Apple execs describe a “unique arrangement” with Netflix (2018) • Hacker News Board

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#171

Post by ameister14 » Mon, Oct 04, 2021, 10:58 PM UTC

CPLX wrote: post #76

smallerfish wrote: post #68

Earlier quoted context omitted.

It's an interesting thought experiment at least. What would the hidden incentives of something like that be? For example, if a company wanted to keep growing, it would have to split organically into separate corporate entities. What would stop them establishing "favored" relationships with each other? Say for example Facebook splits out "Zuckerburg data centers inc" - what's to stop them pricing themselves above mark…

You'd need to actually draft a law rather than write it on a napkin and there would be armies of very well paid lawyers trying to avoid it, but that's common to any attempt to break up concentrated power. In that context it wouldn't be all that hard. You'd need to figure out some definitions for common ownership, joint enterprise, and so on. A lot of those laws and definitions already exist. It's only really in the l…

When have we capped the potential revenue of companies successfully in the past? I've never heard of it

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#172

Post by spiffytech » Mon, Oct 04, 2021, 10:58 PM UTC

jacurtis wrote: post #145

ksec wrote: post #83

I am pretty sure I read something similar before. Probably from Benedict Evans or somewhere else. I think the most important issue from these email isn't the lack of Alternative App Store, IAP, or 70/30 split. It is that Apple Execs has Zero understanding of how other business works especially with respect to Internet or Software Services. They continue to think Netflix as a physical product ( As they often like to c…

For comparison Netflix spends about $1.2 Billion dollars per year on AWS (Amazon Web Services). Their total revenue last year was 27.5B. So that means that AWS fees account for 4.3% of Netflix's revenue. AWS is streaming video, operating hundreds of edge location CDN locations, and everything else running on expensive server infrastructure. AWS has real serious costs with offering that service, to the point that Netf…

> Apple seems to maintain the expectation that they deserve 30% of revenue from massive corporations like Netflix, Amazon, etc.

That's exactly what Apple believes.

From Tim Cook's testimony in Epic v. Apple, from Ars Technica:

> The in-app-purchasing (IAP) system itself, Cook said, is simply the most efficient way of collecting a 15 to 30 percent commission on each in-app sale. "If not for IAP, we’d have to come up with another system to invoice developers. It would be a mess."

This view is explicitly affirmed in the Epic v. Apple verdict[1]:

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

The court found the 30% rate arbitrary but not objectionable[2]:

> Indeed, 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 that Apple is entitled to some compensation for use of its intellectual property.

Personally, I don't approve of Apple feeling entitled to a cut of commerce that doesn't hit their app store, but the court's take (before appeals) is that it's perfectly legal.

[0]: https://arstechnica.com/gaming/2021/05/ceo-tim-cook-faces-po...

[1]: Page 67, https://s3.documentcloud.org/documents/21060631/apple-epic-j...

[2]: Page 150

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#173

Post by easton » Mon, Oct 04, 2021, 11:00 PM UTC

Ambroisie wrote: post #133

ramshanker wrote: post #14

I am of the opinion that the whole "Reader apps" concept itself was brought in to selectively please big and important players. The ones whose absence would diminish the value of iPhone. Indie developer's can't be expected to get same treatment.

What's a "reader app"?

An app designed for getting a user's previously purchased content (i.e. the Kindle app). They are exempted from certain App Store guidelines around account management and in-app purchases.

https://developer.apple.com/app-store/review/guidelines/#rea...

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#174

Post by mitemte » Mon, Oct 04, 2021, 11:03 PM UTC

emsy wrote: post #60

The problem here are not the special deals, saurik commented he cut special deals in the Cydia store occasionally the last time this topic came up. The problem is that there is no alternative to Apple when it comes to publishing software and content on the iPhone and that makes these kind of deals unfair.

Disclaimer: this is from memory

You could submit paid products to default Cydia repositories, where you personally handled payments. There was no commission in such scenarios. If you opted for payments to be handled by SaurikIT, a 30% fee was in place.

Cydia had special deals in place for Intelliborn products, I dont think this extended to other groups. Intelliborn previously operated Rock Your iPhone, which was acquired by Cydia and this was a negotiated term.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#175

Post by ribosometronome » Mon, Oct 04, 2021, 11:10 PM UTC

vorpalhex wrote: post #75

netcan wrote: post #71

Earlier quoted context omitted.

This is naive, IMO. Even if the app store was run differently, say allowing a competing way of installing apps, Apple still have plenty of fungible power to make such deals. You might have ticked a box to make it technically fair, for some definition of, but that would probably be just cosmetic. IE, app store would still represent most revenue and everyone is in the same position but a few geeks. The "platform game"…

An alternative market would create pressure on Apple. If Netflix tells the App store to go screw themselves and lists on a different store, then the App Store gets that much less traffic and either has to compete or lose out.

Does that seem to be the case for Google? My impression was that both companies take essentially the same percentages. They even both announced programs over the last year to reduce their fees for devs making under $1 million a year, only Apple beat Google to the punch there. My take away is that Google has felt more pressure from public perception/noise making than alternative app stores.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#176

Post by AnthonyMouse » Mon, Oct 04, 2021, 11:10 PM UTC

abvdasker wrote: post #77

djyaz1200 wrote: post #12

Tech companies that reach monopoly scale (like Apple, Facebook, Amazon) should have to disclose all their agreements and honor a "Most Favored Nation" clause giving all companies the same pricing and access as the best negotiated agreement with any one company. This is the most reasonable way I can think of without breaking them up to prevent them picking winners and losers as new opportunities emerge. If you have a…

This is a solved problem. Just do what most American cities do with other natural monopolies like utilities: use careful price controls to cap margins and slow rate increases. You don't need to invent some esoteric market-based solution, especially for a service where marginal costs are near zero and supply is almost infinite.

