Large US developers are avoiding third-party App Store alternate payment plans

AppleInsider

No major US app developers have chosen to opt in to new App Store rules allowing outside links for payments, because there is effectively no savings, Apple told a judge during testimony on Friday.

Epic's battle with Apple continues

Apple had revised its rules following the original Epic lawsuit, which Apple largely won in 2021. The one area where Judge Yvonne Gonzalez-Rogers had ruled in Epic's favor in that case was antisteering -- the prohibition on using outside payment processors.

After some time spent developing the new rules, it began allowing developers to include outside payment links in App Store listings in January 2024.

To date, in an accounting of the hearing published late on Friday on Bloomberg, Apple has received just 38 applications out of over 65,000 registered app developers who offer in-app purchases. None of the 38 were from major companies.

The primary reason, according to testimony from developers, is that the fees would essentially be the same or potentially higher under the third-party option. Rather than the App Store's 15 percent to 30 percent commissions, Apple would instead require a 27 percent fee for the use of the App Store platform.

The fee from Apple does not include the cost of paying a third-party payment processor, which would likely bring the total fees to over 30 percent, the court heard on Friday. Apple's Vice President of Finance, Alex Roman, admitted in testimony that Apple did not look into the cost to developers of using a third-party payment processor when revising its rules.

Judge Gonzalez-Rogers then criticized the company's lack of that consideration.

"It sounds to me as if the goal was to then maintain the business model and revenue you had in the past," she said. Epic has complained to the court that Apple is not abiding by the terms of the previous decision.

Apple maintains it has followed the guidelines provided in Gonzalez's original ruling, but the judge seemed skeptical. Upon hearing that the committee that revised the rules -- which included Apple CEO Tim Cook -- had failed to research the total cost to developers of using outside payment processors, she said "I'm looking for data and it sounds like you all made lots of decisions without data."

The fee and the lack of data on total developer costs seems to contradict Apple's original claim that that changes it made would lower prices for app users. Apple has another opportunity to sway the judge's view, as the hearing will resume the week of May 13.



Read on AppleInsider

Luis.A.Masanti

My two cents… worthless as usual.

1— It seems to me that Apple ’reduced’ its commission by the amount it costs Apple to make the payment transaction… obviously less that for other companies in view of its size.
If the individual payment systems charge more to developers… it is not Apple's problem.

2— As far as I know… a public traded company has the obligation to get the best… revenues… to its shareholders.
Where comes the fact that tha Judge asks to ’protect’ developers' revenues?

raymondai

Anyone do business in my theme park has to pay a sort of fee due to I have to handle the transaction, what the customer trust, now you say it is not fair and I take too much from it, just because my theme park is too success, too “public”. OK, according to the judgement, you can do business in my theme park now and handle the transaction fee on your own, and it is more expensive than before, so, it is my fault?
Why don’t anyone rule the transaction company outside to specially lower the fee of the transaction from my theme park? They are not monopoly? Not too “public”, or rule them share their business with me for fair play?
I have to consider the total fee not only control by me? So, if one day, those transaction company raise the fee by 1%, I have to lower mine for justice? 
I don’t get it.

nubus

Luis.A.Masanti said:

2— As far as I know… a public traded company has the obligation to get the best… revenues… to its shareholders.
Where comes the fact that tha Judge asks to ’protect’ developers' revenues?

Investors have the right to be heard (voting) and the board is in control, but investors don't want only profit. Apple installing a local fossil fuel plant at Apple Park and doing "100% recycled materials" isn't revenue maximizing. Offering discounts to all students isn't only about getting young people hooked on the devices - then the discount would be for all young people. The board could move all production back to the US.

foregoneconclusion

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

davidmalcolm

I suspect that the judge wanted to force Apple to allow for steering outside of apps for credit card payments, but they didn’t want to explicitly mandate that Apple stop trying to make any money off those developer partners. I think the judge knows full well that they are on shaky ground trying to force Apple not to make any money off third party apps. 

I can’t think of any other business where courts have mandated that companies have to perform some service for free. 

