Apple Terminates Epic’s Developer Account

Posted on August 29, 2020 by Paul Thurrott in Apple, Dev, Mobile gaming, iOS with 53 Comments

Apple on Friday terminated Epic’s developer account and has removed the firm’s remaining games from the iOS App Store.

“We are disappointed that we have had to terminate the Epic Games account on the App Store,” an Apple statement explains. “The court recommended that Epic comply with the App Store guidelines while their case moves forward, guidelines they’ve followed for the past decade until they created this situation. Epic has refused. Instead[,] they repeatedly submit Fortnite updates designed to violate the guidelines of the App Store. This is not fair to all other developers on the App Store and is putting customers in the middle of their fight. We hope that we can work together again in the future, but unfortunately[,] that is not possible today.”

My reading of the U.S. District Court ruling referenced by Apple was that the consumer electronics giant would not be able to terminate Epic’s developer account. But Epic maintains multiple accounts, with one dedicated to the Unreal Engine, and that account has not been terminated, in keeping with the earlier ruling.

In continuing to defy Apple, Epic is also defying critics who believed that the firm was simply playing a high-stakes game of chicken with Apple and that it would quietly reinstate a version of Fortnite without its own in-app payment system by Apple’s termination deadline. But those with a better understanding of Epic Games CEO Tim Sweeney believe he’s in this for the long haul and is committed to correcting what many feel are illegal and abusive business practices on the part of Apple.

And just in case anyone actually believed Apple wasn’t petty, it started promoting PUBG, a Fortnite competitor, in the iOS App Store the day that it terminated Epic’s account.

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Comments (53)

53 responses to “Apple Terminates Epic’s Developer Account”

  1. SRLRacing

    PUBG by hilarious coincidence is an Unreal Engine 4 game

  2. tallguyse

    I still don’t understand the difference between Apple and Google taking a 30% cut, and Sony / Microsoft / Nintendo taking a 30% cut. Yes I’ve read Epic’s statement on that, and no it doesn’t hold water IMHO.

    • SRLRacing

      In reply to TallGuySE:

      You are a little too focused on the exact cut. In the comparison you make between gaming consoles and smartphones the better thing to focus on is how they are defined as platforms? And how do those definitions effect those in their closed (or mostly closed) ecosystems?

      I am going to miserably fail at describing their distinctions so I will refrain from putting the effort in but it boils down to investment and purpose as I see it.

      The gaming consoles are dedicated devices that do pretty much nothing but play games. They are luxuries that most people do not have or conversely many people are invested in multiple gaming ecosystems. Plus there is still an alternative way to purchase applications for these platforms in the form of physical releases which are available from countless retailers that do compete for those sales.

      Smartphones are the world's primary computing platform where everything from communication, banking, and transportation happens on. In many parts of the world if you do not have a smartphone you basically do not exist. Any harm caused to either consumers or companies by these platforms that consist of over 4 billion users are much wider spread and cut much deeper than the roughly 150 million reached by completely optional gaming consoles. Thus the comparison to gaming consoles are largely invalid.

      • tallguyse

        In reply to SRLRacing:

        Fortnite is free to play on any device and it's cross platform, so this is about in-app purchases. So I really do not understand why Apple and Goole should charge Epic less than Sony / Microsoft / Nintendo for in-app purchases.

        My comments are solely about the Epic vs Apple and Google over in-app purchases. Software pricing, and especially subscription pricing, are a different issue IMHO.

        • wright_is

          In reply to TallGuySE:
          why Apple and Goole should charge Epic less than Sony / Microsoft / Nintendo for in-app purchases.

          The one big difference is that the consoles aren't sold for profit, they lose money, but the manufacturers make up that deficit through software sales. If Apple was selling the iPhone 11 Pro for $399 and getting the rest through the store, people might not be as upset. That said, even that 30% on MS/Sony/Nintendo stores is high, but you start with the biggest offender and work down the list. If the biggest offender is forced to re-assess the situation, then the others will probably follow suit, so they don't also end up in court and in front of investigations into unfair business practices.

