Wednesday, September 9, 2020 [Tweets] [Favorites]

Apple Countersues Epic

Juli Clover (Hacker News, 9to5Mac):

In a court filing today [link], Apple says that Epic’s lawsuit is “nothing more than a basic disagreement over money,” highlighting the revenue that Epic Games has earned through the Fortnite iOS app and Apple’s developer tools.

[…]

Epic, says Apple, has used more than 400 of Apple’s APIs and frameworks, five versions of the Apple SDK, has had its apps reviewed more than 200 times, and has pushed more than 140 updates to Apple customers. Apple says that it also provided advertising each time Epic released a new season for Fortnite, offering “free promotion and favorable tweets” to more than 500 million end users.

This idea that Apple is owed because a developer “used” its APIs is bonkers.

Also, it’s hilarious that, in the Spotify case, Apple argued that “Spotify wants all the benefits of a free app without being free. A full 84 percent of the apps in the App Store pay nothing to Apple[…]. That’s not discrimination, as Spotify claims; it’s by design.” Now it argues that “Epic decided it would like to reap the benefits of the App Store without paying anything for them.”

Steve Troughton-Smith:

Apple: Epic only looking for a free ride

Epic, according to Apple, has given Apple $257,000,000 in commission fees in two years over in-app purchases that Apple has no hand, act, part in, doesn’t host on their servers, just for the privilege of existing on their OS. ‘Free ride’.

Tim Sweeney:

Presumably they’re just posturing for the court, but if Apple truly believes the fight over the App Store’s distribution and payment monopoly is a “basic disagreement over money,” then they’ve lost all sight of the tech industry’s founding principles.

Foremost among those principles: the device you own is yours. You’re free to use it as you wish. Configure it as you like, install software you choose, create your own apps, share them with friends. Your device isn’t lorded over by some all-powerful corporation.

Marco Arment:

Dev relations are at an all-time low as you continue to make statements to the effect of “Developers’ only value to our platform is IAP commissions.”

People buy the iPhone — you know, that hardware you make tons of money from — because of OUR APPS.

(Not even addressing the false and disproven “everyone plays by the same rules” lie you keep repeating, as well as the massive elephants in the room: Facebook, Instagram, Twitter, and every other free app that offer no App Store purchases, yet are somehow OK under this logic.)

Nick Heer:

It seems like these two corporate giants — though “giant” at different scales — are very happy to test how much they can piss off users and regulatory bodies. Epic is being belligerent in its steadfast refusal to play by the iOS App Store rules. Apple is going all-in on whatever it can get away with.

[…]

One of the things I keep wondering about everything here is what it would take for Apple to change course if the law were not involved. I wonder how much control it would be able to exert before users began to switch away in large enough numbers that it would cause consternation in Cupertino. But, then, I also wonder why it would even get to that level — no company should be pushing so hard as to test customer loyalty and trust. This Fortnite thing gets awful close for some players, I imagine. Some will simply stop playing; others will play on another console. But some might decide that they no longer want to be a part of Apple’s ecosystem. You can have all of the gaming consoles you want and switch between them, but most people only have one phone.

[…]

So far, everything is more-or-less holding: many developers need Apple’s platforms and I doubt they are shedding users in meaningful numbers. But it is bizarre and troubling that we are having this conversation. It suggests that Apple is increasingly finding ways to financially exploit its products for self-enrichment at the expense of users and developers. From a strategy perspective, as far as I am concerned, that is not as inspiring as make great products that practically sell themselves.

Previously:

15 Comments

int main() { printf("Apple: You DARED use my API. Pay me NOW!"); }

At this point, Apple suggests every API you use should be considered a liability. Starting to seem like it's time to dump Cocoa and move to WASM... Cocotron for WASM?

This sentence All the while, Apple’s commission only decreased while software prices plummeted and barriers to entry evaporated is particularly delightful. Poor Apple, it pushed hard for 99 cent apps, and now it complains its commission fell. Third party developers who bore the brunt of this decision should commiserate?

And I'll keep hammering this point until someone gives a reasonable answer:

(maybe nobody cares what I think because I'm not a dev, but...)

Why is Apple charging a percentage cut at all? And why does everybody seem to be totally fine with it? Even the people arguing that 30% is too much are basically all saying it should be 15% or some other amount.

But other than the 2% for credit card processing fees, and some small amount to cover their payment infrastructure, the majority of Apple's costs are *fixed* and the SAME for every app whether free or not free. Apple even seems to argue this in their defense against Epic and other apps (Hey email, etc) when they talk about using hosting space, app review, programming APIs, etc

In my mind, it seems like the fair and reasonable thing to do would be to charge a small amount for apps which have payments to cover Apple's fees to Visa/MC and the costs of developing and running IAP etc -- 10% sounds fair, I think everyone would agree that it's a good tradeoff for Apple making payments so easy and secure. Then Apple should have some other method to recoup the costs of app review, server hosting, downloads, etc.