It would be interesting to see a lawsuit force Google to provide the absolute best search results they can, even if that means the ads get sorted further down. 

genovelle

The key is that Apple does allow those who offer Apps to access platforms that don’t use Apple APIs and bring their own customers or offers free ad supported apps onto the App Store with no fees. Most apps are actually free, supported by paid apps from Apple and 3rd parties. So if you want access to the store, you either pay their standard profit or bring value to Apple’s customers with free Apple Platform apps that you are not profiting from outside of Apple. 

danox

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

No one believes it cost money because it's so easy when you press a button on a computer its like magic.  

danox

How do you ultimately communicate or even use an Apple device/computer and not use an Apple API if you want to do something with their tech? The only way out is to buy a different device/ecosystem and use their APIs Windows/Android and that brings you back to square one because you are now using theirs.

https://en.wikipedia.org/wiki/API. (Back to school for me the judge/government and everyone not in tech) The average tech/software company/programmer does a lot of background work just to get out of the front door and out the driveway wow.......

davidw

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not so much that Apple has "negotiated" a better transaction fee rate with the  CC banks, but that Apple has managed to bring the average cost of an iTunes account transaction to 3% of the purchase amount.

One must remember that CC is not the only way iTunes accounts are funded or pre-funded. Account holders (like me) use gift cards to keep a balance in their account and thus Apple pays no CC transaction fee on their purchases. Others iTunes account are tied to a debit card. Those iTunes account purchases only cost Apple a small fee that is not based on the amount of the purchase. Other accounts, specially kids accounts that are managed by their parents, are pre-funded with a balance using a CC, PayPal, debit card or even Apple Pay, maybe just once a month or when the balance runs low. Those  accounts do not incur a CC transaction fee for Apple with purchases.

So it shouldn't be a surprise to any one that it cost Apple only an average of 3% of the purchase amount to handle the payment process. I'll be surprise of it's even that much, (3% of purchase amount) and that Apple is giving the developers a break by giving them more of a discount than it actually cost Apple to handle ITunes payment. If only 3% of their commission was to cover their payment processing cost, then their commission should only be reduced by 3%, if Apple do not incur the cost of payment processing.  Why should Apple have to subsidize developers own payment processing cost? 

There's another trick that Apple use to save on CC transaction fees. Though it's way more effective with iTunes Music Store purchases. Steve Jobs once told in an interview on how Apple was able to lower their CC transaction fee with iTunes accounts, by only billing the account holder once a month for CC music purchases. Included in every CC purchase transaction fee is also a small "per transaction fee" that is fixed, no matter the amount of the purchase. It's like $.10 per transaction. Now $.10 is not a big deal with a $10 purchase but it's 10% of a $.99 song purchase from the ITunes Music Store. So what Apple would do is wait until the end of the CC billing period of the account holder, to charge their CC for all their music purchased during the month. This way Apple only incur one "per transaction fee" for all the music the account holder purchased that month.

For instance, if an iTunes Music Store customer purchased ten $.99 songs at five different times during the month, Apple would charge their CC just once for $9.90. So Apple ended up paying just one CC "per transaction fee" of $.10, instead of $.50 for five separate CC purchases. Of course the customer still see five separate purchases in their iTunes account but only one $9.90 charge for iTunes on their CC bill. When the vast majority of 100's of millions of iTunes Music Store customers are just buying one or just a few songs at a time but several times a month, the saving adds up rather quickly.   

tenthousandthings

davidw said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not so much that Apple has "negotiated" a better transaction fee rate with the  CC banks, but that Apple has managed to bring the average cost of an iTunes account transaction to 3% of the purchase amount.

One must remember that CC is not the only way iTunes accounts are funded or pre-funded. Account holders (like me) use gift cards to keep a balance in their account and thus Apple pays no CC transaction fee on their purchases. Others iTunes account are tied to a debit card. Those iTunes account purchases only cost Apple a small fee that is not based on the amount of the purchase. Other accounts, specially kids accounts that are managed by their parents, are pre-funded with a balance using a CC, PayPal, debit card or even Apple Pay, maybe just once a month or when the balance runs low. Those  accounts do not incur a CC transaction fee for Apple with purchases.

So it shouldn't be a surprise to any one that it cost Apple only an average of 3% of the purchase amount to handle the payment process. I'll be surprise of it's even that much, (3% of purchase amount) and that Apple is giving the developers a break by giving them more of a discount than it actually cost Apple to handle ITunes payment. If only 3% of their commission was to cover their payment processing cost, then their commission should only be reduced by 3%, if Apple do not incur the cost of payment processing.  Why should Apple have to subsidize developers own payment processing cost? 