          You have to start somewhere, so you start with the biggest, most prominent offender.

          • robsanders247

            In reply to wright_is:

            But isn't that the choice of Sony, Microsoft and Nintendo? They "don't" have to sell their consoles below the cost to develop and manufacture the device, they choose to do so because they want to sell more devices. Which then in turn sells more games (hopefully) of which they take 30%, making up for the losses. That's a business model to pursue, just as selling a smartphone at $1000+ is a business model. It's up to the market to decide whether they support that business model and are willing to hand over that amount of money for a device.

            I'm not saying what Apple is doing is right, I actually like having a single storefront that handles my purchases and subscriptions (and not just mine, it also allows me to have a single point of control over what my children install and buy on their iOS devices). Having taken subscriptions to magazines and newspapers through different models, I must say I've only been able to cancel a subscription without friction for the ones I subscribed to through the App Store. Which makes me more likely to subscribe to other services.

            Should Apple take a smaller cut? Probably, especially for smaller developers with a progressive rate when you sell more. It would also drive Google and others to smaller cuts. Should they allow more control for the customer relationship and allow pointing customers to other ways to subscribe? I would support that, I do that for some developers but mostly I just choose the convenience of the App Store. And looking at the lack of success of the Epic store on Android, I don't think that customers really want to have multiple stores. But what I would like is to be able to purchase Kindle content after reading a book (I don't mind this transaction opening in my browser, although that's not ideal for vendors that I have a payment relationship with).

    • shmuelie

      In reply to TallGuySE:

      The key is what you get for the 30%. On smart phones all you get is a place in the store. On consoles you get advertising, access to engineers and devs to help with performance, and more.

    • wright_is

      In reply to TallGuySE:

      Fine, walk down to your local electronics store and count the PS4 and Xbox titles on the shelves, then walk to the next aisle and tell me how many Apple apps are displayed there?

  3. rosyna

    PUBG is a UE4 game owned by Tencent. Fornite is a UE4 game from a company with 40% ownership by Tencent.

    Either way, Tencent.

  4. curtisspendlove

    Heh. I noticed the PUBG promotion. I laughed.

    Epic did this to themselves. Hope they get what they want out of it.

    To be honest though, I think what they are going to actually get out of this is a *slightly* better revenue split and a distinction between “essential” and “non-essential” apps.

    So games or entertainment will be luxury types of apps and subject to harsher revenue splits.

    (Apple does not like to lose. And they will be punitive against Epic forevermore. Paul mentioned the first strike toward the end of this exact article. And like I’ve said before. I expect to *never* see Epic at a keynote again. Scoff, but it *does* matter in the Apple developer community.)

    Now, before everyone yells at me, I’ll also note that Epic has still played this series of strokes brilliantly. They didn’t win as duly as they thought they would. But they scored some blows in a time Apple is doubling down on stubbornness.

    It’s almost like Apple has decided it welcomes the suits or something. I don’t quite get how they can remain this tone deaf on their developer relations. (They have always had an at least semi- if not fully-antagonistic relationship with their devs though. So ... :: shrug :: )

  5. wright_is

    I thought the court had said that they couldn't terminate the license while the case is pending? And that, if Epic wanted back in the Store, they'd have to change their payment options back to only Apple Pay, without prejudice over the outcome of the case?

    Does this mean that Apple are in breach of a court decision?

  6. jabi

    Epic acknowledges that they are in for this for years. I believe they'll make a change to the whole market. Imagine if they were allowed to install a mini store on iOS as long as it's with 'full consumer consent'. That should be the case in all platforms, not only desktop or the web. What's happening in mobile platforms is pure monopoly.

  7. RonV42

    The Apple faithful will always say Apple is doing the right thing for them. No matter how much evidence you may present on this topic they will always believe otherwise.

    • Paul Thurrott

      Yeah. I have a big problem with that.
    • tallguyse

      In reply to RonV42:

      You should browse the forums on MacRumors - there are a very large number of threads critical of Apple and their products.

