Apple Risks Losing Billions of Dollars Annually From Ruling (bloomberg.com) 61
Mark Gurman, reporting on Friday's ruling in Apple and Epic lawsuit: So how much does Apple stand to lose? That all comes down to how many developers try to bypass its payment system. Loup Venture's Gene Munster, a longtime Apple watcher, put the range at $1 billion to $4 billion, depending on how many developers take advantage of the new policy. Apple depicted the ruling as a victory, signaling that it's not too worried about the financial impact. "The court has affirmed what we've known all along: The App Store is not in violation of antitrust law" and "success is not illegal," Apple said in a statement. Kate Adams, the iPhone maker's general counsel, called the ruling a "resounding victory" that "underscores the merit" of its business.
Apple's adversary in the trial -- Epic Games, the maker of Fortnite -- also contended that the judge sided with Apple. This "isn't a win for developers or for consumers," Epic Chief Executive Officer Tim Sweeney said on Twitter. [...] Apple made about $3.8 billion in U.S. revenue from games in 2020, most of which came from in-app purchases, according to estimates from Sensor Tower. But even if the ruling ends up costing Apple a few billion dollars a year, that's still a small fraction of its total revenue. In fiscal 2021 alone, the company is estimated to bring in more than $360 billion, meaning the change won't make or break its overall financial performance. And many developers may choose to stick to Apple's payment system so they don't have to build their own web payment platform.
More concerns were shared by the EFF in a thread on Twitter. "Disappointingly, a court found that Apple is not a monopolist in mobile gaming or in-app transactions, so its App Store commissions don't violate antitrust law. One bright spot: the court found Apple's gag rules on app developers violate California law...
"The court's opinion spells out many serious problems with today's mobile app ecosystem, such as false tensions between user choice and user privacy. Congress can help with real antitrust reform and new legal tools, and shouldn't let Apple's privacywashing derail that work."
Apple's adversary in the trial -- Epic Games, the maker of Fortnite -- also contended that the judge sided with Apple. This "isn't a win for developers or for consumers," Epic Chief Executive Officer Tim Sweeney said on Twitter. [...] Apple made about $3.8 billion in U.S. revenue from games in 2020, most of which came from in-app purchases, according to estimates from Sensor Tower. But even if the ruling ends up costing Apple a few billion dollars a year, that's still a small fraction of its total revenue. In fiscal 2021 alone, the company is estimated to bring in more than $360 billion, meaning the change won't make or break its overall financial performance. And many developers may choose to stick to Apple's payment system so they don't have to build their own web payment platform.
More concerns were shared by the EFF in a thread on Twitter. "Disappointingly, a court found that Apple is not a monopolist in mobile gaming or in-app transactions, so its App Store commissions don't violate antitrust law. One bright spot: the court found Apple's gag rules on app developers violate California law...
"The court's opinion spells out many serious problems with today's mobile app ecosystem, such as false tensions between user choice and user privacy. Congress can help with real antitrust reform and new legal tools, and shouldn't let Apple's privacywashing derail that work."
Much more important than loss of revenue (Score:2, Insightful)
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Sadly this ruling does not mean that Apple has to allow alternative app stores or side-loading, only that they have to allow alternative payment systems. Apple still controls what apps are allowed on the App Store.
It also doesnâ(TM)t stop folks fromâ (Score:5, Insightful)
This means that a native app can contain basically nothing but a glorified shim to authenticate to a website and Apple cannot in practice stop them provided that it functionally works. Combine the Japanese ruling with this one and Apple could be left with a store full of apps which just run glorified Safari in a separate sandboxed context for the most part. Spotify already shipped a lot of key functionality outside of the app package by downloading it dynamically (Apple turned a blind eye).. now everyone else can.
Re:It also doesnâ(TM)t stop folks fromâ (Score:2)
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Especially since this was Jobs' whole and entire shtick.
Total control freak. No idea what mommy and daddy did to him, but it definitely was abusive.
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Both will do Apple good. Anything that breaches their walled garden (or Google's) is a good thing. Do we really trust these companies to have our best interests at heart? They do, as long as it benefits their bottom lines.
Not so sure (Score:4, Insightful)
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Re:Not so sure (Score:5, Insightful)
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Apple isn't dictating what developers have to do.
Developers are entirely free to develop for Android, and there is nothing Apple will try to do about it.
When you develop software for a company, however, it's quite unreasonable to think that the company should not be able to dictate what the software that is being developed for them must and must not do.
And you see, that's where the misunderstanding arises.
A person who writes an iOS app is not writing it for the users of that app, they are developin
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Apple isn't dictating what developers have to do.
Developers are entirely free to develop for Android, and there is nothing Apple will try to do about it.
