I agree that it's an oddly-applied pricing system, but it's not unique. Apple's differential pricing functions similarly to student and senior discounts—it's an acknowledgment that some customers are harder to get than others and it's worth it to the company to meet those customers where they are.

Some apps don't make any money at all, and Apple wants to let those exist and so they get a free pass. For others, Apple is only providing a tiny portion of the value of the app, most of it comes from the content that the app licenses from other companies. Apple recognizes that they can't take 30% from those apps without them giving up on an app entirely, so they get a discount in order for them to stay on the platform.

Is it fair? Probably not. But I see no reason to believe it's illegal.

>Is it fair? Probably not. But I see no reason to believe it's illegal.

If they take it too far, that's how you get into antitrust territory. That's why Epic's court case against Google ruled in Epic's favor, as it was giving paying off devs to not make their own app stores and blocked OEMs from making deals with other studios.

So I'd say this puts apple on thin ground. I'm sure this won't be the last high profile lawsuit over the app store this decade.

The case against Google had a completely different fact pattern. One that resembles the US v MS more.

Google essentially pressured and bullied OEMs and other third parties into doing stuff that was beneficial to Google in exchange for licenses and special deals.

At that point, you’re throwing your weight around, something that Google “had” to do because they started with a relatively open platform.

Apple, on the other hand, preempted needing such tactics by making their ecosystem closed and heavily regulated from the onset when they were still nobodies within the market. That makes it extremely difficult to prove antitrust issues.

Had Apple, say, increased the commission from 30% to 33%, then it would’ve been pretty close to an open and shut case because then it’s easy to argue that Apple threw its weight around once everyone was inside the ecosystem. But the opposite happened.

This is also one of the reasons why everything Apple does is restricted and limited from the onset. It’s always easy to loosen the reigns later, but at their size, you can never go the other way without risking antitrust liability.

FWIW, even MS, with their egregious behavior, got a lot thrown out on appeals and prevented being split up. The DOJ ended up settling instead.

This (a policy of charging some devs more/less than others) isn't Apple bribing devs to not compete with them, and it isn't a series of shady backroom deals. It's a relatively straightforward and transparent price discrimination scheme, and I have a hard time imagining why this would put Apple at risk of an unfavorable antitrust ruling if the complete lack of any alternate app stores didn't.

Where I imagine Apple could get into trouble is if they systematically turned a blind eye to commission-dodging by specific entities as part of a trade to ensure their market dominance. Unlike Google, though, I'm not even sure which entities Apple could bribe that would risk looking like a trust.

>'s a relatively straightforward and transparent price discrimination scheme, and I have a hard time imagining why this would put Apple at risk of an unfavorable antitrust ruling if the complete lack of any alternate app stores didn't.

Like any discrimination case, it depends on the subject of discrimination and potential victims. So I would say that discriminating with the largest streaming service can be a way to lock out the rest of that market from competing properly.

>Where I imagine Apple could get into trouble is if they systematically turned a blind eye to commission-dodging by specific entities as part of a trade to ensure their market dominance

Yeah, that's what I'm getting at. There's no hard evidence but that's what would be subpoena'd in court.

Ironically enough, Google is the biggest smoke signal here. Since court cases reveal they have some sort of deal with Apple to power search. That deal + potential discrimination with Google submitted apps can lead to those exact issues Google is under fire for.

>Its like a toll road arguing "no, driving on the road is free of course, we just charge at the entrance and exit for the privilege of looking at the toll road".

I mean, there's actually many toll roads/bridges that only charge for travel in one direction. The other is free, with the expectation that you'll need to make a return trip anyways.

Does Google Maps still assume that the toll applies in both directions? I used to live near a bridge like this and it was really annoying, because I had Google Maps set to avoid toll roads, but because of this it would refuse to plot a route over the bridge, even though there was no toll in that direction.

I learned decades ago the trick to always go around the bay clockwise.

> Is it just me or does this argument seem insanely flimsy?

Apple being entitled to a commission regardless of who you use as a payment processor is literally part of the court ruling.

The court did not find that the size of the commission was necessarily justified, but they definitely ruled that a commission was justified.

You want to outlaw price discrimination?

No, I'm really just asking what level of scrutiny can be applied to their claimed justification for the fees. I feel those examples are illustrative of how Apple's decisions aren't really aligned with their claimed justification. One could absolutely come up with a rational explanation (as some commenters have) even if it's not the actual explanation, I'm interested if that's all Apple needs to do to fend off claims of them exploiting their market power.

I’m not sure the percentage matters.

Obviously if they tried to charge 85% no one would actually be a developer and the App Store would crater. So they have a very strong incentive not to.

