Update 3: Google also kicked Fortnite off the Play Store, but since Android isn’t locked down, you can just get it straight from Epic instead.
Update 2: Remember Apple’s iconic 1984 ad for the original Macintosh? Epic sure did. This is some 12D chess being played by Epic – they knew exactly how Apple would respond. Epic is filing an antitrust lawsuit against Apple.
Update: Apple has kicked Fortnite out of the App Store.
Original story: Epic, the company behind the Unreal Engine, Jazz Jackrabbit, and Fortnite, has been a vocal critic of Apple’s App Stpre policies. Now, though, with the latest Fortnite update, the company is going straight for the jugular, starting a very intense staring contest with Apple.
On both iOS and Android, Epic has introduced a new direct payment option. If you purchase V-bucks or anything else in the game through either the App Store or Google Play Store, it will cost the same as always. But the new direct option comes with the discount; when you select it, the game sends you to a payment screen where you can choose either a credit card or PayPal. “Currently, there are no savings if players use Apple and Google payment options, where Apple and Google collect an exorbitant 30 percent fee on all payments,” Epic says. “If Apple and Google lower their fees on payments, Epic will pass along the savings to players.” (You can check out a list of supported countries here.)
The new direct payment option circumvents Apple’s App Store rules, which mandate that you can only use Apple’s payment system and must hand over 30% of revenue to Apple. This breaks various App Store rules, and forces Apple to either accept Epic’s circumvention, which would effectively mean the end of this rule, or kick Fortnite, one of the biggest and most popular games in the world, off iOS, thereby angering dozens of millions of players and giving antitrust regulators a lot of ammo.
Combined with Apple blocking Microsoft’s xCloud, that’s easily about 100 million people – mobile Fortnite players and Xbox players – that just rean head-first into Apple’s rules.
This is an amazing Mexican standoff, and I can’t wait to see how it develops.
I’m no fan of epic, but I side with them 100% on developers and customers having a right to conduct transactions using more competitive providers. I don’t believe apple is going to back down publically because it stands to loose billions in fees every year if developers and users learn that standing up to apple is effective.
I see a couple possible outcomes:
1. Epic gets the boot by apple. Obviously this makes apple look bad though and it potentially leads to more developers and users migrating to other platforms.
2. Apple doesn’t kick epic, but brings a lawsuit for non-compliance. Not great for the company’s image, but it gives a strong message to other developers not to mess with apple.
2.a. Epic falls back into line
2.b. Epic drops support for apple users & devices. Similar result to #1, however the optics are different. By leaving on it’s own accord epic would appear to be abandoning users rather than having been pushed out.
3. Apple makes some concessions in private, they would not want the public to get wind of it though. They’d want to give the appearance that apple is getting its way (aka business as usual). Epic wouldn’t be allowed to be transparent about the deal.
It will be interesting to see how this plays out. For the long term sake of the industry though I hope antitrust eventually puts an end to anticompetitive schemes like this. Markets with ultra-powerful oligopolies is a terrible way to go.
Apple won’t back down because they know the app store is a house of cards built on killing flash. I think it was 90% of the revenue comes from shovelware games, and being forced by courts to open up their phone to 3rd parties ends the iphone’s cash cow ability. Honestly the courts should have stepped in at the beginning to stop app stores from being walled gardens, but all the big players were too interested in trying to get their own 30% cut to want to sue each other.
“Built on killing Flash”
Come on, is it 2007 again? LOL
You seem to be missing the point. If it hadn’t been killed, we’d all be playing free flash games on our phones right now instead of 99 cent shovelware, and the various websites that offered free flash games wouldn’t currently be shells of their former glory days.
dark2,
Moreover, the walled gardens pre-emptively shut down a lot of would be competitors that would have needed to compete and differentiate themselves on merit. phti seems to suggest the field would have been stuck at “2007” technology, but that’s obviously not the case as many software players, both old and new, would be racing to innovate rather than exploiting privileged access to the hardware.