There's another trick that Apple use to save on CC transaction fees. Though it's way more effective with iTunes Music Store purchases. Steve Jobs once told in an interview on how Apple was able to lower their CC transaction fee with iTunes accounts, by only billing the account holder once a month for CC music purchases. Included in every CC purchase transaction fee is also a small "per transaction fee" that is fixed, no matter the amount of the purchase. It's like $.10 per transaction. Now $.10 is not a big deal with a $10 purchase but it's 10% of a $.99 song purchase from the ITunes Music Store. So what Apple would do is wait until the end of the CC billing period of the account holder, to charge their CC for all their music purchased during the month. This way Apple only incur one "per transaction fee" for all the music the account holder purchased that month.

For instance, if an iTunes Music Store customer purchased ten $.99 songs at five different times during the month, Apple would charge their CC just once for $9.90. So Apple ended up paying just one CC "per transaction fee" of $.10, instead of $.50 for five separate CC purchases. Of course the customer still see five separate purchases in their iTunes account but only one $9.90 charge for iTunes on their CC bill. When the vast majority of 100's of millions of iTunes Music Store customers are just buying one or just a few songs at a time but several times a month, the saving adds up rather quickly.   

That’s a good point, and just to be clear, that trick is something Apple also does with in-app gaming transactions, the focus of the Epic ruling.

In addition, as I understand it, game developers receive their share of the in-app transaction immediately. Apple fronts them money it hasn’t collected yet. 

Apple takes a risk there, and gets a reward when things go smoothly. If things go wrong, it’s Apple’s problem. The developer has already been paid. 

I think most developers, especially those handling large numbers of small transactions, know all this and don’t want the headache. Like you say, it’s not just a negotiation with a bank, it’s more complicated than that. Epic is an outlier, they already have all this stuff in place. But for others, it’s not that simple.

gatorguy

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.  It's a good time for Mr.Cook to remember his semi-famous comment to the US Congress: “We not only comply with the laws but we comply with the spirit of the laws,” he said.


Apple won't win this one. 

tundraboy

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.  It's a good time for Mr.Cook to remember his semi-famous comment to the US Congress: “We not only comply with the laws but we comply with the spirit of the laws,” he said.


Apple won't win this one. 

Last I heard, the US is basically, still a free enterprise economy, so unless you are a regulated utility or have been declared by the courts to be a monopoly, no one, not even the government, can dictate the prices or commission rate that you charge.  Apple has no obligation to reduce its commission rate just to make high-cost payment providers competitive. That completely turns the free enterprise system on its head by rewarding inefficient companies.  If a judge doesn't understand this, he's not competent enough to preside over the case, and especially with a Supreme Court leaning the way it does, Apple will win this one.

27% sounds like a steep commission but compared against the margins over wholesale that physical stores charge, 27% is actually on the low side.

gatorguy

tundraboy said:

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.  It's a good time for Mr.Cook to remember his semi-famous comment to the US Congress: “We not only comply with the laws but we comply with the spirit of the laws,” he said.


Apple won't win this one. 

Last I heard, the US is basically, still a free enterprise economy, so unless you are a regulated utility or have been declared by the courts to be a monopoly, no one, not even the government, can dictate the prices or commission rate that you charge.  Apple has no obligation to reduce its commission rate just to make high-cost payment providers competitive. That completely turns the free enterprise system on its head by rewarding inefficient companies.  If a judge doesn't understand this, he's not competent enough to preside over the case, and especially with a Supreme Court leaning the way it does, Apple will win this one.

27% sounds like a steep commission but compared against the margins over wholesale that physical stores charge, 27% is actually on the low side.

"He" is a "she", Judge Yvonne Gonzalez-Rogers, and SCOTUS has already denied hearing Apple's appeal of her decision re: alternative payments. 

Marvin

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.

Apple's doing exactly the same for the 27% (and it's 12% for non-millionaires). This is a commission for being part of a well-curated store that serves 1.5 billion customers. The 3% is a transaction fee. Google's discount is similar:

https://techcrunch.com/2022/09/02/google-will-allow-alternative-payment-systems-for-play-store-in-more-countries/

"The company gave a 3% discount on fees for developers using third-party billing in the EEA region. With the new announcement, Google is offering a 4% discount on fees to developers."

gatorguy

Marvin said:

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.

Apple's doing exactly the same for the 27% (and it's 12% for non-millionaires). This is a commission for being part of a well-curated store that serves 1.5 billion customers. The 3% is a transaction fee. Google's discount is similar:

https://techcrunch.com/2022/09/02/google-will-allow-alternative-payment-systems-for-play-store-in-more-countries/

"The company gave a 3% discount on fees for developers using third-party billing in the EEA region. With the new announcement, Google is offering a 4% discount on fees to developers."

Apple is already under a judge's order. What happens on another platform isn't immediately relevant.

