On Friday, the Northern California judge handling the closely watched Epic Games v. Apple court case turned in a ruling that, in many ways, works out in Apple’s favor—but with one massive, App Store-changing exception.
The ruling from US District Judge Yvonne Gonzalez Rogers includes a single-page permanent injunction demanding that Apple open up payment options for any software sellers on the App Store. In other words, Epic Games’ effort to add Epic-specific payment links inside the free-to-play game Fortnite, and thus duck out of paying Apple’s 30 percent fee on in-app transactions, can now happen.
This is a massive blow to Apple’s money printing machine, since it means both applications as well as gambling apps (or “games” as Apple refers to them) can now circumvent Apple’s 30% protection racket. Since the vast majority of App Store revenue – and thus, the vast majority of Apple’s services revenue – comes from exploitative gambling apps, this will have a major impact on Apple’s current strategy of sucking as much money out of Candy Crush whales.
Good news. Nobody should own any multinational company 30% up front. Just for being able to conduct business. I am not saying Apple isn’t entitled to have some fee but 30% of everything you make and not being allowed to use other methods of payment is just robbery.
Mafia-like racketeering ? Capitalism is so noble…
Geck,
I wouldn’t have a problem with it If apple had earned it via merit in a free market. But the problem is that apple has been imposing heavy free market restrictions such that developers & customers aren’t allowed to use competing services. Apple’s app business model is more like mofia extortion: “give us a cut of your sales or we’ll shut you down”. So I’m glad to see this ruling, however as a matter of policy I actually think it would have made more sense to to outlaw the the walled garden itself. Certainly prohibiting apple from enforcing fees will help developers looking for more competitive rates, but I think that store owners including apple should have the right to set fees and consumers should have the right to go to other stores. Yet this ruling gives us the exact opposite, which feels weird and backwards: consumers and vendors are forced to use the apple store, but now they’re welcome to side step the cash registers and use a 3rd party for payments.
This case will likely be retried in a higher court and this ruling may be overruled, we have to watch where this goes.
This won’t happen, because it would be a blow to several business models employed by many “generous” political donors. Playstation and Xbox are walled gardens, and so is Blu-Ray (you have to get an AACS key from them before pressing a disc, because players by specification are mandated to reject pressed discs that aren’t AACS-encrypted).
You just can’t ask from the US government to go against Hollywood’s interests.
kurkosdr,
No need to go full conspiracies here.
Our legal and corporate system does not have a category for “semi owned” devices, and these kind of changes do always take long time and are painful.
When I buy an Xbox, I actually want that “walled garden”. I know I can give the controller to kids, and don’t worry about unauthorized purchases, or unexpected content.
When I buy a PC, I want to be able to control both the hardware and software, as much as possible. I do really dislike soldered RAM, or Windows 11 like restrictions.
With a phone, things are a bit murkier. When I had a Nokia, the only way to upgrade to Snake II from Snake was buying a new device. Today, they are more powerful than a desktop.
I believe this phrasing is where the problem lies. We’re all for giving a parent the possibility of walling the garden where their children play. But with the current model, someone else decides where the walls are built, and that decision also applies to adults. How did we come to globally accept such a strange situation ? I believe we’re trained to think of the market (and thus, the big companies) as organisms that will inherently pursue the good, because that’s how we’re told you reach success. Even if we consciously realize this is not really how Apple, Google, Amazon, Microsoft, Facebook and other tech giants work, deep down we believe they will never broadly abuse the power we give them because that would hurt them. And so we accept the risk of handing the wall management to them. This is quite certainly a mistake, but it feels so easy to let others endorse that role, and we have so many other things to worry about…
worsehappens,
+1. I think that you state it very well.
There are plenty of use cases for sandboxing and restrictions with the owner’s permission. But often corporations go beyond this and actively enforce restrictions against the owner’s wishes, which is what is unethical. Just like the way apple and microsoft have blocked competing browsers of FOSS codecs in some of their products. Sure the PR spin is “protect our customers”, but the underlying truth is that corporate restrictions actually exist in order to control owners and deny competitors access to the market. 🙁
Alfman,
In theory user doing their own sandbox would be a nice choice. In practice it is very hard. I remember trying to lock down the PCs at our lab, and it was always a losing battle. So having a “pre locked down” thing is nice to have.
