No, they don't. As we both agreed, they certainly spend money to maintain the platform. Far more than Spotify would. And Apple would also have to pay to be on the Play Store which covers most of the market.
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Apple’s DMA malicious compliance explained.
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Not sure I understand. Are you saying:
Apple have higher costs with Apple Music than Spotify do with their infrastructure?
That developing / maintaining the iOS platform has greater costs than Spotify's audio streaming platform?
That Apple spend more maintaining iOS than Spotify would if they ran iOS?
Something else?
Yes.
Yes.
No.
You claimed that Apple keeps 100% of the revenue from Apple Music. That's obviously nonsense. They have expenses to maintain the platform.
Why does Apple have higher costs with Apple Music than Spotify does? Wouldn't that just imply poorer operational efficiency? If Apple Music has more customers, then its costs would scale somewhat, but its revenues would scale even more (it's clearly better to have more subscribers than less).
Obviously iOS costs more to maintain than Spotify. It's an operating system, that supports hundreds of services like Spotify. It's not a meaningful comparison.
Yes, obviously. My point was that Spotify have comparable expenses in terms of running a streaming service. It's just that whilst Apple gets to keep 100% of its Apple Music revenue, Spotify would have to give 30% of their income to Apple first. Surely its not a contentious point to argue this puts them at disadvantage?
Apple is merely hosting the app on their store; the streaming infrastructure is all Spotify's. Apple obviously deserves something for the overheads of running its store. But unlike e.g. Sony, who subsidise the cost of PS5 hardware and recoup it through software sales, Apple already makes huge profits of the iPhone itself. So their store cut doesn't need to be so greedy.
Because Apple pays for the platform it runs on and Spotify does not.
Not the point. The point is that Apple invests in the platform and Spotify benefits from that investment. It isn't unfair for them to compensate Apple.
Again, Apple doesn't keep 100%. The pay more for the platform that Spotify would by paying 30%. And again, they also pay the same as Spotify on android.
No, they aren't "merely hosting the app". That's a disingenuous argument. Apple provides and invests in improving a platform and developer support.
Apple has made it clear that the fees they charge aren't for "running its store." They're licensing fees to compensate them for their investment in creating and maintaining the platform, services, and developer tools.
Apple making profits elsewhere in their business is completely irrelevant.
This was in response to your assertion that “Apple have higher costs with Apple Music than Spotify do with their infrastructure”. You’re now conflating that with the costs of developing iOS itself, which as an OS, is likely to dwarf the costs of a streaming music service.
Sure, the question is what’s a fair level of compensation.
Not sure what you’re saying here.
They do a lot more than host an app, but there’s a lot of different costs and expenses getting mixed together. Developers pay fees. Customers pay a lot for iPhones. The App Store has adverts. Some level of store fee is obviously fair. There’s a danger of accounting for the same expenses multiple times though.
Set aside how the fees break down for the moment. Why would you take Apple PR at face value? It’s irrelevant ‘what they make clear’; they’ve got substantial skin in the game here.
My point was that Apple’s cut is likely too high, and they haven’t got the excuse of cross-subsidy. They already make a killing on the iPhone itself.
…and so are their costs. Apple incurring costs elsewhere (for „creating and maintaining a platform, services, and developer tools“) in their business is completely irrelevant.
You can‘t have it both ways and ignore Apple‘s profits elsewhere (than the App Store) as irrelevant - and at the same time insist their costs elsewhere are so relevant that they shall be compensated through App Store commissions.
I mean… you can obviously hold and voice that opinion - but it makes for an inconsistent argument.
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Apple Platform Expenses: Billions
Spotify Platform Expenses: 15-30% of Revenue of memberships initiated through the iOS app
Why is this unfair?
Your implication seemed to be that any platform fees were unfair.
I'm saying that Apple has different expenses than Spotify. Not zero expenses.
None of that's a thing. There is no need for costs to justify pricing.
That's just FUD. I didn't take non-existent PR at face value. I'm referring to court findings, specifically in the US and Dutch cases.
The don't need an excuse related to costs.. As pointed out many times, Apple's pricing is justified by comparing it to the competition.
All of that is irrelevant. Fair pricing doesn't have anything to do with costs or profits. Fair pricing is determined by comparing it to competition.
Of course it does - when there’s regulation that promotes (and partly regulates) fair pricing and economic terms - particularly with the argument of economies of scale that the DMA makes.
When there’s no competition to compare to (e.g. other application software stores on the same platform), we can‘t know if pricing is fair.
We first have to regulate other stores into existence.
Exactly. Which shows that Apple's pricing is consistent with pricing for platforms that don't have "gatekeeping power".