EDIT: Google is operating under the premise that if Apple can game the ruling and maintain their prior commission, then it's leaving money on the table to do otherwise. If Apple ends up on the wrong side of the judge, and I'm confident they will, I fully expect Google to roll back their alternative payment commission voluntarily; no court order to do so is required. Simply reading the landscape is answer enough.

Marvin

gatorguy said:

Marvin said:

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.

Apple's doing exactly the same for the 27% (and it's 12% for non-millionaires). This is a commission for being part of a well-curated store that serves 1.5 billion customers. The 3% is a transaction fee. Google's discount is similar:

https://techcrunch.com/2022/09/02/google-will-allow-alternative-payment-systems-for-play-store-in-more-countries/

"The company gave a 3% discount on fees for developers using third-party billing in the EEA region. With the new announcement, Google is offering a 4% discount on fees to developers."

Apple is already under a judge's order. What happens on another platform isn't immediately relevant.

EDIT: Google is operating under the premise that if Apple can game the ruling and maintain their prior commission, then it's leaving money on the table to do otherwise. If Apple ends up on the wrong side of the judge, and I'm confident they will, I fully expect Google to roll back their alternative payment commission voluntarily; no court order to do so is required. Simply reading the landscape is answer enough.

This is the entirety of Apple's and Google's app store revenue stream at risk. If external payment options had 0 commission, all that would need to happen is a payment system like Paypal comes along, offers them a small processing fee and nearly every developer would use it. This would cost Apple and Google over $100 billion. Not overnight but it would happen quite quickly as the biggest app developers would move first. The store commission is what pays for the whole operation, they have a right to charge it and for most developers a 12% fee is a small amount.

This issue is only about payment competition for the transaction fee being tied to Apple's payment processor. Apple's service here is 3%, that's all they need to remove. It's not Apple's problem if other payment processors charge higher fees. If they charge more then it shows Apple's option is fair and competitive.

gatorguy

Marvin said:

gatorguy said:

Marvin said:

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.

Apple's doing exactly the same for the 27% (and it's 12% for non-millionaires). This is a commission for being part of a well-curated store that serves 1.5 billion customers. The 3% is a transaction fee. Google's discount is similar:

https://techcrunch.com/2022/09/02/google-will-allow-alternative-payment-systems-for-play-store-in-more-countries/

"The company gave a 3% discount on fees for developers using third-party billing in the EEA region. With the new announcement, Google is offering a 4% discount on fees to developers."

Apple is already under a judge's order. What happens on another platform isn't immediately relevant.

EDIT: Google is operating under the premise that if Apple can game the ruling and maintain their prior commission, then it's leaving money on the table to do otherwise. If Apple ends up on the wrong side of the judge, and I'm confident they will, I fully expect Google to roll back their alternative payment commission voluntarily; no court order to do so is required. Simply reading the landscape is answer enough.

This is the entirety of Apple's and Google's app store revenue stream at risk. If external payment options had 0 commission, all that would need to happen is a payment system like Paypal comes along, offers them a small processing fee and nearly every developer would use it. This would cost Apple and Google over $100 billion. Not overnight but it would happen quite quickly as the biggest app developers would move first. The store commission is what pays for the whole operation, they have a right to charge it and for most developers a 12% fee is a small amount.

This issue is only about payment competition for the transaction fee being tied to Apple's payment processor. Apple's service here is 3%, that's all they need to remove. It's not Apple's problem if other payment processors charge higher fees. If they charge more then it shows Apple's option is fair and competitive.

Marvin, it's not about the 3% payment processing fee. Several articles outside of AppleInsider report on what the issue truly is, so it's easy enough to get familiar with, but in a nutshell, it's the up to 27% fee Apple tacks on top of it. 
https://www.courthousenews.com/judge-probes-epic-games-claims-apple-violated-injunction-on-app-store-rules/

If you have any interest in a more detailed report on the Judg's line of questioning and Apple's response, this Bloomberg article has more of the nitty-gritty:
https://www.bloomberg.com/news/articles/2024-05-10/apple-says-no-major-app-developers-accept-new-outside-payments?sref=10lNAhZ9
One excerpt: 
“You’re telling me a thousand people were involved and not one of them said maybe we should consider the cost” to the developers? the judge said. “Not a single person raised that issue, of the thousand that were involved?”

My guess is the judge will settle in on something south of 10% tack-on for the IP.

davidw

gatorguy said:

Marvin said:

gatorguy said:

Marvin said:

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.

