Phil Schiller suggested reduced App Store fees in 2011

Posted:
in General Discussion
Apple's App Store chief mulled cutting commissions on apps and in-app purchases a decade ago, according to evidence presented by Epic Games in its trial with Apple.

Credit: James Yarema/Unsplash
Credit: James Yarema/Unsplash


In 2011, Phil Schiller asked Apple services head Eddy Cue whether "we think our 70/30 split will last forever?" At the time, Schiller called himself a "staunch supporter" of Apple's 30% cut, but said he didn't believe it would remain "unchanged forever."

According to Bloomberg, Schiller suggested that Apple could eventually make a change to the fee structure once the App Store reached $1 billion in profit per year. Schiller floated a 25% to 20% fee, if that cut still amounted to $1 billion.

"I know that this is controversial, I just tee it up as another way to look at the size of the business, what we want to achieve, and how we stay competitive," Schiller said at the time.

Apple, for its part, argued that Schiller didn't say whether the App Store made $1 billion in profit. It added that there's no indication that the fee structure is tied to App Store profits. Currently, the App Store makes more than $1 billion per year.

The Cupertino tech giant has changed it fee structure over the years. In 2016, it cut its commission to 15% for second-year subscriptions. In 2020, it also launched a program that slashed Apple's cut to 15% for companies making less than $1 million.

Comments

  • Reply 1 of 10
    Trey_LanceTrey_Lance Posts: 61member
    Apple's App Store chief mulled cutting commissions on apps and in-app purchases a decade ago, according to evidence presented by Epic Games in its trial with Apple.

    Credit: James Yarema/Unsplash
    Credit: James Yarema/Unsplash


    In 2011, Phil Schiller asked Apple services head Eddy Cue whether "we think our 70/30 split will last forever?" At the time, Schiller called himself a "staunch supporter" of Apple's 30% cut, but said he didn't believe it would remain "unchanged forever."

    According to Bloomberg, Schiller suggested that Apple could eventually make a change to the fee structure once the App Store reached $1 billion in profit per year. Schiller floated a 25% to 20% fee, if that cut still amounted to $1 billion.

    "I know that this is controversial, I just tee it up as another way to look at the size of the business, what we want to achieve, and how we stay competitive," Schiller said at the time.

    Apple, for its part, argued that Schiller didn't say whether the App Store made $1 billion in profit. It added that there's no indication that the fee structure is tied to App Store profits. Currently, the App Store makes more than $1 billion per year.

    The Cupertino tech giant has changed it fee structure over the years. In 2016, it cut its commission to 15% for second-year subscriptions. In 2020, it also launched a program that slashed Apple's cut to 15% for companies making less than $1 million.
    So maybe Tesla also thought about selling the Model 3 for 30k once upon a time too? 

    What kind of child evidence is this from Epic?
    Beatslolliverlkrupp
  • Reply 2 of 10
    sflocalsflocal Posts: 5,511member
    So what?  Companies aren't allowed to discuss price scenarios?  

    Considering the entire market charges 30% (if not more), it's a non-issue.  Epic trying to squeeze blood from a turnip.
    Beatslolliverjony0
  • Reply 3 of 10
    dewmedewme Posts: 3,522member
    sflocal said:
    So what?  Companies aren't allowed to discuss price scenarios?  

    Considering the entire market charges 30% (if not more), it's a non-issue.  Epic trying to squeeze blood from a turnip.
    Yes indeed. Price is only one component of the marketing mix. Smart companies are always looking for ways to improve their position by changing up the mix as the market matures and diversifies. There was a time when OS X upgrades cost money. Now they are free. Why did they do that? Because Apple thought it was the right move at the right time. Needless to say, it seems to have been a pretty good decision but I'm sure it was hotly debated at the time within the inner circles of Apple management. 
    lolliverKTRjony0
  • Reply 4 of 10
    BeatsBeats Posts: 2,064member
    Notice every time Apple considers fee changes it’s always FOR the developer? What stupid evidence.

    What if the evidence suggested Phil wanted a fee increase to %35? Sweeney Turdd would have used the evidence against him anyway for being “greedy Apple”.

