Apple's App Store Had 78% Margin in 2019, Epic Expert Says (bloomberg.com) 127
Apple's App Store had operating margins of almost 78% in fiscal year 2019, according to testimony from an Epic Games expert witness based on documents obtained from the iPhone maker. From a report: The figure comes from Ned Barnes, a financial and economics researcher, who said he obtained documents "prepared by Apple's Corporate Financial Planning and Analysis group and produced from the files of Apple CEO Tim Cook." Apple is disputing the accuracy of Barnes's calculations -- and urging a judge to restrict public discussion of App Store profit -- as the companies head into a high-stakes trial Monday in Oakland, California. Epic, maker of the blockbuster game Fortnite, is trying to show that the App Store is run like a monopoly with its commission on developers of as much as 30%, while Apple insists it doesn't abuse its market power. Epic is also suing Apple in the U.K. and Australia while Apple faces scrutiny from antitrust regulators in the U.S. and abroad.
The companies are relying heavily on dueling economists as they make their case to U.S. District Judge Yvonne Gonzalez Rogers, who is conducting the three-week trial without a jury. As part of the pretrial information-sharing process, Barnes said that an Apple employee told him that the numbers from the company's internal documents don't show the full picture. Barnes said he then made additional calculations, which resulted in higher margin estimates of 79.6% for both 2018 and 2019. In a statement Saturday, the Cupertino, California-based technology giant said Epic experts' "calculations of the operating margins for the App Store are simply wrong and we look forward to refuting them in court." Barnes said he also obtained documents prepared inside Apple that show profit and loss estimates for fiscal year 2020. He said Apple had been tracking App Store profits for years and that he also obtained such statements for 2013 through 2015.
The companies are relying heavily on dueling economists as they make their case to U.S. District Judge Yvonne Gonzalez Rogers, who is conducting the three-week trial without a jury. As part of the pretrial information-sharing process, Barnes said that an Apple employee told him that the numbers from the company's internal documents don't show the full picture. Barnes said he then made additional calculations, which resulted in higher margin estimates of 79.6% for both 2018 and 2019. In a statement Saturday, the Cupertino, California-based technology giant said Epic experts' "calculations of the operating margins for the App Store are simply wrong and we look forward to refuting them in court." Barnes said he also obtained documents prepared inside Apple that show profit and loss estimates for fiscal year 2020. He said Apple had been tracking App Store profits for years and that he also obtained such statements for 2013 through 2015.
What are Epic's margins? (Score:5, Insightful)
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Epics games store is on negative. That info came out from the same court case earlier.
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Also if they're intentionally taking a loss now can they be accused of dumping or other anti-competitive behavior? Microsoft did a lot of the same to drive out competitors. While I highly doubt Epic had any chance of success, I don't know if it couldn't be held against them legally if someone had enou
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Well, the latest figures I could find for Epic as whole are $4.2 billion, with earnings of $730 million for 2019.
But that is not the interesting thing because that is commonly available. The thing we did not know was the stores as neither company had breakouts of those and lumped them in with other stuff.
As for Dumping: Sure, there is definitely a case to be made to say that Epic is engaged in dumping.
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Epic already charges less [epicgames.com]. Game developers get to keep 88% of revenue from games; Epic only gets 12%. Compare that to Apple which gets to keep up to 30%
But this case isn't about Epic... it's about Apple and their (IMO) abusive and monopolist control over their App Store. The only way to get an app for your iOS device is through Apple's App Store. The Epic game store isn't the only means of getting games.
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That right there, after all the blustering and posturing is done, is what will decide this case. Apple will need to show/prove how not allowing individual users to personally load apps on their phones somehow jeopardizes their network, servers. etc., and it's therefore "safer" to have everything routed through their App Store.
I don't see this argument working out for Apple. My cell provider would have a more compelling case
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Assuming the article refers to gross margin and that Epics margin is in the vicinity of EA https://gamingstreet.com/tag/e... [gamingstreet.com] 74% and Blizzard https://gamingstreet.com/tag/a... [gamingstreet.com] 72% I'd be upset as well, to the tune of the worlds smallest violin. If it's net margin or operating margin, it's a completely different ballgame (link figures are cents on the dollar if I'm not completely mistaken),
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Epic is exploiting their market position (Score:3, Insightful)
I want to sell dance moves in Fortnight, but Epic's walled Fortnight garden prevents me from doing so. It's outrageous that Epic isn't opening Fortnight up and allowing all of us to sell costumes.
