Epic to Appeal Apple Ruling

Posted on September 11, 2021 by Paul Thurrott in Apple, iOS, Mobile with 68 Comments

Despite winning on the biggest legal points in its, ahem, epic lawsuit with Apple, Epic is appealing the verdict because it wants Apple branded as a monopolist, which would open it up to federal antitrust regulation.

“Thanks to everyone who put so much time and effort into the battle over fair competition on digital platforms, and thanks especially to the court for managing a very complex case on a speedy timeline,” Epic CEO Tim Sweeney tweeted. “We will fight on.”

As you may recall, Sweeny and Epic are looking to make substantive changes to the dominant mobile app stores to benefit all developers on all platforms, and it is not seeking monetary damages for the ongoing business abuses of Apple and Google. But because Judge Yvonne Gonzalez-Rogers ruled that Epic did not provide enough evidence during the original trial to have Apple branded as a monopolist, Mr. Sweeney now refers to this ruling as a loss.

That explains Epic’s appeal: the firm will now try to provide the court with more evidence of Apple’s monopoly.

As interesting, perhaps, Apple has not indicated whether it will appeal: the theory here is that Apple got what it wanted out of what it sees as a split verdict: It was not outed as a monopolist. And as many are pointing out, this is Apple: it will find a way to recoup any losses it incurs if and when it’s forced to allow third-party payments systems into its ecosystems.

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Comments (68)

68 responses to “Epic to Appeal Apple Ruling”

  1. nbplopes

    Apple does not have a Monopoly over the smartphone market. That ship as sailed for now. Don’t understand Epic stance this time around.


    I believe that the entire issue is not being well put.This for me is about Net Neutrality principles. Yes I know that Net Neutrality was something applied only to ISP .. but the principles still exist and there is nothing to say they can’t be applied to other platforms built on top as they try to gin control over the data spectrum circulation on the Internet.


    Why is Net Neutrality relevant in this cases? For two reasons:


    1) These guiding principles to regulate the data flow on the Internet across multiple providers and services as proven to be crucial to the successful development of all industries, the economy has whole.


    2) 48% of the the planet population use a smartphone. Smartphones already surpassed PC for Internet usage. The smartphones OS are either Android or iOS. This means either App Store or Google Play fundamentally regulate how digital services are accessed on 48% of peoples devices … by gating data flow at the App level, in networks terms at the Client level, a kind of end-point.


    The OSs and policies developed by these companies and ruling the devices used by 48% of the population DO NOT treat all Internet communications equally, they discriminate or charge differently based on user, content, website, platform, application, type of equipment, source address, destination address, or method of communication. Opposing any and all principles of Net Neutrality yet benefiting from its application to ISP.


    I believe this is extremely unfair if no challenging to the principles guiding the Internet that fostered incredible economic growth. The App Store is not just an App Store, its an Internet endpoint its a highly discriminatory Internet end-point controller on users devices. Funneling revenues to their basked.


    Cheers.




    The question

    • nbplopes

      “I believe this is extremely unfair if no challenging to the principles guiding the Internet that fostered incredible economic growth. The App Store is not just an App Store, its an Internet endpoint its a highly discriminatory Internet end-point controller on users devices. Funneling revenues to their basked.”


      Errata:


      I believe this is extremely unfair if not challenging to the principles guiding the Internet that fostered incredible economic growth. The App Store is not just an App Store, its highly discriminatory Internet end-point controller on users devices. Funneling the revenues of the Internet economy to their basked by abusing Internet principles.



    • jchampeau

      You're conflating the smartphone business overall (sales of handsets) with each platform maker's App Store business. No one is claiming Apple has a monopoly on selling smartphones. Epic (correctly) claims that Apple is charging unreasonable fees to developers and forcing those fees to be paid because they don't allow in-app purchases to be processed by any system other than their own. That's where their behavior is monopolistic.

      • cavalier_eternal

        Well, a federal judge ruled otherwise.


        “While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal”

      • curtisspendlove

        “That's where their behavior is monopolistic.”


        This judgement basically says it’s “unfair”, not “monopolistic”.


        Basically they are going to have to prove that the 30% fee is justified to run the App Store.


        I expect, ultimately, they will reduce this to something closer to what Epic themselves charge to have games on their game store. I think it’s something like 12 or 16%.


        But they will go for more. All of this is going to end up being as expensive overall for app devs (if not moreso) and *way* more work to track and figure out.

        • nbplopes

          “This judgement basically says it’s “unfair”, not “monopolistic”.”


