Apple may still demand 30% app commission, regardless of payment method

Posted:
in iPhone edited September 14
Apple could pursue its 30% commission no matter where or how payments are collected by developers, side-stepping some financial aspects of alternate payment methods altogether.

Apple could collect its 30% commission no matter the payment method
Apple could collect its 30% commission no matter the payment method


When developers submit an app to the App Store, any money made from the app via its sale, in-app purchases, or in-app subscription is subject to a 30% fee. The court ruling in the Epic versus Apple case allows developers to point to external payment options, but Apple may still collect its 30%.

According to a report from Bloomberg, the 185-page ruling against Apple doesn't have provisions preventing Apple from collecting its commission on external sales. In fact, the document doesn't have any requirements surrounding the commission, only noting that Apple hasn't shown the 30% rate is "justified."

"Apple has the legal right to do business with anyone they want," Paul Gallant, managing director at Cowen & Company, told Bloomberg. "So Apple could change the terms of the App Store and say to developers, regardless of where you collect your revenue, you owe us 30%, and if developers refuse to pay it, Apple would be free to de-platform them."

Apple's CEO Tim Cook has previously stated that if alternate app stores or payment options were introduced, it would cause difficulties for Apple. Instead of processing payments to developers and collecting its fee, Apple would have to bill developers separately.

"We would have to come up with an alternate way of collecting our commission," continued Cook. "We would then have to figure out how to track what's going on and invoice it and then chase the developers; it seems like a process that doesn't need to exist."

Such a move could cause an uproar amongst developers and disgruntled regulators. Apple is already under investigation for monopolistic control over its App Store, and aggressive action for commission collection would reinforce that narrative.

"The more likely path is for Apple to think seriously about reducing its commissions," Cowen's Gallant said. "I think the pending legislation in the U.S. and Europe and Friday's court ruling increase the prospects for Apple to make a move on commissions."

Apple hasn't sought to challenge the ruling yet, though Epic has. Reactions to the Epic versus Apple ruling have been widely varied, with confusion over which company came out on top.

Read on AppleInsider
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Comments

  • Reply 1 of 23
    Seems reasonable. eBay still collects its fee regardless of how the auction item is paid.
    agilealtitudeaderutterrob53Bosawatto_cobrajony0
  • Reply 2 of 23
    omasou said:
    Seems reasonable. eBay still collects its fee regardless of how the auction item is paid.
    But what we really want is to make ebay allow other auction sites to use its platform. Because ebay has a monopoly on the ebay platform. /s
    aderutterrob53genovelleapplguybloggerblogFileMakerFellerDogpersonwatto_cobra
  • Reply 3 of 23
    I’m not for or against the commission though if there wasn’t value for developers with a 30% commission then developers wouldn’t develop on the platform and it would force Apple to reduce it. Simple economics. Doesn’t it say something that developers still choose in high numbers to develop on iOS?
    rob53genovellewatto_cobra
  • Reply 4 of 23
    They could try, but it would be an enormous red flag for future antitrust cases against Apple.  Antitrust law doesn't look kindly on a private company inserting itself into a transaction between partner companies and their customers.
    elijahgshareef777williamlondonwatto_cobra
  • Reply 5 of 23
    rob53rob53 Posts: 2,646member
    Hreb said:
    They could try, but it would be an enormous red flag for future antitrust cases against Apple.  Antitrust law doesn't look kindly on a private company inserting itself into a transaction between partner companies and their customers.
    What? Apple owns the store, all its apis, everything about the software except the portion where developers use the apis to create an app. Charging for a store front is a price of doing business just like in every store that sells products not made by that store. The non-Apple-supplied payment system is the only thing that came out against Apple and everyone with any understanding of how businesses works knows that you can't market a product and have someone pay someone else for it while getting it at your store. That's stupid. Apple has an absolute right to charge for the process of selling an app on their store. If you don't like this, get a different phone, there's plenty of them out there. Apple is not a monopoly no matter what some people say. They just have a user base that likes their products and are willing to pay for them. Ford sells the most amount of trucks, does that make them a monopoly? No, so how is Apple any different? Could you see someone going to a Ford dealer, picking out a truck, then telling the dealer you're not going to use their payment system and pay John Doe around the corner for the truck? They'd laugh you out of the building. This is why the judge made an improper decision. 
    applguywilliamlondonwatto_cobrajony0
  • Reply 6 of 23
    MacProMacPro Posts: 19,380member
    Sounds fair to me.