Apple's doing exactly the same for the 27% (and it's 12% for non-millionaires). This is a commission for being part of a well-curated store that serves 1.5 billion customers. The 3% is a transaction fee. Google's discount is similar:

https://techcrunch.com/2022/09/02/google-will-allow-alternative-payment-systems-for-play-store-in-more-countries/

"The company gave a 3% discount on fees for developers using third-party billing in the EEA region. With the new announcement, Google is offering a 4% discount on fees to developers."

Apple is already under a judge's order. What happens on another platform isn't immediately relevant.

EDIT: Google is operating under the premise that if Apple can game the ruling and maintain their prior commission, then it's leaving money on the table to do otherwise. If Apple ends up on the wrong side of the judge, and I'm confident they will, I fully expect Google to roll back their alternative payment commission voluntarily; no court order to do so is required. Simply reading the landscape is answer enough.

This is the entirety of Apple's and Google's app store revenue stream at risk. If external payment options had 0 commission, all that would need to happen is a payment system like Paypal comes along, offers them a small processing fee and nearly every developer would use it. This would cost Apple and Google over $100 billion. Not overnight but it would happen quite quickly as the biggest app developers would move first. The store commission is what pays for the whole operation, they have a right to charge it and for most developers a 12% fee is a small amount.

This issue is only about payment competition for the transaction fee being tied to Apple's payment processor. Apple's service here is 3%, that's all they need to remove. It's not Apple's problem if other payment processors charge higher fees. If they charge more then it shows Apple's option is fair and competitive.

Marvin, it's not about the 3% payment processing fee. Several articles outside of AppleInsider report on what the issue truly is, so it's easy enough to get familiar with, but in a nutshell, it's the up to 27% fee Apple tacks on top of it. 
https://www.courthousenews.com/judge-probes-epic-games-claims-apple-violated-injunction-on-app-store-rules/

If you have any interest in a more detailed report on the Judg's line of questioning and Apple's response, this Bloomberg article has more of the nitty-gritty:
https://www.bloomberg.com/news/articles/2024-05-10/apple-says-no-major-app-developers-accept-new-outside-payments?sref=10lNAhZ9
One excerpt: 
“You’re telling me a thousand people were involved and not one of them said maybe we should consider the cost” to the developers? the judge said. “Not a single person raised that issue, of the thousand that were involved?”

My guess is the judge will settle in on something south of 10% tack-on for the IP.

You keep saying  (about the 27%) .... "that Apple tack on top of it" ...... as if the developers were not paying that 27% "fee" when Apple do process their payments. Apple is not "tacking" anything on top of anything. Apple is reducing their commission by what it cost them to process the payments and the 27% (or 12%) is what remains. You're not one those, like Sweeney, that think that the only thing developers get out of paying the commission is Apple processing the payment ... are you?  And let us not forget that Sweeney has always claimed that it cost Apple no more than 3% of the purchase amount, to process payment. So what's his beef when Apple deduct 3% from their 30% commission for those developers that wants to process their own payments? ,

The original ruling had to do with Apple anti-steering policies and nothing to do with the commission. Even if the Judge thought Apple commission might be kind of high, she didn't think it was up to the courts to decide whether Apple have the rights to charge what it can. Unless it can be proven that Apple has a monopoly under US anti-trust laws. Show me where in her original ruling, where Apple would not be able to collect a commission if the developers were to process their own payments outside their apps. 

Right now, the only reason why the 27% is in question is that Epic lawyers are claiming that the 27% represent a barrier to developers that want to set up their own payment system. The Judge have not agreed with Epic lawyers about this. What the Judge seem to agree with is that Apple placing warnings about the danger of paying outside the app puts the developers that wants to use their own payment system at a disadvantage. The claim being, with the Judge agreeing, that if the link is already in the app and the app is already approved by Apple, then the link should be safe and no warning needed about clicking on it. This is where the Judge seems to be agreeing with Epic that Apple is not in full compliance of her initial ruling. But the Judge in no way made up her mind, that Epic claim that the 27% is a barrier to developers setting up their own payment system. She's only going to take that into consideration. The commission was never part of her original ruling.

If the Judge was concern about Apple high commission in her initial rulings, then why did she rule that Epic must pay Apple $6M for the 30% commission on the money they made, when they provided an outside link for payment that avoided the commission. Which got Epic kicked out of the Apple App Store.