I love the you are free to live with whatever restrictions I decide to impose on you arguments.
Apple is holding marketplace for iOS software distribution captive. Developers are not free to sell their software thru a different channel other than the one and only one that Apple maintains by force. In this country markets are subject to regulation.
A person who writes an iOS app is not writing it for the users of that app, they are developing it for Apple, who in turn will pay them a commission based on sales of the app or any in-app purchases.
There is no merit in this statement. The software is the property of the developer not Apple. It's not Apple's software and Apple didn't even contract for its d
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Likes Macdonalds is holding the marketplace for Big Macs captive, you mean?|
Why should they have to, when developers are willing to provide the service without even being asked to?
Explain the reasoning for this conclusion. iOS is Apple's own fricken property.
Why, at the end
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Likes Macdonalds is holding the marketplace for Big Macs captive, you mean?|
No. Big Macs are made by McDonald's. iOS applications are made by their respective vendors. The marketplace is where iOS software can be bought and sold.
It would be closer to living in an alternate reality in which McDonalds is able by fiat to prevent competition like burger king from existing in order to maximize its own profits. The interests of those who would like to compete in the marketplace as well as the interests of customers are infringed by monopoly control over the marketplace for fast food.
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"The marketplace does not simply contain Apple it contains millions of independent software vendors and hundreds of millions of potential customers."
For me, this is the crux of the matter. The marketplace doesn't comprise hundreds of millions of potential customers. It comprises hundreds of millions of *actual* Apple customers, each of whom Apple has invested in acquiring and retaining as a customer, through its operating activities. Apple has spent literally billions winning those customers, and then many
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When you develop software for a company, however, it's quite unreasonable to think that the company should not be able to dictate what the software that is being developed for them must and must not do.
If Apple wants us to develop software for them, Apple should pay us up front to develop the app. As long as this is not happening, Apple is a consignment company, not the party that the software is being developed for. The problem is that half of all U.S. smartphone users are locked into dealing exclusively with that single consignment company unless they spend a grand on a new phone.
But of course, most everyone has their eyes on that not so insignificant slice of the mobile market that are iOS users, and then somehow decides that their business model is completely impractical without it.
Actually, in this case, Epic decided that their business model didn't require Apple at all. That's why they threw away tha
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In actuality, they really don't care if you develop software for them or not, so no.
That's shouldn't be the fault of a company that a person has bought their mobile device from. You can't blame a company that sells the product for buyer's remor
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In actuality, they really don't care if you develop software for them or not, so no.
Then developers aren't developing for them. Apps are ultimately designed for whoever pays the bill.
Apple doesn't decide what the app does, they don't decide how the app looks, they don't demand specific features or reject developer decisions, for the most part, etc. Rather, apps are designed to meet the needs of users. Developers follow Apple's rules as a condition of sale, but apps are no more designed for Apple than the VCR that I sold at a consignment store was designed for the consignment store. (Th
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Of course, and in Apple's case, those payments come from Apple. iOS users do not pay developers directly unless there is physical merchandise that is to be sent.
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And in the case of a camcorder, those payments come from Walmart, B&H, Amazon, etc. Camcorder buyers do not pay manufacturers directly unless they're buying from a Sony store. In the case of Cheerios, those payments come from a grocery store. In the case of gasoline, you're buying from a gas station.
Your argument is prima facie absurd, because it can literally be used to clam that nearly every product ever sold is not made for consumers.
And just to head off your next argument, no, the difference is
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You keep suggesting that there's this thing called an "iOS market" that as if that is a general thing just as much as a grocery market is.
It is not.
iOS is trademarked and owned, in entirety, by Apple. People who are uncomfortable with using a closed operating system such as this should go elsewhere and stop expecting Apple to change.
If a company wants to let you develop enhancements for its own property without taking whatever percentage of cut it deems to be suitable, that's fine. But it's nothin
Re:Not so sure (Score:4, Informative)
I'm sure Apple will very soon be adding a clause to their agreement preventing companies from charging more in the App store then by other means.
Last time they tried to do something similar (with iBooks), they ended up paying out a very large class action settlement - so I have my doubts.
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No. The iBooks settlement was for price fixing. That is different from a price equalisation clause which is actually quite common on business. And even more bolstered by this ruling saying that Apple is not a monopoly.
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No. The iBooks settlement was for price fixing. That is different from a price equalisation clause which is actually quite common on business. And even more bolstered by this ruling saying that Apple is not a monopoly.
The iBooks case was not settled. A trial declared Apple to be a convicted monopolist [wikipedia.org], and the most-favored nation clause was a key factor in that decision. That puts Apple under extra scrutiny. Apple would be wise not to do anything that even smells slightly like it is trying to create a monopoly.