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Do you think a feature that requires every single user to have the animation / skin / whatever is exactly the same as installing an app on an individual device?
Or do you think Epic choosing not to do extra work to enable you to install custom whatevers (noting that they are supporting mods for Fortnite) is just like Apple doing extra work to prevent their customers and third parties from installing custom other-things?
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That's far from being the same if you can't sell anything on FN....
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It might seem odd but the fact that Fortnight doesn't allow any 3rd party stuff is what saves them. Apple both allows and encourages the use of third party purchases, generating significant revenue from the sale of apps, subscriptions and goods that it does not produce itself.
The other problem for Apple is that there are other similar platforms that are less restrictive, which makes it seem like their rules are purely about making more profit by monopolizing the iOS market. I'm sure Apple would argue that t
Re: Epic is exploiting their market position (Score:2)
The other problem for Apple is that there are other similar platforms that are less restrictive, which makes it seem like their rules are purely about making more profit by monopolizing the iOS market. I'm sure Apple would argue that they do it for the benefit of consumers, and I'm equally certain that Google would counter that Android is just as safe and offers a great customer experience.
1. Apple can clearly demonstrate by the difference in Malware "breakthrough infections" between the App Store and the Google Play Store that their App Distribution model is far safer than Googleâ(TM)s (and Android's in general). So there is a clear, demonstrable benefit to the Consumer. Therefore, Apple should carry the day on this issue.
2. 30% Commission on App Store sales is (or was) so Universal across platforms as to be considered "Standard Industry Practice". Again, Apple should Prevail.
3. Other m
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Apple won't get far claiming that the App Store is safer because there has been plenty of malware and many scam apps on it.
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The phone is physical property, but I am not allowed to install any software I want if it isn't published in the app shop. Apple acts as if they still own the phone. The Fortnight server is Epic's property and everyone accessing it are agreeing to abide by Epic's conditions. iPhone users want to connect to Epic's server but Apple won't allow it, unless they go through the app shop.
Bulllshit.
1. Write it yourself. Nothing stops you from writing your own software and uploading it to your own iOS device.
2. Jailbreak your device. Now you can install any malware-ridden POS that the internet has to offer.
3. Buy an Android device instead. Honestly, at this point, anyone who doesn't understand that shouldn't be operating a toothbrush, let alone a smartphone.
And it's "App Store".
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2. Jailbreak your device. Now you can install any malware-ridden POS that the internet has to offer.
That's not possible. iOS devices are secure.
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2. Jailbreak your device. Now you can install any malware-ridden POS that the internet has to offer.
That's not possible. iOS devices are secure.
I assume you forgot to look on DDG. I found this iOS 14.5 Jailbreak in less time than it takes to sneeze:
https://www.youtube.com/watch?... [youtube.com]
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2. Jailbreak your device. Now you can install any malware-ridden POS that the internet has to offer.
That's not possible. iOS devices are secure.
I assume you forgot to look on DDG. I found this iOS 14.5 Jailbreak in less time than it takes to sneeze:
https://www.youtube.com/watch?... [youtube.com]
Sorry, I thought the sarcasm was obvious.
Re: Epic is exploiting their market position (Score:2)
Sorry, I thought the sarcasm was obvious.
It was... I just get kinda trigger-happy when reading down through a dumbass-filled thread (except here *I* was the dumbass!).
I'm skeptical of Barnes' analysis (Score:4, Insightful)
If having an App Store is a necessity for the product offering, the store expenses are probably rolled up into a larger account.
Private company yadda yadda yadda (Score:2)
Margin is a useless metric for a service. (Score:2)
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Well, the summary says *operating* margin, so that is meaningful.
However, trying to derive operating margin for the App store specifically separate from the rest of Apple's concerns seems a daunting task, even for their internal accounting team, let alone an outside expert. To subdivide operating margin, need to figure out to what extent the expenditures 'belong' to a given line of business.
Seems too low to be true (Score:2)
I expected more like 95%.
Operating servers hosting a bunch of 30 MB apps is not that expensive.
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Yeah, I'd like to see what they are spending the money on.
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Yes and none of them are used exclusively for the app store.
