Epic is suing Apple in Australia over Fortnite as Apple halves its profit cut from indie devs

    
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Epic is suing Apple in Australia over Fortnite as Apple halves its profit cut from indie devs

You might think Epic Games’ primary business is video games or video game engines, but as it turns out, it’s fast becoming “filing lawsuits.” Yes, Epic has apparently now filed suit against Apple in an Australia federal court, compounding the ongoing feud between Epic and Apple over Epic’s August decision to sneak a third-party payment system into the AppStore/Google Play versions of Fortnite and force Apple and Google to ban the game – and provoke litigation.

But thus far, that litigation has been in the US. The new filing in Australia takes a slightly different angle; instead of arguing merely that Apple is engaging in generally monopolistic antitrust behavior, Epic alleges that Apple is in breach of Australia’s specific consumer laws.

Epic’s Tim Sweeney told The Sydney Morning Herald that it picked Australia on purpose because of its strong consumer protections and large mobile industry, arguing that Aussie devs “suffer dearly by Apple and Google’s 30 per cent tax.”

Apple has already said it will fight back against Epic, which Apple says “made pawns of customers,” according to the Herald’s coverage of the new suit.

In other Apple news, the company is angling to look more indie-friendly, as this week it announced the App Store Small Business Program, aimed at app developers who pull in less than a million dollars a year. The program essentially reduces Apple’s cut of the profits, down to a 15% commission, on sales for those companies. Companies that make over a million dollars in proceeds every year will still see a 30% cut diverted to Apple.

Source: SMH via GI.biz, Apple
Update
Sweeney has spoken out on Twitter against Apple’s new move too, pointing out that it’s not as good as it sounds. “It’s great that Apple is giving indie devs a better deal, but 95% of in-app purchases are in bigger apps that Apple still taxes at 30%, so this will provide no relief to consumers who are paying inflated prices for items.” (via Gamasutra)

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kjempff

“It doesn’t matter” .. “this will have no effect” .. “Epic is also evil” .. “30% is totally fair” .. “I am a lawyer and this is” .. “blahblahblah”
Ohh Apple reduce their cut.

Though, I wonder how much “indie” developers (under 1 million) is in percentage of the total – I mean I doubt Apple would do this if it had a huge impact, or maybe they are just raking in the lost money on some other scheme.
Considering how the iOS store works with listing only featured (cough paid and brown nosing) and top selling apps (requires huge advertising budgets) – If you are not top100 or featured, your chances of being found is virtually zero.

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cursedseishi

I swear I’d seen a breakdown of it somewhere but can’t for the life of me find the exact one I saw–though quick google-fu brought up;

The cut should apply to an estimated 98 percent of iOS app developers that generated just 5 percent of the App Store’s revenue last year

The 95% that won’t apply to would be your big-name projects that have the sort of cushioning that makes it not even matter–while any Indie who does hit it big would likely naturally have enough selling power to not make the additional 15% cut hurt them, while also easing up on costs taken out beforehand should it fall short.

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kjempff

Thanks. Those numbers are around what I thought too.. think I vaguely remember numbers some years ago that said something like top100 generated 95% of the revenue.
The problem is not as much the percentages, though lowering it to 15% certainly makes a difference. The problem is users can’t even find your App if it is down the list, so if you don’t start out with big download numbers (through advertising & user acquisition), your app can never get the numbers – It is a self enforcing effect.

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Jack Pipsam

The ACCC is pretty powerful here as is our Consumer Law, but what that actually means for an Epic vs. Apple fight I’m not entirely sure.

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Schmidt.Capela

Epic winning that fight in Australia might force all the other walled garden markets (Nintendo, Sony, the XBox part of Microsoft) to cut their rates (or implement whichever remedy the courts mandate for Apple) or face similar lawsuits with little hope of winning, similar to how Valve losing the fight over refunds forced most digital stores that operate in Australia to follow suit.

Google would likely escape because it intentionally designed Android to not be a walled garden (Android phones allow users to side-load applications and even whole app stores). It would also be unlikely to affect anything on PC.

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Jack Pipsam

Oh totally, it would be an ‘epic’ win for them.
But, normally this kind of things play out as “the people” verses X company for Consumer Law related things.
Steam brought in their refund system for everyone on the world after they were sued in Australia by the ACCC (the government consumer agency, every country should get one, they’re great!), who often in court cases takes up the role of “the people”, so it’s like to the courts it’s Steam vs Australians etc. But instead of being random gamers it’s instead the highly trained lawyers of the regularity body who make recommendations on the law.