          That is not what I read in the ruling. The judge specifically said the App Store policy forcing in-app payments to themselves and no one else where in violation of state laws, in particular Californian Competition Laws. In other words Illegal in the State. This is not the same as Unfair.


          There is nothing in the State laws that specifically said the this policy is illegal, but the Judge interpretation was that it denied Customers ability to find the same goods cheaper elsewhere using their device. Furthermore he considered inadmissible requiring Customers to change devices in order to do so … aka sell you device and buy something else.


          This is crucial, because I’m sure that many counter arguments to this were presented by Apple lawyers including the one above.


          “However, if there aren’t restrictions on Apple being able to charge for third party transactions, all developers, whether they use Apple’s systems or their own, are now eligible for Apple to bill their standard rates against (the current developer agreement devs sign lays forth these payment percentages). “


          They where and are always eligible for whatever Apple proposals might be to licensing their APIs. But Not just from now. Apple never made such proposal. No one knows what is the cost of iOS APIs license.


          They cannot charge payment fees per third transactions. That would be illegal as it is such case a service that they don’t provide or sell. Still can apply royalties over gross revenue within the realm of an agreement … but no one know what this is. These are two distinct instruments.


          “This injunction makes it so that there is no advantage to building out your own payment system. And, in fact, you’ll be charged the same rate and also have to develop and maintain your payment system (I think there was a provision that allows a developer to write out their payment processor transaction fees from the 15/30% fees Apple will charge them—so that might bring it to like 11/26%-ish).”


          IMHO, you conclusion is really bad for Apple. If they do what you think they should Apple will be simply creating an App Store legal hole from which it will be even harder to come out.


          As of now the mechanism that Apple has to license the use of their tech is through the usual practices: either charge a yearly nominal value or a royalty be App sales. No more hiding this price in a compound financial scheme such as their own App Store.


          Apple needs to be relatively reasonable with this other wise more law suits with greater loss of power for Apple. As you mentioned, if Apple decides to apply a royalty that equals the App Store sale fee, “Huston we have a problem”. Why? Well if you think that in the App Store fees includes the cost of licensing the iOS tech, if they now come and say that its price is 30% in royalties, that would mean that the App Store is either bankrupt, which is not, or that the royalty is 0 to the App Store.


          Either way they would have much to explain in court in a further law suit. That in this turn might lead to being regulated to unchain app installation and updates in iOS from the App Store. Which is counter to Apple interests.


          Cheers.




          • curtisspendlove

            “IMHO, you conclusion is really bad for Apple. If they do what you think they should Apple will be simply creating an App Store legal hole from which it will be even harder to come out.”


            I didn’t say they should do that.


            I was stating what I expect them to do.


            I don’t think they will go after third party transaction fees.


            I think you’re going to see a huge restructuring of how they license their IP to developers.


            And, I expect it will be a tiered system.


            For instance, if you make less than 1mil gross revenue, it’s the cheapest annual fee to be part of the Dev Program. And you get the best rates (they have already effectively built out this category at 15% I’m response to earlier legislation).


            If you’re over 1mil but less than 5mil … or have fewer than three apps on the store … or whatever; you pay more (I wouldn’t be suprised to see per-developer fees).


            If you’re an enterprise. Or have a free (or paid) app in the store, but you employ a thousand iOS developers; prepare to pay a few hundred bucks per year, per developer.


            OR, prepare to pay for an annual copy of Xcode for each of your developers.


            etc…


            There are hundreds of ways they can legitimately charge for stuff in ways that people won’t bitch and moan about.


            Paying per-developer for development tools is surely not acceptable, though.


            The *cheapest* pro version of Visual Studio is *very* expensive. ;)


            They could easily do a combination of things that are a much more significant pain in the ass.


            And, ironically (and I think it’s hilarious), if they licensed dev tools and their platform the way MS license VS and Epic licenses Unreal; smaller developers would likely pay less and the huge developers like Epic, Netflix, etc will probably pay *way* more.


            And, as I’ve mentioned, Apple can be spiteful. I expect there is a partial plan somewhere in Apple HQ that is basically “how can we epically screw over Epic and these other people via ironclad, industry-proven methods”.


            • nbplopes

              There are many things Apple can do, including do nothing but remove the clause that is not compliant with the ruling. Will see.


              I think that is what they should do and see how it goes. Why? Because App Store in-app payment is still de default and unless the optional methods are substantially bellow the App Store price don’t think they will be much of an option for customers. There are significant advantages to paying through the App Store … heck Apple can even start giving credit back to users to buy apps or subscriptions.


