For the first situation we could get cheaper apps, as developers could reduce the price of the apps themselves or the price of In App Purchases, something good for the consumer.
I see a 0% possibility of developers lowering the price of their apps to account for whatever discount this might force Apple to provide. Epic only lowered their price as a way to bait Apple and Google into this lawsuit. Those prices will go right back up if they receive what they want.
If Epic wants to characterize Apple as a monopoly because they control their own App Store, then Epic is a monopoly because they control FortNite. Epic should be broken up and copies of Fortnite given to several other game developers, so that Epic's Fortnite monopoly is finally ended!
In some seriousness, though... I actually think Apple would be wise to allow other app stores on their platforms, at least sort of.
Other app stores could be authorized to operate on iOS, and perhaps pay Apple a much smaller share of revenue than the Apple App Store gets. By disassociating the Apple brand from these other stores, Apple could get a share of revenue that hey otherwise might never get, because they could lower their content standards. In other words, Apple could finally make money off of porn! Also, Apple could require that other App Store operators accept liability for anything that goes wrong with the apps sold through their stores.
Meanwhile, Apple could more aggressively curate their own App Store for content quality, so that their store truly is the best.
For the first situation we could get cheaper apps, as developers could reduce the price of the apps themselves or the price of In App Purchases, something good for the consumer.
I see a 0% possibility of developers lowering the price of their apps to account for whatever discount this might force Apple to provide. Epic only lowered their price as a way to bait Apple and Google into this lawsuit. Those prices will go right back up if they receive what they want.
Not sure Epic has lowered anything. Aren’t they actually making more money? Rounding figures...a $10 Apple store price nets Epic $7 after the App Store commission. The app-Store-busting direct Epic price is $7.99 right?
The day I get to dictate what price I pay to sell stuff on eBay, Amazon, Etsy, Poshmark, Walmart, a flea market, etc. to the owners of those marketplaces is the day I side with these developers. Until then they can all take a flying leap.
>If anything happens, more than likely it will involve services that users can subscribe to...
Apple will be forced to allow developers to direct users to their websites where they can then subscribe without going through Apple's payment system. That will be the first step.
Why in the world would Apple agree to this? Would you want to advertise a product to a billion of customers and spend countless dollars on maintaining an app store, all without seeing a cent in return? Why should any company be expected to do this? Lunacy.
Very well written piece. You paint a pretty good picture that Epic orchestrated this entire “grievance” quite intentionally.
It is almost as if... Now that the Fortnite bubble has burst that Epic wants someone to buy them out. Then the bosses can retire to a tropical island on the proceeds.
A world where public sentiment (i.e. public opinion ignorantly based on deceptive PR stunts) carries more weight than law, to me, seems like a much worse-off place.
Epic will lose tens of millions of dollars in revenues as this works its way through the courts over the next two years. And each day, Fortnite the game will become more irrelevant and this juvenile PR campaign will receive less attention. And at the end of it all, Epic will wind up losing the legal case
Not even a small speed bump for Apple and Google. Horrors, people will note that all of these companies are just trying to earn a buck like everyone else (and doing a good job at it), before going back to enjoying their products.
On August 13, Epic, developer of the wildly popular battle-royale game Fortnite, began baiting Apple and Google into legal battles. The game developer is playing a game, and it is a strategic one with all to play for.
Playing Fortnight on iOS with a game controller
It started when Epic announced that they would be permanently lowering the prices on in-game purchases for Fortnite. Players on console, Mac, and PC, would automatically get the discount on all future purchases.
Those on mobile platforms -- such as iOS and Android users -- were given two options for payments. Players would be able to purchase through Apple or Google's in-app payment systems, or they would be able to pay Epic directly.
Epic incentivized players to pay them directly by offering substantial discounts over buying items through the App Store or Google Play's payment systems. Paying through Apple or Google would negate the savings, and players would be charged pre-discount prices.
Then Epic justified the move by saying that companies like Amazon and Best Buy were allowed to receive direct payments from customers without going through Amazon or Google.
Of course, this was in direct violation of both Apple and Google's terms of service. While it is true that companies like Best Buy and Amazon do take direct payments, they also offer customers physical goods and services. Physical products are stored, processed, and shipped through their networks.
Yet, digital goods are different. Digital goods are housed within Apple's well-known, easily accessible App Store. Digital goods are monitored by Apple for suspicious activity to keep Apple's consumer base safe.
Apple, for example, requires all digital goods to be subjected to a 30% commission fee -- a rule that has been in place for over a decade. The fee covers the cost of bandwidth and the routine safety checks, plus a courtesy fee for allowing the app to be hosted on the App Store.
