Apple gets appeals court win in Epic suit

[RockRock8]

I don't think you understood my example - it was about IAP. Let's make this concrete: I go into Target and purchase a magazine. Target gets a cut of that sale. If I then order a product from that magazine, does Target get a cut? Of course not. Another example: I purchase a mop with disposable wipes from Target, Target gets a cut. If I then order more disposable wipes from Amazon or direct from the manufacturer does Target still get a cut? No.

Yes, I'm glad you clarified because that's what I thought you meant after you posted, but I stand by my original example as I continue to explain why this argument is wrong

Briefly, I want to say that store within a store concept does exist at Target. Starbucks hosts mini stores in Targets. Target takes a profit of those products sold. Target is rarely involved with any Starbucks products, so that definitely exists as a concept and proof.

Now, this argument relies on the premise that products sold on target shelves are not developed by Target themselves. The thing is, Apple takes it much further than mere shelf space.

First, Apple provides shelf space. This business model is already validated. Target is allowed to host products on shelves, take a portion of revenue from that product, compete with that product, and sell their competitive product at a lower price than other 3rd parties, giving themselves an advantage their competitors can never have, simply because they own the shelf.

Second, Apple not only provides tooling for developers, but they are fundamental to all software creation and usage on Apple platforms. It's not only that Apple developers servers, software tooling, etc that developers can use; it's that Apple provides critical components that developers MUST use. There is zero concept of "third party firmware" on devices. Your phone doesn't just magically load a new company's firmware for the iPhone, with their own implementation of multitouch, networking, etc drivers.

This means that Apple not only hosts people's apps on their physical shelf, and not only plays a key role in developing people's products on those shelves, but literally is REQUIRED to be involved in people's product development that end up on their shelf.

So yeah, it's not exactly the same in terms of that, and that's sort of the point: Apple matches physical stores concept and takes it many miles further.

It is not optional to develop apps on iOS or Mac or whatever without Apple's IP. Their involvement is required because it's inherently required. Apple is instrumental to all product development for products they place on their shelf.

Epic is essentially saying, we want to set up a store within your store, and then not pay you for that development.

Furthermore, it's not a one time thing. It's a continuous cycle of engineering, development, designing products. Apple is involved every year when they release major updates, and throughout the year when they update those updates.

It's not analogous, not because Apple is not unlike Target, but because Apple is akin to Target owning all manufacturing plants required for product development. People cannot make products without Target making it for them.

That 30% is lower than traditional shelf space for software. It's fully fair for Apple to pick a price of 30%, which they explain 3% goes to credit card, and 27% goes to product development REQUIRED for those apps.

Epic like it or not depends on Apple for technology. They cannot make apps without them. There is no concept in technology where you load on demand another OS, firmware, APIs, etc

 

[RockRock8]

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[RockRock8]

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[dada_dave]

Yes, I'm glad you clarified because that's what I thought you meant after you posted, but I stand by my original example as I continue to explain why this argument is wrong

Briefly, I want to say that store within a store concept does exist at Target. Starbucks hosts mini stores in Targets. Target takes a profit of those products sold. Target is rarely involved with any Starbucks products, so that definitely exists as a concept and proof.

Actually it's the opposite! Starbucks within Targets are actually ... Target! Target pays Starbucks for licensing, inventory, and training but the employees, despite the branding, are actually Target employees. Further, Target is responsible for managing the inventory and sales inside their Target-Starbucks.

Further even if it worked the other way, you could argue that the better analogy is that I buy a key at Target to access the Starbucks next door. I then walk out of Target and into the Starbucks. After all I left the App Store and am now in a separate app.

This is again more similar to my magazine. I bought the magazine at Target, take it home, read it, and then order something i find interesting on one of its pages.

Again, I do not actually believe that Apple should be forced to allow IAP free of charge or that Apple can charge 100% for IAPs if they so wished. I am simply trying to demonstrate why physical-digital analogies fail. The details matter. You can't just wish these details away so you can make the analogy work or even worse you can say that you can use them to create any manner of analogy to suit your argument by focusing on which details you choose to say are important.

