Apple needs to get money for it's efforts for the iOS development and all kinds of SDKs etc one way or the other.
Apple are a vertically integrated company; it's often cited as one of their strengths and why their products are so great. And as such, they don't need to consider every part of their business as a cost centre, or an avenue for sales. Apple make more than enough money from selling iPhones to justify all iOS development, all SDK tool development, hell potentially even all App Store running costs. They don't "need" to get money for their efforts in these areas at all, they're making bank, and making it big time, from iPhone sales, which in turn are driven by the sophistication and reliability of iOS and the breadth and quality of the apps that are available on the store, written using the SDK. It is an integrated product, and Apple are making lots of money out of it already.
Costco has its Kirkland Brand, which it makes money from. So it doesn’t need to make money from membership fees, from selling other brands of products, from shelving fees, from selling gasoline, from the automotive centers that sell brand name tires, etc. You see how ridiculous this sounds? That government should arbitrarily dictate which lines of business a company can make profits from?
Apple needs to get money for it's efforts for the iOS development and all kinds of SDKs etc one way or the other.
Apple are a vertically integrated company; it's often cited as one of their strengths and why their products are so great. And as such, they don't need to consider every part of their business as a cost centre, or an avenue for sales. Apple make more than enough money from selling iPhones to justify all iOS development, all SDK tool development, hell potentially even all App Store running costs. They don't "need" to get money for their efforts in these areas at all, they're making bank, and making it big time, from iPhone sales, which in turn are driven by the sophistication and reliability of iOS and the breadth and quality of the apps that are available on the store, written using the SDK. It is an integrated product, and Apple are making lots of money out of it already.
Costco has its Kirkland Brand, which it makes money from. So it doesn’t need to make money from membership fees, from selling other brands of products, from shelving fees, from selling gasoline, from the automotive centers that sell brand name tires, etc. You see how ridiculous this sounds? That government should arbitrarily dictate which lines of business a company can make profits from?
I'm not saying anything about government or CostCo, just that the "Apple needs to make money from the App Store" argument is lacking in potency when the App Store is vertically integrated with one of the most successful and profitable consumer products ever sold.
For most of the world there is a nationalist element in that US tech companies take money out of the countries, pay little local tax and assert their cultural norms over what is allowable. This is the first of many such laws.
I thought we might see a salvo fired from Apple and/or Google today, but they have said and done nothing. Are they waiting for each other to fire first? I believe it was Apple who fired first when Epic violated the Google and Apple terms of service.
Cant wait for higher developer fees and Apple/Google charging for ever aspect of THIER app stores. I would like to see them both pull to of SK and let Google start charging for using android.
People are arguing for reasonable commissions for those use cases that resolves a big discrepancy in pricing that we are seeing today.
I see big complaints about the 'unreasonable' 30%commission all the time and have never yet seen one credible argument about what is reasonable. "I don't like it" or "that sounds large" is not a reasonable argument. How much does Best Buy etc. tack onto the wholesale price when they self software? How much do retailers in general tack on? I know 30% is not uncommon, might even be on the low side. People think the commission should be more like a finders fee where the finder does nothing except refer customers. It's not as if Apple doesn't incur costs running and maintaining the App Store.
From the dollar you spend in the AppStore Apple keeps 30 cents.
According to expert testimony in the Epic case, from that 30 cent cut Apple spends 9 cents in supporting services and hardware to earn it. That leaves 21 cents as clear profit. That's a very healthy return, so no wonder Apple is so big on "Services".
Do those 9 cents account for hosting free apps? They are not supporting services.
And please define supporting services. Is xCode and it’s development a supporting service? Is the development of swift a supporting service? Are the previous research and investments to implement the current eco system a supporting service? What were the margins over time. If margins were lower in the beginning and rose now to 21 cent, then it’s is profit covering the investments in the past.
People are arguing for reasonable commissions for those use cases that resolves a big discrepancy in pricing that we are seeing today.
