Apple: We didn't take commission on 90% of App Store sales and billings
(2021/06/05)
- Reference: 1622845388
- News link: https://www.theregister.co.uk/2021/06/04/apple_vs_epic/
- Source link:
Comment Apple and Epic Games have delivered their [1]final arguments in their California bench trial , but Cupertino is still ratcheting up the charm offensive, revealing the App Store [2]"facilitated" a 24 per cent hike in billings and sales in 2020 to a record $643bn.
The data comes via a [3]study [PDF] from economic consulting outfit The Analysis Group commissioned by Apple. Some of its findings addressed the points of contention raised during the bruising trial with Epic Games.
For example, Apple was forced to defend its anti-steering provisions, which prohibit software developers from pointing to alternative payment methods beyond the walled garden of the App Store. In practice, this means app-makers cannot mention or reference their own payment gateways, where they can process transactions without providing 30 per cent of their revenue to Apple.
[4]
The report noted that 90 per cent of total billings and sales occurred beyond the App Store, where Apple would not have been able to take a cut.
[5]
[6]
Looking at the data, this seemingly included sales of physical goods and services, where Apple didn't charge a commission, and companies (like Amazon, Uber, and Lyft) that have developed apps specifically for iOS users are "allowed" to use their preferred payment gateways.
During the trial, [7]Apple Fellow Phil Schiller distinguished physical goods from virtual ones by noting the firm was unable to guarantee delivery of the former.
[8]
Physical goods and services accounted for the overwhelming majority ($511bn) all of the total "facilitated" app revenue, up 24 per cent from a year ealier. Some $86bn came from digital goods and services, up 41 per cent, with the remaining chicken feed coming from in-app ad sales, which accounted for $46bn and was 4 per cent higher year-on-year.
Apple has tried to link these figures to the earnings of small software developers, highlighting its decision to [9]drop its commission rates from 30 per cent to 15 per cent on small-volume devs in November last year, and pointing to a chart detailing close to three-times growth in earnings for app-makers who make "under $10m a year" since 2015.
But again, that might be misleading as no base figures were given - in fact the "small developer chart" (fig 1) included no financial values at all - and, as the Apple itself noted, the number of small devs increased by 40 per cent in these years.
[10]
The Analyst Group further broke down the $643bn figure by category into general retail, travel, food delivery, and so on. Predictably, general retail sales (like those from Amazon) accounted for the vast majority of physical goods and services revenue, totalling $383bn.
This is no surprise. With most brick-and-mortar stores shuttered around the world, and some regions limiting what supermarkets could sell, the only real option was to head online.
The little guys? Not quite
And it was the big players who benefited here, as demonstrated by [11]Amazon.com’s top line for 2020 , where revenues jumped more than [12]34 per cent to $215.9bn . Other large online retailers, like JD and Walmart, also had bumper years.
It's fair to say that it’s most likely the intrenched retail players with apps on the App Store who benefited last year.
Similarly, the third-largest category, food delivery, is dominated by a handful of large companies, like Uber and Deliveroo. This is a space where smaller vendors are unable to compete. You need a vast moat of venture capital behind your back, as well as the stomach to withstand consecutive years of losses.
Criticism
A post by iPhone software dev and web dev Marco Arment showed that some developers were unhappy about the implications of the report.
He [13]complained yesterday : "If Apple wishes to continue advancing bizarre corporate-accounting arguments, the massive profits from the hardware business are what therefore truly 'pay the way' of the App Store, public APIs, developer tools, and other app-development resources…"
He continued: "Apple further extends the value argument, and defends their justification for forced commissions, by claiming responsibility for and ownership of the customer relationship between all iOS users and each app they choose to use."
He concluded: "At WWDC next week, these same people are going to try to tell us a different story."
This isn’t the only piece of App Store fluffery Apple has published in recent weeks. In May, at the heart of the bench trial with Epic Games, it published a report claiming it [14]stopped $1.5bn worth of fraudulent or suspicious transactions during 2020.
Apple has been repeatedly pressed to justify the 30 per cent cut on its larger developers, and pointed to the safety and security measures in the App Store, as well as other technologies, [15]like the Metal graphics API.