The 30% rule is relatively standard for digital services -- Google Play charges the same fee, as does Steam, Epic's primary desktop gaming competitor.
Unsurprisingly, within eight hours, Apple had kicked Fortnite off of the App Store, and later publicly encouraged Epic to work with them to bring the game back to iOS. Shortly after, Google Play also removedFortnite, citing that they'd also violated Google's terms of service.
It was a calculated move on Epic's part. The CEO, Todd Sweeney, has long been critical of these commission fees. In July, he went on record calling Apple's App Store an "absolute monopoly."
Later, Fortnite tweeted that they would be premiering a new short animation titled "Nineteen Eighty-Fortnite," a less-than-subtle reference to Apple's 1984 Super Bowl commercial (and George Orwell's dystopian, social science fiction novel).
Fortnite Party Royale will premiere a new short: Nineteen Eighty-Fortnite. Join us at 4PM ET. pic.twitter.com/BWvndK3gDt
Epic then announced that they had begun the legal process to sue Apple in response to the company removing Fortnite from the App Store, less than one hour after Apple had removed the game.
The complaint alleged that Apple had become a "behemoth seeking to control markets, block competition and stifle innovation." It claimed that the company's size and reach "far exceeds that of any technology monopolist in history."
Epic later filed paperwork against Google over alleged anti-competitive practices. Like its fight with Apple, the developer paints a picture of duplicity -- mocking Google's already ridiculed "Don't Be Evil" motto -- in its suit.
Understanding Epic's motivations are critical. While iOS accounts for a minority of Fortnite players, they account for a tremendous amount of revenue in the App Store.
In June, Finboldreported that Fortnite was the top earner in the App Store, averaging $2.75 million in daily revenue.
What happens next
Epic's lawsuit does not ask for a jury trial, and while only they can know their reasoning, it looks like they want the trial by jury to happen outside the courts. They want public opinion to go against Apple.
The suit does, though, keep repeating that Apple has "injured" the games company by its actions. Apple's lawyers are surely going to just spread their arms at that one. They'll point out that Epic has profited from the App Store for over two years.
Apple will doubtlessly say that Epic therefore knew the rules well enough to make money -- and now well enough to make certain that it was removed from the store on schedule.
Somewhere within Epic there is a game plan or maybe just a Gantt chart which laid out when it would be ready to launch the suit, when the video would be finished, and so when it had to be booted out of the app store.
You have to assume that the plan continues far beyond this stage, and that Epic has a strategy that it is following. It's an expensive strategy, with this amount of money being lost each day it's off the App Stores, but then all marketing costs money.
This truly could be a marketing expense, and if so, there will be more spent on the campaign later.
Apple may play its regular card for getting out of monopoly arguments and point out that Fortnite earns much more from its other platforms. Apple could also make a case that it is the one being injured, and even that it might be in retaliation for trade disputes.
Chinese firm Tencent owns 40% of Epic, and Tencent is one of the firms affected by the current US Administration's various policies.
But whether it tries that China defense or not, the way this has played out so far makes the next stage reasonably likely. Apple is going to win this legal case -- it's even likely that Epic will end up having to pay costs.
Even if that is not what will certainly happen, though, and even if it is not what Epic wants for any reason, the company knows it's likely and is ready for it. It will be ready to pay up if it has to, but it will also be ready to make its next move.
The question then is not really what that specific next move is, but what the overall aim of the game could be. If Apple is likely to win the legal battle, it is also likely to lose in the court of public appeal.
In a two-horse argument, you can win support by making people disapprove of your rival. If it ends up with Apple seeming like the bad guy, Epic will automatically be the good one.
That's the point when Epic will launch its own App Store.
How would consumers not win? Say Epic wins and they get the fee reduced, the ability for direct payments, or more hopefully, we get full sideloading on iOS. For the first situation we could get cheaper apps, as developers could reduce the price of the apps themselves or the price of In App Purchases, something good for the consumer. For the second we got proof that it would be better for the consumer, as the price of V-Bucks was cheaper with the option for directly purchasing the V-Bucks from Epic rather than through Apple's processor. For the third consumers wouldn't be beholden to the App Store. Stadia and Xcloud would be usable on iOS, Much more open source development could occur on iOS because developers wouldn't have to subscribe to a $100 fee to host their apps on the store. Hell, with sideloading we could get app stores that actually show off more than regurgitate the top apps of each category.
Oh, please! Do you think, an in-game purchase is going to drop from $.99 to $.85, for example and drive more sales?! No. It will remain a buck and they'll stay exactly the same only Apple loses part or all of their service fee. These clowns are looking for free shelf space in the App store.
