At the heart of Epic Games ’ example against Apple is the company ’s 30 % App Store mission and its branding iron dominion over in - app purchase . We now know , thanks to internal document unearthed through the Epic ’s case , that Phil Schiller , the top executive director in bursting charge of App Store , had floated the idea of cutting its notorious Apple revenue enhancement to as low as 20 % way back in 2011 .
“ Do we intend our 70/30 split will last forever ? ” Schiller compose in an email to then CEO Steve Jobs and Eddy Cue , Apple ’s aged vice president of internet software and divine service . Theemailwas include as part of Epic Games ’ evidence against Apple on Monday and was first report byBloomberg . “ While I am a staunch supporter of the 70/30 split … I do n’t think that 70/30 will last that unaltered evermore . ”
Schiller goes on to say that he believed that Apple would finally face competitor from rivals , but that any modification to Apple ’s commission would have to come in “ from a position of strength rather than helplessness . ” He then suggested that such a change could happen once Apple began make over a $ 1 billion yearly profit from the App Store . So long as Apple could potentially hold that $ 1 billion profit , Schiller then suggest possibly cutting the so - called Apple taxation to 25 % or even 20 % . Also included in the email is a link to a2011 Wall Street Journal clause , which center on how developers could potentially use HTML5 to avert in - app transactions in the App Store .
Apple executive Phil Schiller arrives for Monday’s hearing in the Epic Games v Apple case.Photo: Noah Berger (AP)
“ I know that this is controversial , ” Johann Christoph Friedrich von Schiller concludes . “ I just tee it up as another way to look at the size of the byplay , what we want to achieve , and how we stay competitive . ”
For its part , Apple told Bloomberg that Schiller did n’t in reality say the App Store was gain $ 1 billion in 2011 , and that there ’s no indication that “ the fee body structure is tie to the profit produced by the App Store . ” The report also cites Epic ’s good witness as estimating the App Store ’s net tolerance at some 80 % . A disjoined Bloombergreportnoted that analytics house Sensor Tower had count on the App Store made $ 22 billion from commissions last year . It does not take a mathematical genius to suss that number is well over the $ 1 billion Schiller suggested a decade ago .
The email is n’t quite a smoke gun , but it does show that at least Schiller had mulled the idea of bring down rate to be competitive . It also indicates Apple was aware that its commission rate was n’t well-founded in the long streak — and technically speaking , Apple has tweaked how much it in reality charge developers . The 30 % commission rate is still the touchstone , but in 2016 , Applelowered its cut to 15%after the first twelvemonth for app developers with long - condition paid ratifier . ( This is part of Apple’sdefense against Spotify . ) Then in November , Apple againannouncedit would reduce commissions from 30 % to 15 % for developers who earned less than $ 1 million the previous calendar year . Unsurprisingly , the move wasnot apprise by Apple ’s critic — peculiarly larger developers with profits well above the $ 1 million thresholds .
Epic Games ’ effectual beef with Apple has beendramatic from the get - go , and that has n’t exchange now that the tribulation has officially kicked off . The first day of audition wasa technical catastrophe , and the whole matter is expected to last just about three weeks . Each company is expect to bring astacked list of expertsto plead their case , and both Epic CEO Tim Sweeny and Apple CEO Tim Cook will also prove . This e-mail is likely just one of the first among many salvos , so buckle up . It ’s about to get messy .
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