      That said, I think reasonable people can disagree on Epic vs Apple and Google, with each side’s arguments having merit. This is not a black and white issue IMHO.

  8. jgraebner

    In reply to Skolvikings:

    Yes, it's their right, but I would really expect Apple's customers to be the ones that are most on Epic's side here. Apple's policies are both costing those customers money and limiting what they can do with their devices.

    • Paul Thurrott

      People voting against their own interests is arguably one of the biggest issues today. Especially when they don't realize they're doing it.
  9. jgraebner

    In reply to Hawaiianteg:

    Apple is a public corporation. Their profit margins aren't a secret.

  10. Saarek

    In reply to Hawaiianteg:

    I never mentioned the cost of the App Store.

    But it is true that Apple poured Billions of dollars into the iPhone and the iPhone infrastructure.

    They are making back many times their investment. That’s what successful companies do. Why should they be punished for it?

    Microsoft made a reported 11.4 Billion Dollars on the Xbox line in just Q4 2019, how dare they make so much money and still charge 30% for all Xbox games!

    The house of mouse took 65% of the cinema takings for the last star war movies. Those evil scum bags, how dare they charge for a successful product and make all that money, not just on the theatres but on services and products connected to said movie. Evil, evil corporation!

    But no, not a squeak about Microsoft, Sony or Nintendo and their 30% cut. Or any other company, just indignation and disgust at Apple.

    Why no tears over the poor cinemas getting ripped off by 50-65% of their takings being taken? Or for the cost of business across any industry?

    10 years ago if you’d said to a developer “I’ll tell you what, I’ll give you access to a market of billions of active users, and not just any users, no the cream of the crop who have money to spend and a proven track record of doing so. In fact our store is the most profitable by far for all developers. In return you will need to pay 30% of the total sale to me. I’ll give you the developer tools and all the support you’ll need to get up and running too. Oh and if you make your app free there is no charge.”

    Not a chance in a million a developer would have said “ah jeez, that sounds like too much to me. Nah, I’ll give that a miss thanks.”

    Zoom to 2020, and the developers are outraged at the cost and multi billion dollar companies are pretending to be the saviour of the world. You have Facebook who are all pissed off that Apple wants to make iOS even more private and people like epic who have made far more off of iOS than any other platform and want a bigger cut of the pie.

  11. jgraebner

    In reply to Skolvikings:

    That's fine, I suppose, but you wouldn't prefer to pay less for apps/in-app purchases? How does it benefit you to not be able to use Fortnite or Microsoft's XCloud on your device? Are you better off not being able to buy ebooks in the Kindle app or even see instructions on how to sign up for subscriptions for services not offered through Apple's payment system?

    These policies are primarily protective of Apple's profits. It's pretty hard to find consumer benefits from them.

  12. Saarek

    In reply to paul-thurrott:

    Paul, Apple's margins have been in the 30-35% region for decades. When the App Store was released you stated "From a developer standpoint, the App Store looks like a good deal. Developers can set the price of their apps and they can be free if desired. For paid apps, developers keep 70 percent of the asking price, while the remainder goes to Apple to support the maintenance of the store. And there are no credit card or hosting fees."

    Back at that time iOS had around 12 Million active users, it's closer to 1 Billion now so the amount of customers you can potentially reach is astronomically bigger.

    I genuinely want to know, to your mind, why the 30% cut was a good deal with just 12 Million potentialy customers but now with so many more potential customers it's not.

    Why, to your mind, is it ok for Microsoft to charge 30% of all game sales on their platform, but Apple cannot.

    What's the logic here? The costs for the developer are the same now as they were back in 2008. Except they can now potentially reach far more customers. Note as well that having just the one store also benefits developers. Yes, they have to pay the 30% cut, but unlike on Android you won't find your successfull app being pirated and given away on an alternate app store. Apple has paid more to developers, way more, than Google or anyone else ever has done.