But from a legal point of view is there a reason why one number would be legal but another wouldn’t?

The only thing I can think of is a contract being determined to be unconscionable. Until they hit whatever threshold that is it seems like it’s completely up to them to set the terms at whatever they think enough developers will accept.

>Obviously if they tried to charge 85% no one would actually be a developer and the App Store would crater. So they have a very strong incentive not to.

That's not really true. If the iPhone became a real monopoly in the US, for instance, with perhaps 98% marketshare (similar to Windows before Macs started seriously challenging them), then Apple really could charge 85%. What is anyone going to do about it? They'd have a choice of paying 85% to Apple so they can sell apps to 98% smartphone users (basically everyone), or not selling smartphone apps altogether and finding a new business strategy that probably doesn't involve making software for consumers at all (which admittedly, many developers would probably choose).

What I can gather is that if Apple, from day one, had an 85% split, grew to 98% marketshare, then that would be ok. If apple started with 30%, then grew to 98% marketshare, then jacked up the price to 85% then they would have a problem.

I think the missing piece that most people miss is that it is not illegal to have a monopoly. It's illegal to use your monopoly to bully others. Apple did no such thing.

Perhaps, but I disagree about your supposition that "they would have a problem". I don't think they would. It may be technically illegal to use your monopoly to bully others, but enforcement in America these days is rare.

> Is it just me or does this argument seem insanely flimsy?

I'm not sure if it is just you, but both the district court and appellate court are on board with it. And honestly, I can see why.

Apple argued that they provide a bunch of services and access to their IP in exchange for $99/year and a commission over the sales.

The courts have deemed that an acceptable business model.

The district court was hemming and hawing a bit over the actual commission rate being set at 30% (15% for small devs) and at the fact that some developers essentially subsidize others but ultimately didn’t make a ruling on any of that in part because Epic didn’t bring it up as an argument.

The appellate court, however, went a step further and stated in no uncertain terms that it was kosher.

If you think about it, it makes sense. We see similar business models with differential pricing all over in commerce for various reasons.

Sometimes, it’s for goodwill, sometimes, to reach customers that would otherwise be harder to convert into a sale, sometimes, it’s based on usage and who puts the most strain on a system and sometimes, it’s for more egalitarian reasons.

Military discounts, student discounts or even free usage, senior discounts, teacher discounts, first responders, etc. These are all examples of differential pricing.

In particular, the student stuff is interesting because the philosophy there seems to be that as long as you don’t make revenue from it (commercial use), “we” don’t need to make a profit from you.

> It’s like a toll road arguing "no, driving on the road is free of course, we just charge at the entrance and exit for the privilege of looking at the toll road".

I don’t think the analogy is apt, but we see similar stuff on toll bridges. I’ve got a bridge near me where toll rates are based on vehicle type and axles.

While the pricing is slightly higher for commercial vehicles (e.g., trucks), it’s not proportional to the increased cost of upkeep those vehicles cause.

Edit: Also realized that only one direction is burdened with tolls. The other way isn't.

> What does it take for the legal system to be able to call BS on a claim like that?

A very carefully crafted legislative change, I suppose, if possible at all.

Currently, with SCOTUS’ refusal to take up the case, this is standing law, and it’s challenging to craft legislation that wouldn’t have reverberating effects across all of commerce while simultaneously only hitting Apple.

Thanks for your reply, I definitely see what you mean with other pricing schemes and how there is pretty wide latitude for what type of price discrimination is justifiable.

I mostly just find it silly that at no point does anyone seem to address the elephant in the room that the only way to access some hundreds of millions of users is through Apple, and that almost certainly influences the fee in a way that can't be really be explained by the value of the IP.

Does the argument require us to believe the fee would still be 30% if iPhone had practically zero users? Or is that legally irrelevant assuming that they aren't found a monopoly?

> Does the argument require us to believe the fee would still be 30% if iPhone had practically zero users? Or is that legally irrelevant assuming that they aren't found a monopoly?

While not zero users, the default fee has been set at 30% since the beginning of the App Store, long before Apple had the level of market dominance it has today.

This argues in favor of it being acceptable: developers were willing to accept that fee without monopoly pressure being applied, since nobody has successfully argued that Apple held a monopoly in 2008.

> What does it take for the legal system to be able to call BS on a claim like that?

A class of digital native judges.

The App Store sucks. That’s its problem. 30% fees rub salt in that wound.

Name an Apple application you aren’t forced to use that you like. Notes? Final Cut? That’s all I can think of.

The whole paradigm of iOS is predicated on a 65yo+ consumer who doesn’t know any better, and happens to be also the demographics of the government.