In case of gaming consoles, the restrictions are working well, … so far.
In the last gen Microsoft tried to go greedy and lost badly. This generation they are humble, and their consoles are selling like hot cakes. Yes the feedback cycle is a bit slow, but it is there.
Of course, it does not always work. For handhelds, there is only one viable alternative (Nintendo), and gamers and game makers have to accept what is allowed and not.
If the manufacturer is afraid of the owner, they have to offer good choices. Sure, we can add rules, but they usually don’t work or are counter-productive (government intervention in gaming is usually terrible; case in point: Australia).
And then there is the elephant in the room: Piracy.
I am sure many gamers want to play without paying for the games. That is where many ideas break down.
sukru,
I disagree for one simple but important reason: our mobile devices already have sandboxes. These work and consumers are already using them today. Sandboxing in and of itself is not the problem, however when the owner isn’t allowed to have the keys to their own device, that’s not acceptable.
That hinges on a critical assumption that the market is competitive. But when it isn’t competitive, like under a duopoly or oligopoly, there’s very little incentive for corporations to respect consumer choice. Nevertheless, I am in agreement that consumer choice is essential for a healthy free market, and that the absence of meaningful choice indicates an unhealthy market.
That’s a very long discussion that we cannot do justice here, but ultimately I would argue society should not be depriving owners of rights in anticipation of crimes. Unless one supports the idea of a nanny-state, this presumed guilt is wrong and there are betters ways to handle copyright cases than to take away everyone’s keys to their own machines IMHO.
Alfman,
“That hinges on a critical assumption that the market is competitive”
Yes, competition is very fragile, and things are usually held by ropes and strings. Yet, if I were to inject my personal beliefs, I would say consumers and employees are the strongest strings.
But it is more of consumers than employees. Since, employees are (usually) replaceable, but it is much harder to replace consumers.
That is why, the fastest responses comes to consumer action. When Microsoft decided to double Xbox subscription fees, I think it took them only one day to post a very public apology, thanks to a very loud backlash.
Yet, circling back to the original topic, I remember back in they day Apple asked 30% cut from every Kindle book sold, and Amazon had to go through hoops: https://www.businessinsider.com/amazon-kindle-ipad-store-2012-1 . Unfortunately the usual response from my friends were along the lines of “no worries I can always buy from iBooks instead”. That would not be helping anyone.
[sorry it looks like I dragged this discussion a bit too long].
sukru,
I still don’t think customers have much say, especially those of us with less common checklists. I wasn’t really thinking of employees, but given that you are employed by a big multinational corp, I’d like to ask you whether you feel you have much sway over your company’s direction. I wouldn’t think you do unless you’re in management and if you are, good for you!
I vaguely remember that.
So polite, but I’m much more guilty of this than you 🙂
As much as people want to have philosophical debate, I really do think our general approach to monopoly law works pretty well. That is to say, the solution lies in the details. The kind of market, how easy it is for new entrants, competition, pricing, security, piracy…
To emphasize, I do think we need to be more vigilant on monopoly law. I don’t think blanket laws like no walled gardens are useful. Our society is made up of so many different people (workers, consumers, business leaders, investors…) and the situation needs to work for everyone for society to be successful.
Yamin,
Personally I don’t think it’s working well presently. We are seeing mass consolidation consolidating power and wiping out competition.
The problem with walled gardens is that it enables dominant corporations to unilaterally enforce anti-competitive terms and consumers are being intentionally and effectively blocked from competitors. The gatekeepers oversee and control every transaction and if they want to ban a vendor because they don’t want to compete with said vendor, they can impose digital roadblocks and consumers don’t get any say because they don’t have the keys to their own hardware. We need to recognize that this is fundamentally wrong and the laws need to catch up. Although at this point in time I think devices that we buy yet don’t control are becoming normalized. Corporate lobbyists put a lot of pressure on legislators and politicians to keep regulators away and PR campaigns spread the message that walled gardens are necessary to protect us as they tighten their grip on all aspects of consumer tech.
Yes, but the industry thrived for decades without walled gardens and it was far more competitive than today. So I don’t buy the premise that walled gardens are necessary or useful to thrive or innovate, in fact there are reasons to believe the opposite is true. If we stick on this path in the future it may be the case that only the corporations controlling walled gardens at the top are able to thrive and innovate, but it doesn’t have to be that way.
