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Good. I've been saying this awhile, most notably when Apple (of course followed by Google) introduced a discount on commission for smaller developers. This is
by cletus 5y ago
Good.
I've been saying this awhile, most notably when Apple (of course followed by Google) introduced a discount on commission for smaller developers.
This is completely backwards.
I know why they did it. They wanted some positive PR that didn't cost them anything. Thing is, it's the larger publishers who are going to lobby regulators and challenge things in court. It's those same publishers who already have their own payment processing systems where the 30% is pure overhead (minus the CC fees). Small publishers actually get a lot of benefit for that 30% (IMHO).
So what Apple/Google should've done is give larger publishers a volume discount. Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount.
Why? Because it changes the calculus for Epic, etc. Currently that is:
Option 1: Keep paying 30%
Option 2: Leave the app store
Option 3: Challenge the 30% cut in court
Game theory will tell you that there is essentially no downside to (3). Worst case you will be back on the app store at 30% or will leave.
But what if the options were:
Option 1: Keep a volume discount and pay 10%
Option 2: Leave
Option 3: Challenge the cut and possibly end up paying 30% or leaving
Now they have something to lose.
More importantly, it takes the sting out of efforts to lobby regulators because now we're talking about the difference between 1-2% (CC fees at volume) and 10% not 30%.
I stand by my position that end users don't actually want competing third-party app stores. That's just a usability nightmare. But backend payment processing is something else entirely and is the likely first step in breaking the stranglehold.
- ocdtrekkie 5y agoThe reason Apple and Google would never offer up a volume discount for large publishers without legal action is because it's 99% of the app store's revenue. Giving a discount to small developers cost them nothing, giving a discount to Epic Games and similar would cost them billions.
- cletus 5y agoI think it's certainly heavily weighted to the big publishers but 99%? I'm not so sure. But you know what's expensive? Private lawsuits, government lawsuits, a court or legislature deciding the outcome, compliance with legislation, compliance with consent decrees, compliance with judgements, etc. The biggest issue is that third parties will end up deciding the outcome. You're almost always better off heading off government action by instituting the least bad solution for you. What if the outcome of governent action is completely independent third party app stores? Apple and Google certainly don't want that. I would argue that neither do end users actually. A vocal minority thinks they do but they're wrong. That could happen if the wheels of the US or EU regulators start turning against you.
- kryptiskt 5y agoGoogle's Project Hug that was revealed in the Epic trial shows that they give discounts under the table. They just don't want it to be known publicly.
- ocdtrekkie 5y agoProject Hug is basically a bribe, rather than a discount: It's not offered to everyone. Just developers who are likely to strike out on their own. (EA and Activision both being companies who have bucked the Steam train before, demonstrating a willingness to launch outside of monopoly app platforms.)
- oceanplexian 5y agoThere’s an entire cottage industry of jailbroken app stores. You might argue that those using alternative stores are a minority (1-5%), but the act of jailbreaking a phone is quite challenging and we still have a lot of people doing it. If iPhones were able to run third party stores I think you’d see 30 or 40% of users opting in to that. Is it a usability nightmare? Perhaps. But device makers shouldn’t make that “choice” for their users. Likewise you might not like the fact that your city has small businesses instead of a single large warehouse store on the basis of convenience and usability. But the public would not agree with you and that’s why we enact laws against anti-competitive behavior.
- elefanten 5y agoIt’s way less than 1% Waay less.
- sudosysgen 5y agoIn some third world countries going to a shop to get your device jailbroken at least was quite popular.
- saagarjha 5y agoThat's because Apple has waged war on these stores for over a decade. The fraction used to be much, much higher several years ago.
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- andjd 5y agoJust wow. > Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount. So you want apple and google to act as even more monopolistic bullies ... I see that you're taking this position as what you would do if you were Apple or Google, not what is the best course of action for all stakeholders. But you then opine that this is justified because the status quo is better for consumers. The thing is, we already know that it's not. Apple and Google allow third party payment processors for _some_ of their apps. Would it be your best interests as a consumer to pay 40-50% more then you currently do for Uber and GrubHub? There's a reasonable argument to be made that those businesses simply would not be economically viable if they had to pay a 30% apple/google tax on every transaction. How many other apps or services went under (or were never made in the first instance) because Apple decided that their business needed to pay them a 30% cut of everything. Which brings us to another salient point. Apple claims that they need to charge their 30% cut to pay for the cost of running the app store and for the developer tools they provide. But if this is the case, why should Uber and Facebook get to use them for free?
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- SeanLuke 5y agoI don't think he's saying that it'd be good if Apple and Google did that. He's saying they should have done that if they had had their strategic thinking caps on.