Let's face it, from the billion of dollars they make from their 30% cut in the app store, it would be surprising if their fees were more than 5%.
5% of 1 billion is 50 millions. That's a lot of hosting and payment processing.
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Yes and none of them are used exclusively for the app store.
Yes because Apple's multiple billion dollar data centers are used for their massive web hosting business . . .no wait. Database servers. . . no. Outlook servers. . . Hmmmm. What does Apple do with their massive data centers. . . I wonder.
Let's face it, from the billion of dollars they make from their 30% cut in the app store, it would be surprising if their fees were more than 5%.
You seem to forget that it costs something to host/serve those apps.
5% of 1 billion is 50 millions. That's a lot of hosting and payment processing.
Again what is the cost of serving a million apps to a few hundred million users. Also you have to provide customer service and build the infrastructure for all the developers. You seem to have all the ans
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Yes and none of them are used exclusively for the app store.
Yes because Apple's multiple billion dollar data centers are used for their massive web hosting business . . .no wait. Database servers. . . no. Outlook servers. . . Hmmmm. What does Apple do with their massive data centers. . . I wonder.
Ever heard of iCloud? Apple Music?
Seems too high to be true (Score:2)
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They'd provide the Xcode environment with or without their cut on the app store. This is irrelevant. They pay for that by selling iPhones and their various services, and with a good margin by the way.
Also they review free applications as well. If it was too expensive, or even not profitable enough, they wouldn't.
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But I get what you mean. If you put all their costs on the app store, then I guess you can get a number like 78%. It just makes their margin on the iPhone even higher than what it is.
I keep waiting for the net neutrality argument (Score:2)
Netflix, et al complained bitterly about the internet infrastructure not being all-you-can-eat for the same price as a static-text website. When is Epic going to admit that they don't want to pay for the infrastructure Apple built.
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There are a lot of free apps (Starbucks, Target, Bank of America, etc) on Apple's App Store that Apple collects $0 from.
Aside from the annual developer fee they pay Apple, how else are they paying for the infrastructure Apple built?
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I think Epic is happy to pay for the infrastructure Apple built. To be sure, they are paying the Apple developer fees.
What does it matter? (Score:2)
Seriously, how does the margin of a single service that a company provides matter at all?
OK, let's have EPIC tell us their margin on, say, Fortnight? That's probably way over 78%, but how does it matter at all (and they could allow a Fortnight market too - go after them for Fortnight being a walled garden?)
Or, go for the opposite, let's have a look at the EPIC Store, we know that is actually on negative margin as they are trying to compete with Steam, but how is that better - using your huge bank reserves t
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It is an anti-trust case. Anti-trust law allows some anti-competitive practices if they are for 'legitimate business purposes'. For instance, Apple could say that the 'walled garden' is an important part of their product, and they have to control app distribution for that reason. That could be a legitimate business purpose. But if Epic can show the App Store has those high margins, then it looks like the 'business purpose' of the App Store is to restrict competition so they can make as much money as pos
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It is an anti-trust case. Anti-trust law allows some anti-competitive practices if they are for 'legitimate business purposes'. For instance, Apple could say that the 'walled garden' is an important part of their product, and they have to control app distribution for that reason. That could be a legitimate business purpose. But if Epic can show the App Store has those high margins, then it looks like the 'business purpose' of the App Store is to restrict competition so they can make as much money as possible. And anti-trust law does not consider that to be 'legitimate'.
This brings up a very salient point: Exactly what "margin percentage" is allowed by law?
Other than in certain financial businesses, such as lending, "margins" (e.g. "interest"), on financial transactions and businesses are blissfully unlimited. As it should be. And is.
Whether Developers are upset with Apple's Commissions is a matter for a Civil lawsuit (if negotiations in good faith are not possible); muddying the waters with all this "Anti-Trust" bullshit should be a quick ticket out of the Courtroom for E
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You fangirlz are hilarious
And that answers my Post, how?
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If Apple can show a low margin, they could say that the purpose of the App Store is to protect the users, not to restrict competition. A high margin means they are using it to make money, and restricting competition is beneficial to them. Not that difficult a concept.
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I don't see why a high margin has to mean they are doing it to restrict competition, or a low margin means it's for security. The two are not mutually exclusive.
The general reputation of the App store vs the Google's Play store should be indication enough that the "walled garden" is for security, while also generating high margins.