In 2020, Congress [16]estimated Apple’s costs of running the App Store amounted to just $100m, with annual global revenues of $15bn. ®
Get our [17]Tech Resources
[1] https://www.theregister.com/2021/05/26/the_epic_vs_apple_trial/
[2] https://www.apple.com/uk/newsroom/2021/06/apple-developers-grow-app-store-ecosystem-billings-and-sales-by-24-percent-in-2020/
[3] https://www.apple.com/newsroom/pdfs/apple-app-store-study-2020.pdf
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2021/05/18/apple_phil_schiller_epic_trial/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2020/11/18/apple_to_halve_commission_for_small_devs/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2021/02/03/amazon_fy2020_results/
[12] https://ir.aboutamazon.com/news-release/news-release-details/2021/Amazon.com-Announces-Fourth-Quarter-Results/
[13] https://marco.org/2021/06/03/developer-relations
[14] https://www.theregister.com/2021/05/12/ios_lock_in_epic_trial/
[15] https://www.theregister.com/2021/05/18/apple_phil_schiller_epic_trial/
[16] https://www.youtube.com/watch?v=1s1uWo1_bzg
[17] https://whitepapers.theregister.com/
The data comes via a [3]study [PDF] from economic consulting outfit The Analysis Group commissioned by Apple. Some of its findings addressed the points of contention raised during the bruising trial with Epic Games.
For example, Apple was forced to defend its anti-steering provisions, which prohibit software developers from pointing to alternative payment methods beyond the walled garden of the App Store. In practice, this means app-makers cannot mention or reference their own payment gateways, where they can process transactions without providing 30 per cent of their revenue to Apple.
[4]
The report noted that 90 per cent of total billings and sales occurred beyond the App Store, where Apple would not have been able to take a cut.
[5]
[6]
Looking at the data, this seemingly included sales of physical goods and services, where Apple didn't charge a commission, and companies (like Amazon, Uber, and Lyft) that have developed apps specifically for iOS users are "allowed" to use their preferred payment gateways.
During the trial, [7]Apple Fellow Phil Schiller distinguished physical goods from virtual ones by noting the firm was unable to guarantee delivery of the former.
[8]
Physical goods and services accounted for the overwhelming majority ($511bn) all of the total "facilitated" app revenue, up 24 per cent from a year ealier. Some $86bn came from digital goods and services, up 41 per cent, with the remaining chicken feed coming from in-app ad sales, which accounted for $46bn and was 4 per cent higher year-on-year.
Apple has tried to link these figures to the earnings of small software developers, highlighting its decision to [9]drop its commission rates from 30 per cent to 15 per cent on small-volume devs in November last year, and pointing to a chart detailing close to three-times growth in earnings for app-makers who make "under $10m a year" since 2015.
But again, that might be misleading as no base figures were given - in fact the "small developer chart" (fig 1) included no financial values at all - and, as the Apple itself noted, the number of small devs increased by 40 per cent in these years.
[10]
The Analyst Group further broke down the $643bn figure by category into general retail, travel, food delivery, and so on. Predictably, general retail sales (like those from Amazon) accounted for the vast majority of physical goods and services revenue, totalling $383bn.
This is no surprise. With most brick-and-mortar stores shuttered around the world, and some regions limiting what supermarkets could sell, the only real option was to head online.
The little guys? Not quite
And it was the big players who benefited here, as demonstrated by [11]Amazon.com’s top line for 2020 , where revenues jumped more than [12]34 per cent to $215.9bn . Other large online retailers, like JD and Walmart, also had bumper years.
It's fair to say that it’s most likely the intrenched retail players with apps on the App Store who benefited last year.
Similarly, the third-largest category, food delivery, is dominated by a handful of large companies, like Uber and Deliveroo. This is a space where smaller vendors are unable to compete. You need a vast moat of venture capital behind your back, as well as the stomach to withstand consecutive years of losses.
Criticism
A post by iPhone software dev and web dev Marco Arment showed that some developers were unhappy about the implications of the report.
He [13]complained yesterday : "If Apple wishes to continue advancing bizarre corporate-accounting arguments, the massive profits from the hardware business are what therefore truly 'pay the way' of the App Store, public APIs, developer tools, and other app-development resources…"
He continued: "Apple further extends the value argument, and defends their justification for forced commissions, by claiming responsibility for and ownership of the customer relationship between all iOS users and each app they choose to use."
