same "few" apps. (No wonder apps like AppRaven exist.) If the App Store was a different company unrelated to the hardware, I think it would be a different story. But since it's all tied together, it's like their own Sales platform.
- kevingadd 5y ago
  This program does not 'reduce apple's cut to 15%'. Under some circumstances, Apple will reduce your cut to 15% for a given year. But if those circumstances cease to apply your cut jumps back up to 30% for that year AND the next year. For products that you buy once and use forever, this can mean that a small business has a great "launch", earning over the threshold for that one year, then stops earning much the following year but still has to pay 30% for both of those years. This might look like '$1 million per year' in income, but what it actually means amortized across two years is '$500k/year before apple's 30% cut', which once you consider taxes and the cost of employee benefits (insurance, etc) is about enough to pay 3-5 salaries. Note that Apple could have designed it not to work this way - they didn't, they chose this more complex system because they're greedy and want 30%. This program really only benefits lifestyle businesses and businesses with like 1-6 employees. A more "honest" program would be "15% on your first million dollars per year" which would achieve the goal of helping small businesses and be simple. Also note if your income is largely being passed on to third parties (processing transactions for charities or individual small businesses), this eats into both your margins and the profits of the companies you're passing the revenue on to. The only solution for that is for every customer to create their own developer account and upload bespoke apps for themselves - something Apple prohibits under current policies.
  - mattgreenrocks 5y ago
    Good info, thanks!
dash2 5y ago
What’s wrong with them making a profit? I don’t think that would be a powerful argument in this case on its own.
- varvar 5y ago
  Don't you know, we're supposed to martyr ourselves for humanity. Profits bad.
- ProAm 5y ago
  Its not that they are making a profit is that users have no choice, and no choice but to give them 15-30% for no value add (arguable). It's a racket.
  - deleted 5y ago
    [deleted]
  - periheli0n 5y ago
    How many users spend more than a tenner on paid apps? Not many... but Epic made 300 000 000 a year on iOS alone selling in game items. What value is epic selling there? Epic is targeting kids with Fortnite and its their money that they're after. Impulse- and vanity purchases, much more than anything else. Whereas, when buying a paid app, one usually gets real value. At least as I see it. But maybe this means i'm old :D
    - kevingadd 5y ago
      If you're going to argue "most users don't spend more than ten bucks", how do you explain Apple earning 20 billion USD per year off the app store? 20 billion USD divided by 10 dollars is 2 billion customers. But Apple only pockets 3 dollars of that 10, so it's actually 20 billion divided by 3 dollars - around 6.6 billion customers. Do the math.
      - IncRnd 5y ago
        That's not true. There are repeat customers, so you probably mean app sales not customers. Even that isn't true, since there are in-app sales that go through Apple.
throwaway9980 5y ago
"they're clearly profiting" This is the purpose of for profit corporations.
- croon 5y ago
  And the purpose of a market is to force for profit corporations to compete with other actors. Sometimes this requires regulation when a one or a few get too large.
  - manicdee 5y ago
    No, that is not the purpose of a market at all. And no, competition doesn’t mean participants are forced to deliver better value for money. And no, industry won’t regulate itself. We need regulation to force market participants to participate in a way that even remotely resembles “fair”. The default mode of operation for suppliers in a market is “extract maximum value.”
- luxuryballs 5y ago
  and is the reason why I am typing on this iPhone right now
- plater 5y ago
  That's maybe fine, but right now there are only two options, Apple with iOS or Google with Android. They can control pricing, the can control what is there and not, they get all the user stats, they decide what the apps can do and not do etc. Is this it? We are stuck with these two forever? Many have tried and huge firms at that, to create an operating system and app store for phones, like Microsoft with Windows and Samsung with Bada (and I think they had another OS too). And you can't say they have no resources, money, marketing channels etc. Who will manage to break this duopoly and when? I think the only real chance is that web apps/PWAs get up to par with native apps. It's getting there, but Apple is also blocking this with limitations in their Safari browser (and the iOS version of Chrome (which apparently on iOS is just a wrapper around Safari) so also there they are hindering development).
  - 5y ago
wernercd 5y ago
I have issue with both the restrictions AND the cut. Arguments are made along the lines of "don't like the app store? make a web app"... but because of the restrictions, you are limited to a second-rate Webkit base web browser with limitations on bluetooth, game controller support, etc. Not only are the profiting an obscene amount for services available elsewhere (And arguably better services across the board for stuff like payment options, ad options, browser options, email client options, etc) but they are doing so BECAUSE the better options are restricted or limited on their platform. This would be like if Microsoft not only forced you to have IE6 installed... but then forced you to have other browsers simply be an IE6 reskin, forced other companies to not advertise about alternatives and then took a 30% cut of all things installed on Windows. The level of profit goes beyond simply making 30%... it's making 30% after limiting viable options and then saying "we offer this stuff because it's better than the alternative".
