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They definitely consulted a bunch of lawyers. The App Store makes on the order of $100B profit annually. Given that, a reasonable budget for consulting lawyers

by mil22 3y ago

They definitely consulted a bunch of lawyers. The App Store makes on the order of $100B profit annually. Given that, a reasonable budget for consulting lawyers - on a matter which may result in them losing a substantial amount of that profit - would be massive. Even $1B in attorney fees would be a tiny price to pay to protect that. Yes, we know they talked with the EU, but we don't know the content of those discussions. It's easy to assume they were checking whether their proposed implementation would satisfy the regulators. It's equally likely, even more likely, they were gathering information, posturing and probing to see how the EU would react, to gauge how best to craft their scheme to outwit them and what they could or could not easily get away with. You can hold a negotiation and still screw the other side over afterwards - isn't that actually the best way to do it? Holding a meeting first to learn what cards your opponent has in their hand is just a better way to play any game.

andrewljohnson 3y ago
Apple overall makes $100B, not the App Store.
- thedailymail 3y ago
  Thanks for pointing this out. App Store sales (not profit) for 2020 was estimated at around $64B. Apple apparently does not make the profits from the App Store public. https://www.cnbc.com/2021/01/08/apples-app-store-had-gross-sales-around-64-billion-in-2020.html https://www.cnbc.com/2021/01/08/apples-app-store-had-gross-s...
  - politician 3y ago
    I wouldn't be surprised if it was 99% profit. Operating a glorified FTP service isn't going to dent $64B in revenues.
    - brk 3y ago
      A glorified FTP service with an army of moderators. Still good margins I would suspect, but not just passive income.
      - pbhjpbhj 3y ago
        How big is their "army" of app store moderators?
      - fennecfoxy 3y ago
        From my own experiences and plenty of others their so called moderators are crap. App Store review process is total bullshit most of the time, and yet they still end up with scam/trash apps on the store. Besides, how many app updates are there per day? The amount they pay an app reviewer x n reviewers is going to be _nothing_, a drop in the bucket of what they make from the app store overall. App Store is a cash cow so they'll protect it viciously; I expect Apple will win this one through their usual gaslighting/cult personalities unless EU is willing to come down hard enough on 'em. Ban sales of Apple products that do not conform, easy. It doesn't affect consumers in any negative way, only positive.
  - heavyset_go 3y ago
    In 2019, their App Store profit margin was roughly 80%[1]. [1] https://www.bloomberg.com/news/articles/2021-05-01/apple-s-app-store-had-78-profit-margin-in-2019-testimony-shows https://www.bloomberg.com/news/articles/2021-05-01/apple-s-a...
    - HWR_14 3y ago
      Since that $64 billion is gross revenue, their profit margin is trivially less than 30%, since they have to pay out 70+% to developers.
solardev 3y ago
> The App Store makes on the order of $100B profit annually. > Yes, we know they talked with the EU, but we don't know the content of those discussions. Geeze, that's a lot of money. Out of curiosity, how bribeable are EU regulators? If this were the US, they'd just make a few campaign donations and it'd all go away and the citizens would just shrug at the business as usual in DC. Do EU regulators typically have more integrity and teeth?
- tsimionescu 3y ago
  While it's good to assume that everyone is bribeable at some price, in the EU there is no clear legal way to do so. In particular, campaign contributions are highly limited in all EU countries (typically around a thousand euro per person I believe), and typically only open to individuals, not corporations or other legal entities.
- jimnotgym 3y ago
  EU regulators are civil servants, and in the EU at least this makes them nominally non political, so campaign donations won't work. But you can always offer to look after them when they retire. Give them a nice non-exec role, or perhaps make them vice‑president of global affairs and communications.... https://en.m.wikipedia.org/wiki/Nick_Clegg https://en.m.wikipedia.org/wiki/Nick_Clegg
  - jll29 3y ago
    Whilet he parent's point is correct, note that Nick Clegg is not and never was a EU civil servant (although he was a member of the European Parliament when the UK was still in the EU).
    - jimnotgym 3y ago
      Whilst I know he was a curious example, he was obviously a high profile one. According to the linked article he actually did work for the European Commission (part of the EU executive) as a civil servant. "He took up a post at the European Commission in April 1994, working in the TACIS aid programme to the former Soviet Union. For two years, Clegg was responsible for developing direct aid programmes in Central Asia and the Caucasus worth €50 million. He was involved in negotiations with Russia on airline overflight rights, and launched a conference in Tashkent in 1993 that founded TRACECA—an international transport programme for the development of a transport corridor for Europe, the Caucasus and Asia. Vice-President and Trade Commissioner Leon Brittan then offered him a job in his private office, as a European Union policy adviser and speechwriter. As part of this role, Clegg was in charge of the EC negotiating team on Chinese and Russian accession talks to the World Trade Organization.[33]"
AJ007 3y ago
I don't know where you are getting your numbers from, for 2023 their net income was $97b. At some point the tax stuff won't be possible, and it will be even less than that. Apple's gross profit was $169b, which excludes a lot of stuff, but even then I don't think it's possible over half of it would be from the App Store.
- mil22 3y ago
  Apple stated "App Store revenue generated $1.1 trillion in developer billings and sales in 2022, 90% of which was commission-free." [1] 10% was not commission-free. App Store commissions are between 15% and 30% depending on the size of the developer. That would be between $165B and $330B revenue for Apple from commissions. Nobody knows how profitable the App Store is to Apple. "It’s a question that investors would love to know the answer to, because it addresses the entire business model of the App Store. Apple does not disclose any detailed financial results of the App Store,". "Barnes calculated that the App Store had hefty profit margins, which increased to 78% in 2019, up from 75% in 2018" [2] App Store revenue is still growing (not least with inflation) so the number of 2023 was likely even higher. ~80% margin on $165-$330B revenue in 2022 would be $132-$264B. So my original number of $100B may actually have been on the low side. [1] https://techcrunch.com/2023/05/31/apple-touts-1-1-trillion-in-app-store-commerce-in-2022-with-104b-in-digital-sales/ https://techcrunch.com/2023/05/31/apple-touts-1-1-trillion-i... [2] https://www.marketwatch.com/story/how-profitable-is-apples-app-store-even-a-landmark-antitrust-trial-couldnt-tell-us-11622224506 https://www.marketwatch.com/story/how-profitable-is-apples-a...
  - pbhjpbhj 3y ago
    >Nobody knows how profitable the App Store is to Apple. Which country do they hide their business in that doesn't require accounts be published on a business's principle activity?
  - lotsofpulp 3y ago
    https://www.sec.gov/Archives/edgar/data/320193/000032019323000106/aapl-20230930.htm https://www.sec.gov/Archives/edgar/data/320193/0000320193230... >The Company’s total net sales were $383.3 billion and net income was $97.0 billion during 2023. Because $97B is < $100B, it is impossible for AAPL to have earned $100B net income just from the App Store (because we also know its other divisions do not lose money, again according to the 10-K they filed).

