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Apple, Epic, and the App Store

stratechery.com

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Re: Apple, Epic, and the App Store

#561

Post by chipotle_coyote »

scarface74 wrote: post #498
harryf wrote: post #391

Earlier quoted context omitted.

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…

The article tells you where the 30% came from. In the days of iTunes, a song was $0.99. Credit card transaction fees were around 2% + $0.25 per transaction. The minimum price for an app was $0.99 as was the minimum in app purchase. I am not saying it should scale as price scales to remain 30%.

This seems almost certainly correct. The 30% cut for the App Store had a precedent of a 30% cut for media in the iTunes Store. In the past I've jokes that the fees in the App Store were chosen so they could just use the existing infrastructure with as little change as possible -- and while it's a joke, it's not entirely a joke. It's pretty easy to see the execs at Apple looking at that and saying, "Hey, 30% is way cheaper than what physical software stores charge for shelf space, and it's in line with other digital media stores that handle not just payment processing but hosting, downloading, review aggregation, and marketing, so it's a great deal, right?"

And, IIRC at the time it was seen as a great deal. It may not be such a good deal now, though, and in-app purchases are really a whole other kettle of fish.

Re: Apple, Epic, and the App Store

#562

Post by giantrobot »

dangoor wrote: post #262
giantrobot wrote: post #186

Earlier quoted context omitted.

I'm super amused by people bemoaning Apple's cut of sales on the App Store. I remember mobile software before the App Store. Buying software for a Palm or PocketPC device was a fucking shit show. There were multiple competing stores and sometimes even the developer's own site. The prices were ridiculous, partly because everyone had to implement their own payment and distribution systems. If the software didn't work o…

2020 is very different from 2008. Palm and PocketPC devices were "organizers" and not primary computing devices (as smartphones are today, for some users), so there was a lot less at stake back then. Additionally, companies like Stripe have made integrating payments _way_ easier than it was back then. Hosting downloads is not difficult either. As noted in the Stratechery article, developers not only give up 30%, but…

Late model PDAs and early smartphones (Treo, Blackjack, N95, etc) were capable devices. The paid software for these you'd see were office suites, PIMs, e-mail clients, and games. Of course these weren't as capable as 2020 devices but we're not talking early Palm Pilots.

Payment processors like Stripe aren't new, there was PayPal, Kagi, and others before 2008. Handling payments is a non-trivial task for a small developer, the same goes for handling user accounts/data. They're not insurmountable problems but they're a lot more effort than Apple or Google just sending you money when people buy your app.

Hosting is worse than payments as it costs the developer money and keeps costing money. If your app gets a popularity spike instead of getting a revenue spike you get a huge hosting bill.

I think you've got it entirely backwards, more developers have sustainable businesses because of the App Store than without. Payment processing, hosting, managing user data? That shit is easy for big companies or it's an extant expense so mobile app sales aren't adding real overhead. So for Microsoft, Adobe, and Epic those aren't problems. They could easily sell their stuff without the App Store/Play Store and in fact currently do so. For the many thousands of small developers that aren't Epic payment processing and hosting are big costs as is advertising they need to even be found. Before the App Store mobile app aggregators charged money to get listed and wanted bribes to be featured.

Epic et all might see their overhead drop from Apple's 30% to maybe 10%. They pocket the extra revenue and prices don't change for consumers. For many thousands of developers their overhead goes from Apple's 30% to 50-60% doing it in house. So Epic rakes in even more money and small developers get the shaft.

Re: Apple, Epic, and the App Store

#563

Post by m3kw9 »

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…

Ok let’s punish them for making money, how come no one complained when they first came out with this payment scheme? Yes, they covered their fixed costs and then some, are they supposed to lower the price so they barely make a profit? Capitalism doesn’t work like that.

Re: Apple, Epic, and the App Store

#564

Post by giantrobot »

bluedevil2k wrote: post #246
giantrobot wrote: post #186

Earlier quoted context omitted.