I see big complaints about the 'unreasonable' 30%commission all the time and have never yet seen one credible argument about what is reasonable. "I don't like it" or "that sounds large" is not a reasonable argument. How much does Best Buy etc. tack onto the wholesale price when they self software? How much do retailers in general tack on? I know 30% is not uncommon, might even be on the low side. People think the commission should be more like a finders fee where the finder does nothing except refer customers. It's not as if Apple doesn't incur costs running and maintaining the App Store.
From the dollar you spend in the AppStore Apple keeps 30 cents.
According to expert testimony in the Epic case, from that 30 cent cut Apple spends 9 cents in supporting services and hardware to earn it. That leaves 21 cents as clear profit. That's a very healthy return, so no wonder Apple is so big on "Services".
People are arguing for reasonable commissions for those use cases that resolves a big discrepancy in pricing that we are seeing today.
I see big complaints about the 'unreasonable' 30%commission all the time and have never yet seen one credible argument about what is reasonable. "I don't like it" or "that sounds large" is not a reasonable argument. How much does Best Buy etc. tack onto the wholesale price when they self software? How much do retailers in general tack on? I know 30% is not uncommon, might even be on the low side. People think the commission should be more like a finders fee where the finder does nothing except refer customers. It's not as if Apple doesn't incur costs running and maintaining the App Store.
From the dollar you spend in the AppStore Apple keeps 30 cents.
According to expert testimony in the Epic case, from that 30 cent cut Apple spends 9 cents in supporting services and hardware to earn it. That leaves 21 cents as clear profit. That's a very healthy return, so no wonder Apple is so big on "Services".
Do those 9 cents account for hosting free apps?
Yes it would.
So with alternative payments apple might start losing 9 cents. Why would any company to support anything like that - an activity which guarantees losses.
Apple needs to get money for it's efforts for the iOS development and all kinds of SDKs etc one way or the other.
Apple are a vertically integrated company; it's often cited as one of their strengths and why their products are so great. And as such, they don't need to consider every part of their business as a cost centre, or an avenue for sales. Apple make more than enough money from selling iPhones to justify all iOS development, all SDK tool development, hell potentially even all App Store running costs. They don't "need" to get money for their efforts in these areas at all, they're making bank, and making it big time, from iPhone sales, which in turn are driven by the sophistication and reliability of iOS and the breadth and quality of the apps that are available on the store, written using the SDK. It is an integrated product, and Apple are making lots of money out of it already.
Costco has its Kirkland Brand, which it makes money from. So it doesn’t need to make money from membership fees, from selling other brands of products, from shelving fees, from selling gasoline, from the automotive centers that sell brand name tires, etc. You see how ridiculous this sounds? That government should arbitrarily dictate which lines of business a company can make profits from?
I'm not saying anything about government or CostCo, just that the "Apple needs to make money from the App Store" argument is lacking in potency when the App Store is vertically integrated with one of the most successful and profitable consumer products ever sold.
What’s about google. They don’t have such integration, but they will be forced to implement alternative payment methods/systems as well. This implementation will start losing money, for both Apple and Google.
This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea. I
100% agree. Pull the stores and leave South Korea scrambling until consumers rip the government a new one for trying to fix something that wasn’t broken. People retaliating against this legislation will prevent other countries from attempting to do the same. Allowing alternative stores opens up the platform to a world of hurt. There’s a reason I don’t use Android. I don’t want my experience as a consumer to be ruined or compromised because some clueless government bureaucrats half way around the world went on some bullshit self righteous crusade in seek of good press.
The law isn't about opening up iOS and Android to new stores. It's about letting developers take payment in their apps by other means than Apple and Google.
This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea. I
100% agree. Pull the stores and leave South Korea scrambling until consumers rip the government a new one for trying to fix something that wasn’t broken. People retaliating against this legislation will prevent other countries from attempting to do the same. Allowing alternative stores opens up the platform to a world of hurt. There’s a reason I don’t use Android. I don’t want my experience as a consumer to be ruined or compromised because some clueless government bureaucrats half way around the world went on some bullshit self righteous crusade in seek of good press.