Sure, and we’d all be dealing with exploit vectors for mobile malware as well as desktop malware getting in through older version of flashplayer, or zero-day exploits. Let’s face facts here, Adobe didn’t give two craps about security where flash was concerned. Macromedia did, but that was a long time ago. I am glad to see the back end of flash forever, as someone who had to deal with its security consequences on a weekly basis.
darknexus,
I’m not particularly a fan of flash either, but Jobs battle with flash was never about security though, that was a scapegoat he used to pivot from the fact that he was fighting for control. His actions banned a lot more than just flash without regards to security. He set back the internet by banning alternative browsers and open compression codecs for example. Also lets not forget that apple’s own products have a long history of exploits as well, which ironically are needed to give owners a way to jailbreak their own phones. Owners should never have an incentive to block security updates in order to keep exploits around, however that’s the backwards world that a forced walled garden creates. 🙁
Yeah, we would be playing all those “awesome” flash games for like 5 minutes before the battery ran out.
Macromedia cared about “security?” LOL, what?
A lot of the systemic flaws of Flash as a platform were inherited from Macromedia.
javiercero1,
I’ll give you the benefit of doubt that you’re exaggerating for effect, but this was never true. Seriously think about it: even if you wrote a program to deliberately waste battery power it would run more than “5 minutes before the battery ran out.”
In terms of video, when HTML5 introduced video, my fans would ramp up like crazy trying to play it and it struggled. I had to go back to flash player to run their more optimal codecs. Eventually the browser codecs became better, but for a long time flash really was more efficient at playing video on the web.
In terms of code, actionscript used to be interpreted, which is less efficient than native code, but in 2006 flash player added a JIT compilation feature that eliminated interpreted code, which is similar to javascript (not that it matters, but both are derived from the same ecmascript standard).
If you didn’t like flash, fine, neither did I, however the campaign to kill it was in fact based on a lot of misinformation. Job’s true objective was till kill off app store competition. While the underlying reasons were rather deceptive, the decision to block competing tech would turn out to be extremely profitable for apple.
I’m really hoping Apple doesn’t win this case. If they do, this precedent could be one of, if not the most, dangerous ruling for online commerce especially relating to mobile devices. Take Apple’s terms to their logical conclusion: every item, every purchase, every subscription, technically could be in violation of Apple’s terms. That means every Uber, every mobile transit pass, every online order placed through any mobile app, etc could be forced to go through Apple’s payment processor and there by give Apple their cut. Once that happens, prices will rise for damn near every service on mobile and probably not just for Apple users (though I would do exactly that only on Apple devices to make a point). On top of this, Apple could then change the cut and if you don’t like it, too bad. This really is starting to remind me of an old-style protection racket with modern technology.
Now, don’t get me wrong. I’m completely in favor of allowing Apple to charge 30% in their own store. Hell, they can charge 60%. However, we need to insure that competing stores are an option and available. I’ve said before that I’m not in favor of regulation until all other avenues of approach have been tried. Legislation can cause more problems than it solves, and even create new ones. That said, I think every approach has been tried with Apple. They’re not interested. So fine, here’s hoping Apple get the wakeup call they deserve and if it takes legislation to do it… well, we tried everything else first. The precedent needs to be set.
darknexus,
+1
Same. All things being equal, less regulation is better than more. However I would make exceptions for business activities that are deliberately harming competition and disturbing the free market. We shouldn’t have to wait years and even decades either after the fact for owner rights to be protected. Anti-competitive restrictions need to be explicitly & proactively rendered unlawful such that it’s understood by everyone that they are illegal from the outset.
The problem with lawsuits is that they’re always reactive rather than prescriptive. I’d rather see legislation make owner rights explicit across the board rather than to rely so heavily on individual lawsuits on a case by case basis that can drag on for years after the fact. A case against apple is just that, it may not set precedent for the next abusive company to come along and restart the cycle.