Perhaps this could be done with the annual developer fee. Off the top of my head, $99 per year for apps with no payments or ads or monetization (great for open source apps or people who just want to give away apps for fun) and includes 1 app update per month and up to 5,000 downloads per month average (actually an annual pool of e.g. 60k/year). $199 per year gets you 2 / 20,000 mo. $299 is 3 / 50,000 mo. $399 is 4 / 75,000 mo downloads. $499 is 5 / 100,000 mo. With these tiers there's no limit on the total number of apps, you would just have to split the update and download limitations between them. Make the highest tier $999 unlimited but only for a single app (devs who are corporations or people making bank from their apps would have to pay $999 for each app in the store, e.g. Facebook pays $999 for the FB app, $999 for Messenger, $999 for Instagram, $999 for WhatsApp, etc).

Anyway, I don't want to argue the merits of this particular idea... maybe the prices are too high or not high enough... it's just to say, there are ways that Apple could make everything more fair, which I think most developers would agree with, and which wouldn't seem as petty and unfair as their current system (primarily because free apps pay zero, but paid apps who use nearly the same resources as free apps somehow owe Apple a gigantic 30% tax?).

Ben... it’s not that they don’t care, it’s that they’re *scared* — even after all this blows over some memories are long, and the only people who can really comment have nothing to lose.

It’s not the rates anyway it’s the Phil Schiller attitude that if you’re not making money for him every minute of every day then he wants you replaced with someone who will. You’re an employee (even though you’re not) and you can be “disinvited” from Apple or anything Apple.

“Disinviting” is basically they don’t like you anymore and they will hurt you until you leave. It’s not just unique to Apple, this is a Silicon Valley thing and it’s why people who work there are always looking over their shoulders. At any of the FAANGs or even smaller companies. You are basically harassed out of your job due to California “at will” employment. They want you to quit. Most do.

Epic has been “disinvited” by Apple, now Apple has blocked iOS users from “Sign in with Apple” into Epic servers. They’re trying to make it painful enough that Epic never shows up again, and any users caught out don’t matter. Epic is saying “go ahead and fire us.”

That this Silly Valley “DNA” has trickled down to developers or is “out in public” to me is another mindblower. But yes, that heat is very real and no developer “employee of Phil” wants that.

I’m thinking Phil Schiller “was kicked upstairs” when he let the mask slip as to his real attitude about developers. That couldn’t continue.

@Ben:

The 30% comes from the good old days of game consoles, when 20% went towards manufacturing a cartridge, and 10% towards providing access to the APIs, dev software, documentation, and paying for the consoles which were sold at a loss. The fee was reasonable, because in those days, there were a few hundred games for a console, and most were made in a man year or so (one coder, a few days of a composer's time, and perhaps a week or two of a graphics guy). So the console makers had to amortise a lot of work documenting hardware and APIs over very few coders.

Since Apple does not make cartridges, and making an App Store is quite trivial, they aren't owed the 20%. They also do not sell devices at a loss, but at a healthy premium, reducing their claim to the 10%. Given that they use the tools they make to build the OS, and clang is open source, the costs to develop software attributable to third party developers are low. Moreover that software and documentation is amortised over 27 million developers. That means they get 2,7 billion (2,700,000,000) dollars for that ($100 per developer), not including the hardware all those developers must buy. Given the costs, most of that is basically pure profit.

That's why I actually don't think they are owed anything other than the developer fee. If they provide credit card processing, that should be the minimum fee. Reviewing apps is totally unnecessary, and if they insist on it, they should pay for it. Technically, it's security theatre, as Epic and so many jailbreaks have proven. Reviewing App content also seems laughable to me, given that you can access the most inhumane content using the in-built web browser, and for instance some Italian children are now facing prison because they found private "chat rooms" in which they sponsored such things.

If users really care about content review, for instance for children's apps, App developers could pay an independent third party to provide such review, and display an independent seal of approval, rather like organic food certification is done. Apple actually doesn't spend very long on each app, so they can't be doing a thorough job, and the people they use aren't paid much. The third party would probably do a better job, and there could be different reviews for different cultures.

Finally, Apple now seems to claim that third party apps don't matter much, yet 90% of mobile time use is spent in third party apps: https://buildfire.com/app-statistics/

That 400 API statement really blows me away. No one wants to learn "Metal". OpenGL and Vulkan are quite enough to learn, and at least those skills are somewhat transferable. In the same way developers are forced to learn Swift, which is not transferable, and on top of it Apple can use the fact we must use it as proof that they create so much "value" in the form of "reducing barriers to entry". It's worse than 1984: not only must you speak Newspeak, but you must pay for the privilege.