The law isn't about opening up iOS and Android to new stores. It's about letting developers take payment in their apps by other means than Apple and Google.
Okay, so how does Apple get paid for having the store and allowing a developer to offer their wares in said store? How about a monthly or yearly fee for allowing a developer to sit on the app store shelves? How about another fee for promoting an app on the store?
The developer paid for listing in the App Store with their developer account subscription, and 30% taken from the app cost. It's only in-app purchases that are affected by this.
If Apple wants to raise the developer account subscription cost or introduce a hosting fee, of course they can.
Yes, it’s in-app purchases. It will be interesting to see how this is addressed by Apple and Google, considering a developer like Epic makes all their money from Fortnite on those platforms via in-app purchases, the app is free, there is no 30% collected from the sale of the app. I doubt Apple/Google will settle for only getting the developer account fee.
That’s a good point. Why should Apple list free apps with third-party payment systems. Those would have to go.
This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea. I
100% agree. Pull the stores and leave South Korea scrambling until consumers rip the government a new one for trying to fix something that wasn’t broken. People retaliating against this legislation will prevent other countries from attempting to do the same. Allowing alternative stores opens up the platform to a world of hurt. There’s a reason I don’t use Android. I don’t want my experience as a consumer to be ruined or compromised because some clueless government bureaucrats half way around the world went on some bullshit self righteous crusade in seek of good press.
Just because other app stores are allowed, doesn't mean that you have to download apps from them. Stick with the Apple app store, and there is no change for you (or me). I would never go to another app store other than Apple's, so not a big deal to me. If people want to be stupid and download unknown apps from another site, that is on them, and one thing I really hope Apple does is have some sort of disclaimer that if you do, you may void your warranty.
You make a fair case for consumer freedom. But you don't realize that corporations also have freedom to not be required to provide the software and services to allow for third party app stores. How would you like it if you sold lemonade on your street and were told by the government that you had to sell your neighbor's lemonade and give the profits of that lemonade to your neighbor? Apple works very hard and deserves the right to not have to share its app store profit with its competitors.
After the initial euphoria of 2007 and 2010 how many apps/programs have you bought over the years on the iPhone and iPad for me not many, I mainly use the Core Apple apps and maybe 20 more, over the years I own about 175 apps on the iPhone and iPad, and I don’t plan on increasing that total anytime soon.
The Golden age is over in terms of adding apps, free and in app purchases has destroyed the overall quality.
Apple needs to get money for it's efforts for the iOS development and all kinds of SDKs etc one way or the other.
Apple are a vertically integrated company; it's often cited as one of their strengths and why their products are so great. And as such, they don't need to consider every part of their business as a cost centre, or an avenue for sales. Apple make more than enough money from selling iPhones to justify all iOS development, all SDK tool development, hell potentially even all App Store running costs. They don't "need" to get money for their efforts in these areas at all, they're making bank, and making it big time, from iPhone sales, which in turn are driven by the sophistication and reliability of iOS and the breadth and quality of the apps that are available on the store, written using the SDK. It is an integrated product, and Apple are making lots of money out of it already.
They Apple also don’t need a Appstore, a iPhone, iPad, Apple Watch, and a Mac work fine with only Apple built in apps plus 5,000 HIGHLY curated apps there is no need for 1.83 million apps.( the vast majority are junk after the top five in each genre ) The Wild West AppStore is over….
I never understood why apps that offer physical goods don’t have to pay commissions on in app purchases, in stark contrast to apps that offer digital goods. Why this delineation? Uber and Lyft generate billions in revenue that Apple doesn’t get a cut from, yet developers like Netflix, Spotify, and Epic have to collectively pay billions in terms of commissions to Apple from the sale of digital goods. How is that fair?
My point of view is governments have the right to reign in anticompetitive behavior. There’s no reason why an developer shouldn’t be able to offer its own payment processing system if it is willing to take on the task and risk of doing so.
