Apple, Epic, and the App Store • Hacker News Board

Re: Apple, Epic, and the App Store

#461

Post by hinkley » Mon, Aug 17, 2020, 11:14 PM UTC

kartayyar wrote: post #279

enra wrote: post #236

While I don't like Apple's 30% cut on multiplatform/subscription products, I think Epic's real motivation here is to run their own App Store, build a bigger moat and get the profits themselves (they take 12% cut, 5% if you use Unreal Engine, from developers in their store). They also make exclusive deals, bribing developers with funding/marketing support, so that the games can only bought in their store for 6-12mo. C…

I don't get the whole objection to mutiple app stores. Instead of clicking icon A, I click icon B and if I get a cheaper game, all power to Epic. I don't spend time in an app store. I spend time playing the game.

I will only offer that finding content on Apple TV now that everyone has the ability to not only sell content but resell content (eg, HBO on Prime), it's gotten to the point where we sometimes give up on finding a particular movie or TV show and do something else.

I'd like other stores on iOS too, but there's a qualitative difference between 1, 3, and 6 vendors that doesn't necessarily make 6 better than 1. In fact 6 is probably default worse than 1, and requires active management and cooperation to make it behave.

Re: Apple, Epic, and the App Store

#462

Post by danShumway » Mon, Aug 17, 2020, 11:14 PM UTC

ghostwriter wrote: post #447

danShumway wrote: post #414

Earlier quoted context omitted.

And if there were only two livable houses in the entire world, then that would be a completely reasonable position for someone to take. Apple is one half of a duopoly. People keep on bringing up these 'gotcha' arguments about, "how would you feel if Walmart was forced to stock everybody's stuff?" And that ignores the fact that it would be a serious problem if there were only two supermarkets that I could buy from. I…

> And if there were only two livable houses in the entire world, then that would be a completely reasonable position for someone to take. There are more than two platforms out there. But even if there weren't, the fact that there's only N things in the world doesn't make your random claim on someone else's property any more valid. App Store is Apple's property. Build your own and host whoever you want there, but firs…

> There are more than two platforms out there

Such as? If I'm making a mobile game, what other phones can I realistically target other than Android and iPhone? You don't really think that the Librem 5 is a real competitor right now in this space, do you?

> because mere quantity of stuff out there is never a justification for taking it over

All of US antitrust law is based on the idea that the quantity of providers in a market matters. If you're arguing that we should get rid of antitrust entirely, fine. But be upfront about that, that's not a mainstream position to take.

> no monopoly exists without a government acting as a gatekeeper

I'm not going to derail things too much here, but I do have at least a few Libertarian bones inside of me. To the extent that I am sympathetic to your argument here, I would question why you think that Apple is different.

Apple's dominant market position exists in no small part based on its exploitation of copyright, the DMCA, import laws, and heavy lawsuits over trademark and cross-compatible app runtimes, all of which only work because of artificial government intervention into the market.

If you want to go full Libertarian, I'm not necessarily opposed to the idea, but then I'm also going to go full Libertarian and ask what your views are on abolishing copyright. Apple might not have such a stranglehold over the market if it was legal for other US companies to build iPhone emulators, hackintoshes, to distribute jailbreaks, and to build their own compatible phones that could run both iOS apps and apps from other markets.

If we're all OK with making that stuff legal, then I'm OK with dropping antitrust. If we're not OK with making that stuff legal, then I'm keeping antitrust. I'm OK with either having government regulation or not having it, but no halvsies.

Re: Apple, Epic, and the App Store

#463

Post by antaviana » Mon, Aug 17, 2020, 11:15 PM UTC

harryf wrote: post #391

cromwellian wrote: post #352

"But Apple needs to fund the App Store. XCode, payment processing, reviewers, it all costs money". Yes, very little in comparison. Apple made $50 billion in revenue from the App Store in 2019. $50 BILLION. The data centers costs to serve up this are miniscule in comparison. Apple could build 50 datacenters PER YEAR EVERY YEAR for that revenue. Reviewers? A staff of 10,000 fulltime reviewers paid $200k per year would…

This is a great picking apart of Apples justification but I think the issue that most irks everyone who’s not apologizing for Apple is where did this magic number 30% come from? Which market forces created it? Here on HN most of us probably feel that product manager at Apple licked their finger, felt the wind and said “Yeah 30% seems about the most we can get away with” And what irks even more is once Apple set the p…

It is explained in Steve Jobs book. Steve wanted a 30% share on all deals where he has distribution.