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Seriously, how does the margin of a single service that a company provides matter at all?
Huge profit margins are a sign that someone is abusing their monopoly position.
OK, let's have EPIC tell us their margin on, say, Fortnight? That's probably way over 78%,
Copyright is a legal monopoly, and unfortunately is often abused, legally.
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Huge profit margins are a sign that someone is abusing their monopoly position.
Bahahahaha. If that were true, every high profit margin business would invite federal investigations.
Copyright is a legal monopoly, and unfortunately is often abused, legally.
Copyright is an abused monopoly? You do understand the words "abuse of monopoly" is by definition illegal? Which is it? Is copyright a legal monopoly or an illegal one?
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Bahahahaha. If that were true, every high profit margin business would invite federal investigations.
Fool, "it's a sign" doesn't mean "it's guaranteed."
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Why do you even comment if you don't know about the law? You'd be better off reading a law book.
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Apple is, the AppStore isn't. I'm not sure if the disclosure obligations for a publicly traded company need to break down the margin on a department-by-department base.
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Apple is a US based publicly traded company, they are obligated to disclose earnings.
Apple is, the AppStore isn't. I'm not sure if the disclosure obligations for a publicly traded company need to break down the margin on a department-by-department base.
Apple already breaks down revenue for products sold in each region and margins for products and services in their earnings reports and 10-Q they file with the SEC [apple.com].
Their most recent 10-Q [cloudfront.net] shows that for the 3 month period ended March 27, 2021, their services gross margin percent is 70.1 percent, while a year ago during the 3 month period ended March 28, 2020, it was 65.4 percent.
What's being reported here is no deep secret.
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Apple is a US based publicly traded company, they are obligated to disclose earnings.
Earnings, yes. Profit margins on a granular basis, no. That sort of information is quite often kept confidential because of the power it gives others in their negotiations with a company.
If I learn through a leak/court filing/rumor your product line has great margins, I may demand that you pay a higher price for the part I'm selling you than if I am unable to tease that same information out of your division's margins, which may be much lower. Conversely, if your division has decent margins according to your
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Apple is a US based publicly traded company, they are obligated to disclose earnings.
Earnings, yes. Profit margins on a granular basis, no. That sort of information is quite often kept confidential because of the power it gives others in their negotiations with a company.
That information is so confidential that Apple keeps them hidden right here [apple.com] where all their 10-Q filings are found.
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Apple is a US based publicly traded company, they are obligated to disclose earnings.
Earnings, yes. Profit margins on a granular basis, no. That sort of information is quite often kept confidential because of the power it gives others in their negotiations with a company.
That information is so confidential that Apple keeps them hidden right here [apple.com] where all their 10-Q filings are found.
Is that so? Because so far as I can see, their 10-Q breaks margins down by Products and Services, but nothing more granular, just as I suggested. And they additionally break various other metrics down by product category, but those are very high level categories, such as all Macs, iPhones, iPads, or "Wearables, Home, and Accessories", again, just as I suggested.
If I'm missing something, however, let me know.
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If I learn through a leak/court filing/rumor your product line has great margins, I may demand that you pay a higher price for the part I'm selling you than if I am unable to tease that same information out of your division's margins, which may be much lower. Conversely, if your division has decent margins according to your SEC filings and I learn that another product line in your division has abysmal margins, I may be able to infer that your margins must be great, once again putting me in a stronger negotiating position when we next talk about how much you'll be paying me for the parts I'm providing.
Similar things apply to the relation between a company like apple and their customers.
If the customers don't see detailed earnings they will never know if the price apple is asking is unreasonable. Not providing this kind of information puts apple at a direct advantage over their customers.
But somehow everyone thinks this kind of advantage is a-ok.
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With a maximum commission of 30% as discussed in the case, how can you operate at a 75% margin?
Well, this is simplified quite a bit but basically: ((revenue - costs) / revenue) *100 = % margin.
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So, if the pass on at least 70% of what the users are paying to the devs, cost would be at least cost = revenue * 0.7. Now use that in your own formula.
((revenue - 0.7 * revenue) / revenue) *100 = % margin --> 30% margin
And this doesn't even include any costs of actually running the servers, so this is the max limit for margin unless
a) Apple takes usually much more than 30% commission or
b) that accountant isn't taking the money into account as costs that goes from the Store to the devs.
