Court Injunction Cuts Apple App Store Business Model to the Core

A permanent injunction handed down in one of the Epic Games lawsuits against Apple over App Store royalties deals a major blow to Apple (thanks The Verge). The US Court for the Northern District of California has decided that Apple can no longer prohibit apps from promoting alternative payment methods. The following order takes effect 90 days from today:
The Court, having considered the evidence presented at the bench trial in this matter and consistent with its findings of fact and conclusions of law, HEREBY ORDERS as follows:

  1. Apple Inc. and its officers, agents, servants, employees, and any person in active concert or participation with them (“Apple”), are hereby permanently restrained and enjoined from prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.
  2. Any party may seek modification of this Order, at any time, by written motion and for good cause based on changed circumstances or otherwise.
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35.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 11, 2021, 14:32
35.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 11, 2021, 14:32
Sep 11, 2021, 14:32
 
Mr. Tact wrote on Sep 11, 2021, 07:47:
So, all of you who think the government needs to step in and reign Apple practices in... You all support New York City's limits on the fees food delivery company's charges to restaurants, right? From the NYT:

The three largest food delivery platforms have filed a lawsuit seeking to overturn New York City’s cap on the fees they can charge to restaurants.

The lawsuit, filed by Grubhub, DoorDash and Uber Eats in Federal District Court in Manhattan on Thursday, was the latest confrontation in an extended battle that began nearly two years ago, when the City Council first discussed a possible cap.

The Council held hearings where restaurant owners complained of paying fees as high as 30 percent, saying that fees were levied even on calls that did not result in orders.
The problem in both industries is a lack of competition allowing the two or three monopolistic corporations the ability to exploit the "content producers" with exorbitant rates. In the case of the mobile app market, it's Google and Apple, and their ridiculous 30% stipulation, among other rules. For NYC food deliver, the Big Three comprise 98% of all delivery, and have stipulations like restaurants can't charge more in delivery prices than what they offer in restaurants, in addition to other shady practices like hidden fees and shadow websites so they can charge restaurants a "marketing fee." Restaurants make almost no money on their delivery food, sometimes even losing money:
- Customers had paid $1,042.63 for 46 pizzas; the delivery company [Grubhub], which is based in Chicago, had taken $666.09 in commissions and fees.
- A pizzeria owner with his own fleet of delivery drivers posted a $41,230.47 invoice showing Grubhub taking a 27 percent cut — just for processing orders.
- Profit margins for full-service restaurants are typically around 3 to 5 percent, and delivery app fees tend to hover around 30 percent, so the commission charges clearly weighed against the services.
The problem is that people who use these apps are unaware of the exploitation. They use them for convenience: you go one place to search for any kind of food you want.

In short, regulation is the only way to prevent these monopolistic companies from exploiting "content producers," app developers, restaurants, and customers. We allow "monopolies" for things like health care and electricity, but they're very heavily regulated to prevent exploitation. Same should be done in these instances.
With great freedom comes great responsibility.
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34.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 11, 2021, 07:47
34.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 11, 2021, 07:47
Sep 11, 2021, 07:47
 
So, all of you who think the government needs to step in and reign Apple practices in... You all support New York City's limits on the fees food delivery company's charges to restaurants, right? From the NYT:

The three largest food delivery platforms have filed a lawsuit seeking to overturn New York City’s cap on the fees they can charge to restaurants.

The lawsuit, filed by Grubhub, DoorDash and Uber Eats in Federal District Court in Manhattan on Thursday, was the latest confrontation in an extended battle that began nearly two years ago, when the City Council first discussed a possible cap.

The Council held hearings where restaurant owners complained of paying fees as high as 30 percent, saying that fees were levied even on calls that did not result in orders.
“Extinction is the rule. Survival is the exception.” -- Carl Sagan
33.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 11, 2021, 06:46
33.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 11, 2021, 06:46
Sep 11, 2021, 06:46
 
It is not about the 30% cut of the original sale of a product. Its about Crapple claiming all products sold if they have online microtransactions, have to be done via Crapple and Crapple gets 30% of those transactions.

