Apple vs. Epic: Mark Gurman’s got the solution

Epic, says Bloomberg’s top Apple watcher, should use the App Store workaround that Netflix and Spotify settled on.

From Bloomberg’s Fully Charged newsletter, posted Friday to subscribers:

Fortnite was not the first to grapple with this issue. Spotify Technology SA and Netflix Inc. have been grumbling about it for years. Spotify has been almost as aggressive at Epic, filing an antitrust complaint against Applewith the European Commission in 2019. Europe is now ramping up an investigation that focuses on whether Apple’s control of payments lets it enforce high App Store fees. Last month, U.K antitrust authorities opened a probe into this issue, too.

Netflix has avoided public legal clashes with Apple. And both Netflix and Spotify have managed to offer successful iPhone apps with a simple solution: Users can buy subscriptions on the web or another platform and then log in to the iPhone version of these services. This avoids Apple’s App Store fees, and it’s allowed according to the company’s rules. Epic could have focused on this strategy too, instead of launching an expensive legal battle.

The big problem though is that Apple bars developers from promoting such a workaround within their iOS app or game. This is particularly challenging for newer apps that don’t have a following beyond the App Store.

Rather than spending millions of dollars and thousands of hours on this trial, a compromise on this specific rule — 3.1.3(b) — would be a cheaper and quicker solution. Apple might be better off allowing this change. Yes, more developers would probably send users to the web to pay, reducing fee income. But it would reduce the risk of Apple losing its lucrative control of App Store payments. And Epic could have followed Netflix’s lead and avoided losing over a year of App Store revenue.

My take: Well, why not?

8 Comments

  1. Fred Stein said:
    Disclaimer: Not a gamer, not an expert on game monetization.

    One reason Epic did not choose subscriptions, is because they want to take advantage of impulsive in-game purchases of add-ons, extra powers, etc. That’s where the money is. Apple’s platform – the SDKs, the support services, iOS, all the deep tech in the iPhone plus the demographic* they provide for Epic make the iPhone much more than just conduit or just a cash register for game developers.

    *Per Piper Sandler; and per my grandson who spends about $40 monthly in in-app gaming add-ons.

    9
    April 9, 2021
  2. I can deliver all the bee products I want to friends in a local watering hole. They arrange and pay for the honey/pollen/wax purchases ahead of time. When I display jars of honey for sale on a table, the business gets a cut of sales or a table fee. Gotta pay the lease, cleaning crew and bouncer.
    Some open air markets have a high table fee. Not much room for negotiation either. I weigh the cost and sometimes decline to sell. I certainly don’t setup shop and ignore the table agreement.

    8
    April 9, 2021
  3. Thomas Larkin said:
    What if Epic had simply continued to honor the terms of the Agreement by which it procured the contractual right from Apple to offer Fortnite on the App store, for use on Apple’s platform, developed at great cost to Apple in time and money, in exchange for a commission to compensate Apple for the use of its intellectual property, i.e., platform, OS, etc. (including for the protection of Apple user’s privacy and security, which so many of us care deeply about and which is a primary reason we chose Apple in the first place).

    As the court previously observed, this is a self inflicted wound. Moreover, Epic could have even lowered the price of Fortnite if it thought that would actually have an appreciable impact on sales (I seriously doubt it); more likely, I suspect, is that Fortnite sales were starting on a downward trajectory after a peak. So instead, Epic has in effect destroyed what could have been a key part of the evidence, i.e., sales after the date it got itself kicked out intentionally (which would instead have been the date it lowered the price). Instead, apparently, Epic hopes to get a free ride on Apple’s back? IMHO, Epic really is the bad player, and much of the tech world has recognized that for some time, including many from the outset. (Continued below).

    4
    April 9, 2021
  4. Thomas Larkin said:
    (Continued)

    Epic (and its counsel) should, of course, be trying to work out a deal with Apple along the lines of what Netflix, Spotify, and other larger players, with unique considerations, have done. Just stop looking for a free ride. Many of us have been saying this for some time.

    The purpose of anti-trust law is not to deprive those of us willing to pay for quality, security and freedom from attack ads we don’t want, in favor of making everything dirt cheap, second rate, and a constant security nightmare.

    5
    April 9, 2021
  5. Kirk DeBernardi said:
    Let’s keep this simple.

    You enter an agreement with a company to have them take a set percentage of your sales for you to sell your wares in their marketplace. You sell your wares and make money from the very first sale on up to the millions/billions. Maybe even make a big name for yourself. One day you become restless of this arrangement and demand the company take less of a percentage simply because you want them to, believe they should and proceed to publicly “shame” them for doing so while attempting to insert your own method of payment.

    Who’s been wronged in this established agreement?

    6
    April 9, 2021
    • Kirk DeBernardi said:
      …and your only defense for such conduct is your cry that they’re too big.

      Someone please define for me when too big becomes “too big”.

      3
      April 9, 2021
  6. Shamwil Al-Amin said:
    When customers complain about a billing issue with a service that has an app they always call Apple tech support, even when the billing isn’t being handled by Apple. When customers have any issue what so ever with an app they call Apple. I can tell you from experience that customers expect Apple to handle all things that happen on their phone regardless of who they are actually paying or what the issue is. Almost no one ever writes about the free tech support that Apple provides for all of these companies. That to me is much larger value add to these companies than the easy billing and download hosting.

    7
    April 9, 2021

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