All good things come to an end. Apple and Google were able to make billions from the App Store and Play Store, but it was just a matter of time before the hammer dropped as I have predicted for years (and have been ridiculed on this website for saying so). But when you have a company with so much power that it can prohibit other companies from using alternative (and legal) payment processing systems (since doing so would lead to less profits for Apple), it was always a losing battle. It was just a matter of time before the EU or Australia or Korea or the USA acted to stop this behavior.
Secondly, I believe alternative app stores should be allowed as well. If developers and users want to enter into legal trade to buy and sell legal apps (even if Apple disagrees with such an app) who is Apple to prevent such transactions from occurring if they are otherwise legal? For example, there is no Wifi explorer app on the App Store. Many such apps exist on android (and even on the Mac). If a developer wanted to make such an app for the iPhone and charge a minimal fee to his/her users, who is Apple to prohibit such a transaction, when it is for a common good and would enhance the utility of the iPhone, and allow users to understand their radio environment and do some wireless network planning?
I will be interested to see how the requirements of this proposed law will be implemented. Let's assume that past a certain date, the tech companies will have to ensure that all apps on their devices (or devices running their operating systems) will allow payment systems other than those provided by the official store for the platform.
The first question that occurs to me is: does this need to apply to all existing devices, or just new ones? Existing devices is unenforceable, not least because you can't force updates on a device. You'd probably get the majority of Apple devices, but Android devices... no.
OK, so, just new devices, then. What's the cost of implementing the new requirements? I'd be surprised if it was less than USD$250 million, and would not be surprised if it was twice that. For Apple, the article states that KRW8.55 trillion has been delivered to 482,000 registered developers to date - so with some rough maths assuming a conservative 10-year timeframe, 855 billion won per year is 70% of the sales, which means 1.221 trillion won per year... roughly USD $1 billion per year. 3% of sales is therefore roughly USD $30 million per year.
Any day of the week, paying the fine is cheaper than complying with the law. And that, to me, suggests that the earlier comments about this being a shakedown are right on the money. But if more countries jump on the bandwagon, that decision changes.
But let's assume, for the sake of argument, that it's a morally legitimate effort, and get back to the implementation details. My next question is: how do we determine that a user's device is subject to this law? Is it applicable when the device is geographically located in the country (mostly doable)? Is it applicable when the device is sold within the country (probably still achievable)? Is it applicable when the user sets the device localisation to Korean (easiest to achieve)? What happens to the device when the user relocates to a different country? What happens if the device is sold to an international user who is visiting Korea?
These are all legally thorny issues (that might more easily be resolved if every country in the world implements similar legislation) that will take a significant amount of time and energy to overcome. Does the proposed timeframe for application of this law allow for such matters of international law to be resolved? Because I can see that particular process taking five years or more. And we also need to consider (as raised by others) trade agreements between specific countries.
As far as I can tell (and I am not a legal practitioner) the proposed law is requiring the tech companies to change their platforms in a way that is either not practical or not economically feasible. I don't see this surviving even a cursory challenge in the local courts.
Well done South Korea, a step in the right direction. Now help fund the development of Tizen. The world needs an alternative mobile OS over the current duopoly.
Tizen is a on going problem for Samsung developing a OS requires someone stepping out from the crowd (a lone wolf) who likes chaos on a daily basis, more money won’t help but a mathematical/programming/designing Genghis Khan would.
People are arguing for reasonable commissions for those use cases that resolves a big discrepancy in pricing that we are seeing today.
I see big complaints about the 'unreasonable' 30%commission all the time and have never yet seen one credible argument about what is reasonable. "I don't like it" or "that sounds large" is not a reasonable argument. How much does Best Buy etc. tack onto the wholesale price when they self software? How much do retailers in general tack on? I know 30% is not uncommon, might even be on the low side. People think the commission should be more like a finders fee where the finder does nothing except refer customers. It's not as if Apple doesn't incur costs running and maintaining the App Store.
From the dollar you spend in the AppStore Apple keeps 30 cents.
According to expert testimony in the Epic case, from that 30 cent cut Apple spends 9 cents in supporting services and hardware to earn it. That leaves 21 cents as clear profit. That's a very healthy return, so no wonder Apple is so big on "Services".
