Wednesday, September 9, 2020

World-famous iOS app developer Marco Arment highlights community sensitivities as Apple defends against Epic Games' antitrust complaint

By and large, Apple's strong response to Epic Games' antitrust complaint in the Northern District of California has been a PR win for Cupertino. What was widely quoted in the media is Apple's criciticsm of Epic "portray[ing] itself as a modern corporate Robin Hood," which is a similar metaphor to one I recently used when I wrote "Epic would have us all believe that they're idealistic freedom fighters, the Braveheart of the mobile app universe."

It's one thing to expose someone else's hypocrisy (please note that I'm neutral on the question of whether Epic actually sought a side letter that would have resulted in secret kickbacks or merely permission to do something everyone could have seen on the screen). It's a greater challenge to make one's point in an adversarial legal proces while steering clear of unintentionally belittling third parties.

The following Twitter thread by Marco Arment--a very successful app developer (of Instapaper and Overcast fame) who is clearly principled (he pulled a #1 app after 36 hours because it didn't feel right to destroy other people's revenue opportunities through an ad blocker) and who is every bit as thoughtful as he is outspoken--should give Apple pause (this post continues below the three tweets):

The last one of those three tweets shows that Marco Arment isn't going to be fooled by Epic into believing that they're fighting for people like him and me (actually, I can't compare myself to him as an app maker, though I obviously hope the game my company is going to launch in a matter of weeks is going to catapult me to his stratospheric heights).

But there's also much to be desired about the way Apple treats its developers, as those tweets show.

And I agree that Apple and its lawyers need to bear in mind that it's not just the court, the future jury and the mainstream press reading those pleadings and other court filings: the iOS developer community at large.

In yesterday's filing, Apple notes the following:

"For developers who offer only free apps, Apple receives nothing but the nominal annual fee. Indeed, of the almost $140 billion in sales facilitated by the App Store in 2019, more than $116 billion went entirely into app developers' back pockets."

The term "sales" in that passage is a bit vague: does this mean the combination of in-app purchasing, app download fees, and in-app advertising? Or does it also include purchases via Amazon, eBay etc.? Presumably not the latter, since "developers" aren't typically "merchants" and e-commerce transactions over the iPhone must be way bigger.

At any rate, the point Apple makes there is that revenues are--which is undoubtedly true--being generated on iOS without Apple always getting its 30% cut. The first release of my game is going to come with in-app advertising, while in-app purchasing will be added later --just for time-to-market considerations. The second release will come with IAP, but even then we're still going to generate ad revenues. As a result, the effective percentage of my game's revenues on iOS that Apple will get is going to be less than 30% (initially even 0%, apart from the $99 annual developer fee), and in the long run the percentage may be similar to the 17% the paragraph I quoted above suggests.

I don't think anyone in the developer community could criticize Apple for highlighting such numerical facts. But even if they get the numbers right, words matter. Marco Arment has a point that Apple may have gone a bit too far from the developer community's perspective in its efforts to counter Epic's story, which sounds like Apple does nothing and developers contribute everything.

Marco Arment sums Apple's legal argument up as "[d]evelopers' only value to [Apple's] platform is IAP commissions." That's a bit harsh on Apple, but it's true that the answer to Epic's complaint doesn't give credit to the community that enabled the famous "there's an app for that" commercial.

As for whether everyone plays by the same rules or the likes of Facebook are allowed to do things Apple wouldn't let Marco Arment or my company do, I haven't been able to form an opinion on that one yet, simply because my app company focuses on games (not social networks), and I have no reason to assume that Apple treats major games companies differently in the IAP context than everyone else. Google, however, may have special deals with large game publishers in place as Epic claims in its complaint over the Play Store:

"Google has reached at least one preferential deal with another mobile game developer, Activision Blizzard, and Epic believes that Google is using similar deals with other companies to allow Google to keep its monopolistic behavior publicly unchallenged."

As for how the developer community feels treated by Apple, Marco Arment knows a lot more about it than I do. On some other occasion I may talk a bit more about what I wish they could improve. I'd also like to point to this article by The Register on Apple wanting to hear from developers in that regard.

In very broad terms, what I've observed in recent years is that Apple does strongly push developers to maximize IAP and subscription revenues, and to utilize features of the latest iPhone models and iOS versions. But again, this is not the time and place for me to elaborate in detail, though I may do so on some other occasion--or maybe I'll fill out Apple's feedback form when I find the time (after launching my new game).

App Store Optimization (the equivalent of Search Engine Optimization) is already a widely used term. With all that's going on now, in courts of law, in the regulatory arena (see this Bloomberg report: "Apple App Store Draws New Scrutiny in Japan, Epicenter of Gaming"), and in the public debate, there's more focus than before on what could be broadly labeled App Store Governance.

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