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Apple, Epic, and the App Store

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Re: Apple, Epic, and the App Store

#601

Post by AnonHP »

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…

> A $1250 iPhone had a $450 cost to make...

Where do you even get numbers like this? Are you looking at the bill of materials cost and assuming that to be the cost of the device, ignoring the R&D, testing, iterations of development and tweaking, and many other factors (including marketing) that go into the price of a product (apart from profit margin)? If yes, that’s too naive an assumption and bordering on hyperbole.

This is like arguing that the ingredients for cost some low value whereas restaurants are selling it at several tens of times that cost. M

Re: Apple, Epic, and the App Store

#602

Post by nodamage »

nwienert wrote: post #600
nodamage wrote: post #599

Earlier quoted context omitted.

> Antitrust needs no monopoly to enforce. I'm not sure why you think this? Sure, certain Sherman Act violations (e.g. price fixing) do not require monopoly power to be considered illegal, but the specific claims in Epic's lawsuit (unlawful monopoly maintenance) definitely require proof of monopoly power.

“Conspiracy in restraint of trade” would fit perfectly what Apple/Google are doing. The average American spends some what, 4-5 hours a day on their phone? Is there any even remotely comparable precedent for a company to control all trade through everything? The best I can think of is cable, imagine if there were only two cable companies and they not only had unilateral ability to control which channels appear, but al…

> “Conspiracy in restraint of trade” would fit perfectly what Apple/Google are doing.

Proving a conspiracy claim requires two parties to knowingly participate in the conspiracy. While you may believe Apple and Google are conspiring together there is a reason Epic's lawsuit does not make any conspiracy claims - their lawyers know they'd never be able to win such a claim.

At any rate that is irrelevant to my point: Epic made several claims in their lawsuit that will require proof of monopoly power.

Re: Apple, Epic, and the App Store

#603

Post by spsful »

pests wrote: post #444
misnome wrote: post #436

Earlier quoted context omitted.

Ah, but that's outside of Fortnite. Inside Fortnite they have a monopoly on selling items, right?

The core point your parent was trying to make is that Fortnite is not an open market. No one but Epic provides goods to the Epic store. Apple allowing third party developers is the distinction being made.

Which would be irrelevant since the original comment was that Epic had no monopoly on any market, and didn't specify the terms and conditions for a market to fit the argument.

Re: Apple, Epic, and the App Store

#604

Post by lostgame »

AnonHP wrote: post #601
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…

> A $1250 iPhone had a $450 cost to make... Where do you even get numbers like this? Are you looking at the bill of materials cost and assuming that to be the cost of the device, ignoring the R&D, testing, iterations of development and tweaking, and many other factors (including marketing) that go into the price of a product (apart from profit margin)? If yes, that’s too naive an assumption and bordering on hyperbole…

I agree. I very much like the metaphor you're drawing here. Expecting a phone to cost as much as its materials is like expecting to go to a restaurant and being outraged when a steak and fries costs $25 when you can buy potatoes and a steak from your local supermarket for $8.

It's absolutely ignoring the overhead, R&D, etc; but I often also find iOS itself ignored in the built-in costs. I often find comparisons to costs of materials vs. MRSP bizarre at best, in any case.

Re: Apple, Epic, and the App Store

#605

Post by dev_tty01 »

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…

Apple's gross revenue was about $14 billion, not $50 billion. Total app store revenue in 2019 was $61 Billion. Apple received between 15% and 30% of that, depending upon the first year/later years subscription numbers. If we use 22.5%, Apple made $13.7 billion.

https://www.theverge.com/2020/6/15/21292203/apple-app-store-...

Follow the link to the cited study. Another data point is Apple's release that they paid developers $34 billion in 2018.

https://fortune.com/2019/01/28/apple-app-store-developer-ear...

Since the 15% subscription model was relatively newer in 2018, let's put the 2018 developer number at 75% of the total, so Apple made about $11.3 billion in 2018.

Also, we should not forget the huge overall R&D spend Apple is making to keep growing the iPhone/iPad market. Apple makes money off sales of course, but it is still a huge investment in the platform and that creates market for developers.

They have also just announced a new platform for Macs that will allow iPhone and iPad apps to run unaltered on the new Macs. Again, big R&D expense from Apple with upside for developers. In general, there have been big R&D expenditures in software SDKs in recent years for developers to get to a write once model so programs can run on all the platforms.

Apple also eats the 2.5% (typical number) credit card transaction costs. In addition, they deal with collecting and paying local sales taxes in every state and in 155 countries.

For the user, they provide a trusted payment processor and software source so they don't have to worry if the software will have embedded malware or if their credit card data will be handled appropriately.

They provide cloud servers for notifications, file storage, all of the software update processing, payment processing, and many other services.

The app store team performs about 100,000 reviews every week. Somewhat automated, but a lot of humans involved too.

After the first year, Apple's cut is 15%, so after all the other expenses of the app store I'd be surprised if they are clearing 10% after that. Whatever the exact number, it is far less than 30%.