    • Paul Thurrott

      What's the logic?? Let's see. 12 years has gone by. Apple has monopoly power over 1 billion consumers. And it has extended those fees, unfairly, to include subscriptions. Its rules are obtuse. Apple competes with its own developers and doesn't suffer from the fee structures it puts on others. Etc. All kinds of things have changed. It's not OK for Microsoft to do the same thing, but it's not: Microsoft doesn't have a monopoly, nor does it force customers to install apps only through its Store. But wha\tever. You go after the worst offender, the biggest bully, first. Apple is that company. Apple has CHARGED developers more than anyone else too. Please stop defending the indefensible. You clearly don't understand the issues here at all.
      • Saarek

        In reply to paul-thurrott:

        Apple does not have a monopoly, only 13% of all smartphones sold in 2019 were iPhones. I appreciate that you understandably have a US centric point of view but even in the US half of users use Android. Yes, you could argue that Apple has a monopoly on iOS specifically, but so does Nintendo on their devices, it's the same thing and Epic is not leading the charge to change the Console makers cut and no one here is crying out for the poor game developers there.

        You state that Microsoft does not have a monopoly and does not force customers to install apps only through its store. You are correct, I can buy a game from amazon and use a disc, but Microsoft still gets their cut from that sale. Same deal, different delivery medium, exact same end result, you cannot escape Microsofts cut. If I want an app on my Xbox I can only get it from Microsoft.

        Consumers have a choice, it's called Android. They can go Android and either buy from Google Play Store at the same 30% cut or go to another App Store on Android and steal the app (piracy is rampant on Android) or pay a bit less from them.

        I'm sure Developers would love to pay less to Apple, who wouldn't want to cut their costs? But at least on iOS piracy is virtually non existent and you have immediate access to the most lucrative software store on the planet, and it is the most lucrative both for Apple and Developers by a HUGE margin.

        I work for a large insurance company, we have to pay our brokers commission for access to their market and customers and the commission rate ranges from 30-45% of the total insurance premium. But the cost of doing business with them is ultimately worth it.

        As I see it it's the same for Apples install base, it's the cost of doing business.

        Do I think that Apple should probably look to lower their fees a bit? As it happens I do. I don't think I'll pay any less for the same apps, but with a Billion+ active users the scale for both sides to make more profit with a lower cut in place is possible and Apple can easily afford to do it.

        I don't agree though with condemning a company for making money on a product they spend billions to produce. Perhaps I am just an old fashioned capitalist. If the Developer wants to make £7 for their App then they need to price it at £10.

        • Paul Thurrott

          If your understanding of a monopoly begins and ends with a percentage figure, you have no idea what a monopoly is and I just stopped paying attention.
          • Saarek

            In reply to paul-thurrott:

            I'm well aware of what a monopoly is: "the exclusive possession or control of the supply of or trade in a commodity or service." And you will note that I did reference that you were likely referring to iOS and Apple's control of the App Store with no other option on iOS.

            My issue with all of this is that the reporting is extremely biased (not just here, everywhere on this issue) and normally I find you to be eminently reasonable and balanced in your view. It's one of the main reasons I visit your site and I have followed your articles for the last 20 or so years.

            The 30% fee structure is pretty much an industry standard in the tech world. From the console makers to Valve's Steam store, and other examples I could happily provide you.

            It's then thrown back that, oh well Sony has competition against their Playstation! Well, that's true. But Apple has competition against their iPhone, it's called Android and is used by pretty much every other company out there.

            Yes, there is no separate app store for iOS. There is also no separate App store for the Xbox, Nintendo or Playstation. All are hardware products which are a closed design.

            Obviously we will have to see what the courts say about this, but saying that Apple is the biggest and therefore has to be the one to fall first so that the others can also be made to offer a lower fee structure isn't going to work. In the trial, if it ever gets to that stage, Apple can simply point at all of the other companies and say "See, it's an industry standard".

            If people really want the app store fee's lowered then there needs to be adequate pressure applied on all of the companies that charge fees like Apple does. If not the push is doomed to failure and is also illogical. Either they are all guilty or none are.