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Apple is acting as an agent for the sellers. They are not 'buying' the product from the seller and then selling it to the buyer. They just facilitate the transaction, and keep 30% of the selling price for doing so. The only revenue they have for the transaction is the 30%.
also $100 year fee + mac hardware costs (Score:2)
also $100 year fee + mac hardware costs.
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Apple is acting as an agent for the sellers
To be more precise, they are acting as a gatekeeper for the sellers. There is no other way onto iPhones besides through Apple.
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You can make your game free on the app store, setup a webstore and sell in game items through a safari storefront and link the purchase to your ingame account. You just can't make the purchase in app without apple taking a cut which seems reasonable to me.
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Apple isn't buying the software and reselling it; they are acting as an agent paid on commission. Just like a consignment store, Apple never owns the license being sold, and so the 70% of the sale price is not part of Apple's "cost of goods sold".
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Re:I'd like to see that math! (Score:4, Informative)
Apple's revenue is the 30%. 75% of that is profit (the margin).
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Well, in that case I don't think the ~75% are really newsworthy. After developing a software solution being paid off, running a service on the net is basically just running a bunch of servers. And definitely that margin (based on the 30% of total store revenue) isn't evidence that can be used to determine if the AppStore is a monopoly.
Other way round: you can limit prices and/or margins AFTER court decides you became a monopoly. Ask the Flappy Bird guy for his "margin".
In addition, I find basing calculating
Re:I'd like to see that math! (Score:4, Informative)
The differences between your examples and Apple are important:
Walmart often sells on consignment, but even then, they have actual costs to keep each unit in stock. Apple has no per-unit stocking costs; they only have any costs when a sale actually occurs. There is quite a bit [antiquetrader.com] of subtlety in how to "properly" account for consignment sales, but they all hinge on having physical stock and having more control over prices. For example, the FASB memo (No. 99-19) linked from that page discusses what factors determine whether Apple could claim the 70% as part of their revenue; most or all of them (depending on whether you think Apple successfully mitigates credit risk) say Apple cannot claim the 70% as part of their revenue.
Apple is not buying software licenses (or bags of potatoes) and selling them later. The licenses they sell do not exist until someone clicks a "Buy" button. The 78% (according to this third-party analyst) of 30% is their profit, not their gross margin, which is the entire 30%.
A 78% profit margin is pretty good evidence of monopoly rents; it says that no other sellers can effectively compete with you, because they could undercut your prices even with a 50% profit margin.
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they only have any costs when a sale actually occurs
That's not true for many reasons. Apple has a large team that approves apps before they can even enter the app store. That involves significant cost which they incur before the app can even be sold.
There are many apps in the app store which are free, or driven by ad-based revenue (which Apple gets no part of). That is a significant number of apps which Apple does not profit (monetarily) off of, yet bear the expense of approving, hosting and distributing. Walmart doesn't give anything away for free, so y
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You are confusing fixed overhead costs with unit costs. The factors that matter for the purposes of determining whether Apple is an agent or principal for a sale only consider the unit being sold -- and the current guidance is based on who controls that good or service before sale. The factors used in that anal
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It's not arbitrary at all. It is the difference between the wholesale model and the agency model. The App Store is not selling the product, the developer is. In your 'potatoes' example, the seller SOLD the potatoes to YOU for $1, and you can resell them for whatever price you want. That does not happen in the App Store.
As for why it matters. Antitrust law allows some actions that would otherwise be illegal if they are for 'legitimate business purposes'. For instance, Apple could say that part of the va
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I'd compare the app store to something more like Sam's club or Costco than a walmart. Producers give big discounts to Costco/Sams due to the exclusive nature of the stores..basically they pay for access to their customers by selling to them cheaper.
Apple's 30% cut is the same cost for access to Apple's customers. Or are we going to argue Costco/Sam's are a monopoly now too?
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What on earth are you talking about? The producers don't give discounts because of 'the exclusive nature of the stores'. What ever gave you that idea? They give discounts because the stores BUY a ton of product. They also sell BULK products, so the producer has lower costs associated with packaging, etc. They aren't 'paying for access to their customers' in any way. They don't give a crap about Costco's customers, because they aren't selling to Costco's customers, they are selling to Costco. And the
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The 30% is their percent take on the product, and since they don't make the product, it has no bearing on their actual costs.