Moreover, because iAP is tightly integrated into the operating system, which creates the ultimate convenience, there can be no other plausible means besides price in which a third-party payment system could real
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Not a problem. Read the ruling from this case, the judge expressly rejected the claim and declared Apple does not have a monopoly in the app store and rejected all antitrust claims against them.
Possible means is irrelevant to price matching clauses. They aren't illegal even for a monopoly. What Apple would be cautioned against doing is attempting to guide pricing in any way, but if they leave final price up to the developer they can require matching clauses.
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Not a problem. Read the ruling from this case, the judge expressly rejected the claim and declared Apple does not have a monopoly in the app store and rejected all antitrust claims against them.
Read the ruling again. Antitrust claims are not necessary for unfair competition.
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I'm sure Apple will very soon be adding a clause to their agreement preventing companies from charging more in the App store then by other means.
Last time they tried to do something similar (with iBooks), they ended up paying out a very large class action settlement - so I have my doubts.
I believe part of this case has more or less already prohibited them from putting such a clause in their T&Cs.
If true, its a very bad sign for Visa/MC/AMEX who do exactly that, take up to 6% of the transaction as fees and then prohibit merchants for offering a discount for paying cash/other means.
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I'm sure Apple will very soon be adding a clause to their agreement preventing companies from charging more in the App store then by other means.
That is illegal price-fixing.
This is what all the credit-card companies do already.
Although this should be illegal, it isn't because restrictions on a payment method are not the same as restrictions on the pricing of products.
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Courts tend not to look very favourably on attempts to frustrate the meaning of their ruling in that way. Apple has been punished for doing it in the past, like that time they were told to apologise to Samsung on their website but added a load of stuff about how they had won other court cases against them.
Re:Not so sure (Score:5, Insightful)
I think Apple just has to do nothing, to be honest.
Because if you want to use an alternate payment system, Apple will let you go to a link to open a web browser window where you can enter your credit card information to buy stuff. This is called friction, and for a lot of apps using IAP, this is too much because it takes the "impulse" out of impulse buying.
So developers who decide to go exclusively this way may make LESS money. I mean, the real reason Free 2 Play works is because right when you're about to get that boss, you need to buy more gold or smurfberries or whatever. Well, it's a lot easier to hit "Buy 100 Smurfberries Now" when it pops up on screen and continue playing, than it is to tap "Buy Smurfberries", click a link, scroll through the options, enter your credit card number, enter your billing address, click buy then wait while it updates, then continue. At any point you might decide "screw it" and then do something else.
Games that are dependent on impulse buys will likely have to keep using Apple's payment system just to keep revenue up because Apple makes it too easy to keep spending money by tapping a few button.
But really, this shouldn't even be that big news - what should be the news is hidden in the judgement - that the temporary injunction preventing Apple from cancelling Epic's developer accounts is now gone. This should be the worrying one because it means Unreal Engine may soon lose support for iOS. It should concern Epic because that may influence new project development - if you're planning on making a game, this uncertainty may push you towards a competing game engine so you can be sure your project will work.
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So developers who decide to go exclusively this way may make LESS money. I mean, the real reason Free 2 Play works is because right when you're about to get that boss, you need to buy more gold or smurfberries or whatever. Well, it's a lot easier to hit "Buy 100 Smurfberries Now" when it pops up on screen and continue playing, than it is to tap "Buy Smurfberries", click a link, scroll through the options, enter your credit card number, enter your billing address, click buy then wait while it updates, then continue. At any point you might decide "screw it" and then do something else.
Ah, but that friction need not be so severe. Once you have the user's credit card information, that tap can literally be to a page that says "Buy for $XX.XX" with a "Continue" button and a "Cancel" button, and it can be a one-click purchase just as for iAP. There's nothing in principle preventing approximately the same level of seamlessness after the initial configuration. And if they show a "Did you know you can get a 20% discount on the cost of purchases by buying through our Website? [Configure Now]"
Cash discounts are okay under credit card rules (Score:3)
The rules from the credit card companies prohibiting different prices for cash vs cards was found illegal around twenty years ago or so. What's they require now is you can't explicitly charge a the customer a "credit card fee" on top of the marked price. The card price is the "regular price"; a lower cash price is a "discount".
Quoting Visa:
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A discount for cash is different from a surcharge. The rule states the posted price must be for cards, however, merchants can provide a lower price for cash acceptance.
I have seen vending with thing like $0.10 CC fee (Score:2)
I have seen vending with thing like $0.10 CC fee on them.
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That's probably a violation of their merchant agreement if the price is listed as $1 plus 10 cent CC fee.
It would be okay under the merchant agreement if they said $1.10, with a ten cent discount for cash.