Do those 9 cents account for hosting free apps? They are not supporting services.
And please define supporting services. Is xCode and it’s development a supporting service? Is the development of swift a supporting service? Are the previous research and investments to implement the current eco system a supporting service? What were the margins over time. If margins were lower in the beginning and rose now to 21 cent, then it’s is profit covering the investments in the past.
This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea. I
100% agree. Pull the stores and leave South Korea scrambling until consumers rip the government a new one for trying to fix something that wasn’t broken. People retaliating against this legislation will prevent other countries from attempting to do the same. Allowing alternative stores opens up the platform to a world of hurt. There’s a reason I don’t use Android. I don’t want my experience as a consumer to be ruined or compromised because some clueless government bureaucrats half way around the world went on some bullshit self righteous crusade in seek of good press.
Just because other app stores are allowed, doesn't mean that you have to download apps from them. Stick with the Apple app store, and there is no change for you (or me). I would never go to another app store other than Apple's, so not a big deal to me. If people want to be stupid and download unknown apps from another site, that is on them, and one thing I really hope Apple does is have some sort of disclaimer that if you do, you may void your warranty.
You make a fair case for consumer freedom. But you don't realize that corporations also have freedom to not be required to provide the software and services to allow for third party app stores. How would you like it if you sold lemonade on your street and were told by the government that you had to sell your neighbor's lemonade and give the profits of that lemonade to your neighbor? Apple works very hard and deserves the right to not have to share its app store profit with its competitors.
After the initial euphoria of 2007 and 2010 how many apps/programs have you bought over the years on the iPhone and iPad for me not many, I mainly use the Core Apple apps and maybe 20 more, over the years I own about 175 apps on the iPhone and iPad, and I don’t plan on increasing that total anytime soon.
The Golden age is over in terms of adding apps, free and in app purchases has destroyed the overall quality.
Could see them getting rid of in-app purchases. Have an update for an app? Buy it directly on the store.
I will be interested to see how the requirements of this proposed law will be implemented. Let's assume that past a certain date, the tech companies will have to ensure that all apps on their devices (or devices running their operating systems) will allow payment systems other than those provided by the official store for the platform.
The first question that occurs to me is: does this need to apply to all existing devices, or just new ones? Existing devices is unenforceable, not least because you can't force updates on a device. You'd probably get the majority of Apple devices, but Android devices... no.
OK, so, just new devices, then. What's the cost of implementing the new requirements? I'd be surprised if it was less than USD$250 million, and would not be surprised if it was twice that. For Apple, the article states that KRW8.55 trillion has been delivered to 482,000 registered developers to date - so with some rough maths assuming a conservative 10-year timeframe, 855 billion won per year is 70% of the sales, which means 1.221 trillion won per year... roughly USD $1 billion per year. 3% of sales is therefore roughly USD $30 million per year.
Any day of the week, paying the fine is cheaper than complying with the law. And that, to me, suggests that the earlier comments about this being a shakedown are right on the money. But if more countries jump on the bandwagon, that decision changes.
But let's assume, for the sake of argument, that it's a morally legitimate effort, and get back to the implementation details. My next question is: how do we determine that a user's device is subject to this law? Is it applicable when the device is geographically located in the country (mostly doable)? Is it applicable when the device is sold within the country (probably still achievable)? Is it applicable when the user sets the device localisation to Korean (easiest to achieve)? What happens to the device when the user relocates to a different country? What happens if the device is sold to an international user who is visiting Korea?
These are all legally thorny issues (that might more easily be resolved if every country in the world implements similar legislation) that will take a significant amount of time and energy to overcome. Does the proposed timeframe for application of this law allow for such matters of international law to be resolved? Because I can see that particular process taking five years or more. And we also need to consider (as raised by others) trade agreements between specific countries.
As far as I can tell (and I am not a legal practitioner) the proposed law is requiring the tech companies to change their platforms in a way that is either not practical or not economically feasible. I don't see this surviving even a cursory challenge in the local courts.