- mc32 5y agoThat's my take too on what poster is saying. Yet, it's not out of the ordinary to presume apple and google have good strategists among the management ranks... so what gives? What do we not know?
- derefr 5y agoPresumably, that they already do volume discounts/sweetheart deals with certain vendors. Apple allows Microsoft to publish packages through their App Store that install non-sandboxed apps, for example. I’m sure they’re giving them a discount as well. They’re a “strategic partner.” Epic is not.
- jclardy 5y agoThat's exactly it, so many users are afraid that this will mean every random app you download will have a credit card entry field. Nope. Those random apps will still benefit from the simplicity of the system IAP, one tap, auth, done. The ones asking for a credit card will drop in ratings and search results. The big players are the ones that will switch, amazon, Netflix, Spotify, Hulu, etc. And beyond that, competitors like Square and Stripe will release SDKs that make purchasing just as easy as the system IAP, and will actually force Apple to improve their system. If Apple thinks hosting costs are of any consequence, then charge people for hosting if they don't actively use IAP. For 99% of apps hosting is pennies on the dollar, but for games like Fortnite it may actually cost a decent amount, especially for the binary size. The end point is that there are no technical limitations to anything here, it is all political and Apple has the ability to change this at any time. There just isn't any point when they can continue to rake in 30% of every digital subscription service on the internet that wants to exist on their platform.
- eropple 5y agoIt's more than just one-time IAP, though. I'm generally "whatever" on what payment processor people use, but one of the things that does concern me is subscription management. To me there is a lot of value to having a central place where all my subscriptions are and where they can be canceled easily, even if I don't have the app installed anymore. YOLOing something with Stripe doesn't give me that without a bunch of fundamentally opt-in stuff on the part of the developer, and that's pretty concerning. If the platforms can (and do) solve this, then I feel a lot better about it.
- Aldo_MX 5y agoso as an end user I have to pay 30% more because YOU want that convenience? sorry, but you should be the one paying for that convenience.
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- ren_engineer 5y agoThe tech giants simply flexed their power too hard during the last few years and now pretty much every country on earth realizes they are a threat to national security in various ways. They are getting sued, fined, or punished in almost every major country now and they deserve it honestly
- Closi 5y ago> So what Apple/Google should've done is give larger publishers a volume discount. From Apple/Google's perspective this is a terrible strategy. The problem is that, if we assume the Pareto Principle holds, the larger publishers probably generate 80% of revenue on the App Store. So assuming 5% is operating at cost, you are talking about them probably sacrificing 70%-75% of their current profits (i.e. moving to 5% margin vs 25%, profit for high-grossing apps is probably closer to 1/5th previous rather than 1/3rd). So they avoid the lawsuit, but they also lose all the profits they are trying to protect anyway.
- zrm 5y agoNot only that, "we charge 10% to the big monster and 30% to the little guy" is terrible PR against the amount of money they would generate from just the little guy. It's so bad that by that point they might as well just charge the lower rate to everybody. Especially when they're trying to stave off legislation.
- ece 5y agoSteam is doing this 30%-20%, and it seems to be working fine of them.. so far. I generally think volume discounts come a bit too close to price fixing, if proven in court. Granted, it's tough to prove, as we've seen in Intel vs. AMD which settled out of court AFAICR.
- Closi 5y agoYes - although I think Steam is in a different market position where there are substitutes (e.g. developers/publishers can choose to submit via GOG, Epic store, Microsoft Store or sell direct so there is no monopsony), so providing a lower revenue split to encourage big developers to the platform is a good/valid strategy. The strategy is different for Apple (where there are no perfect(ish) substitutes, and they can exploit this to have higher margins).
- zrm 5y agoThe unusual thing about Steam is that their high fees discourage developers from using it. If they charged 3% then everyone would use it, there would be a million games there and being in the store wouldn't cause you to stand out at all. If they charge 30%, most small developers don't use it and then if you choose to pay, you get to be featured on a list without that many of your competitors. You're paying for exclusivity. Then you reach an equilibrium where small developers pay to be listed next to Valve's first party AAA titles, until there are enough of them that the exclusivity is sufficiently diluted to stop attracting more developers. That doesn't apply to Apple because anyone who wants to reach iOS customers doesn't have any reasonable alternative way to do it, so there are millions rather than thousands of apps in the store and the exclusivity of being listed is already diluted to nothing. But they still charge the same rate.