Of course people violate the merchant agreements all the damn time, such as by storing the CVV2 number (three digits in the back) so they can use it to bill you again later without paying the 20 cent fee for card-not-present transactions that don't have it.
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I'm sure Apple will very soon be adding a clause to their agreement preventing companies from charging more in the App store then by other means. This is what all the credit-card companies do already.
Card companies lost that battle long ago.
Evolution? (Score:2)
Don't call it "losing". (Score:3, Funny)
I dunno dude (Score:1)
I am siding with Epic because I like Unreal Engine 5. I don't know any of the facts or merits of the case, but I do know Epic is innovating by exponentiation while Apple does incremental plus one updates. Basically, Apple hasn't been doing anything cool lately while Epic is actually coming up with funky ass shit like every single day. I mean, have you seen Nanite and Lumen?
Neither company is philanthropic, so we can decide based on which one is doing cool stuff that oughta be rewarded.
Unlikely (Score:4, Insightful)
The ruling only allows developers to redirect customers to external payment methods. It does not prevent Apple from forcing the store payment method to exist nor does it prevent Apple from mandating equal prices.
End result, will you as a customer jump through hoops to pay, or just use the Apple...
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Right, where that "external payment method" is the PayPal or Shopify or whatever wallet app you have installed, and you one-click buy just like with Apple Pay. If I were one of these existing payment services, I'd be scrambling to update my iOS app to to be easily tied into by all of the developers.
So take your game elsewhere (Score:1)
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No you don't.
That is precisely the whole damn point here.
Stop drinking that Rockefeller Kool-Aid, mate.
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(Yoda voice) Oh, but you do!
iOS isn't the only mobile platform around. It isn't even the most prevalent. You have plenty of options.
The Spin (Score:1)
Apple depicted the ruling as a victory, signaling that it's not too worried about the financial impact. "The court has affirmed what we've known all along: The App Store is not in violation of antitrust law" and "success is not illegal," Apple said in a statement. Kate Adams, the iPhone maker's general counsel, called the ruling a "resounding victory" that "underscores the merit" of its business.
How grown adults do this with a straight face is something that astounds me to this day. These are ostensibly p
Not a loss. (Score:2)
No it will not! It will not lose one single cent! (Score:1)
It will just not gain some money it tried to rob from people, and hence did not deserve in the first place.
Those are two different things.
Your wording is one of the oldest "libertarian" memes, where not being able to take something from others is deliberately confused with others taking something from one.
Try arguing "But I risk losing my money!" next time a cop stops you from robbing somebody else for their money.
Re: No it will not! It will not lose one single ce (Score:2)
You never establish how anyone is being robbed so none of this gibberish makes any sense.
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It can't be established because it's bullshit.
Other App Stores are risky (Score:1)
Entitlement Culture (Score:1)
This case perfectly highlights the entitlement culture of today. The government does not exist to force a private company to operate a specific way simply because you do not agree with the way they do it. Nobody is harmed by Apple's business model. You have options. Just because they may not be the options that you want doesn't mean that they don't exist.
There hasn't been a non-hyperbolic argument port forth yet in support of Epic's claims.
Apple is not a monopoly. (Score:3)
It's not as if Ford is suing Tesla for not being able to sell Ford cars from a Tesla dealership.
There are far more Android phones than IOS phones. Apple should continue to have full control over their store.
This is a judicial waste of time.
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It's not as if Ford is suing Tesla for not being able to sell Ford cars from a Tesla dealership.
If Apple were simply selling their own cars (Apple's software) from their own dealership (app store) there wouldn't be an issue.
The problem in this case Apple is preventing buyers (iPhone users) and sellers of cars (software vendors) from buying and selling anywhere except from Apple's dealership (app store).
There are far more Android phones than IOS phones.
Market share of Android is not relevant.
Apple should continue to have full control over their store.
Agreed.
What Apple should not have full control over is whether Ford or Tesla are allowed to exist. In Apple land everyone else's stores are outlawed and anyone w
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Antitrust law does not apply solely to monopolies. It also applies to companies that control a significant share of a market. The primary idea is that if your market power is so great that others MUST do business with you, antitrust law attempts to rein in abuses of that power. If you are are Republic Wireless, and you want to demand exclusivity and high fees from your vendors, and you can get them to do that, there's no legal issue, because they are such a tiny player in the market, vendors can go anywhere
Greed (Score:1)
That said, maybe if they had not been such douche-nozzles about it, then it might not have gone to court.
Correct me if I am wrong, they took 33% of what was transacted? That is gouging - I am surprised that it took this long for someone which a large enough army of laywers to push back.
If it was maybe 5%-10%, then it may have continued as is, or a sliding scale, something like t