You keep comparing the expenses of a single app / service (Spotify) to the costs of the whole iOS platform. I don't see the point of this, other than to make Apple look good. It would be more relevant to compare the total expenses of iOS to the total revenue brought in via apps / subscriptions - which is likely orders of magnitude higher. It's not like Apple has to create a new App Store for each app - the costs are clearly spread over the marketplace as a whole.
Yet you have repeatedly justified Apple's developer tax in terms of how much it costs to run their platform. No one is saying Apple doesn't deserve to earn money - or even a lot of money. It's a question of how much is fair.
Ultimately, the argument boils down to whether one believes the market alone is able to determine a fair tax for selling apps / services on Apple's iOS platform. It's primarily a concern for developers and services, not consumers.
Apple's products are highly desirable to consumers, especially those with greater disposable income, so the App Store is likewise very desirable to sell into - by revenue, it has 2/3 of mobile app sales and 3/4 of mobile subscriptions. This means Apple can charge developers high commissions, with the only limit being that if they squeeze too hard, developers would gradually leave the platform. And if consumers could no longer get their favourite apps / services, iPhone sales would fall.
Some would say that because Apple has created a high quality product, which (rich) consumers overwhelmingly prefer, they deserve to milk every cent they can from developers - the spoils of their success. Those on the other side would argue that individual developers are in a weak position, because if they left, they'd only be ceding business to competitors. The only way they could have serious influence at this point would be to get together and threaten to leave iOS en masse (unionise, essentially). The problem with this a) this level of coordination is unlikely to happen, and b) even if it did, moving exclusively to Android would simply transfer the whip hand to Google. Hence the need for legislature to reduce the stranglehold of either platform provider by allowing for multiple marketplaces (amongst other things).
FUD's an acronym, and doesn't apply here. The PR is absolutely existent - you said "Apple has made it clear that the fees they charge aren't for "running its store"". Not that a court had agreed this is the case.
The point is that I am comparing the cost of creating the platform with the costs of accessing the platform. You keep saying that Apple has zero expenses for the platform (e.g. Apple keeps 100% of revenue.)
Absolutely not. I don't think costs justify pricing. I've said that repeatedly. My reference to costs was in response to your claim that Apple has no comparable costs to a potential Spotify commission.
There are a lot of people arguing that Apple charging a platform fee outside of a transaction fee is unfair. Your argument about Spotify certainly implied as much.
Exactly. And the way to determine if Apple's platform fee is fair is to compare it to other platform fees. Where they are certainly competitive.
I've think that a developer union would be a great response.
They could open their own store outside of Google's control on Android.
I disagree. You stated that my claim was based on PR to create doubt. It was not.
And Apple made it clear through the courts, not PR.
30% commission vs. Paddle's, Fastspring's, Microsoft's or Epic's 10-15% range suggests it is not.
None of them is a general-purpose operating system in a monopoly or duopoly market.
Gaming consoles aren't handhelds used by banks, transit companies and governments to provide services. And they aren't used for productivity applications in businesses.
Apple Music and the iOS platform are entirely separate entities. Spotify competes with Apple Music. Like Spotify, Apple Music's costs revolve around licensing and content delivery.
The costs of iOS platform development are a separate matter. As you say yourself, costs have nothing to do with pricing. It might be that e.g. a 5% tax on Spotify would cover Apple's costs; they charge 30% because they can.
What if iOS development and App Store costs were 100% (or more) covered purely from the profit of selling iPhone hardware? Would that change your position at all? Or would it still boil down to the fact that Apple is a business, and should maximise profits through all avenues?
What's the practical difference between a 'platform fee' and a 'transaction fee' anyway? What's a transaction fee for, ultimately, other than helping to pay for the platform? It's all money into the same pot; the accounting is a bit academic.
It's true that many stores take 30%, but the business models aren't necessarily comparable. For example, games console vendors charge licensing fees, but that's partly to offset the hit they take on selling subsidised hardware; there's no suggestion that's the case with iPhones. And even there, there's plenty of choice - console games are sold on new / second hand disks as well online. In fact, when Microsoft tried to make the Xbox One download-only (from a single MS store), it was a PR disaster, as customers recognised the obvious potential for being ripped off. Sony were quick to capitalise, and the XBone never recovered.
Why would you prefer this to legislation? Because you think it's less likely to actually happen?
We're talking about iOS here. Whilst moving solely to Android is the sort of choice a consumer can make, it's harder for a developer that needs to make a living.
Whatever way you cut it, you cannot imagine that Apple is unbiased. You would surely concede that regardless of the truth, Apple's lawyers would make exactly the same case?