            As to Epic's own battle, I think they are going to get burned and burned badly. The second this gets to proper trial they will have to justify why it is fine with them to pay Microsoft a 30% cut but not Apple. I'd love to be in the room when they try to explain that one!

            • Paul Thurrott

              It's not fine with Epic that they pay 30 percent to Microsoft. Sweeney complained about that years ago. But there's a big difference: Apple has a monopoly on app distribution on iOS, and Microsoft doesn't on Windows. The Microsoft Store is not the only avenue for apps on Windows, and Microsoft doesn't get a 30 percent cut on probably 99 percent of the apps sold to Windows users. That's the difference between having a monopoly and not having one.
              • Saarek

                In reply to paul-thurrott:

                You're right, but you also know I was referring to the XBox specifically in relation to Microsoft.

                As with Mac OS, Windows has many routes for purchasing software.

                Personally I hope that Apple reduces their cut on the App Store and this all just goes away. Although I enjoy being able to purchase my Mac and Windows software from wherever I wish (who doesn't want cheaper software!) I do appreciate the privacy that comes with iOS and part of that is an advantage of the walled garden approach Apple has with iOS.

                I don't feel for Epic one bit. They have made Billions of dollars out of Fortnite, as they should with a popular gaming title, and they just want more money for themselves. It's not about any kind of principal other than corporate greed on both sides.

                • Paul Thurrott

                  Actually, I didn't, sorry. The issue with Xbox is that the market is so small. When you go after Apple, it's a market of one billion people, and a company with 40-50 percent marketshare. When you go after Xbox, you're talking 10s of millions of people and a minority share in the market vs. Sony and Nintendo. So you go after the biggest problem first. When Apple's arbitrary 30 percent vig is stripped away, that will impact all the other app stores that charge at the same level. It's inevitable.
  13. richardbottiglieri

    Seems to me that the biggest losers here are the users. The dispute should be played out in court (or resolved directly between Apple and Epic), but why wouldn't Epic just maintain the status quo and Apple compliance until that happens? That sounds like the better option in this case. In that scenario, the app is still available, users are happy, and Epic is still making money. After all, 70% of $10 is better than 100% of $0.

    • madthinus

      In reply to richardbottiglieri:

      You forget public pressure and opinion. This is going to be a slog, and terrible and petty.

      • richardbottiglieri

        In reply to madthinus:

        Yeah, I get that, but I still think this isn't the right move. No one really buys an Apple device for the sake of playing Fortnite. That game is a huge cash cow for Epic, and game popularity can be a fleeting thing. Just seems like a very risky thing to do when, 1) Epic has already likely made a ton of money off of this game on Apple devices, and 2) they can still fight the public fight and sway public opinion while continuing to earn revenue from the game.

        Most people aren't going to know or understand what's going on here. They'll just see that the game isn't available on Apple products and move along to something else (if they're using that platform). Just my $0.02, but easy for me to say, I guess.

        • madthinus

          In reply to richardbottiglieri:

          I fully agree with you. This does feel very petty/pedantic on Epic's part.

        • jgraebner

          In reply to richardbottiglieri:

          I think part of it is that Epic is hoping that other developers will join the fight and that is more likely to happen if they continue to hold their apps back from the platform. We've already started to see some support from Microsoft and Facebook, although neither has yet pulled anything major from the platform. I'm sure Epic's hope is that if their battle gets some traction, some other big names will also refuse to meet Apple's requirements.

          I agree that the number of customers who would switch platforms due to Fortnight being unavailable is probably pretty small, but if you start adding too many other big name titles it could start to really eat into Apple's bottom line. For an obvious example, I suspect the impact might be pretty big if Microsoft decided to pull Office from the platform unless Apple let them sell MS365 subscriptions in-app without giving a cut to Apple.

  14. oscar90

    Is it only me that are thinking of George Orwells 1984 when i read Apples new speak? That company is only getting creepier by the minute.

  15. longhorn

    Monopolies are always bad. With Android it's a duopoly, however Android solved this problem neatly. You can install any additional App Store on Android (F-Droid, Android Reddit App Store, Chinese App Store... and so on). Yes, competition.