That is predatory. Imagine if you bought Quicken from Amazon, and Amazon told you that if you wanted to use Quicken to buy or pay for something, the transaction has to go through Amazon and they require 30% of that.
"Meet the new Boss, same as the old Boss." - The Who.
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32.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 11, 2021, 00:10
32.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 11, 2021, 00:10
Sep 11, 2021, 00:10
 
jdreyer wrote on Sep 10, 2021, 20:30:
MeanJim wrote on Sep 10, 2021, 18:57:
Can Apple, Google, Microsoft, Steam, etc. operate on less than 30%? I don't know and neither do you, so until I see data proving otherwise, I'm not going to pretend I do know and you shouldn't either.
I think I just showed that they can operate well under 30%, and it is long past time for the government to force competition in these markets.
You guestimated, as I did, but showed nothing concrete. I'm not denying that Steam could operate on less than 30%, I'm pretty damn sure they can, but I'm not going to pretend to know it absolutely. I bet if Steam could operate on 1% and still make a profit, they would because I doubt anyone one else could compete with that, and then Epic would probably be suing Valve for being anti-competitive.

Also, I misread Hellcinder's post as "why does Apple... deserve 30% or anything for products they don't produce?". I just noticed that of was not an or when reading the replies. I should have coffee before I argue on the internet.
"The only way anyone can live in peace is if they're prepared to forgive." - The Doctor
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31.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 22:56
31.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 22:56
Sep 10, 2021, 22:56
 
If you don't own some AAPL you are doing a terrible job of managing your investments. That said, the fact I managed to buy some Apple at $97 before the split doesn't figure into my thought process on this. They aren't getting my money, the ISP and mobile carrier are, I'd much rather see them get reigned in. Apple's turn can come later...
“Extinction is the rule. Survival is the exception.” -- Carl Sagan
30.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 22:47
30.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 22:47
Sep 10, 2021, 22:47
 
We found the person who owns some AAPL.
- I refer to it as BC, Before Corona, and AD, After Disaster. -
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29.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 21:07
29.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 21:07
Sep 10, 2021, 21:07
 
I think I'd rather see the government take on ISPs and/or the mobile carriers themselves than Apple or Google. Seeing as I have never given Apple or Google a cent (directly), I'm not particularly concerned about how they run their app stores.
“Extinction is the rule. Survival is the exception.” -- Carl Sagan
28.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 20:30
28.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 20:30
Sep 10, 2021, 20:30
 
MeanJim wrote on Sep 10, 2021, 18:57:
What is stopping publishers from putting their apps on the Apple store for free, and then locking everything inside the app behind in app purchases, cutting Apple completely out of the loop?


Hellcinder wrote on Sep 10, 2021, 15:32:
I've been hammered quite a bit for this view, but why does Apple (Google, Microsoft, Steam, name your leach here) deserve 30% of anything for products they don't produce?

The infrastructure argument is swiss cheese also, because if you need 30% to keep yourself afloat, you're doing something very wrong.
Running those app stores isn't free. They have bandwidth costs, utility bills, and employees to pay. With Microsoft, Sony, and Nintendo, they sell the consoles at a loss and make up for that by taking a cut from the games sales. I don't know if that's the same for Apple's phones or not.
Apple made $72 billion in revenue from the app store in 2020. Development and operation of the app store costs them a few hundred million. It's an incredibly profitable cash cow, literally a penny on the dollar to run. Within the mobile app market, it's a duopoly between Apple and Google. What would that percentage be if there was actual competition? Typical payment processors charge 2%. Apple does a bit more work than just payment processing, like verifying apps it allows on its system. However, it does nothing to justify 30%.