by mil22 3y ago

andrewljohnson 3y ago

Apple overall makes $100B, not the App Store.

thedailymail 3y ago
Thanks for pointing this out. App Store sales (not profit) for 2020 was estimated at around $64B. Apple apparently does not make the profits from the App Store public. https://www.cnbc.com/2021/01/08/apples-app-store-had-gross-sales-around-64-billion-in-2020.html https://www.cnbc.com/2021/01/08/apples-app-store-had-gross-s...
- politician 3y ago
  I wouldn't be surprised if it was 99% profit. Operating a glorified FTP service isn't going to dent $64B in revenues.
  - brk 3y ago
    A glorified FTP service with an army of moderators. Still good margins I would suspect, but not just passive income.
    - pbhjpbhj 3y ago
      How big is their "army" of app store moderators?
    - fennecfoxy 3y ago
      From my own experiences and plenty of others their so called moderators are crap. App Store review process is total bullshit most of the time, and yet they still end up with scam/trash apps on the store. Besides, how many app updates are there per day? The amount they pay an app reviewer x n reviewers is going to be _nothing_, a drop in the bucket of what they make from the app store overall. App Store is a cash cow so they'll protect it viciously; I expect Apple will win this one through their usual gaslighting/cult personalities unless EU is willing to come down hard enough on 'em. Ban sales of Apple products that do not conform, easy. It doesn't affect consumers in any negative way, only positive.
- heavyset_go 3y ago
  In 2019, their App Store profit margin was roughly 80%[1]. [1] https://www.bloomberg.com/news/articles/2021-05-01/apple-s-app-store-had-78-profit-margin-in-2019-testimony-shows https://www.bloomberg.com/news/articles/2021-05-01/apple-s-a...
  - HWR_14 3y ago
    Since that $64 billion is gross revenue, their profit margin is trivially less than 30%, since they have to pay out 70+% to developers.