              Don’t think Apple will want to pass the idea to the market (that includes regulators) that its purposely charging high on royalties to make third party payments uncompetitive when compared to the App Store. That would be the path for further law suits.


              At $45 monthly a seat to use Visual Studio Pro, including licensing all the SDKs, is quite cheap when compared to 30% fee over in app revenues that ones digital business or app may generate. Unless ones does not really have a business, in which case it does not matter.


              I mean, who pays $300K a year in a million for licensing SDKs and to anyone eles Apple (80.000 Visual Studio Pro seats a year) … all to have the opportunity to enrich their system and help sell even more iPhones.

          • nbplopes

            Or even worst … eventually split force Apple to pivot the App Store into a separate company if it is found to favor the App Store in the royalty agreements.

      • nbplopes

        In my opinion is not a monopoly in eCommerce either, the App Store being just an instance. Yet the Judge simply ruled that it was not proven that it was a Monopoly, and I find really hard to prove that is the case. By definition an owner does not have a Monopoly over its own properties …

  2. RobertJasiek

    As much as I wish that the big companies are torn into pieces, the means to achieve this is first of all legislation. Judges can only apply the law written before the Internet age.

  3. John Craig

    Apple is a monopoly. A corrosive, abusive monopoly that treats its customers terribly.


    I feel for developers large and small, who are caught up in this, with only two options in front of them.


    When I envisage the app store in my mind, I see a huge "shopping mall" owned entirely by Apple, where it controls every aspect of who gets a shop in the mall AND hits every shop owner with a vig on every sale. The shop owner can't move to another mall, or set up on a little high street. If he wants to sell his products, he has to have his shop in that huge mall. It's a terrible, terrible, highly abusive process.

    • behindmyscreen

      It's literally not though.

    • Hawaiianteg

      A federal judge just said apple is not a monopoly. You can say what you want but they were redeemed in court so whatever you say is just a opinion and not reality. Second the judge said there are other options and making apple like the other option gives customers less choice. Android open, Apple Walled garden. Apple didn't lose at all and has now has a prior ruling to apply to any other person that tries to go after them in this sense. Its amazing how much apple haters will do anything to distort the narrative because they so have so much hate towards a successful company. The way news outlets reported this story is the perfect example as well as many comments in here who just hates apple. They literally get redeemed in federal court and people still keep slinging the same garbage they said when this case started. Sorry folks but Apple won, I know it hurts but its fact.

      • shameer_mulji

        What the judge specifically said was that Epic did not provide sufficient proof that Apple is a monopoly. That's not the same thing as saying "A federal judge just said apple is not a monopoly"

        • cavalier_eternal

          Quotient the judge here:


          “While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal”


          The part in bold is the relevant part. Monopolies are defined by the Sherman Antitrust Act, and she say there isn’t antitrust conduct. So, no monopoly.


          People falling back on the argument that there was insufficient evidence either don’t know how our legal system works or are being intentionally disingenuous. People acquitted of a crime is acquitted due to insufficient evidence that they committed the crime. It is why people are found “not guilty” vs. being found innocent.

          • John Craig

            Honestly, I can't say that I'm surprised that an American court has stepped back from having to sort out the beast that is big tech.


            I'm not sure why (although I'm thinking money/funding/lobbying play a big part in this) but the American government seems certifiably terrified to take on tech companies.


            Your judge could not have chosen a more vanilla, middle of the road, let's not rock the boat outcome to this case if her career depended on it. Which it probably did.


            Apple, and Google, are technology monopolists. Microsoft used to be until it got its arse handed to it for, of all things, bundling a browser with an OS.


            Apple bundles a store with its OS and makes that store the only way to download useful software.


            They use that store to track which apps are doing well (Spotify, Netflix, Tile, etc) and they create in-house alternatives, and they push those independent apps to the back of store to give their alternative, in-house crap an unfair advantage.


            And just to be absolutely sure that they can thoroughly and completely hold onto their grip of the market, they charge those app owners a ridiculous fee to allow their apps to run on the operating system.


            Now, I get it. Your judge was too petrified to call that what it is. A grossly unfair, anti-competitive abuse of power.


            Maybe she's up for some sort of re-election and needs a corporate backer. Or is eyeing a non-exec role on the Apple board. Whatever. Doesn't matter. She held a moment in time in her hand...a moment to make a substantial and positive contribution to tech consumers and developers, but she bottled it.