The 2019 net prior to R&D and other expenses is probably around $12 to $13 billion best case. Developers made about $47 billion. At any rate, Apple is making money, but we should keep the right numbers in mind when we have these discussions.

Re: Apple, Epic, and the App Store

#606

Post by nwienert »

nodamage wrote: post #602
nwienert wrote: post #600

Earlier quoted context omitted.

“Conspiracy in restraint of trade” would fit perfectly what Apple/Google are doing. The average American spends some what, 4-5 hours a day on their phone? Is there any even remotely comparable precedent for a company to control all trade through everything? The best I can think of is cable, imagine if there were only two cable companies and they not only had unilateral ability to control which channels appear, but al…

> “Conspiracy in restraint of trade” would fit perfectly what Apple/Google are doing. Proving a conspiracy claim requires two parties to knowingly participate in the conspiracy. While you may believe Apple and Google are conspiring together there is a reason Epic's lawsuit does not make any conspiracy claims - their lawyers know they'd never be able to win such a claim. At any rate that is irrelevant to my point: Epi…

You shifted from arguing from a purely theoretical view (if Epic had a market should they be regulated) to now arguing a very narrow view local to this case. I’m arguing the big picture, so feel free to engage there or not.

Sure, Epics specific case may be the only strategy they can take - they won’t find any documented collusion when there’s only two players, that’s obvious. They already colluded to suppress wages. We can all see what’s happening. You’re arguing semantics on one side then arguing generalities on the other. But let’s call a spade a spade: theres no smoking gun, but they are colluding, it’s just a silent “don’t lower yours and I won’t lower mine” nod.

Edit: further, with the amount of lock in they each have, there’s not much pressure anyway. It’s just not comparable to anything really that has existed beyond Windows/Mac which were/are entirely open. And it goes even further. Mobile phones are on people at all times. They do way way more. You have accounts with hundreds of apps, services. It’s just not a comparable thing, it’s a world with big lock-in.

Re: Apple, Epic, and the App Store

#607

Post by govg »

colinmhayes wrote: post #474
jimmydorry wrote: post #459

Earlier quoted context omitted.

If they manage to land their store on iOS, expect them to do the same anti-competitive things they did in the PC market... paying studios to exclusively put their games on the Epic Store only. Even games fund raised by communities, and games already announced to be launching on other platforms. I don't see that as much of a win.

That sounds like a gigantic win for developers to me.

It's a "gigantic win" for everyone in the same manner that Uber paying drivers and customers (via bonuses / free rides) to use their service was one for everyone involved . Sooner or later, Epic will have to stop doing this once they get their market share and there is no guarantee that this will be the financial model they follow (free games frequently, paying devs to be exclusive etc).

It works in a different context ( platform exclusives ) because the lock in / costs to developing for a different platform are far different from that for different stores on a single platform.

Re: Apple, Epic, and the App Store

#608

Post by tomcam »

IANAL, but I think the strategy epic will use is called tying in anti-trust law. That means obtaining an unfair advantage for one line of business by requiring its use in another line of business. The android app market is big in numbers, even bigger than the number of iPhones, and therefore it may be difficult to call the App Store a monopoly. In Epic’s case, while the App Store may or may not be a monopoly, forcing anyone who uses the App Store to use Apple’s payment services as well may be the illegal part in the eyes of the court.

Re: Apple, Epic, and the App Store

#609

Post by 9nGQluzmnq3M »

gsich wrote: post #549
cromwellian wrote: post #385

Earlier quoted context omitted.

Games have a limited shelf life. I don’t really care about Epic. Fortnite won’t be around much longer when the next big game du jour comes out. Whether or not Epic charges for their store is immaterial to whether one of the largest and most important general purpose computing platforms in the world is performing highway robbery.

I hear this argument often, but there are counterexamples like Minecraft, CSGO, World of Warcraft (one of the few MMOs that still have a subscription). So it's entirely possible that Fortnite will stay.

Minecraft has arguably evolved into its own "platform" with people building and sharing their own worlds (some on Minecraft's own managed Realms, many not) and tons of third-party games built on top of Minecraft accessible to the public. Fortnite may evolve in this direction some day, but it hasn't yet.

Re: Apple, Epic, and the App Store

#610

Post by dev_tty01 »

ct520 wrote: post #538
misnome wrote: post #377

Earlier quoted context omitted.

I don't understand these arguments either. It's not illegal to have high product margins, right? Why can't they charge whatever they want? It comes across as pure moral "I don't like it" objection, which is fine, but don't use it as a legal argument.

It's the fact when you get large enough and force things that are considered unrealistic or anti competitive platform it becomes an issue. This isn't new to American business. It evolves. It use to be oil, steel, ATT, Microsoft.. Now it's Apple. Tech is long over due for a overhaul only a matter of time until some politician uses it to add a feather to their cap. 30% cut of a sale of a mature economy is just crazy.

>30% cut of a sale of a mature economy is just crazy.

That is why it isn't 30% after the first year. It is 15% for subscription based software starting year 2. As I pointed out earlier, Apple also eats credit card transaction costs (~2.5%) and the costs of collecting and paying sales tax in 50 states and 155 countries, app store personnel, servers, etc...

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