Epic Games Won Apple’s Case The Reasons It Wasn’t Worth it It

The highly anticipated decision in Epic v. Apple’s antitrust case was issued by Judge Yvonne Gonzales Rodgers on Friday. The judge ruled in Apple’s favour, declaring the company not a monopoly and ordering Epic Games, maker of Fortnite, to pay Apple 30% of its revenue generated by the implementation of an in-app payment system (IAP).

Still, Judge Gonzales Rodgers had harsh words for Apple, especially about the company’s anti-steering provisions, which prohibit developers from pointing customers to other ways to pay for subscriptions or transactions, were a violation. An injunction was issued by her that prohibits Apple from:

Developers are prohibited from: (i) including within their apps, their metadata buttons or any other calls to actions that direct customers towards purchasing mechanisms in addition to In App Purchasing; and (ii), communicating with customers via points of contact acquired voluntarily by customers through their account registration within their app.

That is similar to changes Apple made recently to settle a developer lawsuit, as well as an investigation by the Japan Free Trade Commission. Apple stated that it will allow readers to add a single link where they can manage and set up their accounts. Developers will be able to contact users by email regarding alternative payment options.

However, in this instance, Judge has made it clear that developers must be free to tell their users about other payment methods, including within their own apps.

Let me be very clear: I believe that this decision is correct. In just one paragraph, Judge fixes the worst problem with Apple’s regulations. However, nothing will be changed beyond that. Judge Gonzales Rodgers stated that Apple doesn’t have a monopoly in mobile gaming transactions.

Epic was clearly overreaching, just as Judge said in her ruling. It also sought major changes, not on behalf of other developers, but for its own benefit. This was a billion-dollar company suing a trillion-dollar company over how much money is a fair cut of the sale of virtual goods in a video game.

Epic was not just trying to lower Apple’s pay, but it also wanted to be the intermediary to charge other developers a commission. This was a case Epic did not want to be made.

The thing is, it shouldn’t have required a lawsuit for Apple to see that its rules were costing it far more than whatever it might lose in commissions. This was an extremely bad image that could not have been avoided in terms of user experience and developer relations.

Imagine if Apple had, as Phil Schiller suggested years ago, lowered its commission, say to 15 percent. Imagine if Apple had actually decided to run the App Store as an income-neutral business and lowered the commission rate as transactions increased. This would cover expenses.

If Apple decided to allow developers to use alternative payment methods provided that they offer the same security level and privacy protections as Apple’s IAP, imagine what it would look like. There is no doubt that Apple’s IAP would be preferred by many, if not all of them.

Because it’s integrated so seamlessly, people can trust that their credit card details will not be stolen if they pay using Apple’s IAP. It doesn’t matter if Apple is already used to paying for services, many people will not bother changing their payment method.

Apple instead has been fighting developers and found itself at the end of antitrust suits. Apple is currently facing legislation and regulation around the globe. It is difficult to imagine how small adjustments could have any impact on Apple’s highly profitable services division.

However, it has been costly for the company to not listen to developers and users and to make adjustments to its business model. This was something even its executives recommended years ago.

This is the main lesson: Apple’s insistence on refusing to make changes seems almost to have nothing to do it with customers. It looks almost like hubris on the outside. Hubris can make you appear bad and cause you to make poor decisions, which are often costly.

Inc.com columnsists’ opinions are not the views of Inc.com.

Publited Fri, 10 Sep 2021 at 20:33.29 +0000

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