As for Steam, their only income is from the cut they take from sales, and running a service like Steam isn't cheap. I did some rough estimates on Steam a year or so ago when this all started and lots of "experts" here where claiming to know small of a cut Steam could operate on:
Rather than make shit up, I actually made some effort to get an estimate of some of Valve's operating costs just now. Valve's Download Status page shows a peak rate of 5.8 Tbps in the past 48 hours. It looks like they average about 4 Tbps. I looked up prices for commercial CDNs and find prices from 4 cents to 80 cents per GB. Going with the lowest rate of 4 cents per GB means Valve would be spending an average of $20 per second to run their data centers.
That was from over a year ago. That download status page now shows their 48hr peak at 14Tbps, and averaging closer to 8Tbps.

Also Steam only a takes a 30% cut from sales directly on the Steam store. They don't take any cut at all from key sales.
The fact that Steam pretty much instantly and voluntarily reduced its percentage with just the slightest whiff of competition from Epic a couple of years ago tells you all you need to know: Steam has incredibly high profit margins. Steam had well over $4.3B in revenue in 2017, and has only grown since then, especially under the pandemic. They have around 360 employees and an estimated worth of $10B, making them one of the most valuable companies per employee on Earth. With an average salary of $120,000, that puts payroll at around $43M. Throw in a few hundred million for infrastructure costs, and you can see why making $5-6B per year puts them at around a 90% profit margin. With 70% of the PC gaming market, they can stifle competition with rules for publishers like "most favored nation" status and such.

Can Apple, Google, Microsoft, Steam, etc. operate on less than 30%? I don't know and neither do you, so until I see data proving otherwise, I'm not going to pretend I do know and you shouldn't either.
I think I just showed that they can operate well under 30%, and it is long past time for the government to force competition in these markets.
With great freedom comes great responsibility.
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27.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 19:34
Kxmode
 
27.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 19:34
Sep 10, 2021, 19:34
 Kxmode
 
Slightly related
"What is the most resilient parasite? Bacteria? A virus? An intestinal worm? An idea. Resilient... highly contagious. Once an idea has taken hold of the brain it is almost impossible to eradicate."
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26.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 19:34
26.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 19:34
Sep 10, 2021, 19:34
 
MeanJim wrote on Sep 10, 2021, 18:57:
What is stopping publishers from putting their apps on the Apple store for free, and then locking everything inside the app behind in app purchases, cutting Apple completely out of the loop?
You need a game that's built around a constant flow of microtransactions for that to work (including a simple payment UI). They also need to set up a deal with a third party payment processor (because getting the papers in order to become a payment processor is not a cheap or quick thing) who will take a cut anyway even though that is likely far less than 30% (1 to 5% depending on card,a paid amount and transaction volume is the norm iirc). I don't know how Apple handles payment disputes, but that's something the publisher has to think of now as well. And chargebacks are always a nasty surprise waiting to happen for any company dealing with online transactions.

While it would be possible if the order survives the inevitable myriad appeals, it's not something I'd suggest to a smaller publisher (and certainly not for a small indie developer). The large publishing houses will almost certainly switch as fast as they can.

MeanJim wrote on Sep 10, 2021, 18:57:
Hellcinder wrote on Sep 10, 2021, 15:32:
I've been hammered quite a bit for this view, but why does Apple (Google, Microsoft, Steam, name your leach here) deserve 30% of anything for products they don't produce?

The infrastructure argument is swiss cheese also, because if you need 30% to keep yourself afloat, you're doing something very wrong.
Running those app stores isn't free. They have bandwidth costs, utility bills, and employees to pay. With Microsoft, Sony, and Nintendo, they sell the consoles at a loss and make up for that by taking a cut from the games sales. I don't know if that's the same for Apple's phones or not.
From what information I have been able to gather, Apple does earn a substantial amount from selling the phones whether directly to customers or to a carrier (that then recoups the cost via the long term plan that comes bundled). From what I can tell they also make a decent amount of money on support and peripherals, which is why there's also a large market for third party support and peripherals.
25.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 19:21
25.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 19:21
Sep 10, 2021, 19:21
 
MeanJim wrote on Sep 10, 2021, 18:57:
I don't know if that's the same for Apple's phones or not.
It's not, they make a killing.
https://www.digitaltrends.com/mobile/how-much-does-it-cost-to-make-iphone

As for consoles, they might start out losing money at first but most eventually become profitable with economies of scale and decreased manufacturing costs.