The challenge was to massage the numbers of the deal so he could see his 30% and approve it.

Also the 30% is often the budget for the Sales and Marketing operation in a typical organization.

Re: Apple, Epic, and the App Store

#464

Post by chadcmulligan » Mon, Aug 17, 2020, 11:16 PM UTC

earhart wrote: post #331

danShumway wrote: post #272

Earlier quoted context omitted.

I'm going to heavy push back against both-sides-isms here. > I think Epic's real motivation here is to run their own App Store Yeah, you're right. That is the outcome that we want. We want multiple stores on iOS. I thought advocates for this position had been really clear, but maybe we haven't been clear enough. For the record, we want there to be multiple app stores on iOS. > build a bigger moat and get the profits…

The problem is not that Epic would be able to prevent other stores from being installed. The problem is that if there are multiple app stores, it encourages a race-to-the-bottom for the app stores -- why go through Apple's store with all its vetting if you can release to the Epic store instead? So, yes, the worry is exactly that another company might offer better terms to developers -- because sometimes, those terms…

I suppose one way to counteract this is for apple to license app stores and they have to have the same standards as apples store. I have no desire to have low quality stores on my phone, thats why I like the iPhone - I don't have to worry about all the nonsense android phone owners do.

Re: Apple, Epic, and the App Store

#465

Post by danilocesar » Mon, Aug 17, 2020, 11:17 PM UTC

siruncledrew wrote: post #428

naikrovek wrote: post #373

Earlier quoted context omitted.

You may not know how to follow logic. No one is saying that Epic are doing bad things in order to maintain their monopoly position. Epic doesn't have a monopoly on any market. People ARE saying that Apple are doing bad things to maintain their monopoly position, and others are justifying that by saying that "running a business is expensive" as if that justifies a monopoly or monopolistic actions.

Epic is not putting up some legal crusade for the “little guy” competitors. Epic is putting up a fight for Epic. It all comes down to money. If Epic was running their own platform, and 3rd parties didn’t want to abide by their rules, then Epic would give those 3rd parties the finger and tell them to F-off the same as Apple. Each is trying to grab as much profit as they can while running into the issue of other hands…

I said the same thing in another thread. It's all about money.

But even though is all about money, a legislation change is still necessary. As long as the result of this benefits the society, who's pushing it shouldn't matter that much.

At the end of the day, antitrust process are frequently started by people with a lot of money and power to catch people with more money and power. That's the game.

Re: Apple, Epic, and the App Store

#466

Post by Kocrachon » Mon, Aug 17, 2020, 11:19 PM UTC

How is this any different from PlayStation, Nintendo, and Xbox services? Not only do they get a cut of all of that revenue from those services and DLC, but the companies have to even pay for the right to make software for these devices. so are we going to start attacking Nintendo now? At some point I think a manufacturer should be allowed to manage this kind of stuff.

Re: Apple, Epic, and the App Store

#467

Post by paulmd » Mon, Aug 17, 2020, 11:21 PM UTC

all this because Epic didn't want to pay apple's app store cut and thought they could bully their way through blatant ToS violations. Move fast and ask forgiveness later, the Silicon Valley way!

It's pretty funny to look back and read the "whether or not apple backs down, Epic will have won a victory!" thinkpieces from last week.

Epic thought they could leverage their IPs into forcing Apple to play ball. Surely Apple wouldn't dare let Fortnite get deplatformed (as the game updates on without iOS). Surely Apple wouldn't dare let Unreal Engine get deplatformed as the OS updates onwards without it.

Turns out Apple does dare, and now third party developers are going to pay the price for Epic's arrogance. To be very clear: nothing is going to piss Apple off quicker than fucking with their cut of the revenue, this was eminently foreseeable and a blatant violation of ToS and there was no way Apple wasn't going to react. You should be mad at Epic here for trying to play silicon valley games with your products, not Apple.

The fact that Epic would then take cuts from third party developers in this app store is just the icing on this cake. They want to be the ones running the walled garden, nothing more.

Steam manages to get along with Apple just fine - they went ahead and made a revenue sharing agreement, and they haven't had a problem. Epic wanted to keep it all themselves, be the ones running the walled garden.