I personally don't see why this even matters. Even if their "margin" is 95%, how is "you're making more on this, so WE should too!" an actual argument? If they're clearing 95%, it's because their customers are willing to pay that much for it from the retailer, it can be very disconnected from how much the retailer is willing to pay the manufacturer.
If Epic doesn't like it, they can
Re:I'd like to see that math! (Score:5, Insightful)
If Epic doesn't like it, they can go somewhere else or sell directly to their customers.
Uh, no, they can't. That is what the whole suit is about.
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If Epic doesn't like it, they can go somewhere else or sell directly to their customers.
Uh, no, they can't. That is what the whole suit is about.
Of course they can. They just can't sell to their customers on someone else's device while not playing by someone else's rules.
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Interesting. I didn't know Apple retained ownership of the phone after it was SOLD to their customer.
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It's literally impossibly for epic, or anyone else for that matter, to sell apps to an iphone user without having to deal with Apple. This isn't true for laptops and desktops apple makes, just apparently their phones. Seems like they hold all the cards and all the power over a device they sold, not leased, loaned or rented out but sold.
Imagine if you wanted to install software on your Windows computer but were told you could only install apps through microsoft's store. No other way. Of course that's not how
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That's not even remotely true. Epic can do what Netflix did, offer the app on the app store and charge the user outside the app/store for access and thus avoid Apple taking a cut.
What they can't do is offer in app purchases without Apple getting a cut.
Here's the math. (Score:2)
Your operating margin is how much profit you make of the money you get to keep. If you're just passing the money through then that's not money you get to keep.
Out of each $1 spent on the app, $0.30 goes to Apple.
Out of that $0.30 they are (according to Epic's expert) spending $0.066 (22% of $0.30) on operating the App Store and the rest is theirs to keep or spend on something else. The remaining $0.234 (78% of $0.30) is theirs to keep or spend on something else.
Usually, the operating margin doesn't cover ge
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It's really up to Apple to explain why such a high margin isn't coming from anti-competitive practices
Wrong.
Apple is the Defendant (Respondent). They don't have to explain anything.
It is up to Epic to explain why any particular margin constitutes "anti-competitive practices", which seems completely ridiculous.
In fact, I would think that if Apple deliberately operated the App Store at a loss, that would be stronger evidence of "Anti-Competitive" Behavior. Kind of akin to the "Dumping" model.
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Eh, no. In a civil case both parties have EQUAL responsibility to show evidence for their side. If Epic shows ANY evidence, no matter how thin, and Apple shows nothing, Apple will lose.
The margin does not show anti-competitive practice, and nobody said it did. There is no question that Apple prevents everyone else from selling IOS apps. The question is, WHY do they do that? Do they do it to protect the user? Or do they do it to make money? The margin certainly assists in answering that question. Bot
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Eh, no. In a civil case both parties have EQUAL responsibility to show evidence for their side. If Epic shows ANY evidence, no matter how thin, and Apple shows nothing, Apple will lose.
The margin does not show anti-competitive practice, and nobody said it did. There is no question that Apple prevents everyone else from selling IOS apps. The question is, WHY do they do that? Do they do it to protect the user? Or do they do it to make money? The margin certainly assists in answering that question. Both reasons could be considered anti-competitve, but only one of them is necessarily illegal.
Your comment about dumping is just dumb. Dumping is designed to drive competitors out of business. The App Store has no competitors, because Apple won't allow it.
Actually, I believe the Plaintiff (Petitioner) has an initial burden of proof. If they cannot meet that, then they will fail. But once they have met that bar, you are correct: Apple must Respond (hence the title, "Respondent"). Then, and only then, does it become a battle of the "Preponderance of the Evidence".
But remember, "Evidence" has to be Truthful, Relevant, and Admissible. And that second one, "Relevance", is pretty much up to the Judge.
And remember, all of this is against a backdrop of "Standard Ind
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It's really up to Apple to explain why such a high margin isn't coming from anti-competitive practices
Wrong.
Apple is the Defendant (Respondent). They don't have to explain anything.
Apple does have to explain it once it's a public fact (or a public, well-supported analysis). If not to this court (and see below how it will, in practice, have to explain it to build a coherent case) then to the regulators who will be very interested in the whole situation - especially in the EU (and possibly in China too, where anti-monopoly regulation is increasing). There's more than just this court case at state to Apple. Their gravy train is on some bumpy track and may derail.
