Oh, You Don't Like 30%? Okay, How Does 31% Sound?
Rachel Graf & Leah Nylen
Amidst all of Apple's legal troubles and challenges around the world, a seemingly important one in 2021 often almost feels forgotten. Except by Epic, of course. The one (and only) major concession Apple lost and Epic won in that fight, which was more recently upheld, is that Apple must allow apps to link to outside ways to pay for services. So how's it going?
Apple said in January that it would would let all third-party apps sold in the US include an outside link to a developer website to process payments for in-app purchases. Since then, Apple has received just 38 applications for outside links out of an estimated 65,000 app developers that offer in-app purchases, company executives testified.
38 out of 65,000. That's a robust, um, .058%. A legit "lol". Even if you assume that most of those 65,000 developers are perfectly happy to use Apple's own payment rails (and "most" is probably doing some work there), there's no way that all things being equal, just .058% would take up the offer.
Why? Because all things are not equal, of course:
The reason: Apple will charge a 27% fee to developers who want to use the link entitlement program — and when combined with payment processing fees, the total is even more than the 30% the App Store has taken for itself for years, the judge was told at the hearing in Oakland, California.
I'm not even sure why a judge has to be told this, a simple Google search for standard transaction fees will reveal that the 27% number Apple chose is no accident, it's almost exactly the lowest amount they could pick to ensure this is a worse deal with said fees for everyone. If they chose 26%, for example, it would results in a slightly better deal for some (but not all – depends on scale/fees) developers. Frankly, I'm surprised even 38 developers took Apple up on this. Presumably they just wanted some other form of granularity of payments on their website that Apple didn't allow for (or present in a way they wanted).
And, of course, no large/major developer chose to provide their own payment solutions as a result of the above. Again, it would mean making less money on transactions. Who wants to make less money? No one.
“It sounds to me as if the goal was to then maintain the business model and revenue you had in the past,” Rogers said to an Apple executive during a multi-day hearing to address Epic’s complaint that the iPhone maker isn’t abiding by the terms of a corrective order the judge issued in 2021.
That would be US District Judge Yvonne Gonzalez Rogers, who has been overseeing Apple v. Epic for years now. And this is obviously true. I'm not even sure Apple would deny this? Again, it was so clearly the goal in picking 27%.
Rogers indicated that Apple hasn’t convinced her it has done enough. Testimony revealed that the 27% fee was approved by a committee that included Chief Executive Officer Tim Cook and other top executives.
“You’re telling me a thousand people were involved and not one of them said maybe we should consider the cost” to the developers? the judge said. “Not a single person raised that issue of the thousand that were involved?”
This sounds bad for Apple, but the question is what Rogers will do about it. Presumably she won't force a certain number/cut upon Apple, but will instead make them come up with a better deal. Which Apple will then once again take as long as possible to come up with and implement. And it will likely be restrictive in some other way that will dissuade developers from using it. And around and around we'll go...
Still, you have to wonder if the .058% uptake didn't highlight just what a mockery Apple seemed to make of the ruling here that Rogers doesn't push for something more...