cloogshicer 5y ago
Gotta disagree. I don't care about the cut, the problem is the fact that you can't install whatever you want.
- macinjosh 5y ago
  I agree, if a user could check a box saying they are OK leaving Apple's walled garden they should be able to install anything they want on their device. This provides a path around the 30% cut as well. I think Apple's point is they think users are too dumb to handle that and they don't want to take any chance of user ignorance reflecting poorly on them or their product experience.
  - websites420 5y ago
    > I think Apple's point is they think users are too dumb to handle that and they don't want user ignorance to reflect poorly on them or their product experience. And I sympathize with this argument, which is why I propose calling the outside-the-garden toggle “Developer Mode.” Apple already has “Pro” phones and headphones. This is just an extension of that. So when the user toggles the Developer mode they get a dialog box that says we can’t do refunds or offer support until you turn this off, which will delete any 3P apps.
    - trdtaylor1 5y ago
      This would align well (Some in Apple may say too well) with the Right To Repair movement.
    - macinjosh 5y ago
      Couldn't Epic, et. al still have an issue with this? I would see them argue that putting this behind a developer mode is still too restrictive and 'unfair.' Most user's wouldn't know what developer mode implies and Epic would have to have a list of instructions on their install page to show users how to enable it. That is not a small barrier to entry for many users. Not sure what my opinion is, just thinking out loud.
ProAm 5y ago
There are three legs to the problem, 1) 30%, 2) TOS 3) Monopoly on app distribution to IOS If any of those pillars fall I think Apple is off the hook here.
- oauea 5y ago
  Don't you mean all?
  - throwawaygh 5y ago
    I could see the argument that reducing the cut is still anti-competitive, especially because it's easy to show how the TOS harms both competition and the consumer. But if they allow alternative distribution channels, that would make the anti-trust case a lot more difficult both in actual court and in the court of legislative opinion. I have no problem with a 30% cut if alternative app distribution channels are allowed (a la Android).
    - 3GuardLineups 5y ago
      Exactly - there's no reason a 30% is out of line if that's what the market bears. The issue with 30% is its a monopoly with no competitors trying to push the price down. There's a chance no other service is able to provide a comparable user experience to the app store for a 20% or 25% cut, but we can't know that until Apple allows competition.
  - ProAm 5y ago
    I think Apple will have good legal grounds to stand on if they get rid of one of those, and will garner a lot of customer goodwill. Right now it really looks like Apple does not respect both their customers and third party developers at all which comes off has pure greed.
headmelted 5y ago
There's clearly merit to both arguments. Is Apple making a fortune by not having a competitive marketplace for software on iOS? Of course they are. The hardest aspect of this to defend, and it's obviously not a use case that Epic are going to push because it hurts their potential to profit from this, is blocking services like xCloud and Stadia. Those services aren't downloading software to the user's device, and much like Netflix, the user is accessing a content catalogue administered and provided elsewhere. Epic doesn't want democracy on Android and iOS, it wants its own store on both devices so it has a competitive advantage over both companies everywhere (if I can buy an app or a game from Epic rather than Apple, and know I can take that purchase with me to other platforms like Windows/Playstation or even if I switch phone eco-systems, that's what I'm going to do as a consumer). A ruling in Epic's favour would almost certainly get the Epic store onto games consoles, too. Essentially it does boil down to greedy corporation vs. greedy corporation. Part of me hopes that Epic wins both cases if only to force Google and Apple to separate their income streams from the security model, but Apple's not wrong here. Most users wouldn't understand any of what I've just said and won't take the time to learn so they are a danger to themselves. You would also be trusting Epic to curate content to the extent that Apple does when they have no financial incentive to do so, which is IMHO why the Play Store is so full of garbage.
- periheli0n 5y ago
  If Epic wins, then consoles are next, and the whole store business will be either in a race to the bottom, or there will be wild mergers with game companies buying hardware makers. Fortnite was a 5bn/year game that made only 7% of its revenue on iOS, but much more on consoles. This is just a the beginning of a huge fight over a market that has grown incredibly huge, and Epic having realised that access to hardware is crucial to their further growth. I mean, they could simply make their own, but perhaps that's more risky than suing Apple, Sony, MS for access to their platforms.
  - headmelted 5y ago
    I think what Tim Sweeney has noticed is what Steve Jobs realised (by his own admission) far too late. The money is in the hardware but the value is in the software. People will buy hardware thinking of that as their investment, without realising that the software is what extracts almost all of the revenue from them as a customer regardless. Steve Jobs talking about this in 2007: https://www.youtube.com/watch?v=dEeyaAUCyZs https://www.youtube.com/watch?v=dEeyaAUCyZs