He concluded: "At WWDC next week, these same people are going to try to tell us a different story."
This isn’t the only piece of App Store fluffery Apple has published in recent weeks. In May, at the heart of the bench trial with Epic Games, it published a report claiming it [14]stopped $1.5bn worth of fraudulent or suspicious transactions during 2020.
Apple has been repeatedly pressed to justify the 30 per cent cut on its larger developers, and pointed to the safety and security measures in the App Store, as well as other technologies, [15]like the Metal graphics API.
In 2020, Congress [16]estimated Apple’s costs of running the App Store amounted to just $100m, with annual global revenues of $15bn. ®
Get our [17]Tech Resources
[1] https://www.theregister.com/2021/05/26/the_epic_vs_apple_trial/
[2] https://www.apple.com/uk/newsroom/2021/06/apple-developers-grow-app-store-ecosystem-billings-and-sales-by-24-percent-in-2020/
[3] https://www.apple.com/newsroom/pdfs/apple-app-store-study-2020.pdf
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2021/05/18/apple_phil_schiller_epic_trial/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2020/11/18/apple_to_halve_commission_for_small_devs/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YLtLPqWerhECyqCWTPNTOwAAAFg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2021/02/03/amazon_fy2020_results/
[12] https://ir.aboutamazon.com/news-release/news-release-details/2021/Amazon.com-Announces-Fourth-Quarter-Results/
[13] https://marco.org/2021/06/03/developer-relations
[14] https://www.theregister.com/2021/05/12/ios_lock_in_epic_trial/
[15] https://www.theregister.com/2021/05/18/apple_phil_schiller_epic_trial/
[16] https://www.youtube.com/watch?v=1s1uWo1_bzg
[17] https://whitepapers.theregister.com/
Re: Charm offensive
mevets
The charm offensive isn't for the judge; it is for the politician that will over ride the judge. It isn't whether or not you bribe, it is how you maximize your influence to the point permitted by law.
Re: Charm offensive
razza
True. A vile and filthy business it is to, but still...
This is a biggie though for the future of the web and Apple lose whatever the result. U cant hide from web-apps Apple. They are here, we all use them daily and the walls of your 2000's-style walled garden crumble to the trumpeting sound of the next-gen telling you that ur bullshit post-hippie bollocks is out of date, Grandpa.
You are old tossers. We are the new tossers. Our toss is fresh and more suited to the next-gen.
"They’re selling Hippie wigs In Woolworths"
Walled Garden
Schultz
So Apple tries to defend their walled garden (think Disneyland), where everybody entered by their own volition and is happy to pay in FantasyPark money (we'll take it from your credit card with a 30% markup, thank you). Only the garden is more like a market place, where the evil count taxes every trade and has his goons ensure that nobody deals on the side.
Most modern societies did away with arbitrary taxation by local powers. Remember that the opposite was quite common throughout most of human history: you could be born with the right to tax (or be taxed, go complain to your villager parents), you could buy or bribe your way into the position of a for-profit tax collector (doesn't everybody love Julius Cesar), and you could even buy a monopoly from fairly modern governments, e.g., guaranteeing your income whenever someone would light a match. Didn't create all too stable societies though and came at a cost to the economies.
Charm offensive
I don’t think Apple are doing themselves any favours with this charm offensive trying to look like they are the good guys. It looks like the Judge has already seen through this with his question on apps like Epic’s subsidising the free apps. Yet still they continue this strategy.
15% on app makers who are below a certain revenue level does not look like helping smaller app makers it looks like they are ripping off the bigger ones. An app maker on 30% who generates twice the revenue of an app maker on 15%. If they were charged the same % of revenue generating twice the revenue gives Apple twice the money taking 30% means Apple get 4 times the money. The costs to Apple having the App in their store, security review etc are the same no matter how many sales there are.
Now 90% of transactions Apple don’t take a commission means that the app makers generating 10% are paying to support makers of apps that generate 90%. Looks like the few are subsidising the costs of the many. Some of those many are generating more revenue having an IOS app than Epic. Uber for one and Amazon way more than anyone else.
That does not make Apple look like good guys. It makes them look like dictators who with absolute control of the store can do what they like. Extort certain sections of the market gamers and game makers so other sections get cheaper or free apps.