I'm super amused by people bemoaning Apple's cut of sales on the App Store. I remember mobile software before the App Store. Buying software for a Palm or PocketPC device was a fucking shit show. There were multiple competing stores and sometimes even the developer's own site. The prices were ridiculous, partly because everyone had to implement their own payment and distribution systems. If the software didn't work o…

> Apple's cut of sales for the service they provide is pretty small compared to the costs of doing it yourself Pretty small? I think Epic, who makes billions and billions of dollars in overall sales (though revenue is unknown specific to Apple devices, but fair to say at least $100M), would strongly disagree with this point.

I couldn't possibly care less if Epic only makes $100m instead of $130m. Why are you carrying water for Epic which makes stupid amounts of money selling props for in-game toons? I'd be sympathetic if they sold anti-cancer drugs or built low income housing but they sell fake things to people in their own captive market.

Re: Apple, Epic, and the App Store

#565

Post by m3kw9 »

naikrovek wrote: post #373
bttrfl wrote: post #359

Earlier quoted context omitted.

Following your logic, Fortnite's add-ons should clearly be free since the cost to make and sell them is minuscule in comparison to 400M Epic made in April alone [0]. [0] https://venturebeat.com/2020/06/15/epic-games-shareholders-s...

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.

Even if Apple lower their price their market position is still the same, vertically integrated at massive scale.

Re: Apple, Epic, and the App Store

#566

Post by lwansbrough »

scarface74 wrote: post #529
kevingadd wrote: post #504

Earlier quoted context omitted.

Selling virtual items is not especially common due to the exposure it creates to fraud and abuse. Fortnite doesn't allow selling or trading - games that do like Team Fortress 2 and Counter-strike Go are home to lots of scammers who try to trick teens and other uninformed players into giving away their valuable loot :( Who are you going to buy from without giving Epic a cut? They're the only ones offering Fortnite ite…

Selling virtual items is not especially common due to the exposure it creates to fraud and abuse. How is that argument any different than the one Apple is making?

Apple doesn't just require you use their payment processor - which might in theory be acceptable - they also demand 30 cents on every dollar. Payment providers everywhere have shown that fraud and abuse can be mitigated to an acceptable level with transaction fees as low as half a cent on the dollar. So Apple forces you into an agreement to use a payment processor that is 30-60x more expensive than the competition simply because they can.

Re: Apple, Epic, and the App Store

#568

Post by nodamage »

projektfu wrote: post #426

I think it’s absurd that you can neither buy a kindle book from the iOS kindle app nor the Amazon app. How user unfriendly! And yet, Apple runs their own digitsl bookstore... since there’s no way to remove 30% revenue from apple’s own venture, they’re using a monopoly position to monopolize another market. Oh, but Apple isn’t a monopoly because there’s Android. Why did we think Microsoft was a monopoly? You could alw…

The key difference is that Microsoft had 90% market share in the operating system market. Apple's 46% market share in the smartphone market is not likely enough to be considered holding "monopoly power".

Re: Apple, Epic, and the App Store

#569

Post by ifmpx »

rymate1234 wrote: post #541
donor20 wrote: post #521

Earlier quoted context omitted.

Xbox has a monpoly on their game store. Sony has a monpoloy on their game store. Come on - is this argument going to be used for all these too? Walmart has a monopoly on what sells in Walmart.

Unironically there should be alternatives for those platforms, and the Switch

I'd include walmart too if walmart is the only store I'm ever allowed to shop at.

Re: Apple, Epic, and the App Store

#570

Post by nmfisher »

RyanShook wrote: post #567

The entire way Epic went about this has me scratching my head. Just looks like a lose-lose situation to me. They lose out on 70% of their revenue on iOS now and likely lose a lawsuit later.

I’m guessing they are very confident in their legal position.

Just think how much it would be worth to Epic to run their own Games store on iOS - literally billions.

This is big brain thinking from Tim Sweeney.

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