by iandev 5y ago

mattgreenrocks 5y ago

Smaller shops/indie devs can qualify for the Small Business Program, which reduces Apple's cut to 15%.

ulimn 5y ago
I think something like 15% default and 5% for small companies would be much better for the services they provide. App Store compared to Play Store regarding discovering apps is still much worse in my opinion. I think it’s one of the biggest gripes I have after I switched to iPhone.
- bagacrap 5y ago
  Without robust* competition, how can you put a value on the services they provide? They wrote an entire, very successful, platform, upon which someone's business depends. They employ an army of engineers that are probably more highly skilled than the average app developer to keep this going. They've even done the hard work of attracting almost all the consumers who spend money freely to their platform. Auction houses such as Christie's take up to 25% for a similar service (connecting sellers with affluent buyers), although one that's probably far easier to replicate. *robust meaning low switching costs, but it's hard to imagine how one could have low switching costs on smart phone platforms
  - IncRnd 5y ago
    > Auction houses such as Christie's take up to 25% for a similar service (connecting sellers with affluent buyers), although one that's probably far easier to replicate. When you want to place an item up for auction, there are more auction houses to use than only Christie's. That might be why their price fixing scandal was discovered in 2000.
  - ChrisLTD 5y ago
    Imagine also having to buy a $1,000+ ticket to be able to bid in a Christie's auction.
  - ulimn 5y ago
    I understand all that and if I wouldn't like the core of the concept, I wouldn't have switched to the Apple ecosystem. But they also get money if the software for their hardware is easy to find and browsing the App Store is a fun experience instead of getting the same "few" apps. (No wonder apps like AppRaven exist.) If the App Store was a different company unrelated to the hardware, I think it would be a different story. But since it's all tied together, it's like their own Sales platform.
kevingadd 5y ago
This program does not 'reduce apple's cut to 15%'. Under some circumstances, Apple will reduce your cut to 15% for a given year. But if those circumstances cease to apply your cut jumps back up to 30% for that year AND the next year. For products that you buy once and use forever, this can mean that a small business has a great "launch", earning over the threshold for that one year, then stops earning much the following year but still has to pay 30% for both of those years. This might look like '$1 million per year' in income, but what it actually means amortized across two years is '$500k/year before apple's 30% cut', which once you consider taxes and the cost of employee benefits (insurance, etc) is about enough to pay 3-5 salaries. Note that Apple could have designed it not to work this way - they didn't, they chose this more complex system because they're greedy and want 30%. This program really only benefits lifestyle businesses and businesses with like 1-6 employees. A more "honest" program would be "15% on your first million dollars per year" which would achieve the goal of helping small businesses and be simple. Also note if your income is largely being passed on to third parties (processing transactions for charities or individual small businesses), this eats into both your margins and the profits of the companies you're passing the revenue on to. The only solution for that is for every customer to create their own developer account and upload bespoke apps for themselves - something Apple prohibits under current policies.
- mattgreenrocks 5y ago
  Good info, thanks!