Of course, if we’re not willing or able to put our foot down and demand owner rights to free markets, then make no mistake we are headed for a future with a few elite corporations having near absolute control over markets.
The government of Sweden takes around 65% of my income each month, and that is not considered robbery?
A man can only hope this will encourage Apple to take steps to end the in-app-purchase model, maybe even ban it outright.
I mean, Apple doesn’t own the 30% cut they get from in-app-purchases any more, but since the App Store offers no way to sideload (or buy apps outside the App Store and “redeem” them) they still own the 30% cut they get from app purchases. So, they now have a strong incentive to push users from in-app-purchases to app purchases.
kurkosdr,
I suspect the opposite is going to happen, more applications will be motivated to charge for content in app. If you read the text of the ruling it doesn’t sound like apple is going to be allowed to block developers from doing this. Of course time will tell.
Most game developers are already using in-app-purchases to sell games. Even honest games like Horizon Chase are bought as a single (very affordable) in-app-purchase. Don’t remember what was the last time I had to purchase a game upfront.
Apple could take subtle steps to discourage in-app-purchases, like promoting paid apps in their App Store and urge governments to classify loot boxes as gambling. Or just ban in-app-purchases from the App Store altogether.
kurkosdr,
They probably could do that, although I’ve heard that application developers often don’t feel they’re getting much exposure through apple anyways. To be able to stand out from the crowd one needs a marketing budget on top of apple’s fee. So there are probably many developers who are happy to split ways with apple fees and use that money to market themselves directly instead.
This is what I was saying about the ruling through, quoting the relevant portion here…
I don’t fully understand the wording, but if no in-app purchasing mechanism (basically any mechanism to “add” in-game resources) exists, does this portion still apply?
kurkosdr,
It sounds clear enough to me, but you never know. Heck, it could better for apple to ignore the ruling and deal with the consequences. I’m pretty sure the case will escallate to a higher court anyways.
Yes, and here I suspect there’s a rather unpleasant situation just waiting to rear its very nasty head. How many apps will not use Apple’s payment processor at all? How many extra accounts and/or card databases will we all have to deal with?
A bit disappointed on the fact Apple still doesn’t have to allow installing applications from outside their store. This should still happen in the future.
This is not a major blow. For big companies like Epic and Netflix etc yes this will allow them to skip paying most of their %30, but the %30 still stands and since its so easy with API’s etc to use Apples payment system, everyone else will most likely still pay. On top of that Epic is still banned from the App store. (Not sure if Apple will appeal which will then hold this ruling in Limbo for years while they build up other services etc to off set any loss in revenue)
Windows Sucks,
So long as the parties mutually agree, then it’s fine. But IMHO 30% of sales is a significant burden for many developers. Keep in mind the developers we’re talking about won’t have any trouble using other APIs, I’ve don’t it many times for ecommerce, it’s not particularly difficult. If I were a mobile app developer I’d probably take the same approach Epic Games took by giving customers a choice. If the consumer prefers to pay using their apple account along with the corresponding 30% fee, have at it. If they want to to use a more competitive payment option, now they can. Freedom of choice is how the free market is supposed to work, otherwise there is no incentive for companies to be competitive. Apple’s 30% was not competitive. Presumably if competitors aren’t going to be blocked in the future, we’ll start to see more competitive services crop up and apple will have to react by making it’s own service compete on merit, which is how it should be.
The only problem with that is that Google allows choice yet Epic sued them also so though it sounds easy it’ appears not to be be as easy.
And again if Apple is smart and this is a bump to revenue you just appeal and keep business as usual until further notice.
The 30% cut is the same things Microsoft charges on the XBox, same as Google charges in the play store the list goes on. You don’t have to be on the iPhone or iPad their devices only make up 13 percent of the market in the US. (Less internationally) Oh but on Android people don’t spend money and on iOS they do so you have to be there so instead of playing by the rules that everyone else has been playing by for years I’m gonna sue because iOS is where the money is at. Got it.