    I'd also add some system where any link leading outside of the walled garden carries warnings.
    watto_cobrajony0
  • Reply 7 of 23
    Didn’t think of that being an option. Makes sense though; Apple was paid a cut from the money Epic after  bypassing AppStore payment system. 
    watto_cobra
  • Reply 8 of 23
    crowleycrowley Posts: 8,742member
    I would question the wisdom of the people in charge at Apple if they did this. One judgement has been made against them, others will follow if they dick about in contempt of the complaints being made about them.
  • Reply 9 of 23
    crowley said:
    I would question the wisdom of the people in charge at Apple if they did this. One judgement has been made against them, others will follow if they dick about in contempt of the complaints being made about them.
    How many times do you need to have it explained to you?

    The 30% commission is not just a processing fee, it is also a charge for use of the Apple IP,  hosting infrastructure and running the App Store.

    Apple has the right to charge for this, irrespective of the payment method used.


    williamlondonDogpersonwatto_cobrajony0
  • Reply 10 of 23
    Hreb said:
    They could try, but it would be an enormous red flag for future antitrust cases against Apple.  Antitrust law doesn't look kindly on a private company inserting itself into a transaction between partner companies and their customers.
    That’s just it. They are actually Apple customers. If they were the developer’s customers they would signup on the developer site and use their platform to get the service. That is why companies like Netflix don’t pay Apple and it’s ok, their free app only provides the interface for the Netflix platform. Netflix brings their customers to Apple, not the other way around. Some call it a special deal, but it’s really a win win win. Apple’s customers gain easy access to Netflix’s platform which they are already paying for via a free app. Apple does not provide significant resources to create or maintain the service or app, Netflix gets to extend their reach. 
    Detnatorwatto_cobra
  • Reply 11 of 23
    crowleycrowley Posts: 8,742member
    BlueRock said:
    crowley said:
    I would question the wisdom of the people in charge at Apple if they did this. One judgement has been made against them, others will follow if they dick about in contempt of the complaints being made about them.
    How many times do you need to have it explained to you?

    The 30% commission is not just a processing fee, it is also a charge for use of the Apple IP,  hosting infrastructure and running the App Store.

    Apple has the right to charge for this, irrespective of the payment method used.
    I understand that perspective and Apples rights. However, it’s clear that there are others concerns about market competition in play, and  in order to fend off regulatory attention Apple would be well advised to not exercise those rights quite so voraciously and with such an eye on profit.

    Free market Puritanism may keep you ideologically satisfied, but it won’t shield you from the opinion of a judge who feels like you’re making a mockery of a ruling.
  • Reply 12 of 23
    All the pro-Apple folk sure had a different tune when it came to IE and Microsoft.
    williamlondon
  • Reply 13 of 23
    rob53rob53 Posts: 2,646member
    All the pro-Apple folk sure had a different tune when it came to IE and Microsoft.
    Totally different scenario and you know it. Microsoft forced Windows onto PC manufacturers along with IE and made it difficult for others to compete. Apple owns the hardware and software, nobody else is involved. Developers are simply an extension of Apple's product line. Developers might not like this statement but that's how it works, especially in the eyes of consumers. One stop shopping, no driver installations, nothing extra needed to run any Apple product (you could always add some things but they're not required). Microsoft, except for their Surface, licenses Windows, historically with corrupt terms, to a ton of computer manufacturers.  
    williamlondongenovelleFileMakerFellerwatto_cobrajony0
  • Reply 14 of 23
    sflocalsflocal Posts: 5,732member
    Hreb said:
    They could try, but it would be an enormous red flag for future antitrust cases against Apple.  Antitrust law doesn't look kindly on a private company inserting itself into a transaction between partner companies and their customers.
    Wrong.

    "partner companies" and "their" customers are actually Apple customers.  Nice try.

    Apple is at the behest of its customers.  You know, the ones that actually spend money on iPhones, and those "partner companies" are paying rent to be in Apple's shopping mall to solicit business from APPLE's customers that it worked really hard to get, earn loyalty, and to continue being Apple customers.