So in other words, I’d really rather see a more holistic approach rather than merely having apple loose a circumstantial antitrust case.
Update x2: Epic is suing Apple https://cdn2.unrealengine.com/apple-complaint-734589783.pdf
I didn’t investigate this area in depth, but any payment system that takes 30% commission on a transaction can likely be considered a bit over the top. Imagine a bank doing the same. Substantially lower the transaction commission or allow competition. Both options should do.
Geck,
In the absence of walled garden restrictions, apple’s fee is clearly not competitive and would not survive a free market showdown. That said, I think apple should be allowed to charge whatever it wants. The moral issue is NOT what apple is charging, but that they’re blocking owners & devs from going to alternatives. I won’t even try to predict the outcome of this epic versus apple case one way or the other.
Like dark2 said, they should have done something to nip these walled garden restrictions in the bud many years ago, but they didn’t and here we are. Who knows whether legislators will ever address this but it does seem there is more and more pressure to do something about intentionally anti-competitive restrictions by technology companies. At least in the EU seems to take antitrust more seriously. If it came to pass that apple would no longer be allowed to block competing services in the EU, I wonder what impact that might have world-wide. It’s hard to see apple voluntarily giving up walled garden profits in jurisdictions where it doesn’t have to, yet it could create an uncomfortable gap between unrestricted and therefor superior iphones being sold in the EU and the inferior restricted iphones sold in the US. I could see that opening up an international gray market for unrestricted iphones.
The fee was designed for the era when virtually every single mobile app would cost between $1-5 for a one-time payment. (Model adopted from online music purchases.)
Yeah, it is very much outdated now when most apps push recurring subscriptions and in-app purchases worth of tens or even hundreds of bucks per month.
The 30% rule is relatively standard for digital services — Google Play charges the same fee, as does Steam.
While that may be true, Epic itself takes a 12% cut, which as Tim Sweeney suggests in this thread, is much closer to traditional retail markup (although given who’s making the claim, that probably deserves separate corroboration).
https://twitter.com/TimSweeneyEpic/status/1120441795010338816?ref_src=twsrc%5Etfw
But I guess the point is that Epic is walking the walk, not just talking the talk.
There are two basic on-line retail models these days, plus a modifier on the second:
– The retailer buys the product, pays the vendor and later the retailer gets paid itself when the customer buys – this is “traditional retail” and mark up in the US us about 45%, for physical products that need handling etc..
– The retailer displays the product, transacts the sale on behalf of the seller and the seller gets paid, minus a commission, when the customer buys. This is much closer to the App store model. Amazon charges 15% for this service. However they will also charge for storage, shipping and advertising additionally. A good budget for all of this is about 40% of the sale price. Not cheap but I believe a lot more value add that an App store as the products are physical vs digital (zero experience so happy to be corrected). eBay charges 10%-12% and Kickstarter / Indiegogo charge 8%-10% (includes transaction fee). However there will be a lot of other charges for advertising to be successful on crowd sourcing.
– The third model is an adjunct to the second. An agent charges to manage your presence as a seller on a digital market place (for physical product). They take an additional 5% to 10% commission of the sale price to the customer. For this they will prepare, upload and manage you listings, manage advertising, pricing etc.,
It seems to me that the 30% charged by Apple and Google would be deemed monopoly behavior and possibly implicit price fixing as clearly they have chosen not to compete despite superior profits.
Thanks @lapx432 for the informed input. Useful comments like yours are one of the many reasons osnews remains such a great place to visit.
> The moral issue is NOT what apple is charging, but that they’re blocking owners & devs from going to alternatives.