I think you are looking at the Korean legal system through the lens of a person more familiar with the US system. It is unlikely they would rule against Korea’s national interest.
People are arguing for reasonable commissions for those use cases that resolves a big discrepancy in pricing that we are seeing today.
I see big complaints about the 'unreasonable' 30%commission all the time and have never yet seen one credible argument about what is reasonable. "I don't like it" or "that sounds large" is not a reasonable argument. How much does Best Buy etc. tack onto the wholesale price when they self software? How much do retailers in general tack on? I know 30% is not uncommon, might even be on the low side. People think the commission should be more like a finders fee where the finder does nothing except refer customers. It's not as if Apple doesn't incur costs running and maintaining the App Store.
From the dollar you spend in the AppStore Apple keeps 30 cents.
According to expert testimony in the Epic case, from that 30 cent cut Apple spends 9 cents in supporting services and hardware to earn it. That leaves 21 cents as clear profit. That's a very healthy return, so no wonder Apple is so big on "Services".
Actually, by Apple's reckoning it's about 3%. They count all the dollars, including those transacted through free apps, the ride hailing apps, the meal delivery apps, etc. The free apps are 85% of all apps, accounting for 90% of the money in the iOS App Economy. Apple gets that 3% by only taxing 10% of transactions, for the stuff that is consumed on the device, with 30%. Epic thinks this is unfair because they are effectively subsidizing the free apps, some of which are their competitors. But that is just how taxes work, you pay for stuff you don't need, or even stuff you would like to not exist. Epic is like someone who does not want to pay road tax for all the roads other people use.
Comments
The Golden age is over in terms of adding apps, free and in app purchases has destroyed the overall quality.
The first question that occurs to me is: does this need to apply to all existing devices, or just new ones? Existing devices is unenforceable, not least because you can't force updates on a device. You'd probably get the majority of Apple devices, but Android devices... no.
OK, so, just new devices, then. What's the cost of implementing the new requirements? I'd be surprised if it was less than USD$250 million, and would not be surprised if it was twice that. For Apple, the article states that KRW8.55 trillion has been delivered to 482,000 registered developers to date - so with some rough maths assuming a conservative 10-year timeframe, 855 billion won per year is 70% of the sales, which means 1.221 trillion won per year... roughly USD $1 billion per year. 3% of sales is therefore roughly USD $30 million per year.
Any day of the week, paying the fine is cheaper than complying with the law. And that, to me, suggests that the earlier comments about this being a shakedown are right on the money. But if more countries jump on the bandwagon, that decision changes.
But let's assume, for the sake of argument, that it's a morally legitimate effort, and get back to the implementation details. My next question is: how do we determine that a user's device is subject to this law? Is it applicable when the device is geographically located in the country (mostly doable)? Is it applicable when the device is sold within the country (probably still achievable)? Is it applicable when the user sets the device localisation to Korean (easiest to achieve)? What happens to the device when the user relocates to a different country? What happens if the device is sold to an international user who is visiting Korea?
These are all legally thorny issues (that might more easily be resolved if every country in the world implements similar legislation) that will take a significant amount of time and energy to overcome. Does the proposed timeframe for application of this law allow for such matters of international law to be resolved? Because I can see that particular process taking five years or more. And we also need to consider (as raised by others) trade agreements between specific countries.
As far as I can tell (and I am not a legal practitioner) the proposed law is requiring the tech companies to change their platforms in a way that is either not practical or not economically feasible. I don't see this surviving even a cursory challenge in the local courts.
Tizen is a on going problem for Samsung developing a OS requires someone stepping out from the crowd (a lone wolf) who likes chaos on a daily basis, more money won’t help but a mathematical/programming/designing Genghis Khan would.
Epic thinks this is unfair because they are effectively subsidizing the free apps, some of which are their competitors.
But that is just how taxes work, you pay for stuff you don't need, or even stuff you would like to not exist.
Epic is like someone who does not want to pay road tax for all the roads other people use.