The better approach therefore is to deal with the actual systems we have in place and recognize that physical and digital realms are simply different. So let's create rules based on how digital systems actually function not based on how Target might function if X were true.

Now, this argument relies on the premise that products sold on target shelves are not developed by Target themselves. The thing is, Apple takes it much further than mere shelf space.

First, Apple provides shelf space. This business model is already validated. Target is allowed to host products on shelves, take a portion of revenue from that product, compete with that product, and sell their competitive product at a lower price than other 3rd parties, giving themselves an advantage their competitors can never have, simply because they own the shelf.

Second, Apple not only provides tooling for developers, but they are fundamental to all software creation and usage on Apple platforms. It's not only that Apple developers servers, software tooling, etc that developers can use; it's that Apple provides critical components that developers MUST use. There is zero concept of "third party firmware" on devices. Your phone doesn't just magically load a new company's firmware for the iPhone, with their own implementation of multitouch, networking, etc drivers.

This means that Apple not only hosts people's apps on their physical shelf, and not only plays a key role in developing people's products on those shelves, but literally is REQUIRED to be involved in people's product development that end up on their shelf.

So yeah, it's not exactly the same in terms of that, and that's sort of the point: Apple matches physical stores concept and takes it many miles further.

It is not optional to develop apps on iOS or Mac or whatever without Apple's IP. Their involvement is required because it's inherently required. Apple is instrumental to all product development for products they place on their shelf.

Epic is essentially saying, we want to set up a store within your store, and then not pay you for that development.

Furthermore, it's not a one time thing. It's a continuous cycle of engineering, development, designing products. Apple is involved every year when they release major updates, and throughout the year when they update those updates.

It's not analogous, not because Apple is not unlike Target, but because Apple is akin to Target owning all manufacturing plants required for product development. People cannot make products without Target making it for them.

And physical stores have rent and inventory management and shipping and typically operate on the pay in bulk model not commission and physically limited space, especially on shelves, less true for warehouses but still more true than for servers ... it's just a different model for business*. Oh and of course Apple also charges developers a yearly developer fee which is what is supposed to cover API development costs and access to said developer tools. Now you can argue that the developer fees are heavily subsidized by the App Store, one only need look at what developer fees used to be to see that to be true, and indeed is one reason why Apple is arguing that they should still collect fees on outside links and in the EU charge extra for apps distributed outside of Apple channels and I agree with and ... none of which has anything to do with an analogy to Target.

*And btw the digital store front is generally far superior for procuring digital goods - there's a great video of Tim Sweeney, before launching his own game store naturally, talking in fact about how wonderful the App Store and Steam are for developers and how much more money they get than the bad old days of physical retail. Which btw is absolutely true! Physical retail sucked for developers compared to Steam and the App Store!

That 30% is lower than traditional shelf space for software. It's fully fair for Apple to pick a price of 30%, which they explain 3% goes to credit card, and 27% goes to product development REQUIRED for those apps.

Epic like it or not depends on Apple for technology. They cannot make apps without them. There is no concept in technology where you load on demand another OS, firmware, APIs, etc

Which is why I am not approaching this from the angle of "the poor developers". I am approaching this from the angle of who owns what and why and a recognition that physical and digital goods and retail and are just different beasts. If the outcome is that Apple has to pay more to developers in some circumstances or developers get paid less in some circumstances is not my concern. I want rational rules, not based on tortured metaphors to physical retail, but based on how digital economies actually operate in and of themselves. Blank page, remove assumptions, how should digital store fronts operate based on how we see them operating now and not based on how Target and Starbucks operate. And most importantly rules that concretely define the rights consumers have to their digital goods. Start from centering the consumer, then build B2B off of that.

 

[RockRock8]

Actually it's the opposite! Starbucks within Targets are actually ... Target! Target pays Starbucks for licensing, inventory, and training but the employees, despite the branding, are actually Target employees. Further, Target is responsible for managing the inventory and sales inside their Target-Starbucks.