It’s two issues, both of them need to be resolved.
emphyrio,
I realize that’s important, however I was actually trying to imply that fair prices are already a bi-product of a healthy free market. It’s not necessarily a problem that some stores charge more than others as long as buyers always have genuine freedom of choice. Unless there are extenuating circumstances (ie vendorlocking/monopolies), stores that overcharge will naturally loose customers and market share over time to those offering superior services & prices. The whole point of adam smith’s “invisible hand” is that you don’t need to regulate prices, a competitive market produces fair prices automatically. The main problem is that this falls short when there’s an imbalance of power: merit becomes irrelevant when someone else controls the market. Even if it were possible, regulating prices would only be treating the symptoms rather than the cause. By addressing the anti-competitive barriers then the market will tend towards optimal prices on their own.
Also while prices are the first thing people think of when they think about competition, consumers may have other reason for choosing between alternatives.
Apple ripping off its customers is enabled by the fact it is allowed and able to block competing “stores” on its platform. Being forced to allow alternative platforms would automatically rein in Apple’s greedy pricing as well, to some extent at the very least, so there are two issues, yes, but they are not fully separate.
Apple is responsible for creating a secure environment for software. There’s a cost to monitor those apps. There’s also a fixed cost for bandwidth. Apple is also a business with the goal of earning a profit. 30% is not an unreasonable fee when you factor these issues.
Alternatively… the android store could justify a significantly reduced rate because they don’t monitor apps for security purposes. THAT is where the real gouging is happening in my opinion.
haus,
Most of us don’t have any issue with apple offering those services and charging whatever they want for it. However that misses the point that companies and owners shouldn’t be forced to use apple’s services.
This is why competition is good, and not for nothing but your argument is stacked on a flimsy premise that apple (or google for that matter) set a high bar for app store quality. Let’s be honest, there’s tons of crap in apple’s store – it’s mostly crap! Some users would be better served through a more selective higher quality store than what apple offers. I can definitely see the merit in specialty stores that focus more on quality and professionalism than apple does. That’s the whole point of the free market, apple categorically blocking competitors does a disservice to consumers who would benefit from more app store competition.
I know you’ll forever be an apple shill and you’ll never admit to apple having any negatives at all. You do you man, but if it were any other company you wouldn’t be ok with them blocking competition. The truth is consumers will always loose when we kill off viable competition. Maybe for some that’s a mere annoyance and they can look the other way in the name of pro-apple favoritism, but the long term consequences of allowing it to continue unchecked will become more dire as governments make walled garden restrictions their own. This is already beginning to happen with apple.
I suspect you still don’t have a good argument why forceful manufacturer restrictions without consent outweigh the cons to free market competition and owner rights. it’s always the same nonsense that consumers shouldn’t worry about not having the choices because apple knows whats best and is acting in our interests (barf!). The irony of it all is that if apple truly believed in the superiority of it’s services over competitors, then apple would have little to loose by allowing competition. The reason apple fights so hard to block competition is because they know their services become less competitive when owners aren’t forced to use them!
Should Ford be required to have more than one supplier of buttons for their center consoles… or do you reserve the limitation of how many options are available to just Apple?
Apple’s business model is to supply a secure platform. The opening of the platform so that some people can have a secure phone if they want it and others not if they choose completely disregards the entire premise which is to supply a secure platform. The opening of app stores disregards that goal for all app store users.
haus,
Ford can go wherever it wants for buttons. It’s not about where Ford gets buttons, it’s about the owner having the right to go elsewhere. We don’t have to debate this fictitiously, you can go to a mechanic today and buy both authentic and 3rd party parts… Oddly enough even at an official dealership, sometimes they offer both authentic and 3rd party discount parts for repairs/upgrades.
In that case you and I can agree that apple should stop charging 30% fees 🙂
If you think apple is perfect and want to use them for all your apps, then more power to you. Seriously you go install whatever you want from wherever you want on the devices that you own. But this choice needs to be up to each owner, that’s the whole damn point.
Sure apple shills will always insist that apple is overriding owner’s rights & control in order to protect us from ourselves, but public sentiment is changing and people are getting increasingly wary of this BS. Corporations controlling what we are allowed to do is harmful and dangerous to our individual liberties.