    • curtisspendlove

      In reply to longhorn:

      Except Epic’s lawsuit against Google is effectively trying to suggest that Google allows other app stores as “lip service” and in reality makes the experience for users bad enough that it might as well not even offer out App Store APIs.

      And they also accuse them of using their market force to prevent partners from offering non-Google stores by default.

      So...kinda a distinction without merit. No?

      • longhorn

        In reply to curtisspendlove:

        "Except Epic’s lawsuit against Google is effectively trying to suggest that Google allows other app stores as “lip service” and in reality makes the experience for users bad enough that it might as well not even offer out App Store APIs."

        If you try to distribute your App Store through Play Store you will probably have a hard time.

        If you preinstall or distribute outside Play Store there aren't any problems I'm aware of. Many companies (Samsung, Xiaomi, Huawei, Amazon) have their own App Stores I believe.

        I mostly have experience with F-Droid and I haven't noticed any problems. It lets you install additional App Stores which you probably won't find in Play Store.

        I don't know why you think you have to use Google App Store APIs since the power of Android is that it is open source so you don't need special Google APIs to use an application/Store. Create your own APIs if anything is lacking. I'm sure companies the size of Amazon are perfectly capable of doing that.

        I think you are definitely underestimating the number of users of alternative App Stores on Android. Several million people get apps from other Stores than Play Store. Do you even need Play Store in China and what for? To please Google maybe.

        It's true that Google prevents other stores by default (if you want Play Store). That's their policy. On the other hand custom ROMs or small OEMs might ship their own stores by default. Some big companies like Huawei might also be forced to ship their own stores by default if they aren't allowed to work with American companies. That would be a huge blow to sales in America and Europe.

        Android is Windows for mobile, but with the added benefit of open source underpinnings.

        • curtisspendlove

          In reply to longhorn:

          Ok. But most of that basically requires you to manufacture your own phone, correct?

          Epic doesn’t have the option to install their App Store by default on a phone if they don’t make the phone.

          They would have to cut a deal, for instance, with Samsung or Microsoft. Which they apparently tried to do. And which Google allegedly blocked by using their “market force”.

          Epic’s whole point is that by default, it isn’t quite as easy as just pushing your App Store to the phone and having people be able to seamlessly use it without scary warnings.

          Their goal is “easy for anyone to use”. For instance as easy as going to the Epic Store website on your Windows rig and downloading / installing their Games Store.

          Remember this is Epic’s ultimate goal for all platforms.

  16. sentinel6671

    Apple so firmly and doggedly believes that it's doing nothing wrong. I'm not surprised by what they've done. I don't see them changing until the court system forces them to.

  17. yaddamaster

    I bought one Apple product - the iPad when it was first released. A few weeks after I bought I resolved to never buy another Apple product with a closed ecosystem.

    Consumers have a choice.....sort of. It's not a monopoly in the classic and legal definition. But it's probably time to update the laws. When you only have two cell phone platforms and one is completely locked down you don't really have competition.

    • mikegalos

      In reply to yaddamaster:

      Monopoly doesn't require that there be no choices. Monopoly only requires that the monopolist have the power to change the market unilaterally. Apple can do that and does.

      Now it's also worth noting that being a monopoly is not illegal. Virtually any "market" can be defined narrowly enough that virtually any business is a "monopoly" in that market. What IS illegal is abusing that monopoly power to damage the fairness of the market. That is what Epic is accusing Apple of doing. Not of being a monopoly but of abusing their monopoly power.

    • nbplopes

      In reply to yaddamaster:

      The digital market place is totally different from the analog space. Comparisons between each always fall short albeit some fall shorter than others.

      Apple services two kinds of customers. One kind of entity are customers because they bought their devices, one in two Americans. The other kind uses their platform to provide services to those Americans. The later do not really have a choice unless they would like not to serve 50% of their mobile customers.

      Case in case Epic. Unless people analytical abilities went bezel thin Epic won this battle over the Apple charges and the imposed payment model.