            What a shame

            • cavalier_eternal

              A couple of things:


              1. You profound misunderstanding of how the American judicial system works. The judge wasn’t elected , for example.
              2. Impugning the character of the judge with literally nothing to back up your claims and insinuations is just lame and speaks poorly for you critical thinking skills. Personal attacks are basically a type of logical fallacy. If you actually looked into her career you see that she deals with big tech regularly as many of the companies are in her jurisdiction. Nobody who looks at her record would argue that she is anyway soft on big tech. And anybody that actually read this ruling would argue that she was easy on Apple.
              3. You are welcome to hold any opinion you want about Apple being a monopoly. I have zero interest in changing your mind. What matters is if court found them to be a monopoly that is abusing its power and that didn’t happen.
            • Greg Green

              the American government seems certifiably terrified to take on tech companies.”


              the American governments largely have been purchased by the tech companies. Examine how many visits tech CEOs have made to congress, or the White House, or have been hired by executive branch regulatory agencies. There’s no fear at all but full cooperation.

          • pixymisa

            “While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal”


            The part in bold is the relevant part.

            • cavalier_eternal

              Yes, the lack of evidence is why she ruled there was no monopoly. But I don’t think that is the point you are trying to make. Again, people either don’t know who the U.S. Judicial system works or are being disingenuous. We operating on the presumption of innocence. The whole idea of innocence until proven guilty. Epic failed to show Apple had a monopoly so Apple is presumed to be innocent. Claiming otherwise is incorrect.


              People here can insist Apple is a monopoly and they are entitled to their opinion.

        • Greg Green

          From a legal point of view it is the same. Apple is not guilty. Until that’s proven in court Sweeney’s opinion is irrelevant.

    • curtisspendlove

      When I envisage the app store in my mind, I see a huge "shopping mall" owned entirely by Apple, where it controls every aspect of who gets a shop in the mall AND hits every shop owner with a vig on every sale. The shop owner can't move to another mall, or set up on a little high street. If he wants to sell his products, he has to have his shop in that huge mall. It's a terrible, terrible, highly abusive process.


      Uhm. The above is *exactly* how a “mall” or other commercial suite works.


      You can lease a portion of the mall and setup shop. You follow their rules. If not, you’re kicked out.


      Apple are very greedy in their lease terms. And the alternatives aren’t readily available (but this happens in “physical life” too—if all the commercial real estate is taken, you have very little choice.)


      If you want to be bent over a desk, try finding a co-working space or somewhere you can legally setup shop for commercial retail (or even services).


      They don’t charge 30% of your revenue; but leasing commercial space is very expensive.


      So yeah, the App Store is a mall. A very popular mall with a lot of people possessing disposable income walking by your store every minute. And it doesn’t ever shut down. And you don’t have to hire some teenager to hand the corn dogs and sugar water to customers.

      • curtisspendlove

        In fact, about the only thing a psychical space shopping mall does that Apple doesn’t is charge 30%.


        A retail mall will typically only charge 3-10%. But they also charge a bunch of other stuff too. (And Apple has said their 30% is just an easy way to collect what they feel they are owed.)


        The ultimate outcome of all this litigation is simply going to be them breaking it all apart and charging for a bunch of different things instead of a flat 30%.


        It’s going to get a lot more “nickel and dime-y” to be an Apple developer heading forward.

      • nbplopes

        Let’s be honest. This mall would be worth 0 without the iPhone. So comparing this to a regular mall is nonsense … because not mall as such kind of leverage.


        The App Store business model (Apple App Store and Google) is all about leverage. Leverage built around people that choose the iPhone as their mobile Internet enabled device. If you consider that 48% of the planet population uses a smartphone one can see where this is going.


        I’m not at all against Apple, I really like their products. Yet people talk about market share as percentages … but nominally the market is absolutely gigantic at planetary level is … guess what the world is getting a lot smaller by the day. Just think, USA population is just 4.25% of the entire population … the number of iPhone users is way pass that …


        What this means? Everyone customers are using an iPhone … that is the leverage.

  4. siverwav

    LOL - But, but what a minute ? I thought you said that they had won?! Why would they appeal… oh it was just click bait!… sad, but you have to pay the bills, so understandable. You are better than this Paul.


    • cavalier_eternal

      This quote from the “Wins Big in Case Against Apple” aged particularly poorly;


      “Naturally, Apple will appeal this ruling, so the obvious and correct outcome could be delayed quite some time.”