The way I have always looked at set ups like the Apple app store is that it is like the old protection racket. Pay us the 30% of your earnings, or stop selling on our street. This is our turf!
Granted, you could try to look at it more like a mall, where stores pay a lease and they can peddle their wares. While both certianly have rules, the mall example is only going to charge them that fee for the space and not make profit off of every item sold. This is the key difference.
With the millions that Epic is apparently making (I found the figure of 455 million in 2018 from Fortnite on iOS, no idea what it is now) 30% is a huge chunk of change!
leech,
I don’t have a problem with what apple does within it’s own store, or even “mall”. The problem is really when apple impedes iphone owners from going to other stores/malls not controlled by apple. Just think if car owners accepted this sort of crap, we would only be allowed to go to “in network” petrol stations! We need common sense rules: the manufacturer looses their say the moment someone else buys the product from them and becomes the new owner.
That’s true, but a 30% fee on gross sales is a significant loss of income for small developers too. Small freelance devs are more likely to be facing financial difficulties and may be living paycheck to paycheck. So although it may be chump change for apple, that 30% really makes a big difference.
Petrol stations no, but vehicle manufacturers have been trying to force customers into their “in-network” car dealerships for servicing since forever. First by threatening to cancel warranties and then by using locked ECUs that require special software to be serviced, special software not normally available “off-network” obv (until both practices were outlawed for cars, but still legal for farm equipment). A recent trick to force customers into “in-network” car dealerships is by offering “free” roadside assistance which they ‘ll cancel if you don’t do your servicing in “in-network” car dealerships at the specified intervals. Please note this is a voluntary contract you sign for $0 and separate from the warranty.
Dependence is a hell of an income stream, it’s why ink cartridges have DRM in them now. And lawmakers think computers shouldn’t be regulated for some reason, so it will get a lot worse before it gets better.
kurkosdr,
That’s kind of my point though. Where lawmakers have been totally absent with regards to protecting owner’s rights on digital devices, they have been more or less on top of it when it comes to cars. It’s hard to say why there’s such a gap. Maybe it reflects an education/experience gap in politics and politicians simply don’t understand mobile technology as well as they understand more traditional things like cars. Perhaps it’s because virtually all lawmakers will have direct experience with bad car mechanics and bad warranties, but virtually none will have experience with walled garden restrictions, being denied fair access to the market, and anti-competitive terms.
In any case my point is that legislators could and should give us strong & consistent legal rights across the board regardless of whether it’s a car, tracker, phone, or whatever else.
I haven’t seen that myself, but I suspect those terms could be void if it went to court. Still, in practice fighting for your rights is far more expensive than just giving in 🙁
Agreed.
“I suspect those terms could be void if it went to court”
No, they won’t. This is not a case on them reneging on a warranty obligation but the customer asking to engage in a separate contract with their roadside assistance division in a voluntary fashion. Since it costs the customer nothing and doesn’t affect any of his other rights, the customer signs it voluntarily in most cases. However, it does act as an incentive to service at the car dealership. It’s not complete coercion like the other (now outlawed) methods carmakers once used, but still a strong incentive, otherwise the customer has to buy roadside assistance for an extra cost (reducing gains from going to independents) or go without roadside assistance.
“In any case my point is that legislators could and should give us strong & consistent legal rights across the board regardless of whether it’s a car, tracker, phone, or whatever else.”
For lawmakers, phones and computers are throwaway devices bought with disposable income (considering their monthly income) and not considered by them a big purchase (like a car is). The long-term restriction of innovation and competition caused by all kinds of lock-ins and restrictions is too small fine print for them.
kurkosdr,
I’m just not sure it would necessarily hold up. It happens sometimes that line items are voided by courts if the terms aren’t deemed reasonable. As a fictitious example, say there’s a dealership and accounting firm owned by brothers. The dealership could add a requirement to the contract whereby the car owner has to use a the accountant next door to file their taxes. The court might determine that such provisions in the contract are unreasonable and the owner is entitled to the roadside services without having to go to the brother for unrelated accounting services. Now obviously this example is a stretch, but the point is that a contract saying something doesn’t automatically make it enforceable, courts can and sometimes do exercise discretion. If the car owner followed the official maintenance schedule and completed equivalent service at his own mechanic, that could be enough to convince the court to rule in his favor.