- I refer to it as BC, Before Corona, and AD, After Disaster. -
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24.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 19:20
24.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 19:20
Sep 10, 2021, 19:20
 
Hellcinder wrote on Sep 10, 2021, 15:32:
I've been hammered quite a bit for this view, but why does Apple (Google, Microsoft, Steam, name your leach here) deserve 30% of anything for products they don't produce?

The infrastructure argument is swiss cheese also, because if you need 30% to keep yourself afloat, you're doing something very wrong.

I mean, it's not ENTIRELY swiss cheese, otherwise these people wouldn't be leeching off Apple/Google/Microsoft/Steam/etc. for the infrastructure development and upkeep they've done, as well as building the user base. Is 30% too high? Probably! Is 0% too low? Probably! I mean, Apple's likely going to have to start charging developers for a LOT of things they were just giving away for free before if this holds. Testflight, store listings, etc.

Don't get me wrong -- I'm not saying Apple is entirely in the right, but to say you don't have to give them ANY money at ALL for ANY of their architecture/infrastructure/development that you as a software developer haven't paid a dime for? C'mon.
23.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 19:08
23.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 19:08
Sep 10, 2021, 19:08
 
ECisMe wrote on Sep 10, 2021, 12:34:
Apple income will drop considerably so the stock is likely going to take a hit.
Since when has stock price ever been based on income. Looking at you GME. Wink

Apple dropped $5 today. It's now the same price as it was on August 27th, 2021.
- I refer to it as BC, Before Corona, and AD, After Disaster. -
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22.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 19:03
22.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 19:03
Sep 10, 2021, 19:03
 
Welcome to the point. You have finally arrived.
21.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 18:58
Kxmode
 
21.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 18:58
Sep 10, 2021, 18:58
 Kxmode
 
El Pit wrote on Sep 10, 2021, 12:52:
ECisMe wrote on Sep 10, 2021, 12:34:
This will likely be appealed, so it's not over yet, but still a big blow to Apple. Apple income will drop considerably so the stock is likely going to take a hit. Developers are going to save BILLIONS being able to use in-app payments, and with no more Apple umbrella, some companies will try to compete by lowering prices. The show goes on.
Competition is good. It will take Apple out of its comfort zone and will actually be a win for its customers.
It also means publishers can sue Epic for not allowing them to direct customers to their payment processors instead of the Epic's platform.

Expect to see a wave of lawsuits against platforms like Google Play, YouTube, GOG, Steam, EGS, Amazon, and any other eCommerce site that forces third-parties into the site's proprietary checkout and payment processing system.
"What is the most resilient parasite? Bacteria? A virus? An intestinal worm? An idea. Resilient... highly contagious. Once an idea has taken hold of the brain it is almost impossible to eradicate."
Avatar 18786
20.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 18:57
20.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 18:57
Sep 10, 2021, 18:57
 
What is stopping publishers from putting their apps on the Apple store for free, and then locking everything inside the app behind in app purchases, cutting Apple completely out of the loop?


Hellcinder wrote on Sep 10, 2021, 15:32:
I've been hammered quite a bit for this view, but why does Apple (Google, Microsoft, Steam, name your leach here) deserve 30% of anything for products they don't produce?

The infrastructure argument is swiss cheese also, because if you need 30% to keep yourself afloat, you're doing something very wrong.
Running those app stores isn't free. They have bandwidth costs, utility bills, and employees to pay. With Microsoft, Sony, and Nintendo, they sell the consoles at a loss and make up for that by taking a cut from the games sales. I don't know if that's the same for Apple's phones or not.