      Uh, sorry… who exactly is going to appeal? Apple called it a win and doesn’t seem likely to appeal at all. Why would they, they lost virtually nothing.


      Anyway I’d imagine we are going to be subject to Sweeny and his vanity court case for some time.


      Some of us argued early on that while Apple’s App Store rules need to change Sweeny shouldn’t be the person to lead the charge because he will completely bungle it and leave behind legal precedent that will make it harder for other developers to overcome in the future. And here we are. Congrats to the folks that got all wrapped up in the moronic #freefortnight marketing gimmick and failed to realize courts actually expect you to have an argument based on substance. At least you comfort yourselves with the redo of the 1984 commercial that really showed…. Well no one…



    • behindmyscreen

      No, they are just cry babies. I don't think they will find any success on appeal either.

  5. waethorn

    If they lose, Apple could claim damages against Epic.

  6. hbko

    It's almost funny how much effort Epic is putting into trying to convince people they are actually "the good guys" in all of this. Of course it's just a lucrative opportunity for them - they'd have a way to abuse the App Store for free without having to contribute in any way by having their users use "external" means of payments instead of IAPs.

    • Oreo

      They’re not. That’s what makes the suit itself a bit more interesting, but also the reason why we shouldn’t have high hopes for the outcome either way.


      Epic’s interests are not aligned with those of customers or smaller developers. Its arguments in the case and the related Google case have often been disingenuous. And the way they orchestrated the breach — complete with breach release video — has left a foul taste in everyone’s mouths.


      Apple’s sins are different. They have become a bit greedy and haven’t evolved the App Store very quickly. I heard on The Vergecast that they only have 500 reviewers for apps, way too little. And that you can’t use third-party payment processors worsens the experience for users (think of the Kindle app). To make that into an antitrust case with today’s laws is not straightforward.


      I would prefer new laws that is not a lex Apple, but takes care of a lot of anticompetitive things that are legal today but perhaps should not be. (Amazon’s marketplace comes to mind, but IMHO also the app stores for the big console makers should be included here. They also tend to charge 30 % … like a famous fruit company.)

      • behindmyscreen

        Apple Pay actually makes the users have a better experience. The issue is being able to sell inside the App without paying the Apple Vig on every transaction. Even with 3rd party payment processors (which will suck ass for users who just want to buy the damn app/IAP), Apple can charge their vig if the app store contract says they can.

        • Oreo

          I’d be totally cool if Apple Pay was one of several different payment processors. But I think Apple’s insistence on 30 % leads to worse products for customers.

  7. Greg Green

    Saint Sweeney must’ve decided the judgement was so unfairly in his favor that the only just thing to do is appeal on apple’s behalf. What a great guy he is! /s

    • curtisspendlove

      I’m still amazed when people think Epic are the white knights.


      If they cared about humanity that much, they wouldn’t be pedaling digital crack to children.


      They would also fairly compensate the creators of the dances they sell as digital crack and other things that aren’t too far off from what Apple does.


      I will credit them for actually reducing their percentage cuts over time with Unreal Engine and Epic Games Store.


      Although, it’s laughable that they are asking for Apple to charge nothing when they have all sorts of charges and clauses in their own products and services.


      (Did you know, if you use Epic Games Store they waive the 5% Unreal Engine fee? Perhaps Apple should charge 10% to use Kit APIs and waive some of it if you use their payment APIs. It’d be great if they waived it all, but this is Apple and I’m a realist.)

    • curtisspendlove

      Additionally, for anyone still on their high horse, and insisting Epic are perfect:


      5. Royalty


      You agree to pay Epic a royalty equal to 5% of all worldwide gross revenue actually attributable to each Product, regardless of whether that revenue is received by you or any other person or legal entity, as follows:


      a. Gross revenue resulting from any and all sales of a Product to end users through any and all media, including but not limited to digital and retail;

      b. Gross revenue resulting from any and all in-app purchases, downloadable content, microtransactions, subscriptions, sale, transfer, or exchange of content created by end users for use with a Product, or redemption of virtual currency, either within a Product or made externally but which directly affect the operation of the Product;

      c. Gross revenue from any Kickstarter or other crowdfunding campaign which is directly associated with Product access or in-Product benefit (e.g., in a multi-tiered campaign, if an amount is established in an early tier solely for Product access, your royalty obligation will apply to that amount for each backer with the same access, but not on additional amounts in higher tiers based on ancillary benefits);

      d. Your revenue from in-app advertising and affiliate programs;

      e. Revenue from advance payments for a Product (from a publisher or otherwise);

      f. Revenue received in connection with a Product’s inclusion in a streaming, subscription, or other game-delivery service (e.g., Apple Arcade, Microsoft GamePass, or any similar or successor services), including without limitation development funds and bonuses; and

      g. Revenue in any other form actually attributable to a Product 


      So, let’s recap: what does Epic count as revenue?