> Just do what most American cities do with other natural monopolies like utilities: use careful price controls to cap margins and slow rate increases.

Nothing Apple does is a natural monopoly.

Artificial monopolies can be maintained through vertical integration. If you don't like their app store, use another one. If all they provide is the app store, that's easy, and every platform would have half a dozen or more.

But if using a different app store requires you to develop your own operating system, and convince millions of third party developers to make applications for it even before it has any users, and make your own hardware, on and on, well then it's infeasible to make a competing app store and you get an uncompetitive and abusive market.

The solution there isn't to regulate it like a utility, it's to break up the company so that the operating system isn't made by the same company as the app store and has no reason to restrict the users to only the one. Then you have competition again and don't need any regulation other than the constraint on vertical integration.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#177

Post by Cederfjard » Mon, Oct 04, 2021, 11:12 PM UTC

spywaregorilla wrote: post #109

CPLX wrote: post #62

Earlier quoted context omitted.

We could also just put a tax of 100% on any revenue in excess of $10bn a year and nip this entire society-destroying problem in the bud.

So what happens to the company spending 10.5bn to earn 11 bn? They just get a net loss of 0.5 bn? edit: Or lets pick a real example and see how that works out. ArcelorMittal is a major steel provider. They sold $53B last year. They had a tough year though, so their final net loss was actually about half a billion. Under your proposal, they would have lost 43 billion dollars. Uh oh, you just collapsed the steel indust…

I assume the idea is that large companies such as this would have a period of time to scale down operations to the largest size where it still makes sense, and then more competitors would pop up to take over the market share they leave behind. I’m not defending the proposal since I’m too ignorant to have an opinion worth speaking out loud, but that was my interpretation at least.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#178

Post by Retric » Mon, Oct 04, 2021, 11:13 PM UTC

spiffytech wrote: post #172

jacurtis wrote: post #145

Earlier quoted context omitted.

For comparison Netflix spends about $1.2 Billion dollars per year on AWS (Amazon Web Services). Their total revenue last year was 27.5B. So that means that AWS fees account for 4.3% of Netflix's revenue. AWS is streaming video, operating hundreds of edge location CDN locations, and everything else running on expensive server infrastructure. AWS has real serious costs with offering that service, to the point that Netf…

> Apple seems to maintain the expectation that they deserve 30% of revenue from massive corporations like Netflix, Amazon, etc. That's exactly what Apple believes. From Tim Cook's testimony in Epic v. Apple, from Ars Technica: > The in-app-purchasing (IAP) system itself, Cook said, is simply the most efficient way of collecting a 15 to 30 percent commission on each in-app sale. "If not for IAP, we’d have to come up w…

Yea, legally it’s clear Apple can charge whatever they want. The actual leverage large companies have is by not having their Apps on iOS Apple may lose customers.

But at this point I doubt Netflix is willing to risk it as there is simply to many streaming options. However, Netflix doesn’t need to use IAP so for them it’s a question of increased conversions with IAP rather than dropping the platform. Assuming their also saving a little on CC processing fees a 15% cut is probably a reasonable deal for increasing the number of Netflix customers and quite a bit of revenue for Apple.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#179

Post by robocat » Mon, Oct 04, 2021, 11:15 PM UTC

PoignardAzur wrote: post #156

garblegarble wrote: post #148

Earlier quoted context omitted.

>AWS is streaming video, operating hundreds of edge location CDN locations, and everything else running on expensive server infrastructure. AWS has real serious costs with offering that service, to the point that Netflix has yet to determine that it is better to build it themselves. Somewhat off the core topic, but netflix run their own CDN (I also don't see any evidence for that 1.2 billion AWS bill figure, can you…

I'm not sure Netflix Open Connect counts as a CDN? They might still use distributed servers from AWS.

The CDN nature of Netflix appliances is clear if you read their docs on fill patterns: https://openconnect.zendesk.com/hc/en-us/articles/3600356180...

Netflix installs appliances at peering exchanges around the world: https://www.peeringdb.com/net/457

Disclaimer: I don’t know much beyond a few Google searches on the topic.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#180

Post by ribosometronome » Mon, Oct 04, 2021, 11:16 PM UTC

fbelzile wrote: post #81

Jcowell wrote: post #79

Earlier quoted context omitted.

From a consumer point of view, this is terrible.

No, it increases choice and lowers costs for the consumer. If you see switching app stores a "cost" because it's less practical, you most likely would still be able to use your store of choice, but you might need to pay more. I don't see Netflix pulling out of the App Store if there alternatives. Right now, this is the only thing they can do to retaliate.

>If you see switching app stores a "cost" because it's less practical, you most likely would still be able to use your store of choice

This doesn't really match what's happened with the PC gaming marketplace. Facebook pays for exclusives to the Oculus Store, Epic (whose lawsuit brought this e-mail to light) pays for exclusives on their store. A fair few major developers only release through their own store. Cases that buck this trend (like Halo releasing on Steam) tends to be news rather than typical.