As for Steam, their only income is from the cut they take from sales, and running a service like Steam isn't cheap. I did some rough estimates on Steam a year or so ago when this all started and lots of "experts" here where claiming to know small of a cut Steam could operate on:
Rather than make shit up, I actually made some effort to get an estimate of some of Valve's operating costs just now. Valve's Download Status page shows a peak rate of 5.8 Tbps in the past 48 hours. It looks like they average about 4 Tbps. I looked up prices for commercial CDNs and find prices from 4 cents to 80 cents per GB. Going with the lowest rate of 4 cents per GB means Valve would be spending an average of $20 per second to run their data centers.
That was from over a year ago. That download status page now shows their 48hr peak at 14Tbps, and averaging closer to 8Tbps.

Also Steam only a takes a 30% cut from sales directly on the Steam store. They don't take any cut at all from key sales.

Can Apple, Google, Microsoft, Steam, etc. operate on less than 30%? I don't know and neither do you, so until I see data proving otherwise, I'm not going to pretend I do know and you shouldn't either.
"The only way anyone can live in peace is if they're prepared to forgive." - The Doctor
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19.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 15:52
19.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 15:52
Sep 10, 2021, 15:52
 
El Pit wrote on Sep 10, 2021, 15:03:
Acleacius wrote on Sep 10, 2021, 14:57:
Well, looks like tiny sweeny finally got 1 in the win column.
Not that it makes up for fraud and demagoguery aimed at Steam, nor the catastrophic harm caused to the industry as a whole.
One example is that smaller stores like Itch.io can't compete with a megalomaniac billionare giving away free games.
Who then writes it off as a business expense and lets the tax payers pick up the tab. But don't worry tencent will sweep in and
rescue Itch.io for a 40% share of course, same with developers for anyone keeping up with tencent.

Edit: Is it me, Jivaro? Say it's me, me, me! Mwahaha
Just asking: You don't happen to have quite a bit of Apple shares, hm?
Lol, I got nadda, nothing. I've never done business with Apple.
And the only reason I thought this was a win it because people at Blue's News, say so! Highfive
I've got no problem being wrong if you say so.
The worst criminal in human history, undeniably.
Ain't no tweetin, in jail jammies!
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18.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 15:46
18.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 15:46
Sep 10, 2021, 15:46
 
Hellcinder wrote on Sep 10, 2021, 15:32:
I've been hammered quite a bit for this view, but why does Apple (Google, Microsoft, Steam, name your leach here) deserve 30% of anything for products they don't produce?

The infrastructure argument is swiss cheese also, because if you need 30% to keep yourself afloat, you're doing something very wrong.
You can charge whatever you like in a non-competitive market, especially when the government is as gunshy as it currently is RE: antitrust.
With great freedom comes great responsibility.
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17.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 15:43
17.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 15:43
Sep 10, 2021, 15:43
 
Mr. Tact wrote on Sep 10, 2021, 15:00:
I have to figure Apple's lawyers were already preparing an appeal in case this happened. I'm guessing we'll see another decision on this as soon as an appeal court can schedule a date...
Yeah, not a done deal until the appeals are exhausted or one company or the other cries "Uncle!"
With great freedom comes great responsibility.
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16.
 
Re: Court Injunction Cuts Apple App Store Business Model to the Core
Sep 10, 2021, 15:35
16.
Re: Court Injunction Cuts Apple App Store Business Model to the Core Sep 10, 2021, 15:35
Sep 10, 2021, 15:35
 
Well I guess the argument is that all capitalism is good capitalism, but your points are smaller stores wont survive because they have no money when in fact Epic attacking the 30% markups is good for everyone. It strips the monopolies of their abuses.
Also known as one problem at a time, lets fix the sinking ship before we swap out the poop deck.
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