      Sales,

      DLC,

      IAP (micro transactions, digital currency),

      Kickstarter revenue (yup, if you get a million on your Kickstarter you owe Epic 50k of that),

      In-Game Advertising Revenue (yup! You pay 5% of any ads you sell in your game or product),

      Subscription Revenue (yup, if it’s in GamePass or xCloud, it counts),

      and a final … kinda just catch-all item tacked on at the end there. 


      Yup. Saints. Every one of them. 


      Now, I don’t agree with 30%. But it wasn’t too long ago that Epic was using 30% with Unreal Engine 3. 


      (I don’t believe the last couple years of them reducing this stuff was out of the goodness of their hearts. I believe it was *all* part of the strategy to try to make themselves look better for this legal campaign they planned to get their store everywhere so *they* can be the ones to get all the money. They are not happy that Apple gets 30% of all Unreal based games on the App Store and they only get 5%.)


      • curtisspendlove

        BTW, I think the sub-clause in “b” is fun:


        Lets say … Mario Maker … were written on UE4. You had built a mechanism for little Timmy to toil away on a Mario level in his bedroom and sell it to other players for $1. Epic would get a nickel for every time Timmy’s level was sold on your platform. (I would hope Timmy would make at least 70% of that dollar.)

      • curtisspendlove

        “e” is fun as well.


        If a publisher comes to you and says “we are enamored by this little game you have here…we want to offer1million in advance for publishing rights”…guess what?


        Yup, Epic get 50k of that.


        (This is all fine, to me; you’re making money off their framework.)


        But it’s disingenuous to be all up in arms about Apple’s “vig” and be perfectly fine with Epic’s more far-reaching “vig”.


        Just because it’s a smaller percentage doesn’t mean it’s any different.

  8. cavalier_eternal

    “And as many are pointing out, this is Apple: it will find a way to recoup any losses it incurs if and when it’s forced to allow third-party payments systems into its ecosystems.”


    This isn’t what the ruling was. Apple isn’t forced to allow third-party payments systems in Apps. Apple is forced to allow apps to link to purchase options outside of the App. It’s a fairly important distinction. Further the judge ruled that Apple was legally entitled to charge their commission on purchases made outside of the app. So, if direct customers to my website to do purchases Apple is legally entitled to charge me 30% of that purchase. And, wording of Apple’s agreement with developers already covers this situation.

    • curtisspendlove

      So, if direct customers to my website to do purchases Apple is legally entitled to charge me 30% of that purchase. And, wording of Apple’s agreement with developers already covers this situation.”


      This is important, and not something people are thinking enough about.


      This ruling basically now allows Apple to require all developers that sell *outside* the App Store to track those purchases and apple can now bill on *all* purchases. (And, if you doubt this, they were handed the 3.5 mil or whatever from Epic’s sales via their own payment system so there is now president to bill it.)


      As I’ve mentioned before. Apple is clever and vindictive. They *will* make this work for them. And I expect them to extract even more money than before from developers, armed with these new laws.

      • nbplopes

        Apple never forced 30% royalty fees in sales made outside the App Store, either directed or not by the the third party business. It did enforce a 30% fee on App Store sales.


        As mentioned in another is not in Apple interested to do that … it would be a royal pain.


        If I had any relevance in Apple … is one thing that I think is key going forward. App Store in app payments aren’t going away. Apple can still enforce them as they did with the exception of not being able to prevent in-app links to other methods of sale and payment.


        Why this is key. How much lower need to be the price of a digital service or app outside the App Store to be worth it for the consumer to leave behind the App Store advantages. The App Store has several advantages to the consumer:


        • Consolidated billing
        • Consolidate purchases and management
        • Easy to cancel
        • Easy and problem free App updates
        • Family Share


        Honestely, if the digital services is offering me a lower price of say 10% does it cover the value of these benefits? It really needs to be a big and well known business to trust that none of this would be a problem.