      Just the very fact that people conclude that Epic is hurting their customers by not surrendering to Apples demands exposes how fragile is the entire market when faced with Apple demands. heck even the judge saw that.

      If Apple can do this by law to Epic imagine what they can do to small businesses.

  18. Daekar

    At this point it doesn't really matter if Apple is legally correct. This is a sterling example of why I will never voluntarily subject myself to a walled garden ecosystem.

  19. Saarek

    This dispute has nothing to do with Epic wanting to be some white knight out to improve the world. It's about a corporation that wants more money and is angry that Apple would not bend over and give them a special deal.

    Could you imagine if Walmart stocked a brand of sauces and allowed the manufacture to have a stand in their store to advertise those sauces. And then the manufacturer decided to use that stand to sell the sauces cheaper themselves costing Walmart the sale? They'd get kicked out flipping quick and their product removed. And rightly so.

    Epic is not releasing its own game stores at a lower price than the incumbents because they think we, the end customers, deserve a better deal. They are doing it so that they can gain some market share and then profit accordingly.

    30% fee is an industry standard amount. From Microsoft, Sony or Nintendo on their consoles, Valve on Steam, Google on Android.

    • exreey

      In reply to Saarek:

      The problem Epic has with the App Store is not the 30% tax on app sales, but 30% on all in-app sales.

      So it's actually more like this:

      "Could you imagine if the owner of the building Walmart rents, asks 30% on all items Walmart sells in that store?"

      • curtisspendlove

        In reply to exreey:

        Those Walmart’s are pretty big. I betcha they cost a lot of money to own and run. ;)

        How about we add up everything that “selling out of a Walmart” costs (including personnel costs / wages / etc) and I’m willing to bet it’s higher than 30% of the revenue).

        I’m not saying that it costs Apple 30% of the App Store revenue to run it, but it is more than just the common costs that everyone usually sites.

        • Paul Thurrott

          I bet it's actually a lot less. Regardless, it's fully subsidized by hardware sales. The App Store doesn't "cost" Apple anything.
          • jgraebner

            In reply to MikeGalos:

            I think you missed Paul's point. It isn't that there are no costs associated with running the App Store, but that Apple's hardware business is so profitable that it almost certainly makes those operating costs irrelevant. Basically, running a thriving app store for the platform is part of the cost of selling all that hardware.

            • mikegalos

              In reply to jgraebner:

              Yes, and that's clear in the updated version of Paul's comment BUT not in the original I replied to which stated it had no cost.

              Yes, it is a highly profitable are with very low costs compared to income. It is not, however, free of costs altogether - a mistake many who what web content to be cost-free make.

          • curtisspendlove

            In reply to paul-thurrott:

            I bet it's actually a lot less. Regardless, it's fully subsidized by hardware sales. The App Store doesn't "cost" Apple anything.

            I get where you’re coming from. But Apple still has to make the stock market and all the investors and everyone happy.

            There is absolutely a cost to the App Store. Do you really think the Board would be fine with Tim just saying “oh what were we doing all this time...of course we don’t need to charge for the App Store”.

            I’d guess that would be about the fastest way possible for his early retirement.

            Is any of this good for consumers. No. Big business usually isn’t. But again. All of this is *very* complex because that money *does* allow Apple to make better products.

            We can argue whether they need $500 billion or $100 million to make that happen.

            But that then also becomes an ethical debate. How rich is “too rich”?

            Does Microsoft really need all the money they make? Google? Amazon?

        • Daekar

          In reply to curtisspendlove:

          The thing that many fail to understand is that on the internet, the incremental cost of selling another unit of anything is virtually zero. Sure, it costs Apple a little bit of money to run the app store, but it costs nothing in comparison to what they make from it. Check out Ben Thompson's website for a good discussion of why internet services can be so lucrative.

          • curtisspendlove

            In reply to Daekar:

            The thing that many fail to understand is that on the internet, the incremental cost of selling another unit of anything is virtually zero.

            Nope. I get that. What most people also fail to understand is that kind of cost is built into the product development plan.