- fabianhjr 5y ago> So what Apple/Google should've done is give larger publishers a volume discount. Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount. Binding arbitration is a uniquely US-legal system thing that is not legal elsewhere. (And imo it is better to have a more neutral third party than an arbitration private firm that has one of the parties as a recurring customer)
- majormajor 5y agoI'm surprised discounts for big publishers hadn't already been more of a thing. It's certainly happened before from time to time: https://www.cultofmac.com/319040/apple-only-takes-15-cut-on-hbo-now-netflix-and-hulu-subscriptions/ https://www.cultofmac.com/319040/apple-only-takes-15-cut-on-...
- spywaregorilla 5y ago> Game theory will tell you that there is essentially no downside to (3). Worst case you will be back on the app store at 30% or will leave. Worst case is you want to be on the app store at 30% but are not allowed back in. > I stand by my position that end users don't actually want competing third-party app stores I disagree. More stores bring more competition. Both in terms of platform costs and in terms of promos for customer acquisition. The epic game store is kind of crap, but their weekly free game setup has offered some great content. I haven't given them a single dollar and I've gotten a number of titles including Control, Enter the Gungeon, Alien Isolation, etc. I say let them fight
- skrtskrt 5y ago> Worst case is you want to be on the app store at 30% but are not allowed back in If 30% cut of your revenue is big enough, Apple will let you back in even if the two companies apparently just tried to murder each other in court. Money talks. Companies keep massive clients and vendors that they are locked in lawsuits with all the time, just look at Apple and Samsung.
- cletus 5y agoWhile technically possible I consider that incredibly unlikely as a result of what's essentially a contract dispute. What would Apple's cause of action be to terminate, say, Epic from the App Store entirely? They sort of tried this at the beginning of the dispute when they claimed anything running Unreal Engine was a security risk and should be kicked. They overplayed their hand with that one and a court blocked it. Game theory applies to Apple too. What's their upside from banning Epic from the App Store? They face the risk that a court may take that decision out of their hands. And while they're doing it they are losing out on that 30%.
- tomc1985 5y agoWhat an incredibly shitty contract to be forced to sign. Apple overstepped, and they are going to get reeled back.
- dogleash 5y ago>I stand by my position that end users don't actually want competing third-party app stores. I have 9 chat apps on my phone. I just counted, and that's skipping things like email and basecamp that I might have included to inflate the number. It's not ideal, and the downsides can be exaggerated for the sake of banter, but overall the chat app situation is fine. Similarly, I wouldn't mind having more app stores. I expect there'd be one all the free software hardcores believe in, one that fills the role Steam does on PC, another with all the "too hot for TV" content that Apple and Google won't touch with a 10 foot pole, a few developer-publishers big enough to get traction, and dozens of also-rans that nobody uses. Yes, slightly more inconvenient like all the chat apps, but in reality it'd also be fine. I don't think it makes sense to say what consumers do and don't "want," because largely they don't understand the terrain the App Store and Google Play put down. Ask people if they'd like a 2nd store that lets them install apps that contain porn without putting it behind hidden curtains in otherwise general-purpose apps, then we might expect positive responses. Ask people if they want an app store that contains more malware because the app store monopoly provides a chokepoint to enact user protection that on-device sandboxing can't, then we'd expect negative responses.
- sam0x17 5y agoIt's also quite possible that if they had just set it at 10% from the beginning across the board, there would simply be more sales than there are now with 30%. I know a lot of apps make users foot the bill for the extra 30%, with different pricing if you buy not through apple. This just translates to lost sales. The market is the market.
- grishka 5y agoNo. This would entrench their monopolies even further. It should be legally required that any device that is marketed as a general-purpose computer, whether pocketable or not, and is shipped in a locked state, is fully unlockable by the end user. Without a single network packet sent to manufacturer's servers. That's the only way we as a society could fix this dire situation. In other words, if I buy a phone from Apple, I should have the choice for this to be the only interaction I have with Apple. They sold it to me. I gave them money, they gave me an iPhone. It's mine now. They're no longer in possession of it. I thus should be able to run arbitrary code on it with highest privileges possible with no hindrance.
- kryptozinc 5y agoSure, though they may chose to wipe iOS from your device if you unlock it. Then you are free to build your own os and execute root level code if you wish.
- ClumsyPilot 5y agoOkay, so you want to live in a world where you buy a car and the manufacturer will wipe the engine firmware or lock the vehicle if you change oil without their permission? Thats already happening to farming equipment. You will love in a world where you own nothing, and have less control over your life than a medieval surf - all devices are becoming 'smart', frok door locks to toasters
- grishka 5y agoI'd love an iPhone that runs Android tbh
- stale2002 5y agoActually, no. The other option is that the court forces Apple to not do that, and fines them billions of dollars if they refuse. South Korea is already doing significant laws that are at least related to this conversation. I expect more countries to pass similar laws soon.
- monocularvision 5y ago