        So I really do not think that Apple needs to change anything for the moment. People will opt for App Store payments anyway as they probably do now. For the services that are already paying to directly through the web sites, it becomes more convenient.-

      • cavalier_eternal

        I am not a developer and freely admit I have a lot of blind spots in this area but I struggling to think of why I would bother building my own payment system to redirect customers to if I’m still going to have to pay 30% to Apple. There may be an upside that warrants the effort but I’m not sure what it is. I guess we will have to see how Apple updates the developer agreement to account for this.

        • curtisspendlove

          “…if I’m still going to have to pay 30% to Apple.”


          This is new. I haven’t read the whole thing, so I may be wrong here (there may be language in the injunction preventing this—but I don’t think there is).


          Before this lawsuit, you could have users sign up and pay (for instance, a subscription from your website) using your own payment gateways and Apple would get nothing.


          You couldn’t, however, guide a user to that site from within your app. (This is why services like Netflix or Todoist or such try to get users via direct website marketing and then advertise their “free app” on the site.)


          However, if there aren’t restrictions on Apple being able to charge for third party transactions, all developers, whether they use Apple’s systems or their own, are now eligible for Apple to bill their standard rates against (the current developer agreement devs sign lays forth these payment percentages).


          This injunction makes it so that there is no advantage to building out your own payment system. And, in fact, you’ll be charged the same rate and also have to develop and maintain your payment system (I think there was a provision that allows a developer to write out their payment processor transaction fees from the 15/30% fees Apple will charge them—so that might bring it to like 11/26%-ish).


          This is not the win most people think it is. And if it plays out like I expect it to, it’s a significant loss for small and mid-size developers using their own payment systems and also for the iOS platform users.

          • curtisspendlove

            I hope that there is some specific language somewhere that states Apple can only go after devs that technically violated the contract (like Epic did when they added the links to their payment system).


            If that is the case, then when the injunction goes into effect; they *can* link out to external payment methods which would mean new / updated apps aren’t in breach of contract, and therefore not subject to Apple’s collection attempts.


            In this case, there may be fairly substantial benefits in maintaining your own payment system (you essentially can run it for the cost of development and maintenance and payment gateway fees—which are generally in the realm of 3.x%—a much better rate than apple is taking.)


            But I’m sure Apple is going to try to find a way to use this to their advantage. They have already stated they will change the costing models to develop on apple platforms.


            At the very least I expect participation in the developer program to cost more; and perhaps even have a tiered approach (likely based on revenue—the bigger your company or profit, the more you pay annually).


            And I expect that there will be a large expansion of the “iCloud” transaction pricing models. You now get a *lot* of “free” stuff before you run into excessive usage that would trigger per-service pricing.


            I expect this will change and be less flexible and less forgiving. And I expect them to add all sorts of new services and tiers including App Hosting and Egress (Download) pricing.


            (Honestly, I’m fine with all this and it’s generally how “cloud” is priced in most products and services.)


            But all those free apps that Apple Pay’s for hosting and transfer may end up costing a fairly hefty chunk of change.

            • cavalier_eternal

              I’m going to quote the ruling here:


              “Under all models, Apple would be entitled to a commission or licensing fee, even if IAP was optional”


              That is pretty clear that Apple is entitled to it’s commission even if you don’t use their processing (IAP).


              “Apple is entitled to license its intellectual property for a fee, and to guard its intellectual property from uncompensated use by others.”


              Again, Apple is entitled to the fee and within its rights to take action against those that use it without compensation.


              “Even in the absence of IAP, Apple could still charge a commission on developers. It wouldn’t simply be more difficult for Apple to connect that commission”


              So, again. Even if you don’t use Apple’s processing Apple can still charge a commission.


              “While the court finds no basis for the specific rate chosen by Apple (i.e.,the 30% rate) based on  the record, the  Court still concludes Apple is entitled to some compensation for use of its intellectual property.”


              And again, Apple is entitled to compensation. This is the one opening for developers though. The Judge didn’t rule on the 30% being reasonable or not because reducing the charge wasn’t what Epic was asking for. Epic was arguing that Apple can’t charge them anything.


              “To the extend Epic Games suggests that Apple receive nothing for in-app purchases made on its platform, such a remedy is inconsistent with prevailing intellectual property law.”


              And again, Apple is entitled to compensation.


              So, there you have it. The ruling is pretty clear on Apple being entitled to compensation no matter who processes the transaction or if it is processed in the app our outside of the app.