But for Epic V Apple, it’s different, it’s company verse company and Epic really has to bank on attempting to convince the court that their interest isn’t just their interest. If they can get lots of Australian indies and other mobile developers on board it could work, but American company verses American company alone might not go over as clear-cut as Epic might be desiring in our court system, even if it technically the local branches of each.

Unless they’re aiming more for the anti-competitive aspect of it, which has a better shot, but if I recall Apple and others were already examined a while back here, so there’s a precedent for them having an “all clear” about the 30% (although I did read they’re now going to slash it, I have no idea if the Australian threat was that much for them haha).
But that stuff isn’t nearly as strong here as say Europe.
We have extremely strong world-leading consumer laws, but the anti-competitive stuff is far more a toothless tiger by comparison and far more likely to struggle. For example the ACCC blocked the merger of two majors telcos here saying (correctly) that instead of four big ones, it’ll go down to three leading to possible worse outcomes. A long legal battle followed in which ended with the two companies winning and so the merger went ahead despite of the ACCC’s objections.
The percentage cut of Apple would be seen as a far less important issue for the courts, so that could go either way for them.

Honestly, Epic should have sued Google.
Various aspects of the Australian government are currently fighting, threatening and suing Google, from data/privacy violations to anti-competition to having a negative influence on our local media (that last one is a bit of a stretch imo), so Epic might have been better jumping on Google here as there’s already a million things Google Australia is dealing with right now while Apple Australia is just vibing.

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Arktouros

From what I can understand, much like the US, Epic’s case in Australia breaks down to how one defines the market for their case. Epic wants to define iOS system as a whole marketplace while ignoring other phone manufacturers, other operating systems and other avenues in which their software product can be delivered. It also might struggle with the idea that Apple is abusing it’s place in the market because it’s rates are on par with every other service except for Epic’s own service but Australian courts have been extremely consumer friendly so that’s kinda a toss up.

The big issue with Tim Sweeney’s self righteous twitter diatribes is they are just factually and provably wrong. Prices don’t get lowered if the developers get more. His own store shows that abundantly as even with a lower cut they still charge the same prices to consumers.

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Rndomuser

says “made pawns of customers,” 

That is true, Epic does this, however as a person who was treated as a much worse “pawn” by Apple in many ways over the years, I hope Epic’s lawsuits will eventually produce the results and Apple will eventually be forced to be more developer-friendly and consumer-friendly by providing an option for users to load any third-party software on their phones in a user-friendly way, including third-party game stores. This would be fair to everyone, except Apple since people and developers will not be forced to use their app store on Apple devices, but they will be ok. Apple can always compensate for slight revenue loss by doing stuff like adding more “tax for gullible people” by increasing prices on their genuine accessories, like the monitor stands: https://www.apple.com/shop/product/MWUG2LL/A/pro-stand

Or by soldering more components to the motherboard in their devices to make these devices more costly to repair and more costly to upgrade.

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Lily Cheng

Yeah I know right, it’s absolutely ridiculous that these companies spend millions and millions of money on R&D and they still have the gall to not let us do whatever we want with their devices we paid money for.

I mean why am I paying any money at all for a game, I paid for the hardware so clearly I should also be given free right to side-load anything I want onto the device I paid for freely.

Just in case anyone reading this is that dense…. /sarcasm

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Arktouros

This would be fair to everyone, except Apple since people and developers will not be forced to use their app store on Apple devices

Your literal, exact same argument can be applied to software developers who are not forced to develop or use Apple’s platform or pay them anything if they don’t want.

Demanding Apple change their behavior or business model because you or anyone else doesn’t like it is rediculous. Adjust your own behavior rather than demand others adjust theirs. You don’t like Apple’s 30% cut? Don’t develop on their platform. I don’t like Apple’s walled garden setup? I bought a different kind of phone. I don’t like Epic’s exclusivity practices? I don’t buy games through their store.

Things don’t have to be “fair” to everyone and they almost never are. Why this was chosen as a metric is just baffling.

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Rndomuser

It never ceases to both amaze and disappoint me how many narrow-minded and selfish people still exist in the world. People who share same thought process as what you just wrote, “you don’t like someone’s rules? Just don’t use their product and services because you are not forced to, problem solved”, totally disregarding simple facts that things like these vastly decrease the opportunity for developers to earn more money, as well as opportunity for some people who are forced to use particular hardware platform (yes, there are people who are required to use specific tablets or smartphones or laptops by specific brand, either through work or study) to enjoy having an option to use their favorite software on same device. Or people who genuinely like specific mobile device like iPhone and don’t want to switch to a different platform but would appreciate having an option to, for example, install an app which Apple refuses to put on their store for many reasons (for example, a PornHub app) or to delete an app which they just downloaded update for and download and install a previous version that is not available on the Apple’s own app store because previous version had better functionality or interface, or for other reasons.