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In this instance, the "something else" also includes all the other app infrastructure. Think about near-realtime push notifications from free apps (like Facebook, for example). The "App Store" isn't close to the entirety of the "App Ecosystem".
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Here's the red flag I have with the 78% figure; most people I know do not pay for apps at all. Their apps are generally free and they pay for services like Netflix or the product like Sony Connect for my headphones. I would guess that the accountant is not looking at the total costs to run the App Store and cherry picking numbers.
Apple may try to prove that in court, in which case you'll find out.
The app store and the 30% cut of the locked-in customer spend on the store is pretty close to a license to print money. From working in the online services biz for some years now, I doubt very much that it takes anywhere near 30% of the app cost to run the push infrastructure, app download servers, etc on the scale that Apple is doing it - everything except the push notifications (CDN to serve content, networking to datacentres, etc) is a c
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Like I said, the actual app store infrastructure is not going to be that complicated. Apple may (and does) have large datacentres, but those are providing other services as well as App Store - things like iCloud, which is a paid service all its own, iMessage storage and forwarding which is not part of the App store, and so on. For distributing the actual apps, they might well use a third party CDN anyway - so either their own DCs are cheap for this, or they use a CDN that is. Apple used to be close with Aka
Re: Here's the math. (Score:2)
I would guess that the accountant is not looking at the total costs to run the App Store and cherry picking numbers.
Thatâ(TM)s âoeExpert Testimonyâ in a nutshell.
But Apple has its own Experts, and can conduct Cross-Examination of Epicâ(TM)s; so, especially at this stage, just because Some âoeExpertâ sez it, doesnâ(TM)t make it so...
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Some items sold through App Store are produced by Apple (e.g. Apple News+ and Apple Music subscription), so they get to keep more than 30% of revenue.
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Some items sold through App Store are produced by Apple (e.g. Apple News+ and Apple Music subscription), so they get to keep more than 30% of revenue.
Apple News subscriptions and Apple Music subscriptions are not "sold through the App Store".
You're an idiot.
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The subscriptions are processed through their respective app, an app which in addition to being pre-installed on Apple devices is also available through the App Store (in case it gets deleted and the user wants to re-download it).
When a digital transaction (subscription) is made through the respective app, it counts as "services" revenue for the App Store.
Apple even offers developers an App Analytics [apple.com] tool for them to track and monitor this data.
Find out how customers discover and engage with your app.
Su
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Don't worry, I won't. But to calm you down: I'm able and ready to learn and I fully got bws111 explanation on how they got to that number, so my question on what they did here is fully answered.
But now we end up with a number that I don't see in any way connected to the pending court case if the AppStore is a monopoly.
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The 75% matters because it shows that Apple is making lots of money on the App Store, much more than it costs to run it. If Apple was barely breaking even on the App Store, then they could claim the App Store existed for 'a legitimate business reason' (like keeping users safe). That would probably not run afoul of anti-trust law. But if Epic can show they have a high margin, then it becomes apparent that Apple is just using its monopoly to make money and restrict competition.
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No. Making a crap ton of money from a service isn't wrong.
It's the other way round. The question is, if the AppStore is a monopoly? (IMHO it is, but it's the court's HO that matters here) Only after that is decided, making lots of money is a problem.
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Making a crap ton of money on a service is not wrong UNLESS you make that crap ton of money through anti-competitive means.
How do you think to court arrives at a decision? By looking at the evidence provided by the parties. The court will use this piece of evidence, along with other pieces of evidence, to decide whether or not the App Store is an illegal monopoly (which is different than just a monopoly).
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Making a crap ton of money on a service is not wrong UNLESS you make that crap ton of money through anti-competitive means.
Yes. But the question is, if it is anti-competitive means.
I don't think anyone doubts that Apple's profits need to be measured in crap-tons
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Yes, these are the questions. I don't know why people have such a hard time with this. The suit raises a bunch of claims like, Apple has a monopoly on IOS app distribution, Apple maintains that monopoly through technical and contractural means, the App Store is anti-competitive, etc. Both sides will introduce evidence to support or refute those claims. No single piece of evidence will involve all the claims.
Previously Epic introduced evidence showing Apple takes actions to prevent iPhones from interacti