Apple's Legal Battle with Epic Games: Major Changes for iPhone App Store

The Supreme Court decision means major iPhone app change is on the way

The U.S. Supreme Court effectively upheld a lower court's ruling that Apple must allow third-party iPhone app developers

to point customers to their websites when making purchases. This means the company is forced to drop its anti-steering rule for such applications

A major change. It's the primary result of Apple's long-running legal battle with Epic Games

Well, the Supreme Court didn't technically rule on it, but they declined to pick it up as a case

which upheld what the lower court ruled. With the court's decision or rather lack of decision

Apple finds itself out of legal options. Now the company must allow developers

to notify customers that in-app purchases can be made on their websites as well as in the app store

Apple fought the change tooth and nail because it'll be much harder to collect

a 15 to 30% commission on purchases made outside the app store

So on the surface level, this sounds good. You know, if this is something Netflix caused a big stink over because they didn't

want all like 30% of every Netflix subscription to go to Apple instead, it's all well and good

because now they can tell people if you're, if you open the Netflix app, hey, you can sign up on

Netflix.com. You don't have to go to the app store, right? Well, not really because there are a lot

of restrictions. Apple developed, Apple very quickly updated their developer guidelines with all the

additional rules. And they largely followed the playbook of, I think, how this works in like the Netherlands

and like Japan and other countries where this has been ruled on as well

There can only be one single link to one URL inside the app

The link can only appear in one fixed place, not on any pop or any modal dialog boxes It you know so it not like you go to the checkout page and the thing pops up and it like hey you can go on the website instead Now it has to be a fixed part of the app

When you tap on the link, a pop-up will appear, which says, you're about to go to an external website

Apple is not responsible for the privacy or security of purchases made on the web

Tim Cook recommends you don't do this. Any accounts or purchases made outside the app will be managed by the developer

Your app store account, store payment method, and related features such as subscription management and refund requests

will not be available. Apple can't verify any pricing or promotions offered by the developer

Continue or cancel. You want to spend money on the internet with your credit card

They also have a picture of like a skull next to it, doesn't it? Like a red skull dripping with blood

And blinking. With red and glowing eyes. And the best part is Apple still expects developers to pay a commission

So the 30% or 15% tax is only brought down to 27

or 12%. And it's on the developers to just make these payments to Apple

And if Apple doesn't think you're being honest, they are allowed at any time

to ask you for an audit of all your transactions and your payments to Apple

And if you don't comply, they can just remove your apps from the App Store or revoke your entire developer account

Well, that's the part I thought was most interesting out of all this. I mean, we knew that Apple wasn't going to give developers

a big savings over this anyway. But they're moving from a we pay you, what we owe you model, where we deduct our fees on the front end to now it's essentially an honor system

That is a massive shift for any, and a huge incentive for any developer, unscrupulous developer who wants to try to game the system

Because think how many millions of developers there are. They could all just move to their own payment systems And what is Apple going to go after all these small developers They go after the big ones but the small ones are going to be incentivized to basically lie to Apple and how much they

actually selling, which is not a good thing as a huge Apple stockholder. I don't like that part

But I am happy that people have the freedom to do this now. And, you know, it's funny, I'm a YouTube

I think they call it YouTube Premium Now subscriber. And what people are

People, I think regular people don't realize is how much extra Apple tax you're paying when you subscribe to things via Apple, via the app itself, right

In app payment. Like I was paying some low sum for YouTube premium and they wanted to market up to like $18 a month, which I was like, holy now, that's a huge increase

And then I realized, oh, they're working in the Apple fee into that price. If you go to Google directly, it's much cheaper

And I think a lot of people don't realize this. So for consumers, this could be a good thing

But I think tons of developers are going to lie to Apple about how much they're actually making

If you, I'm not, I'm certainly not encouraging people to do that

But a lot of people when it comes to money are maybe not going to lie outright and say

oh, we didn't make any sales. But they'll probably adjust how many sales did we actually make

Like Apple's not going to receive everything that they're due. So this is going to mean less revenue for Apple

and the App Store, I think. If you're moving to an honor system, that is. Yeah, the thing is, this is a solution that nobody is happy about because Apple isn't

happy that they have to concede even a single penny of the 30% that they like to take

Developers are furious about this. Like, I've seen a lot of independent developers, Brent Simmons, you know, et cetera, et cetera

like going on about how this is basically changes nothing and this isn really giving them anything Like saying that developers have the freedom to go outside the app store is a very generous use of the word freedom And the thing is the U government isn going to be like

the regulators who are breathing down Apple's neck aren't going to be happy about this either

because Apple isn't following the spirit of the ruling whatsoever. You know, reducing their tax

by only 3% is crazy, and it's just going to prolong this battle. Like, what is Apple's end game here

they seriously think that all of the regulators who are like watching their every move

are going to be like, oh, yeah, yeah, that's good enough. All right. I mean, look

Good job, Tim. I'm no legal professional. But if you can't win, you delay is what I've heard

And that's what they're doing here. And also, they are, it seems, going along with the letter of the law

The complaint was we want to use alternate payment systems. And Apple said, oh, okay, here you go

you can try this. It's going to benefit you in no way. It might even be more onerous than the current way that we do things. And we still want all the money that we think that you owe us. Which is funny because I remember when Steve Jobs first introduced the Apple store and his argument was, oh, well, we're taking 30% and people were not happy about that huge cut, obviously. But he was like, well, we run the store. We take the payments and we do all this stuff for you. And I think a big part of that was, oh, we manage all the payments

and we pay you and now that's being removed. They're like, oh, we still want the 27%

You can, we'll give you a 3% discount because that's how much payment platforms

typically charge, but we still want a majority of VARCut. So they're going to make, they're going to structure this in a way where they are

they are, they are going along with the ruling, but only to the degree that they

absolutely have to, like they're going to do as little as possible