>Epic, says Apple, has used more than 400
>of Apple’s APIs and frameworks

If you're an Apple dev, and this doesn't make you extremely uncomfortable, you're really not paying attention.

>The 30% comes from the good old days of game consoles

I think it's also important to point out that Capcom doesn't spend two years making a game, only for Nintendo to refuse publishing it. These companies have actual relationships with each other, Nintendo pre-approves games, often licenses its own characters for these games, and provides actual support for the money a company like Capcom pays them.

If you’re an Apple dev, and this doesn’t make you extremely uncomfortable, you’re really not paying attention.

It’s also kind of all over the place. The 30% App Store cut is now… a fee to get access to the APIs?

(And, as has been pointed out many times: why then do the massive corps like Facebook get that access for free? Plus… enterprise accounts, anyone?)

The 27 million app registered developer figure cited by Apple seems very odd: https://www.scribd.com/embeds/475308825/content?start_page=1&view_mode=scroll&access_key=key-ihvcnd8DjMlZZ1lZfrOW

There were supposedly only 26 million developers in the world last year... https://www.daxx.com/blog/development-trends/number-software-developers-world

Presumably, therefore, some of the "27 million" are managers or others who use their licenses to run custom software on employees' devices, some have multiple licenses (eg for the day job and for fun), and some are kids learning how to code.

@Old Unix Geek Some developers probably have multiple accounts, e.g. for different apps owned by separate business entities.

@Ben, Because they can.

Your question would be the same as why is Apple selling their Phone at those price with industry leading margin. Because they can.

I think there's a risk to Apple because it feels like they're doing what Microsoft did in the 90's, and creating a generate of future-tech-people who will actually hate Apple and everything they stand for.

I wonder how much of Apple's mid-2000's resurgence (prior to iPhone, that is) was down to the generation of technically inclined people who grew up watching Microsoft be such a bad company and wanted an alternative?

@Adrian O
I would not even consider myself all that technically inclined, especially in a historical sense during that late 1990s into the early 2000s time period. Even as a fairly unsophisticated user in those days, Microsoft being the big bad bully in the room definitely led me to have a permanent distaste in my mouth for them. Which leads me to…

Wiser people than me always said, "Apple is not the bad guy solely because of their limited scope, smaller companies are given more allowances than bigger ones." Sure enough, the more successful Apple became, the more their controlling, vertically integrated, walled garden, widget salesman attitude began to grate on me. To be fair, Apple has increasedly flexed their muscles in the marketplace, reinforcing their bully status, it is not solely from the increase in their market presence, that just worsened the existing behavior.

It is a shame because Apple could really have the best of both worlds. High margin devices with many users opting into their services solely because the friction is reduced given you already have an Apple login and installing software from the official Apple store is easier than any sideloading mechanism. Instead, Apple has double downed on vendor lock-in as the primary push for growing their services revenue. An example from the non consumer side, if developers would opt out of your development tools, hosting, and payment processing if given the choice, then your (Apple's) offering is not competitive enough. Simple as that. From the consumer side, if people would flock in droves to sideloading because the apps in the App Store were not compelling enough, then improve the app store! Again, simple enough.

The API access is mandated by Apple!!!! It is not like people requested access, you have to use Apple's development infrastructure to publish apps on the app store. There really is not another way to build apps…

Look, I know developers make requests for API access for features as a way to make development easier, in a general sense, but in this case, Apple requires you to pay the $99 annual fee to access the tools needed to build apps and if you want to sell the app or provide in app purchasing opportunities, Apple requires you to use their hosting and payment processing. I mean…no one asked for Metal as noted, it is required by Apple to use while the rest of the industry is using something else. OpenGL, now Vulcan, and DirectX on the Windows side (Yes, Microsoft pushes their own vendor specific graphics toolkit and yes, that's annoying too.)

This is all maddening to me.

According to https://venturebeat.com/2020/09/11/the-deanbeat-apple-v-epic-a-briefing-on-the-antitrust-arguments-and-interesting-facts/

38.8 billion was paid to third party developers, minus the 2.7 billion from the "nominal $99 fee" makes $36.1 billion. Apple got $16.6 billion + $2.7 billion = 18.7 billion, making a 34% cut, not 30%. Then one should add all the advertising third party developers must pay for to make up for the fact Apple's App Search doesn't return the results users expect. It would be interesting to know how much that further reduces the actual income of third party developers.

Stay up-to-date by subscribing to the Comments RSS Feed for this post.

Leave a Comment