            Did Paul choose to write his book for one sale at $100,000 or plan to sell 10,000 at $10 each?

            The choice as to whether the scaling is fair for Apple to take or not is a different question entirely.

            They don’t pay the App Store engineers only the first time anyone sells a new product on the store.

            I think it can also be pretty easily proven that Apple’s hardware business is enough to float the entire App Store ecosystem and most of their other services.

            But again. It is a complex question. Do you want an outside entity coming into your business telling you what you can and can’t charge for?

            I don’t. However, Apple is a lot bigger than my business. :: shrug ::

            What is “fair”? Where are those lines? I really don’t know. It is probably less than 30% but probably more than 0%.

            It will be interesting to find out how this is all argued in court.

            And I’ll reiterate. This will *quickly* become an “essential” vs “luxury” style debate. Whenever you try to constrain “how rich is too rich” it will end up there.

            Which means most likely the inevitable conclusion will result in some sort of “tiered” system with games and other entertainment being at the higher tiers.

            I don’t think this is going to end how Epic wants it to end.

      • Saarek

        In reply to exreey:

        What’s the difference. If a developer sells a game for £10 and makes £7 that’s ok in your mind. But if a developer markets a game for “free” and then charges in app purchases and ends up making even more over long term that’s not ok?

        People like epic only do loot boxes because they’ve worked out that it’s more profitable than just selling it straight.

    • Paul Thurrott

      Um, no it really is about a person, Tim Sweeney, wanting to end abusive business practices in app stores.
    • jim_vernon

      In reply to Saarek:

      Can people just stop with the physical retail store analogies? They're all bad.

  20. SvenJ

    Not sure why everyone wants to think this is an Apple exclusive. Epic did exactly the same thing to Google, and Google removed Fortnight from their store as well. If you know how, you will likely be able to find the Android updates at some shady site and side load it, at your own risk, but I expect the majority of Android users don't know that. Oh and you'll recall that PubG, who uses the UnReal engine, sued EPIC when they released Fortnight, for ripping them off. I believe that is called Sherlocking. So EPIC's halo has a little tarnish as well.

    • jgraebner

      In reply to SvenJ:

      Epic did sue Google as well, but it is probably less of a strong case since Fortnite and other Epic games are still available on Android even with them being blocked from the Play Store.

      The "shady" sites that you can go to get them include Epic's own website or the Samsung App Store.

      • Paul Thurrott

        It's just as strong a case.
        • jgraebner

          In reply to paul-thurrott:

          Your articles have mostly focused on the Apple case, so I'd be interested in reading it if you decided to write more detailed thoughts on the Google side of it.

          My view is that Epic is going to have a major, uphill battle convincing the court that the 30% fee for using Apple or Google's payment processing systems is unreasonable. I think the much stronger case is centered around the requirement that developers use those services and no others. Apple's prohibitions on developers even including text in the application explaining where you can purchase add-ons or subscriptions outside the app seems especially egregious.

          Without that restriction or the prohibition against side loading, it feels like the case against Google isn't as strong. Epic does have a valid point that Google makes side loading a daunting process for users that aren't highly-technical and there is certainly a huge marketing disadvantage to not being in the Play Store, but they do lose the "no alternatives exist" argument that is there against Apple.

          • Paul Thurrott

            So far I've been responding to the news. There's just less going on with the Google case. But yes, of course. The Google case isn't any less strong than the Apple case because side-loading exists. As Epic points out, that's a solution in name only because the language users encounter would scare off anyone normal. And with 85 percent of the devices market and about 40 percent of mobile app revenues, Google does just as much harm as Apple. They're just not as bald-faced about it.
    • nerdile

      I don't think that's what "Sherlocking" is.

      • SvenJ

        In reply to nerdile: When a platform 'rips off' a third party ad-on/product and provides it natively, that's Sherlocking. Epic's 'rip off' of PUBG, built on Epic's UnReal engine and providing it themselves as Fortnight, comes pretty close to that.

  21. spiderman2

    apple is such a cry baby