This is Epic trying to run the playbook that many of you have normalized, no different from Uber trying to bully their way out of background checks by threatening to pull out of Dallas, or threatening to pull out of California to bully their way out of paying for their employees' healthcare. Then cue the waterworks about those heartless regulators putting all those innocent employees at risk.

Only this time - it’s Epic who’s using your livelihoods as leverage for their power play. Very ironic!

All so that they can make $1 off a llama skin for bideo james instead of $0.92. Just like the Uber thing is so Uber doesn’t have to pay 20 bucks to run a background check. Playing games with people's lives so you can run a little fatter profit margin, that's the silicon valley way.

Re: Apple, Epic, and the App Store

#468

Post by chadcmulligan » Mon, Aug 17, 2020, 11:23 PM UTC

pwinnski wrote: post #229

orliesaurus wrote: post #14

Okay this is going to sound stupid but maybe someone else feels like me about it: I don't understand why Apple has to take such a big chunk from transactions of in-app purchases? Similarly Google. Why 30%? Why not 5%? That feels like it would be more honest. Is it just because "they can"?

At launch, Apple operated the App Store hoping to break even, and 30% wasn't quite doing it at first. On a $.99 app, they still might not. I mean, they might, given economies of scale, but barely. Free apps incur costs with zero compensation. If all apps cost 99 cents, I don't think we'd be having this conversation. If Apple were still operating the App Store at break-even, I don't think we'd be having this conversat…

The trouble is with the App Store that you can't charge more on the App Store than you do elsewhere to cover the costs of the App Store. This is perhaps the anti competitive part - if you could just pass on the App Store costs then the free market would reign.

Re: Apple, Epic, and the App Store

#469

Post by blackearl » Mon, Aug 17, 2020, 11:24 PM UTC

harryf wrote: post #391

cromwellian wrote: post #352

"But Apple needs to fund the App Store. XCode, payment processing, reviewers, it all costs money". Yes, very little in comparison. Apple made $50 billion in revenue from the App Store in 2019. $50 BILLION. The data centers costs to serve up this are miniscule in comparison. Apple could build 50 datacenters PER YEAR EVERY YEAR for that revenue. Reviewers? A staff of 10,000 fulltime reviewers paid $200k per year would…

This is a great picking apart of Apples justification but I think the issue that most irks everyone who’s not apologizing for Apple is where did this magic number 30% come from? Which market forces created it? Here on HN most of us probably feel that product manager at Apple licked their finger, felt the wind and said “Yeah 30% seems about the most we can get away with” And what irks even more is once Apple set the p…

Steam started selling games on their marketplace around 2005 to 2007, before the Apple app store.

They supposedly have a tiered cut, something like 30% off first X million, 25% of next X amount, etc.

Re: Apple, Epic, and the App Store

#470

Post by cromwellian » Mon, Aug 17, 2020, 11:24 PM UTC

Terretta wrote: post #441

PaulDavisThe1st wrote: post #432

Earlier quoted context omitted.

The $450 is the marginal cost of an iPhone. That's typically the normal number cited for the "manufacturing cost" of a product, regardless of the level of R&D and marketing that goes into it.

GP claimed iOS was "free". Can't be both free, and the phone only costs its parts. GP also said to cover cost of app store in the phone, despite only costing its parts. I consider iOS to be one of the iPhone's parts. I don't understand why machinery engineered from metal is so different from that engineered from bits, that I must consider them two products instead of one. Metal, glass, silicon, bits: one PDA applianc…

This is economics. The price of a product in a competitive market tends to its marginal cost -- the cost to produce one additional unit. The marginal cost of an iPhone is $450 in parts and labor. The R&D costs are fixed costs, not marginal costs, they don't vary whether you sell 1 million iPhones or 10 million iPhones.

Most of iOS's costs are fixed. Even if you amortize the cost of it across the number of phones sold each cycle, it will be insignificant.

Apple employs ~12,000 engineers. If all 12k cost $1million per year, it would cost Apple $12 billion a year. Apple revenue in 2019 was $260 billion, or 4.6% of revenues. Apple gross profit was $104 billion. So if Apple had to somehow cut some rent-seeking streams and eat $12 billion, their profits would only be reduced 12%

Now we know these figures are way overboard. Employee costs aren't $1 million per year for every engineer. All 12k engineers are not working on iOS or the App Store, etc.