dash2 5y ago

What’s wrong with them making a profit? I don’t think that would be a powerful argument in this case on its own.

varvar 5y ago
Don't you know, we're supposed to martyr ourselves for humanity. Profits bad.
ProAm 5y ago
Its not that they are making a profit is that users have no choice, and no choice but to give them 15-30% for no value add (arguable). It's a racket.
- deleted 5y ago
  [deleted]
- periheli0n 5y ago
  How many users spend more than a tenner on paid apps? Not many... but Epic made 300 000 000 a year on iOS alone selling in game items. What value is epic selling there? Epic is targeting kids with Fortnite and its their money that they're after. Impulse- and vanity purchases, much more than anything else. Whereas, when buying a paid app, one usually gets real value. At least as I see it. But maybe this means i'm old :D
  - kevingadd 5y ago
    If you're going to argue "most users don't spend more than ten bucks", how do you explain Apple earning 20 billion USD per year off the app store? 20 billion USD divided by 10 dollars is 2 billion customers. But Apple only pockets 3 dollars of that 10, so it's actually 20 billion divided by 3 dollars - around 6.6 billion customers. Do the math.
    - IncRnd 5y ago
      That's not true. There are repeat customers, so you probably mean app sales not customers. Even that isn't true, since there are in-app sales that go through Apple.

throwaway9980 5y ago

"they're clearly profiting" This is the purpose of for profit corporations.

croon 5y ago
And the purpose of a market is to force for profit corporations to compete with other actors. Sometimes this requires regulation when a one or a few get too large.
- manicdee 5y ago
  No, that is not the purpose of a market at all. And no, competition doesn’t mean participants are forced to deliver better value for money. And no, industry won’t regulate itself. We need regulation to force market participants to participate in a way that even remotely resembles “fair”. The default mode of operation for suppliers in a market is “extract maximum value.”
luxuryballs 5y ago
and is the reason why I am typing on this iPhone right now
plater 5y ago
That's maybe fine, but right now there are only two options, Apple with iOS or Google with Android. They can control pricing, the can control what is there and not, they get all the user stats, they decide what the apps can do and not do etc. Is this it? We are stuck with these two forever? Many have tried and huge firms at that, to create an operating system and app store for phones, like Microsoft with Windows and Samsung with Bada (and I think they had another OS too). And you can't say they have no resources, money, marketing channels etc. Who will manage to break this duopoly and when? I think the only real chance is that web apps/PWAs get up to par with native apps. It's getting there, but Apple is also blocking this with limitations in their Safari browser (and the iOS version of Chrome (which apparently on iOS is just a wrapper around Safari) so also there they are hindering development).
- 5y ago

wernercd 5y ago

I have issue with both the restrictions AND the cut. Arguments are made along the lines of "don't like the app store? make a web app"... but because of the restrictions, you are limited to a second-rate Webkit base web browser with limitations on bluetooth, game controller support, etc. Not only are the profiting an obscene amount for services available elsewhere (And arguably better services across the board for stuff like payment options, ad options, browser options, email client options, etc) but they are doing so BECAUSE the better options are restricted or limited on their platform. This would be like if Microsoft not only forced you to have IE6 installed... but then forced you to have other browsers simply be an IE6 reskin, forced other companies to not advertise about alternatives and then took a 30% cut of all things installed on Windows. The level of profit goes beyond simply making 30%... it's making 30% after limiting viable options and then saying "we offer this stuff because it's better than the alternative".

cloogshicer 5y ago

Gotta disagree. I don't care about the cut, the problem is the fact that you can't install whatever you want.