Further even if it worked the other way, you could argue that the better analogy is that I buy a key at Target to access the Starbucks next door. I then walk out of Target and into the Starbucks. After all I left the App Store and am now in a separate app.

This is again more similar to my magazine. I bought the magazine at Target, take it home, read it, and then order something i find interesting on one of its pages.

Again, I do not actually believe that Apple should be forced to allow IAP free of charge or that Apple can charge 100% for IAPs if they so wished. I am simply trying to demonstrate why physical-digital analogies fail. The details matter. You can't just wish these details away so you can make the analogy work or even worse you can say that you can use them to create any manner of analogy to suit your argument by focusing on which details you choose to say are important.

The better approach therefore is to deal with the actual systems we have in place and recognize that physical and digital realms are simply different. So let's create rules based on how digital systems actually function not based on how Target might function if X were true.


And physical stores have rent and inventory management and shipping and typically operate on the pay in bulk model not commission and physically limited space, especially on shelves, less true for warehouses but still more true than for servers ... it's just a different model for business*. Oh and of course Apple also charges developers a yearly developer fee which is what is supposed to cover API development costs and access to said developer tools. Now you can argue that the developer fees are heavily subsidized by the App Store, one only need look at what developer fees used to be to see that to be true, and indeed is one reason why Apple is arguing that they should still collect fees on outside links and in the EU charge extra for apps distributed outside of Apple channels and I agree with and ... none of which has anything to do with an analogy to Target.

*And btw the digital store front is generally far superior for procuring digital goods - there's a great video of Tim Sweeney, before launching his own game store naturally, talking in fact about how wonderful the App Store and Steam are for developers and how much more money they get than the bad old days of physical retail. Which btw is absolutely true! Physical retail sucked for developers compared to Steam and the App Store!


Which is why I am not approaching this from the angle of "the poor developers". I am approaching this from the angle of who owns what and why and a recognition that physical and digital goods and retail and are just different beasts. If the outcome is that Apple has to pay more to developers in some circumstances or developers get paid less in some circumstances is not my concern. I want rational rules, not based on tortured metaphors to physical retail, but based on how digital economies actually operate in and of themselves. Blank page, remove assumptions, how should digital store fronts operate based on how we see them operating now and not based on how Target and Starbucks operate. And most importantly rules that concretely define the rights consumers have to their digital goods. Start from centering the consumer, then build B2B off of that.

I wrote am entire reply to this but I realized it's pointless. Your response is predicated on the idea that I saw an analogy and created from it my arguments; rather than what I did, which was create my arguments and then use an analogy to help explain what I mean.

I can fully argue what I think without analogies.

The points remain the same. A private store front exists; it sells 3rd party business products; they take a commission off of it; they also compete with those people, offering lower prices; they can offer lower prices, because they own the store and don't pay store fees. This is obviously allowed

Apple not only does this, but is required for all products in their store, should a third party choose, to require involvement into their product development; not only that but their product literally cannot exist without Apple's involvement and technology.

Apple has argued since 2008 that all of this justifies 30% of revenue from a select portion of revenue in the App Store; notably it doesn't take 30% from purchases that are physical, or ads, or real goods and services.

Epic's entire argument is essentially they want the exposure and access of the store without actually compensating Apple for that, not compensating them for their engineering nor their technology. That is profoundly ridiculous. Not even utilities like water or gas operate like that.

Once again I have zero clue why you're playing "devil's advocate" here. You said don't agree with them, and epic doesn't even have a logical position lol

 

[dada_dave]

I wrote am entire reply to this but I realized it's pointless. Your response is predicated on the idea that I saw an analogy and created from it my arguments; rather than what I did, which was create my arguments and then use an analogy to help explain what I mean.

I can fully argue what I think without analogies.

The points remain the same. A private store front exists; it sells 3rd party business products; they take a commission off of it; they also compete with those people, offering lower prices; they can offer lower prices, because they own the store and don't pay store fees. This is obviously allowed

Apple not only does this, but is required for all products in their store, should a third party choose, to require involvement into their product development; not only that but their product literally cannot exist without Apple's involvement and technology.

