Tencent technology news on September 14, the final judgment result of the antitrust case of Epic Games v. apple, the developer of the popular game fortress night, has been released, and the latter’s app store business model is in a precarious situation. Epic Games wants to completely abolish Apple’s in app payment system and break Apple’s control over software distribution on IOS, but the latest ruling is far from achieving such a goal. Instead, the judge gave a vaguely worded injunction, which seems to open the door for developers who bypass Apple’s commission system, or at least make it easier to use non Apple payment methods outside their applications.
Shortly after the judgment, apple immediately regarded it as a huge victory, and Epic Games seemed to think it had lost the lawsuit. This is understandable: it is difficult to determine what the ban means until we see Apple’s response to the ruling and the court’s new view on Epic Games’s recent appeal. The ruling could create major loopholes in Apple’s carefully controlled ecosystem. But to achieve Epic Games’ goals, the company and its allies need to do more in and out of court. Apple still has many advantages, and there are many ways to weaken developers’ already weak chances of victory.
The following are the four most important issues left over from this legal war, which deserve our special attention in the coming months:
1. How much freedom does the ruling actually give developers?
Despite the complexity of the case, the actual order issued by the court was simple. It focuses on a sentence in Apple’s App Store guide, which Apple now prohibits from implementing, that is, the app and its metadata shall not include buttons, external links or other call to action to guide customers into purchase mechanisms other than Apple’s in app purchase.
One thing is clear in the ruling that developers must be allowed to transfer users to external payment systems in some way. However, as some analysts pointed out, the wording of the “button” clause is very vague, which may make developers think that these systems look like Apple’s official choice, prompting them to open safari or other applications for actual payment.
Enforcing the injunction requires developers to do a lot of legal work, and the court also needs to make more decisions in favor of developers. On the other hand, Apple will have many opportunities to weaken the effectiveness of the ban. It’s hard to say how interested the court will be in defending it. But if they don’t, the app store is still a very dangerous place for developers using alternative payment systems.
Of particular concern is that a real threat is that apple can still impose the so-called “Apple tax” on any allowed new payment system. In theory, the commission charged by the app store is to support the operation of the entire app store, not just the payment system. In the ruling, the judge considered Apple’s idea of allowing other payment methods, but requiring the same 30% commission rate through audit or other systems. If this is confirmed in the actual legal order, the door to the alternative payment system will be closed soon.
2. How will Apple change its app store rules in response to the ruling?
For apple, if the judge’s injunction takes effect, the company will almost certainly change the rules of the app store, even if it only changes the so-called “anti steering” clause. Specific regulations on the use of external payment systems have been published, but Apple still has extensive legal power to formulate its own rules for the app store. So what new rules will the company make to replace the old rules?
It should be noted that Apple has many ways to prevent external payment systems without complete prohibition. We have discussed the idea of commission rate, but apple can also limit the presentation of external payment links. The company can require specific price differences between Apple’s IAP system and any competitor, and can also require the two systems to be displayed side by side in order to attract developers to continue to use Apple’s system.
3. What will the external payment system look like on the app store?
When the above two issues are settled, developers will have some options to replace Apple’s built-in payment system. It may be a simple button, or it may be a pile of intricate links and tables. Many things will depend on the benefits of external payment options.
Specific figures in this regard are important because developers need to balance friction costs with the additional benefits of bypassing apple. On the surface, if Apple’s payment system is not used, developers can earn an additional $0.30 for every $1 spent by application users similar to fortress night. But leaving Apple’s “walled garden” also seems to increase the resistance to this process, which means that consumers will spend less on other systems.
But how much less? If you lose four tenths of your customers because you use an external payment system, there is no need to use an external payment system. But if only two customers are lost, developers can gain greater benefits. Specific user experience details will have a huge impact in determining the churn rate: how big are the buttons? How many additional payment systems are there? Can Safari force you to enter your credit card number every time you buy something new? Each additional step will push developers back to Apple IAP and make Apple App store profits safer.
4. How many developers will turn to external payment?
Tim Sweeney, CEO of Epic Games, launched the lawsuit with the dream of breaking Apple’s control over IOS software. But this has not happened. As long as the appeal decision is valid, Apple’s control of IOS looks more stable than ever. According to the ban, Sweeney’s only way to hurt apple is to let developers leave with a commission.
Apple is particularly dependent on large developers like Epic Games because they have enough profits to pay a 30% commission and generate most of the revenue for the app store. Most importantly, the court’s injunction is not limited to internal payment of games or applications, so it is unclear how many developers will leave Apple’s payment system. If this happens, Apple may be forced to permanently abandon the commission system.
So far, this does not seem to have happened. The reaction of most developers is ambiguous, and some developers seem to think that there is no point in paying outside Apple’s system. However, as the actual changes will take months to show, developers may continue to wait and see if the new system is worth using. But after the latest ruling gives many possibilities, more people will be interested in exploring their options. (reviewed by Tencent technology / Jinlu)