The only people who will benefit, in the long run, will be scam artists creating bogus apps that will rip people off, steal data and invade privacy
The day I get to dictate what price I pay to sell stuff on eBay, Amazon, Etsy, Poshmark, Walmart, a flea market, etc. to the owners of those marketplaces is the day I side with these developers. Until then they can all take a flying leap.
But this is not something you are buying from amazon, eBay etc. this is an accessory to what you bought from them
Buying v-bucks in fortnite has absolutely nothing to do with apple doesn't go through their servers, doesn’t need to be checked by Apple like apps, requires zero effort from any Apple employee. So what am I paying Apple $3 for when I buy v-bucks? What service am I getting for that? This is like amazon saying if you buy a digital camera from them, you can only buy memory cards for the camera from them. I doubt any of the Apple fanboys here would be ok with that no? subscriptions being charged 30% by Apple is a rip off, plain and simple. And an abuse of their power as the only App Store you can get on their products, google is not the same, because you can download fortnite directly to your android phone, without going through play store. sure that’s why it’s much easier to infect an android, but that also puts google in a much better place as they are NOT a monopoly. Apple saying we want 30% cut on anything sold on the App Store is completely, and justifiably owed to Apple . Fair and square. They run the Apple store, they pay hosting, they pay for staff, they check every app to make sure it’s safe which is why they have the best App Store out there. but subscriptions are not the same case.
i think the biggest loser of this case, if it does proceed, will be apple google can say hey, don’t like our rules? go straight to the consumer and have them load it directly from your website. Apple is in a much worse position, especially that they already had lawsuits about App Store being a monopoly.
While I guessed wrong on the ebooks, but it seems like Apple has the better position here. Looking back to when the App Store first came out, it was compared to a typical agency fee of 50% in the market. It would be easy to argue a lower number is “better” for developers, but the logistical floor is likely around 25%. The alternative would be to charge developers a fee to post an app on the web store for a lower commission (and to cover ad-supported and Free apps overhead costs)— and Apple can immediately show how that would be worse for everyone but a very select few.
Epic should have negotiated the 15% rate after one year for recurring revenue (even if it isn’t a true “subscription”; that is likely their best end-game today.
The problem is Apple calling out to Epic to negotiate.
Do small developers get this kind of treatment? They’re stuck with that 30% whereas the big boys might negotiate 15%. Not exactly a level playing field...
That is the way it is in every business, from insurance to groceries to consumer electronics. Does the mom and pop electronics store get the same pricing as Best Buy? Does the local Deli pay the same as Walmart for potato chips ? Nope.
If Epic wants to characterize Apple as a monopoly because they control their own App Store, then Epic is a monopoly because they control FortNite. Epic should be broken up and copies of Fortnite given to several other game developers, so that Epic's Fortnite monopoly is finally ended!
In some seriousness, though... I actually think Apple would be wise to allow other app stores on their platforms, at least sort of.
Other app stores could be authorized to operate on iOS, and perhaps pay Apple a much smaller share of revenue than the Apple App Store gets. By disassociating the Apple brand from these other stores, Apple could get a share of revenue that hey otherwise might never get, because they could lower their content standards. In other words, Apple could finally make money off of porn! Also, Apple could require that other App Store operators accept liability for anything that goes wrong with the apps sold through their stores.
Meanwhile, Apple could more aggressively curate their own App Store for content quality, so that their store truly is the best.
There you completely ignore that for Apple to guarantee security and adherence to guidelines they still have to do the work vetting all apps (and all updates of said apps) themselves; so they are still doing the same work, they just don't get paid the same to do it (and according to your scheme they would also intentionally have to let less quality products get in, just to somehow prove their own superiority by applying the regular quality only in their own store).
Kinda gutsy of them to intentionally getting themselves kicked out of the app stores.
Personally I think it's next level stupid and that they will take a huge hit from the fallout of it; but perhaps they know something I don't (maybe some politicians that's promised to support them?), or they simply think that they are too big to fail (ie that the people will rise up against Apple just to get to play Fortnite). Or perhaps their profit and number of players are in free fall and they're desperate for attention?
How would consumers not win? Say Epic wins and they get the fee reduced, the ability for direct payments, or more hopefully, we get full sideloading on iOS. For the first situation we could get cheaper apps, as developers could reduce the price of the apps themselves or the price of In App Purchases, something good for the consumer. For the second we got proof that it would be better for the consumer, as the price of V-Bucks was cheaper with the option for directly purchasing the V-Bucks from Epic rather than through Apple's processor. For the third consumers wouldn't be beholden to the App Store. Stadia and Xcloud would be usable on iOS, Much more open source development could occur on iOS because developers wouldn't have to subscribe to a $100 fee to host their apps on the store. Hell, with sideloading we could get app stores that actually show off more than regurgitate the top apps of each category.