It’s funny how other companies do the same stuff but Apple gets pointed out like the bad guys. Like with CASM. Google and FB have been doing picture hash scanning for years. Apple does it and it’s like they are going to destroy humanity. Funny part is most of the people complaining aren’t even Apple customers and are already having it happen by Google! ♂️ Lol
Oh and the thing something people missed is that Apples App Store contract up to this point according to the judge was valid and Epic (unless they appeal) owes apple back revenue for going around the App Store. (About $3 million)
Windows Sucks,
You’re market share number is way off,…
https://www.phonearena.com/news/apple-iphone-record-sales-us-december-2020_id129957
Apple products are aimed at wealthier audiences who spend more on phones and apps, but this fact in and of itself isn’t a good justification for anti-competitive behaviors
.
In fairness though other companies like microsoft, google, facebook, etc routinely get tons of flack too. Fans always get offended when you criticize their favorite company, but no companies should be above criticism.
Yeah,as many of us have already stated, we feel the ruling does not go far enough to curb market abuse. I believe issues like this are going to be long term ongoing issues for the simple reason that we really don’t have great legislation to protect owner rights, like right to repair & access to competition. So I do hope we see legislation sooner rather than later. but at the same time apple has an army of lobbyists working to defeat pro-consumer laws.
https://www.huffpost.com/entry/apple-right-to-repair_n_5755a6b4e4b0ed593f14fdea
The US has not been very progressive on owner rights, but other countries might over time.
In other news, FB is getting raked over the coals for their image AI labeling black males as primates.
Here’s what’s really going to happen.
a) Apple’s business will be hardly effected. The loss of income this might generate will at maximum be almost undetectable in Apple’s financial returns.
b) Epic will suffer more because they lost all but one of their claims, and the one they won was the least significant financially to them. Plus Epic have to pay Apple a lot of money for breaking App stores rules that have been judged as being legally valid
c) Apps will now be able to post links for external financial transactions. Apple will respond by making their system more attractive to users. Those developers who most want to screw an extra buck out of end users, mostly game developers I suspect, will offer a variety of sleazy ways for end users to pay them more money via tricky external payment scams. They will succeed to some extent.
d) A small area will open up where unsuspecting end users can be tricked out of cash but other than that almost nothing else will change. Apple’s ecosystem will continue to be extremely successful and attractive to end users.
Strossen,
https://www.msn.com/en-us/money/companies/how-profitable-is-apple-s-app-store-even-a-landmark-antitrust-trial-couldn-t-tell-us/ar-AAKuugb
This lawsuit effects a lot more developers than just Epic Games though.
If apple responded by making their own service more attractive, then great! It would be a prime example of why markets benefit from competition. Also it’s a bit hypocritical to call other developers “sleazy” when it is apple themselves tacking 43% over what those developers are charging themselves. Surely you can see the hypocrisy in blaming 3rd parties for this money grab. Now that alternatives will be allowed, some developers may even end up splitting the difference with consumers like Epic did.
There’s nothing wrong with apple being successful, so long as they stop using thier power to restrict competition, which is bad for consumers. It’s not just one company, we should put an end to abusive tactics regardless of if it’s apple, microsoft, google, facebook, amazon, etc. But as kurkosdr suggested earlier, this is hard to accomplish because these companies have a lot of power.
told you so it was expected…not sure why everyone should be surprise by this…cause i am not ..i was expecting easy case cause apple ceo became more clumsy than predecessor and yes he is no steve jobs ….it be more humiliating for him to loose a case like this in first place but he is not steve jobs…the steve jobs i know.,wouldn’t do things as tim cook been doing to his company, taking many feature out, limited computer users ability to upgrade their power macs, ditching 3rd party hardware vendors, and ruin apple reputation….the board gonna see this that tim cook is no longer asset to the company…more like previous ceo before steve jobs took over apple from worst ceo on history in apple time…remember red envelope and yellow envelope debacle? and the losing shares daily by broken computers they sold with unstable os…this is coming to haunt tim cook now…he gonna loose billion dollars now
NEGA,
Jobs was too controlling and manipulative for my tastes. Granted he was a good salesman, but to people outside his RDF his way of evoking a cult mentality in people can be disagreeable. In this sense Job’s personality reminds me a lot of Trump. I detest authoritarian leadership, but evidently there are many people who consciously or subconsciously buy into it.