This is exactly the same argument that Epic used against Google. Epic claimed that because Google places warnings on the danger of sideloading and downloading from third party app stores, Google is favoring their own Google Play Store. But if Google claim that Android is safe because of all the scanning they do to detect malware, before any apps are installed, whether from sideloading, third party store or Google Play, then the warnings are not needed. And even you. on many occasions, pointed out how Google had made Android almost as safe as iOS because all the scanning for malware that they do. 

No way that the Judge will rule on how much Apple can charge for the commercial use of their IP. No way will Microsoft, Amazon, Google, Sony, Nintendo, Valve, Amazon. eBay, Qualcomm, Oracle, Salesforce  and many many others, that derive revenue from charging for commercial use of their IP, will allow this Federal court to set a precedent for other lawsuits by others that think they are paying too much for the use of some one else's IP, to profit from. The only time the courts step in is with SEP and FRAND or when a monopoly is involve. Which do not apply here.  We are not the EU.  

BTW- only 3% of iOS developers are paying the 30% commission and 27% if they process their own payments. 97% of iOS developers are paying 15% commission and 12% if they process their own payments. So 0ver 95% of iOS developers are only paying about 10% commission for the use of Apple IP to profit from.  And only a handful of the 3% of developers that are paying 30%, are complaining about having to pay 30% when they have made millions if not billions of dollars, from using Apple IP.  

cropr

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

This depends where you are living.   In the US this might be the case, but in Europe this is no difference between online transactions and physical transactions fees.   

gatorguy

davidw said:

gatorguy said:

Marvin said:

gatorguy said:

Marvin said:

gatorguy said:

foregoneconclusion said:

Question: why would developers complain about Apple handling the payment processing if they can't negotiate a better rate than 3% themselves? The reality for credit card processing fees is that online transactions are ALWAYS going to have higher cost than physical transactions with a card. That's how the banks have set it up. 

It's not the 3% fee that's an issue. It's the attached 27% cut of the gross for Apple that the company insists on. Apple gets the same cut as before while doing far less to deserve it.

Apple's doing exactly the same for the 27% (and it's 12% for non-millionaires). This is a commission for being part of a well-curated store that serves 1.5 billion customers. The 3% is a transaction fee. Google's discount is similar:

https://techcrunch.com/2022/09/02/google-will-allow-alternative-payment-systems-for-play-store-in-more-countries/

"The company gave a 3% discount on fees for developers using third-party billing in the EEA region. With the new announcement, Google is offering a 4% discount on fees to developers."

Apple is already under a judge's order. What happens on another platform isn't immediately relevant.

EDIT: Google is operating under the premise that if Apple can game the ruling and maintain their prior commission, then it's leaving money on the table to do otherwise. If Apple ends up on the wrong side of the judge, and I'm confident they will, I fully expect Google to roll back their alternative payment commission voluntarily; no court order to do so is required. Simply reading the landscape is answer enough.

This is the entirety of Apple's and Google's app store revenue stream at risk. If external payment options had 0 commission, all that would need to happen is a payment system like Paypal comes along, offers them a small processing fee and nearly every developer would use it. This would cost Apple and Google over $100 billion. Not overnight but it would happen quite quickly as the biggest app developers would move first. The store commission is what pays for the whole operation, they have a right to charge it and for most developers a 12% fee is a small amount.

This issue is only about payment competition for the transaction fee being tied to Apple's payment processor. Apple's service here is 3%, that's all they need to remove. It's not Apple's problem if other payment processors charge higher fees. If they charge more then it shows Apple's option is fair and competitive.

Marvin, it's not about the 3% payment processing fee. Several articles outside of AppleInsider report on what the issue truly is, so it's easy enough to get familiar with, but in a nutshell, it's the up to 27% fee Apple tacks on top of it. 
https://www.courthousenews.com/judge-probes-epic-games-claims-apple-violated-injunction-on-app-store-rules/

If you have any interest in a more detailed report on the Judg's line of questioning and Apple's response, this Bloomberg article has more of the nitty-gritty:
https://www.bloomberg.com/news/articles/2024-05-10/apple-says-no-major-app-developers-accept-new-outside-payments?sref=10lNAhZ9
One excerpt: 
“You’re telling me a thousand people were involved and not one of them said maybe we should consider the cost” to the developers? the judge said. “Not a single person raised that issue, of the thousand that were involved?”

My guess is the judge will settle in on something south of 10% tack-on for the IP.

You keep saying  (about the 27%) .... 

No way that the Judge will rule on how much Apple can charge for the commercial use of their IP. 

Surprise, our opinions differ. The Judge's ruling will come down soon enough.