Consumers would not win because many of them bought Apple's products with the explicit understanding that its apps are safer by being reviewed/inspected in the App Store. So if your third argument (Apple being forced to allow other app stores) came to pass, this extra safety net would be gone. I don't want to argue how much extra security a single App Store adds (but basic logic would suggest a house with one door and one key is more secure than a house with multiple doors and multiple keys), but the fact is that many customers would feel less secure!
Indie developers or at least those who currently get to distribute their apps on the App Store for free might not be winners either. If the big boys like Epic refuse to pay their fair share, what's to prevent Apple from no longer letting apps deploy for free and/or charge more to those who must still pay?
The fact of the matter is that the CEOs of these big software houses would like to paint Apple as a monopolist abusing his monopoly.. But they're just throwing around words trying to get the public on its side. How is Apple's App Store a monopoly? Look up the definition - a monopolist is someone that's gotten to a dominant position in a market. The word "dominant" implies there were at least two participants in said market - otherwise how did this one player become "dominant"? Apple created the iPhone and a place from which iPhones could get software. Apple simply decided that it would also allow other software makers, provided they followed a set of rules, to become available to those iPhones. Software makers won because for a smaller fee than they previously paid to market and distribute to physical stores, they could sell to a large user base. Apple won because more software makes their iPhones more useful - in turn causing more iPhone sales. The customer won because they could get software from a single place, secure in the knowledge that software available from Apple's App Store was free of malware.
Apple created and manages a store. It has every right to decide what it sells in that store as long as those decisions aren't discriminatory! Again, how is that a monopoly? Arguing that Apple is a monopoly is akin to calling every store in the country a monopoly because the store owner gets to decide what to put on their shelves, instead of the manufacturers.
Comments
In some seriousness, though... I actually think Apple would be wise to allow other app stores on their platforms, at least sort of.
Other app stores could be authorized to operate on iOS, and perhaps pay Apple a much smaller share of revenue than the Apple App Store gets. By disassociating the Apple brand from these other stores, Apple could get a share of revenue that hey otherwise might never get, because they could lower their content standards. In other words, Apple could finally make money off of porn! Also, Apple could require that other App Store operators accept liability for anything that goes wrong with the apps sold through their stores.
Meanwhile, Apple could more aggressively curate their own App Store for content quality, so that their store truly is the best.
Epic will lose tens of millions of dollars in revenues as this works its way through the courts over the next two years. And each day, Fortnite the game will become more irrelevant and this juvenile PR campaign will receive less attention. And at the end of it all, Epic will wind up losing the legal case
They just really put themselves in a corner
Also, check out how awful Epic's online PC store is: https://www.epicgames.com/store/en-US/ They can't even do this right
this is an accessory to what you bought from them
Buying v-bucks in fortnite has absolutely nothing to do with apple
doesn't go through their servers, doesn’t need to be checked by Apple like apps, requires zero effort from any Apple employee. So what am I paying Apple $3 for when I buy v-bucks? What service am I getting for that?
This is like amazon saying if you buy a digital camera from them, you can only buy memory cards for the camera from them. I doubt any of the Apple fanboys here would be ok with that no?
subscriptions being charged 30% by Apple is a rip off, plain and simple. And an abuse of their power as the only App Store you can get on their products, google is not the same, because you can download fortnite directly to your android phone, without going through play store.
sure that’s why it’s much easier to infect an android, but that also puts google in a much better place as they are NOT a monopoly.
Apple saying we want 30% cut on anything sold on the App Store is completely, and justifiably owed to Apple . Fair and square.
They run the Apple store, they pay hosting, they pay for staff, they check every app to make sure it’s safe
which is why they have the best App Store out there.
but subscriptions are not the same case.
i think the biggest loser of this case, if it does proceed, will be apple
google can say hey, don’t like our rules? go straight to the consumer and have them load it directly from your website.
Apple is in a much worse position, especially that they already had lawsuits about App Store being a monopoly.
Time will tell
Epic should have negotiated the 15% rate after one year for recurring revenue (even if it isn’t a true “subscription”; that is likely their best end-game today.
That is the way it is in every business, from insurance to groceries to consumer electronics. Does the mom and pop electronics store get the same pricing as Best Buy? Does the local Deli pay the same as Walmart for potato chips ? Nope.
Personally I think it's next level stupid and that they will take a huge hit from the fallout of it; but perhaps they know something I don't (maybe some politicians that's promised to support them?), or they simply think that they are too big to fail (ie that the people will rise up against Apple just to get to play Fortnite). Or perhaps their profit and number of players are in free fall and they're desperate for attention?