macinjosh 5y ago
I agree, if a user could check a box saying they are OK leaving Apple's walled garden they should be able to install anything they want on their device. This provides a path around the 30% cut as well. I think Apple's point is they think users are too dumb to handle that and they don't want to take any chance of user ignorance reflecting poorly on them or their product experience.
- websites420 5y ago
  > I think Apple's point is they think users are too dumb to handle that and they don't want user ignorance to reflect poorly on them or their product experience. And I sympathize with this argument, which is why I propose calling the outside-the-garden toggle “Developer Mode.” Apple already has “Pro” phones and headphones. This is just an extension of that. So when the user toggles the Developer mode they get a dialog box that says we can’t do refunds or offer support until you turn this off, which will delete any 3P apps.
  - trdtaylor1 5y ago
    This would align well (Some in Apple may say too well) with the Right To Repair movement.
  - macinjosh 5y ago
    Couldn't Epic, et. al still have an issue with this? I would see them argue that putting this behind a developer mode is still too restrictive and 'unfair.' Most user's wouldn't know what developer mode implies and Epic would have to have a list of instructions on their install page to show users how to enable it. That is not a small barrier to entry for many users. Not sure what my opinion is, just thinking out loud.

ProAm 5y ago

There are three legs to the problem, 1) 30%, 2) TOS 3) Monopoly on app distribution to IOS If any of those pillars fall I think Apple is off the hook here.

oauea 5y ago
Don't you mean all?
- throwawaygh 5y ago
  I could see the argument that reducing the cut is still anti-competitive, especially because it's easy to show how the TOS harms both competition and the consumer. But if they allow alternative distribution channels, that would make the anti-trust case a lot more difficult both in actual court and in the court of legislative opinion. I have no problem with a 30% cut if alternative app distribution channels are allowed (a la Android).
  - 3GuardLineups 5y ago
    Exactly - there's no reason a 30% is out of line if that's what the market bears. The issue with 30% is its a monopoly with no competitors trying to push the price down. There's a chance no other service is able to provide a comparable user experience to the app store for a 20% or 25% cut, but we can't know that until Apple allows competition.
- ProAm 5y ago
  I think Apple will have good legal grounds to stand on if they get rid of one of those, and will garner a lot of customer goodwill. Right now it really looks like Apple does not respect both their customers and third party developers at all which comes off has pure greed.

headmelted 5y ago

There's clearly merit to both arguments. Is Apple making a fortune by not having a competitive marketplace for software on iOS? Of course they are. The hardest aspect of this to defend, and it's obviously not a use case that Epic are going to push because it hurts their potential to profit from this, is blocking services like xCloud and Stadia. Those services aren't downloading software to the user's device, and much like Netflix, the user is accessing a content catalogue administered and provided elsewhere. Epic doesn't want democracy on Android and iOS, it wants its own store on both devices so it has a competitive advantage over both companies everywhere (if I can buy an app or a game from Epic rather than Apple, and know I can take that purchase with me to other platforms like Windows/Playstation or even if I switch phone eco-systems, that's what I'm going to do as a consumer). A ruling in Epic's favour would almost certainly get the Epic store onto games consoles, too. Essentially it does boil down to greedy corporation vs. greedy corporation. Part of me hopes that Epic wins both cases if only to force Google and Apple to separate their income streams from the security model, but Apple's not wrong here. Most users wouldn't understand any of what I've just said and won't take the time to learn so they are a danger to themselves. You would also be trusting Epic to curate content to the extent that Apple does when they have no financial incentive to do so, which is IMHO why the Play Store is so full of garbage.

periheli0n 5y ago
If Epic wins, then consoles are next, and the whole store business will be either in a race to the bottom, or there will be wild mergers with game companies buying hardware makers. Fortnite was a 5bn/year game that made only 7% of its revenue on iOS, but much more on consoles. This is just a the beginning of a huge fight over a market that has grown incredibly huge, and Epic having realised that access to hardware is crucial to their further growth. I mean, they could simply make their own, but perhaps that's more risky than suing Apple, Sony, MS for access to their platforms.
- headmelted 5y ago
  I think what Tim Sweeney has noticed is what Steve Jobs realised (by his own admission) far too late. The money is in the hardware but the value is in the software. People will buy hardware thinking of that as their investment, without realising that the software is what extracts almost all of the revenue from them as a customer regardless. Steve Jobs talking about this in 2007: https://www.youtube.com/watch?v=dEeyaAUCyZs https://www.youtube.com/watch?v=dEeyaAUCyZs