But hey, “screw those people and their preferences because I do not belong to such groups and because it would hurt me to see multi-billion business to lose a few millions of revenue by being mandated to give more choices, even though that business can easily compensate lost revenue through other means”, right?

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Arktouros

It seems far more selfish to me to expect and/or demand others change their behavior to suit what you think is fair, right or otherwise.

I don’t disregard the facts, you do. The fact is that platforms have built a customer base. It is not easy or cheap to build a platform and history is strewn with the dead bodies of platforms and businesses that failed to keep up. The hundreds of millions of dollars that get invested in building that platform are entirely for the pay off at the end should they succeed.

Developers want access to that platform’s customer base. If they were to launch their own software on their own website at 100% cut they would make vastly less money because they don’t have access to that same customer base even with a 100% of the profits. In most cases if they sold their software even with a 30% cut they will still make more money because of that access. So access to that customer base is valuable and worth money, especially because again you’ll still make more money at 70% than if you tried to go at it on your own.

So if you want more money, yes you’re going to have to pay the companies who invested hundreds of millions/billions into their technology platforms and built a customer base up. You can decide to not do this on principle because you think a revenue share split is a “tax” but then you’re deciding to make less money. Being sour grapes about it after the fact and complaining you should simultaneously get access to more customers but then also not have to pay for is entirely selfish and entitled. You want access to something without paying for it. That’s called stealing and even if it’s stealing from a trillion dollar company it’s still wrong.

You also vastly under estimate the value loss in this proposition. Ignoring the hundreds of millions of dollars that has been invested in things like app review mechanisms, the level of tech support Apple has invested in, and over all product design the simple fact of the matter is the revenue share makes them hundreds of millions of dollars (if not billions) not just “a few million.” It means in future versions they have less incentive to invest in their products because they won’t profit from them like you see with minimal to no support in the Android ecosystem.

If you don’t like the way a company does business, you just don’t interact with them. I don’t like the way Apple does business, I no longer own any Apple products outside of a 10 year old Shuffle. I don’t arrogantly demand they change their product and company plans to suit my selfish desires. I just don’t do business with their company. It really is that simple.

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McGuffn

You sound like someone who will help me sue wal mart because i’ve decided they make too much money on the things they sell. They can easily compensate by treating their workers worse or something.

Edit: wait, you’re upset you can’t install pornhub on your work phone?

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Danny Smith

And Sweeny painted himself as the victim comparing himself to minorities in the 60’s campaigning for civil rights and is still going on twitter right now.

This man is either a Trump level twitter dullard or actually needs to talk to somebody as he sounds like he is having a major breakdown.

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cursedseishi

He’s also crying foul that ‘indies’ are getting ‘special tax brackets’ from this whilst also patting his own back as if he’s the reason for it and ignoring the long-standing lawsuits that existed well before him about the same thing.

He’s shifting it now to ‘consumers are getting ripped off’ rather than ‘indies’. He’s also trying to paint the ‘30% set aside’ suggestion as Epic’s idea that Apple refused, not the Judges idea that Epic refused.

Sweeny’s a creepy little sweater-goblin child who needs to let the adults actually talk. And now he’s going international because he probably isn’t liking how it might go here and desperately wants a ‘win’ no matter how shallow it might be.

Next thing you know, he’s going to buy some junk island in the middle of nowhere on the ocean, then try to claim some element of Maritime law is applicable because it occurs on Epic’s land and other countries have no jurisdiction on them–kind of like the Fake Church (which they claimed was totally not religious) peddling bleach as a covid/disease cure-all tried to claim they have their own court of law which supersedes the courts trying them.

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McGuffn

Nevermind the fact that Sweeney and Epic still charge inflated prices for items on the Epic Games store. We need relief.

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Hikari Kenzaki

Would have to see the actual legal wording, but I think this line means that devs pay 15% on the first million and 30% on any subsequent sales.

“If a participating developer surpasses the $1 million threshold, the standard commission rate will apply for the remainder of the year. ”

If not, that app that pushed over the threshold cost the dev $150k. Oof.

There’s also what appears to be a requalifying period of a full calendar year if you happen to go over your first year and not the second, which would give you another discount on the third year.

Still, good for those smaller devs who won’t get anywhere near a million but might make an extra $50k because of this.

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bobfish

The devs don’t pay Apple, they pay the devs, so it would be something like this…

Up to $1m in Gross Revenue, Developer would receive around $750,000 to $800,000 from Apple. This accounts for Apple taking 15% ($150,000), and taxes (varies by state/country).

After $1m in Gross Revenue has been earned, Developer would receive around $0.60 to $0.66 per $1 in Gross Revenue.