Cover photo by App Store website
Regulations are all over the internet. From the availability of apps to be in either the Apple App Store or the Google Play Store or even perhaps both, to the requirements and guidelines outlined of specific apps as to how the users should behave within their platforms, rules are used to maintain and protect the users of the digital world. While some platforms may be stricter than others, all of them are attempting to maintain a safe space in their own unique ways. Despite this, not all practices used to regulate and protect are considered good or beneficial to users. One of the most prominent discourses over regulation during our time is the ongoing dispute between Apple and Epic Games over Apple’s App Store guidelines, particularly concerning their rules for in-app purchases.
As some of you may already know, both Apple and Epic Games are fighting a legal battle over some of the guidelines imposed by Apple on their App Store (more details can be found here). More specifically, Epic Games is fighting for the reduction of the 30% cut that Apple takes from every in-app purchase as well as app developers having the ability to route users to an outside payment system. Up until now, this cut was a given if you were to distribute your application through the App Store and offer in-app purchases. But this mentality changed once Epic Games decided to violate Apple’s terms of service (Apple Guidelines Section 3.1.1) by providing users with external payment methods for the alluring in-game currency known as “V-Bucks”. This move on Epic Games’ part resulted into the major lawsuit of Apple vs. Epic Games that we have come to know all throughout the internet. But how does this lawsuit and violation of Apple’s Terms of Service tie into the many other regulations that Apple has put in place in its App Store?
The guidelines that Apple has put in place are meant to, like other guidelines across the internet, protect the users from malicious actors. But how does outlawing external payment methods protect Apple users? The main concern comes from Apple’s inability to verify external payment sites. What to say that the payment site that an application endorses is malicious and results in stolen information or digital theft? Because of this, Apple encourages and enforces the use of in-app purchases through its App Store, and as such, takes a 30% cut from all purchases made. Now more than ever, developers are advocating for a reduction of Apple’s aggressive 30% cut or a third-party marketplace to compete with Apple’s App Store. Epic Games, by directly violating the App Store guidelines, braced itself for a legal battle in hopes of turning disturbing what Epic Games and other app developers consider a monopoly in Apple’s ecosystem.
Although it this is not the case for the majority, some apps are able to offer alternative forms of payments enable them to bypass Apple’s 30% fee. This method consists of disabling the ability for customers to purchase things or services directly through the App Store, however, the App must have no mention or reference within its app to its own payment system. By employing this method, an app loses the potential to acquire a wider range of customers but at the same time, bypasses Apple’s cut resulting in cost savings. This method can even be seen used by one of the most popular music streaming apps, Spotify. Rather than having the ability sign up for a premium account from inside the app, Spotify only mentions that there is a premium version but makes no mention of where to sign up. This way, Spotify avoids the Apple fee but loses what could become many more paid subscribers.
But what would be the outcome if the regulations enforced by Apple were to be ruled harmful for developers and consumers? If what Epic Games is pushing for becomes a reality, a new way of downloading applications would come about. Instead of the App Store being the sole marketplace for applications on iOS devices, many different marketplaces would start to appear making it easier to install applications which Apple does not allow onto its App Store and more competitive in terms of pricing for app developers. This would not only offer Apple’s users more flexibility but would even allow many apps that already offer in-app purchases to lower their prices as a result of more competition, and in turn, lower fees to be paid by app developers. Thus, Apple’s monopoly and walled garden on available apps would be broken. On the other hand, allowing unknown applications and marketplaces to be installed onto users’ devices poses a risk a great risk which Apple has been able to ward off so far.
As with anything, there is always a trade off. By allowing users to have more control over their devices, it allows for more errors to be made resulting in far less security, something which Apple has been known to maintain over the years for its customers. Users could potentially download malicious apps or app marketplaces putting in jeopardy their devices and sensitive information. Apple would no longer be able to withhold and protect the information and security of their customers on the devices which they manufacture.
Through their guidelines and rules, Apple has taken care and protect the information and devices of many of its users. However, many see Apple’s practices as monopolistic and dangerous towards a free market. Considering Apple’s dominance of the smartphone world as well as massive presence in the tech world at large, the legal proceeding following the Apple vs. Epic Games lawsuit will have massive effects on the tech industry. The outcome of the lawsuit will potentially create one of two likely outcomes, either Apple wins in which case other application marketplaces like the Google Play Store will continue to enforce a 30% fee on all in-app purchases and may perhaps become more strict due to a court precedent on their side. The other potential outcome is that Epic Games wins and as Apple is forced to either introduces the ability to install apps from other marketplaces and/or lower its fee for in-app purchases. In this later case, competition for application marketplaces will start flooding iOS devices leading to more apps available with perhaps cheaper pricing because of competition for customers in the form of app developers.
The lawsuit between Apple and Epic Games is one that will have tremendous consequences in the world of regulations and will undoubtedly affect those in and outside the iOS ecosystem. The ruling has the potential of impacting the future of app markets as we know them in and out of the iOS ecosystem. Needless to see, this is one of the most important lawsuits that will undoubtedly show its fruits not too far into the near future so be ready.