    You're justifying freeloading.
    williamlondonkurai_kagegenovelleDogpersonwatto_cobrajony0
  • Reply 15 of 23
    @rob53 ;

    "Could you see someone going to a Ford dealer, picking out a truck, then telling the dealer you're not going to use their payment system and pay John Doe around the corner for the truck? They'd laugh you out of the building. This is why the judge made an improper decision."

    I don't think this metaphor is quite right. Consider this: Ford saying "you can get your oil changed at a third party service center, but we are collecting 30% of whatever you pay them,,"
    williamlondonHreb
  • Reply 16 of 23
    rob53rob53 Posts: 2,646member
    @rob53 ;

    "Could you see someone going to a Ford dealer, picking out a truck, then telling the dealer you're not going to use their payment system and pay John Doe around the corner for the truck? They'd laugh you out of the building. This is why the judge made an improper decision."

    I don't think this metaphor is quite right. Consider this: Ford saying "you can get your oil changed at a third party service center, but we are collecting 30% of whatever you pay them,,"
    Nope, your analogy doesn't work. Epic still wants to sell through the App Store but not pay Apple the 30% commission (theirs would be less because of quantity of sales) instead handling the payment directly. In your case, Ford sends you to a non-Ford owner service center to get the work done. That's totally different and the service center would never do this, they'd laugh at you and tell you to GTH. 
    williamlondonDogpersonwatto_cobrajony0
  • Reply 17 of 23
    crowley said:
    BlueRock said:
    crowley said:
    I would question the wisdom of the people in charge at Apple if they did this. One judgement has been made against them, others will follow if they dick about in contempt of the complaints being made about them.
    How many times do you need to have it explained to you?

    The 30% commission is not just a processing fee, it is also a charge for use of the Apple IP,  hosting infrastructure and running the App Store.

    Apple has the right to charge for this, irrespective of the payment method used.
    I understand that perspective and Apples rights. However, it’s clear that there are others concerns about market competition in play, and  in order to fend off regulatory attention Apple would be well advised to not exercise those rights quite so voraciously and with such an eye on profit.

    Free market Puritanism may keep you ideologically satisfied, but it won’t shield you from the opinion of a judge who feels like you’re making a mockery of a ruling.
    The judge actually acknowledged Apple’s right to levy a charge, irrespective of the payment method.


    williamlondonkurai_kageBosaDogpersonwatto_cobrajony0
  • Reply 18 of 23
    davidwdavidw Posts: 1,329member
    @rob53 ;

    "Could you see someone going to a Ford dealer, picking out a truck, then telling the dealer you're not going to use their payment system and pay John Doe around the corner for the truck? They'd laugh you out of the building. This is why the judge made an improper decision."

    I don't think this metaphor is quite right. Consider this: Ford saying "you can get your oil changed at a third party service center, but we are collecting 30% of whatever you pay them,,"
    That's not even close to a proper analogy. 

    Ford does not offer any assistance, equipment or supply the oil, for a third party oil change service. Thus do not deserve to collect a commission.

    Here, Apple is operating an App Store, develop and maintain the OS that developers rely on to run their apps, offer assistance in making sure the app runs properly in iOS and spend RD money to attract consumers to use iOS devices. Apple deserve to collect a commission from developers that makes money selling apps on iOS to Apple customers. Otherwise Apple can charge rent, like a shopping mall, where the developer is not guarantee to make a profit, if they don't make enough to pay the rent. 


    It's more like this. A third party oil change service wants Ford to supply them with the space, equipment and oil, so they can make money changing the oil for Ford customers, but don't want to pay Ford a commission.  

    genovellewatto_cobrajony0
  • Reply 19 of 23
    Actually the Judge wrote Apple can do annual Audits to collect their commission if people don’t do payment with them 
    Dogpersonwatto_cobra
  • Reply 20 of 23
     Even in the absence of IAP, Apple could still charge a commission on developers. It would simply be more difficult for Apple to collect that commission. .... Right now it’s 30 %. The judge even told Apple they can start doing annual audits if they don’t have IAP anymore to collect

    Judge Wrote:

    In such a hypothetical world, developers could potentially avoid the commission while benefitting from Apple’s innovation and intellectual property free of charge. The Court presumes that in such circumstances that Apple may rely on imposing and utilizing a contractual right to audit developers annual accounting to ensure compliance with its commissions, among other methods. Of course, any alternatives to IAP (including the foregoing) would seemingly impose both increased monetary and time costs to both Apple and the developers.
    Dogpersonwatto_cobra
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