Apple’s Fee Cut Fails To End App Store Controversy

As we rapidly head toward the end of 2024, at least one of the year’s big stories from the world of technology appears to be set to rumble on into the new year. It’s the bitter, ongoing battle between Apple, Epic Games, and the increasing number of large app and software companies that are joining the battle on Epic’s side. Within the past few days, Apple made a move that it hoped would draw a line under the argument. Instead, the company appears to have angered its detractors even more.

If you’ve somehow managed to steer clear of this news story until now, here’s a rapid recap. Epic Games is a company that makes “Fortnite.” “Fortnite” has to be downloaded as an app if you want to play it on a smartphone or a tablet. The only way to download apps on Apple products is through the company’s App Store – unlike Android devices, Apple doesn’t allow users to download apps from elsewhere. When an app is downloaded or sold through the App Store, Apple takes a thirty percent cut of all revenue. That cut isn’t limited to the purchase price of the app (if applicable). It also covers any payments made through the app in the future. Some companies, including Epic Games, Microsoft, and Spotify, believe that the thirty percent fee is excessive.

Source: weirdworm

A few months ago, Epic Games decided to trial a new in-game payment system within “Fortnite” that cut Apple out of the deal. Apple responded by blocking “Fortnite” from its App Store. The row has escalated since then with both sides filing lawsuits, and Apple briefly blocking all Epic Games content from the App Store. Much of the non-”Fortnite” content has since been restored but “Fortnite” remains unavailable, meaning millions of people who only play the game through Apple devices don’t have access to the latest ‘season’ of the wildly popular game. Both companies are regularly receiving complaints from players, who appear to apportion blame equally for not finding a way to resolve the issue.

The companies who oppose Apple’s stance believe that the tech company is effectively trying to create a monopoly by preventing apps from being downloaded to their devices via any other method. We’ve heard the situation compared unfavorably to online slots websites. Let’s take a second to explain that metaphor. The internet, as we’re sure you’ve noticed, features hundreds of different sites like that host online slots. The companies who make those online slots reach agreements with the websites that cover revenue split, and who gets what cut of the money made by the slots. If an online slots development company doesn’t like the revenue split offered by one website, they can take their games to another one and do a deal with them instead. They have options. App makers who work with Android have options. App makers who work with Apple do not.

Source: – Tulsa, OK

As we intimated at the start of this article, Apple has changed its stance on the issue significantly within the past few days. They’ve now offered to cut their share of revenues in half by dropping it to fifteen percent – but only for companies who make less than one million dollars per year through the platform. The new policy will take effect automatically on January 1st 2024. it will automatically be applied to any company who hasn’t published on the App Store before, subject to a review after twelve months in the event that their revenue exceeds the one million dollar mark. While the move is designed to be PR-friendly, it will have been prompted in part by a report completed by the House Judiciary Subcommittee on Antitrust in the United States of America in October, which criticized Apple for making excessive profits from its App Store.

This move will make no difference to the companies that have the biggest issues with Apple’s current policy. Epic Games makes almost two billion dollars per year through the App Store, and Spotify is also well above the revenue threshold. Both Epic and Spotify have already released statements responding to the news, and they’ve been scathing. Epic Games accused Apple of creating a loophole to accommodate Amazon at a lower price, and suggested that the company’s true desire was to turn smaller app developers against larger ones. Spotify’s statement was even more scathing, accusing Apple of operating policies that are “arbitrary and capricious,” and failing to level the playing field. The music streaming platform is particularly keen to point out that it feels Apple’s current policies allow the company to promote Apple Music at the expense of Spotify.

Source: – Tulsa, OK

A new company has also weighed in on the debate for the first time. Match Group, the company behind Tinder, used its social media accounts to wonder what further evidence of Apple’s allegedly anti-competitive policies lawmakers could possibly want to see. They believe that by lowering the fee, Apple has demonstrated that it could always have done this anyway and has kept the fees at an inflated level to disadvantage its competition. Going further, they point out that the App Store raised around fifty billion dollars in revenue last season, and that Apple took a fifteen billion dollar cut of that for doing nothing other than processing payments. They feel that even a fifteen percent cut of one million dollars is still excessive, pointing out that a small company that made that amount would have to give away $150,000 of it to Apple for providing a service that could easily be obtained for free elsewhere.

It’s unlikely that Apple seriously believed that this new policy would satisfy its biggest critics, and it’s equally unlikely that anything other than opening the App Store up to competition would satisfy Epic, Spotify, and their allies at this point. Despite Apple’s best efforts, this argument is set to head to the courts – and when it gets there, anything could happen. In the meantime, “Fortnite” players still can’t play the latest version of their favorite game on Apple devices, but Apple is still being paid very handsomely for basic hosting and payment processing duties. Based on the findings of the American political inquiry in October, that situation might not be allowed to continue for very much longer.