    Damned if they do, damned if they don’t situation.
    lolliver
  • Reply 5 of 10
    sflocalsflocal Posts: 5,511member
    dewme said:
    sflocal said:
    So what?  Companies aren't allowed to discuss price scenarios?  

    Considering the entire market charges 30% (if not more), it's a non-issue.  Epic trying to squeeze blood from a turnip.
    Yes indeed. Price is only one component of the marketing mix. Smart companies are always looking for ways to improve their position by changing up the mix as the market matures and diversifies. There was a time when OS X upgrades cost money. Now they are free. Why did they do that? Because Apple thought it was the right move at the right time. Needless to say, it seems to have been a pretty good decision but I'm sure it was hotly debated at the time within the inner circles of Apple management. 
    Apple as not being threatened with lawsuits for charing for MacOS upgrades.  Microsoft did it with Windows, and every other OS maker did the same.  That Apple decided to provide it for free doesn't necessarily mean that Apple avoided some kind of market pressure, but maybe Steve Jobs wanted to give a swipe to Bill Gates & Microsoft.  OS X was selling for $29.99 back in the day right?  I don't remember.

    Then again, Apple could give MacOS for free as Apple is making money on selling hardware.  Microsoft could not do that as it was a software company back then.  Windows (and MSOffice) were its bread-and-butter.
    mobirdbaconstang
  • Reply 6 of 10
    Trey_LanceTrey_Lance Posts: 61member
    Sweeney and Epic are owned by Tencent a media of China, a company that is controlled by the Chinese communist government 
  • Reply 7 of 10
    tmaytmay Posts: 5,069member
    sflocal said:
    dewme said:
    sflocal said:
    So what?  Companies aren't allowed to discuss price scenarios?  

    Considering the entire market charges 30% (if not more), it's a non-issue.  Epic trying to squeeze blood from a turnip.
    Yes indeed. Price is only one component of the marketing mix. Smart companies are always looking for ways to improve their position by changing up the mix as the market matures and diversifies. There was a time when OS X upgrades cost money. Now they are free. Why did they do that? Because Apple thought it was the right move at the right time. Needless to say, it seems to have been a pretty good decision but I'm sure it was hotly debated at the time within the inner circles of Apple management. 
    Apple as not being threatened with lawsuits for charing for MacOS upgrades.  Microsoft did it with Windows, and every other OS maker did the same.  That Apple decided to provide it for free doesn't necessarily mean that Apple avoided some kind of market pressure, but maybe Steve Jobs wanted to give a swipe to Bill Gates & Microsoft.  OS X was selling for $29.99 back in the day right?  I don't remember.

    Then again, Apple could give MacOS for free as Apple is making money on selling hardware.  Microsoft could not do that as it was a software company back then.  Windows (and MSOffice) were its bread-and-butter.
    I would contend that Apple wanted to have the largest number of users on the latest OS simply because it was good for the Mac platform, especially developers, and that has certainly worked out well, but there would have been substantial financial risk at the time.


  • Reply 8 of 10
    baconstangbaconstang Posts: 690member
    "Apple as not being threatened with lawsuits for charing for MacOS upgrades.  Microsoft did it with Windows, and every other OS maker did the same.  That Apple decided to provide it for free doesn't necessarily mean that Apple avoided some kind of market pressure, but maybe Steve Jobs wanted to give a swipe to Bill Gates & Microsoft.  OS X was selling for $29.99 back in the day right?  I don't remember."

    i remember paying, I believe, $59.95 for Tiger, 10.4.

    What was the last one they charges for?  Lion?
  • Reply 9 of 10
    baconstang said: What was the last one they charges for?  Lion?
    Mountain Lion. Mavericks was the 1st freebie. 
  • Reply 10 of 10
    dewmedewme Posts: 3,522member
    My point was that companies routinely discuss all kinds of marketing related matters, including pricing, within the confines of the company. Tim Cook isn’t a leader who surrounds himself with “yes men” so everything is on the table when these discussions take place. Lots of ideas and opinions get floated and discussed and decisions are made. The fact that some Apple insiders discussed changes to pricing for developers, opening up iMessage, etc., kinds of things is totally immaterial to this case.  That’s how businesses work.
    edited May 4 muthuk_vanalingam
Sign In or Register to comment.