How, by their lawyers making the claim in court? That's a distinction without much of difference.
It hasn’t become a talking point except among those who want to lower the quality of the Apple experience so they can slip their mediocre phishing and privacy violating software on to Apple devices. Most Apple users like not having to worry about being tracked by DoubleClick and the myriad of other electronic dossier companies who trade on personal information surreptitiously collected on computers and phones.
No matter what direction you turn, you are being tracked. Even Apple does it.
A walled garden does not stop tracking.
Users kind of know, but kind of ignore, that there is only one place to purchase iOS apps.
”Walled Garden” is still a pretty much unknown term.
btw - from Apple’s lawyers, iOS users using Apple core apps have no expectation of privacy.
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The main talking point outside of the MacRumors forums seems to be US iPhone users, dismayed they're missing out on the advantages of their EU counterparts. Perhaps it'll turn out to be a case of 'be careful what you wish for', but the regular consumer only sees upsides to increased freedom of choice.
Personally, I'm confident that Apple has the ability to implement the facility for multiple app stores, without iOS's security falling apart. I see no reason to doubt them, though they'll obviously resist doing so first.
If you cherry pick numbers that support your point, it doesn't really suggest anything other than you cherry-picked numbers.
And you're comparing store fees to platform fees.
You're arguing semantics here.
What if? I assume that's already true.
I never suggested Apple should maximize profits through all avenues.
It's just a description of the value received by the developer. Obviously, a fee for simply processing a transaction is going to less than a platform fee, because the value received is less.
Again, costs are irrelevant. Wasn't it you who said in this same post that the platform and the apps were completely separate?
No, I prefer it because it addresses problems in a meaningful way with both parties making compromises. And I'm certainly not against regulation in general. I just think certain regulations in the DMA are ham-handed attempts to address the wrong problems that will have negative effects on the market with clear issues, particularly around security, that the EU simply hand waves away.
Is it? Maybe that because of the choices that Apple made, instead of in spite of them. If you can't make a living with 4 billion potential android customers...
No, I would not expect Apple's lawyers to lie in court. Nor would I expect the judge to put lies into the findings of fact.
OK, so you:
Assume that iPhone sales already cover Apple's iOS development and App Store costs.
AND
That Apple Music has higher costs than rivals such as Spotify because AM has to partly finance iOS development / App Store costs.
AND
That Apple should still charge 30% commission on Spotify subscriptions, yet reject the idea that Apple should simply maximise profits.
Some of these seem mutually exclusive.
OK fair play. Transaction fee = payment processing fee. I don't take the position that the only costs involved in running a store are in payment processing.
To the price of things? So we're back to the idea that Apple should simply maximise profits. Fair enough, that's business 101, but you seem to bristle at this suggestion elsewhere.
Fair enough. I respect the concern around security. In my opinion it's being leant on hard by Apple for mostly commercial reasons, but there's pros and cons to every policy. I'm sure glad the Mac isn't as locked down as iOS, though care less about a phone OS, as I'm not going to be using it for work (aside from email / calendars etc.).
You think any business would like to lose 2/3 of its revenue? For better or worse, the money is on iOS. Though I take your point that there's a reason iOS is more popular (primarily, that Android is made by the world's biggest advertising company, and treats your data accordingly).
C'mon, there's shades here. Accounting can be looked at from all sorts of perspectives. It's not perjury if Apple make a claim about the way they see it.
Also, which Dutch court case are you referring to? This one: https://www.lexxion.eu/en/coreblogp...in-the-netherlands-a-potential-game-changer/?
Where the finding was "Apple suffered a loss in the Netherlands where a national court in preliminary relief proceedings struck down its attempt to block the remedies imposed by the Dutch competition authority following a finding of abuse of dominance. As a result, as of last weekend, Apple is forced to accept third-party payment solutions implemented in (paid) dating apps in the Dutch storefront of the App Store."
No.
That's the point: Apple's 30% commission has always been a "store fee" for Apple acting as an agent or "commissionaire for the marketing and delivery of the Licensed Applications to end-users".
"Apple shall be entitled to the following commissions in consideration for its services as Your agent and/or commissionaire under this Schedule 2:
(a) For sales of Licensed Applications to End-Users, Apple shall be entitled to a commission equal to thirty percent (30%) of all prices payable by each End-User"
👉 Commission on sales. Not platform fee. That's what their developer agreement clearly says.
Picking some of the biggest, most well-known services that offer handling sales of downloaded software applications isn't cherry-picking.
Referring to limited-use gaming console platforms or brick & mortar stores is comparing apples to oranges.
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The difference, of course, being that Apple isn’t selling you the way Google and Facebook do.