You can criticize the guy all you want, but I’m not sure attacking Cook’s financial record is going to get much traction. After all he brought in mind boggling profits and turned apple into the two and a half trillion dollar company it is today.
https://www.macrotrends.net/stocks/charts/AAPL/apple/market-cap
https://www.zdnet.com/article/epic-games-appeals-decision-made-in-antitrust-lawsuit-against-apple/?ftag=TRE-03-10aaa6b&bhid=%7B%24external_id%7D&mid=%7B%24MESSAGE_ID%7D&cid=%7B%24contact_id%7D&eh=%7B%24CF_emailHash%7D
Epic Games has filed a notice of appeal days after a judgment was made for its US antitrust lawsuit against Apple.
The games developer is making an appeal of the federal court’s broader decision, which mostly sided with Apple. In that judgment, US District Judge Yvonne Gonzalez Rogers rejected Epic’s claims that Apple was a monopoly.
“Success is not illegal,” Gonzales Rogers wrote in her judgment.
She also said that Apple did not act anti-competitively in removing Fortnite from the App Store, finding that the games developer violated its developer agreements when it introduced a new payment system that sidestepped the iPhone maker’s payment systems and in-app purchase commissions.
In making that finding, Gonzales Rogers ruled Apple is entitled to damages from Epic Games for breach of contract, with the games developer being ordered to pay damages in an amount equal to 30% of the more than $12 million in revenue Epic Games collected from users in the Fortnite app on iOS via Epic Direct Payment between August and October 2020.
Additionally, Epic Games has also been ordered to pay 30% of any such revenue Epic Games collected from November 2020 through to the date of judgment.
Windows Sucks,
Thanks for quoting the ZDNet piece, unfortunately though there’s some dishonest reporting. The author took a legitimate quote from the judge and made completely false extrapolations from it. Here is the judgement with much more context.
https://cand.uscourts.gov/wp-content/uploads/cases-of-interest/epic-games-v-apple/Epic-v.-Apple-20-cv-05640-YGR-Dkt-812-Order.pdf
In short the ZDNet author is making some false statements:
“The mixed ruling found Apple was not a monopoly.” -> False. The ruling specifically did NOT make any conclusion one way or the other about apple being a monopoly.
“She also said that Apple did not act anti-competitively in removing Fortnite from the App Store” -> False. The court concluded that Epic overreached in violation of it’s contract and that the court was not suited for micromanaging apple’s business operations. But it did specifically find that apple’s actions are anticompetitive and that remedies would be warranted and appropriate going forward.
Nice, in the mean time Epic actually paid Apple 6 Million today and Apple has done nothing.
Epic is not back on the App Store and nothing in the current ruling says Apple has to ever let them.
And Epic is appealing (I’m sure apple will also) which could bog things down for years, especially if Apple wins a stay on the injunction.
Windows Sucks,
I think you’ve been misreading my position. You keep focusing on what happens to Epic Games, but I don’t particularly care about Epic Games. It doesn’t phase me at all if they loose. What I actually care about is consumer rights and freedom to choose alternatives (payment methods, app stores, repair stores, etc). I think all sensible people should too. These tech companies are endangering our independence. I don’t want us as consumers to become dependent on technology that we don’t control. Lest we are ok being used as sheep obeying the rules and restrictions our corporate masters have set for us without question.
I, like most people actually personally don’t care. If I have a problem with it I won’t use Apple Products (Or Googles) I will speak with my money. These companies are businesses like any other business, they are about making as much money as possible for their share holders and don’t really care about us. I know that and know that comes with the territory.
So then its my choice. If I don’t like it, I will move on. Maybe use an ASOP version of Android or whatever and keep it moving.
Ether way if Epic loses you loose what you are looking for (The big companies to be more open)
Windows Sucks,
That’s not a good justification though. It’s frustrating when people who don’t care (ie you), try to speak up against those who do care (ie me). Why? If you genuinely didn’t care, then you should be totally neutral, but instead here you are saying why it’s ok for companies to take away consumer freedoms. Giving owners freedom to choose alternative stores for apps/repairs/etc would not interfere with your right to keep using apple’s store exclusively. It’s obvious that apple doesn’t want it’s appstore competing under a meritocracy, but it’s well established that when companies do compete customers win. It’s like Strossen said, the added competition would compel apple to make their own offerings more attractive.
The judge explicitly acknowledged that apple are behaving anti-competitively and that changes are needed, but one thing we can both probably agree on is that the biggest corps usually get their way and they’ll continue to trample over our digital freedoms.