Apple has argued since 2008 that all of this justifies 30% of revenue from a select portion of revenue in the App Store; notably it doesn't take 30% from purchases that are physical, or ads, or real goods and services.

Epic's entire argument is essentially they want the exposure and access of the store without actually compensating Apple for that, not compensating them for their engineering nor their technology. That is profoundly ridiculous. Not even utilities like water or gas operate like that.

Once again I have zero clue why you're playing "devil's advocate" here. You said don't agree with them, and epic doesn't even have a logical position lol

I don’t think you understood my post and yes I understand you were using your analogy to explain your arguments and I’m showing why those analogies to physical stores don’t work - they are simply too different. I've tried that myself, you end up just going around and around and around arguing over details. So I agree with your choice to drop them entirely here.

I’m not playing devils advocate for Epic and have not been. The one time I partially used that phrase was to argue against using Steam for an example but then pivoted to show that the consoles are practically identical to Apple's business model and noting that regulators are (often deliberately) giving consoles a pass (although Epic has said they plan on going after consoles after they are done with mobile - they want be an everywhere App store but of course they'll be totally non-evil and you can absolutely trust their continued benevolence). Thus consoles are the closest business model to Apple by far where I feel the strongest analogy argument in favor of Apple's position can be made and where I would say the hypocrisy of some people who argue both in favor of breaking Apple's walled garden while maintaining those of consoles is galling. I was partially playing devils advocate to lead you to (what I felt was) a stronger line of argument for your position.

That said, I do believe we are due for a regulatory overhaul in the digital goods space and have attempted to explain why in part by demonstrating how ill fitting the analogies to physical stores are and noting that our laws were primarily meant to regulate the latter. Of course, the primary rationale for my belief we need change is that the inadequacies of the current regulatory frameworks is why we see such conniptions in the legal system dealing with these issues and the scrambling by governments to pass legislation sadly without often stopping to look at the underlying reasons for why we're here (i.e. they are trying to improve their frameworks but not doing a very good job in my non-expert opinion).

This does not mean that I believe Apple should necessarily be forced to give up the walled garden model - and if they are to do so, then everyone has to as well unless extremely good reasons can be furnished as to why a not for a particular business (all the arguments I've heard so far for such have been wanting) - nor do I believe that Apple has to charge any particular rate on goods and services. What I am arguing for is an acknowledgement in the legal system that digital store fronts and digital goods/services often create questions and issues that rarely if ever came up in physical spaces and laws and regulations should be updated accordingly. And the legal system is haltingly getting there, but sometimes in ways that are less than ideal often because it is being decided on a case by case basis rather than a holistic look.

Things like the US' DMCA was a (mediocre in my opinion) first stab at this, but more is needed as it was mostly focused on piracy and the rights of copyright holders and less so on consumer rights (fair use being a sort of exception to a certain class of consumer-producer). The EU's DMA law have been another stab, but seem mostly focused on reigning in big tech companies and trying to redefine monopolies* (and even what a market even is) rather than actually grappling with the basic issues at hand and thus causing, again in my opinion, more problems. The EU GDPR has been another stab though more at data than digital ownership of purchased goods, so a bit tangential. California's AB 2426 law was good, but narrowly focused - expanding such legislation at the national level to cover more aspects of digital ownership is needed. There may be other countries and governments that I haven't kept track of who have passed legislation. While I understand this may seem like it has little to do with Epic vs Apple, I actually believe that building such legislation from the bottom up would ameliorate many of the tech issues roiling the legal system without what I consider to be ham-handed approaches like the DMA.

I have been editing this post probably too often to try to make my points as clear as possible, however, if you don't wish to continue the conversation I understand.

*there have been other governments which have passed other regulatory laws recognizing that more than just monopoly can be problematic for markets that at first glance appear better but I haven't looked deeply enough to say for sure and again is more tangential to what I'm talking about.