              Here is what Apple has in their development agreement:


              “For sales of Licensed Applications to End-Users, Apple shall be entitled to a commission equal to thirty percent (30%) of all prices payable  by each End-User”


              Note that it doesn’t say the purchase has to be in-app or processed by Apple. It simply say they are entitled to 30% of all prices paid by each end user. They may choose to amend this to make it more clear how that will apply to purchases done outside of the app but they are certainly well covered already.

              • nbplopes

                I don’t understand. Why some people ever thought Apple’s right to be compensated for its IP was in question indeed puzzles me. Up to a point, that a Judge needs to clarify that aspect. What about digital business right to get compensation from their IPs, or be able to freely access their customer and their customer to them, why is that never in question in these peoples minds? It’s just a weird bias.


                Honestly I don’t get it why people get sidetracked by basic concepts. Most people are indeed imbeciles.

                • cavalier_eternal

                  Can we have a quote on that? Because I sincerely doubt that Epic said precisely that “



                  I quoted the judge above but here it is again:


                  “To the extent Epic Games suggests that Apple receive nothing for in-app purchases made on its platform, such a remedy is inconsistent with prevailing intellectual property law.”



                • cavalier_eternal

                  “I think they were hoping to replicate how the current pc world operates. The pc world is wide open, Microsoft and Apple do not get a cut for publishing applications there, unless they go to those respective os appstores.”


                  I think this gets to the heart of it. People assume that because Apple and Microsoft didn’t charge developers a commission or license the use of their IP (MacOS and Windows) respectively means that they aren’t allowed to do it. They are and opted not to. Operations systems are IP and the idea that developer of an operating system isn’t entitled to compensation for their work is just ridiculous.

                • nbplopes

                  “It was literally part of the lawsuit. Epic said Apple didn’t have the right to charge a commission on purchases through the App Store. Apple argued that the commission was for use of their IP.”


                  Can we have a quote on that? Because I sincerely doubt that Epic said precisely that … Even before the case started, I’ve been that theory. Hey, but maybe Epic is really dumb company to make such an argument … evidences don’t point to dumbness.

                • cavalier_eternal

                  I don’t understand. Why some people ever thought Apple’s right to be compensated for its IP was in question indeed puzzles me. Up to a point, that a Judge needs to clarify that aspect.”


                  It was literally part of the lawsuit. Epic said Apple didn’t have the right to charge a commission on purchases through the App Store. Apple argued that the commission was for use of their IP. The Judge ruled on it because that is their job and what they were asked to do.

                • toukale

                  I think they were hoping to replicate how the current pc world operates. The pc world is wide open, Microsoft and Apple do not get a cut for publishing applications there, unless they go to those respective os appstores.

              • curtisspendlove

                “It simply say they are entitled to 30% of all prices paid by each end user.”


                I was pretty sure I’d read it somewhere but the reporting on this is all over the place so I was doubting myself.


                So yup, every single developer that develops for Apple’s platforms should be flat-out pissed at Epic right now.


                I fully expect this fall will be a very rough one on developers.

                • Oreo

                  Epic was only fighting for itself, not for anyone else and I am surprised anyone thought they were. Epic is a huge behemoth fighting with an even bigger behemoth. Epic has deliberately broken contracts before to push its own interests (Microsoft and Sony, for example).


                  If we want to regulate app stores and curb the power of dominant corporations, we ought to do that through legislation rather than court verdicts.

                • toukale

                  Agreed, if I were one of those conspiracy nut, I would say Epic and Apple planned the whole thing to screw over all the rest of the developers :). That’ s how bad Epic screwed this up for everyone.

    • toukale

      Is it me or is there another ruling by the judge I am not aware of because some takes by some websites are wildly bad/inaccurate.

      • sykeward

        The judge’s ruling was specific and nuanced, and the news stories definitely shifted after the media’s initial mad scramble when more people actually read the ruling in detail. Talk about a mess.


        The only person in the tech press who seemed to grasp what was going on right away was Nilay Patel from The Verge, which makes sense since he’s a lawyer by education. Interestingly, he made a convincing argument that this ruling is bad news for Google. Epic is suing them too, and their behavior fits classic monopoly abuse as defined in this ruling more closely than Apple’s did (e.g., Google pressuring 3rd party handset makers over the Play Store). Epic has time to adjust their approach in that case, too, so it’ll be interesting to see how that pans out.

      • cavalier_eternal

        I think it is fair to say that the press at large completely bungled the reporting on this. I listened to a lawyer break down the ruling and it was fairly narrow and nowhere near the victory that Paul and just about ever other tech news site seems to think.

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