solardev 3y ago

> The App Store makes on the order of $100B profit annually. > Yes, we know they talked with the EU, but we don't know the content of those discussions. Geeze, that's a lot of money. Out of curiosity, how bribeable are EU regulators? If this were the US, they'd just make a few campaign donations and it'd all go away and the citizens would just shrug at the business as usual in DC. Do EU regulators typically have more integrity and teeth?

tsimionescu 3y ago
While it's good to assume that everyone is bribeable at some price, in the EU there is no clear legal way to do so. In particular, campaign contributions are highly limited in all EU countries (typically around a thousand euro per person I believe), and typically only open to individuals, not corporations or other legal entities.
jimnotgym 3y ago
EU regulators are civil servants, and in the EU at least this makes them nominally non political, so campaign donations won't work. But you can always offer to look after them when they retire. Give them a nice non-exec role, or perhaps make them vice‑president of global affairs and communications.... https://en.m.wikipedia.org/wiki/Nick_Clegg https://en.m.wikipedia.org/wiki/Nick_Clegg
- jll29 3y ago
  Whilet he parent's point is correct, note that Nick Clegg is not and never was a EU civil servant (although he was a member of the European Parliament when the UK was still in the EU).
  - jimnotgym 3y ago
    Whilst I know he was a curious example, he was obviously a high profile one. According to the linked article he actually did work for the European Commission (part of the EU executive) as a civil servant. "He took up a post at the European Commission in April 1994, working in the TACIS aid programme to the former Soviet Union. For two years, Clegg was responsible for developing direct aid programmes in Central Asia and the Caucasus worth €50 million. He was involved in negotiations with Russia on airline overflight rights, and launched a conference in Tashkent in 1993 that founded TRACECA—an international transport programme for the development of a transport corridor for Europe, the Caucasus and Asia. Vice-President and Trade Commissioner Leon Brittan then offered him a job in his private office, as a European Union policy adviser and speechwriter. As part of this role, Clegg was in charge of the EC negotiating team on Chinese and Russian accession talks to the World Trade Organization.[33]"

AJ007 3y ago

I don't know where you are getting your numbers from, for 2023 their net income was $97b. At some point the tax stuff won't be possible, and it will be even less than that. Apple's gross profit was $169b, which excludes a lot of stuff, but even then I don't think it's possible over half of it would be from the App Store.

mil22 3y ago
Apple stated "App Store revenue generated $1.1 trillion in developer billings and sales in 2022, 90% of which was commission-free." [1] 10% was not commission-free. App Store commissions are between 15% and 30% depending on the size of the developer. That would be between $165B and $330B revenue for Apple from commissions. Nobody knows how profitable the App Store is to Apple. "It’s a question that investors would love to know the answer to, because it addresses the entire business model of the App Store. Apple does not disclose any detailed financial results of the App Store,". "Barnes calculated that the App Store had hefty profit margins, which increased to 78% in 2019, up from 75% in 2018" [2] App Store revenue is still growing (not least with inflation) so the number of 2023 was likely even higher. ~80% margin on $165-$330B revenue in 2022 would be $132-$264B. So my original number of $100B may actually have been on the low side. [1] https://techcrunch.com/2023/05/31/apple-touts-1-1-trillion-in-app-store-commerce-in-2022-with-104b-in-digital-sales/ https://techcrunch.com/2023/05/31/apple-touts-1-1-trillion-i... [2] https://www.marketwatch.com/story/how-profitable-is-apples-app-store-even-a-landmark-antitrust-trial-couldnt-tell-us-11622224506 https://www.marketwatch.com/story/how-profitable-is-apples-a...
- pbhjpbhj 3y ago
  >Nobody knows how profitable the App Store is to Apple. Which country do they hide their business in that doesn't require accounts be published on a business's principle activity?
- lotsofpulp 3y ago
  https://www.sec.gov/Archives/edgar/data/320193/000032019323000106/aapl-20230930.htm https://www.sec.gov/Archives/edgar/data/320193/0000320193230... >The Company’s total net sales were $383.3 billion and net income was $97.0 billion during 2023. Because $97B is < $100B, it is impossible for AAPL to have earned $100B net income just from the App Store (because we also know its other divisions do not lose money, again according to the 10-K they filed).