I concede you never know and it depends a lot on the court and circumstances. Obviously this is hypothetical, it would be useful to look at specifics stats for relevant case rulings across the country. It’s not unusual for different jurisdictions and judges to be legally inconsistent. So I’d say for any particular issue, there’s a chance for either party to win, but here’s the rub: it might take deep pockets and good representation. In reality most clickwrap licenses are never challenged for the simple reason that it can be economically irrational to put money and effort into trying to win a case over a small monetary dispute. Lawyers are more interested in cases with big payouts. That’s the way it goes though, oh well.
I really do think their lack of exposure to our side of the industry has a lot to do with why they haven’t addressed it for so long.
Oh yisss… There is a clear benefit in a popular app having to be sideloaded, in the sense Google will be less inclined to degrade sideloading ability (using Bouncer for example).
Fortnight released a new video paradying apple’s “1984” commercial:
http://www.youtube.com/watch?v=zWuPlm3LhPA
It’s strange, I couldn’t care less about fortnight specifically, but I appreciate what they’re doing. They have immense popularity and they’re bringing the fight to the streets. Like I said in the first post under the label of scenario #1, this action by apple really looks bad for apple. I’m very confident that in the court of public opinion apple will be in the wrong by a wide margin. Apple is still the goliath and this lawsuit could well go in apple’s favor. Even so, I’m glad this is all happening because it helps shine a spotlight that might not only tarnish apple’s brand over compulsory restrictions, but also may lead to something being done at the legislative level to combat anti-competitive behavior. Epic’s video does a brilliant job making apple’s hypocrisy obvious and apparent to laymen.
Kyle Orland commenting at Ars Technica
“Most if not all of the complaints Epic makes against Apple and Google seem to apply to Microsoft, Sony, and Nintendo in the console space as well. All three console makers also take a 30-percent cut of all microtransaction sales on their platforms, for example. ”
What’s the difference between a console and an iOS device? None. They are all computing devices whose platform owners impose restrictions on how and under what circumstances software can run. Microsoft complains about Apple,e but runs the same system on x-Box.
Sony recently invested $250 million in Epic, so no complaints from them about the Playstation system.
The whole thing seems like a publicity stunt by Epic rather than a principled stand on trying to change all such walled garden systems.
BTW I loved the comments suggesting we would all be in a better space if Apple hadn’t banned Flash. That’s a ridiculous resentment that’s been carried an unfeasibly long time
It’s not resentment, just a simple statement of fact (although I didn’t say better place, but there seem to be some people still drinking the apple kool-aid that somehow think flash would kill a 4000mAh battery in 5mins). There might be a flash 2 with security features or independent Java SDK for mobile with no middleman if Apple hadn’t set up the walled garden.
Strossen,
A lot of users didn’t like flash websites, myself included. But to be clear, I wouldn’t have had as much of a problem if apple simply removed flash from its browser. The more serious issue in terms of owner rights is that apple banned alternative browsers.
dark2,
Yes, I get why some people blamed flash. I didn’t like flash either (esp as proprietary tech), but there’s zero doubt flash was a scapegoat for issues that weren’t really its fault. It was actually the web designers themselves who were causing the problems and ironically the elimination of flash framework has directly resulted in horrendous bloat in javascript & HTML frameworks which kills efficiency in the same way flash was blamed for. In a way things have gotten worse because at least flash was easy and practical to block. Now that the bloat is built using HTML5 and javascript you can’t block it anymore and unlike flash it’s deeply integrated into websites that we use everyday; there’s nothing we can do about it anymore.