Apple’s Response to the EU’s DMA: What Developers Need to Know

David Barnard:

Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat. Thousands of the world's best apps trust RevenueCat to power in-app purchases, manage customers and grow revenue across iOS, Android, and the web. You can learn more at RevenueCat.com. Let's get into the show.

Hello everyone and welcome to this impromptu panel of experts on the 24 hours of DMA compliance with Apple. I have not slept much, so please excuse any flubs.

 Jacob Eiting:

David, regulatory capture doesn't help you sleep at night like it does me?

David Barnard:

No. So those of you listening on the Sub Club podcast, this is a live recording Friday, less than 24 hours from the announcement of Apple's compliance with the DMA. So let's do a quick round of intros. Let's kick it off with Gabriel. I actually don't know Gabriel, so happy to learn a bit about Gabriel and Runway ML real quick.

Gabriel:

For sure. So Gabriel, one of the founders of Runway. We are a mobile release management platform. We work with medium to larger size mobile team. So I think a bit of an interesting perspective here and excited to chat with you all. Thanks for having me.

David Barnard:

Awesome, Nico.

Nico:

I'm Nico. I'm the founder of Adjacent, which is an early stage fund focused on the mobile ecosystem. So I invest in a lot of consumer subscription companies, prosumer subscription company and incredible infrastructure companies that support them.

David Barnard:

Jacob?

 Jacob Eiting:

I'm the chief poster here at RevenueCat. I've been-

David Barnard:

Biggest beard.

 Jacob Eiting:

I think by a mile and I achieved it all without regulation, which is really what's important. I'm excited to use the research of other people to add hot takes to what happened.

David Barnard:

I think everybody knows what RevenueCat does at this point, but give us 10 seconds.

 Jacob Eiting:

We help developers make more money and so Jens who in just a second and David and everybody internally have been scrambling the last 24 hours or whatever to figure out how and if developers can make more money with these changes. But we make infrastructure for processing payments on app stores and beyond. So it's been an interesting 24 hours for us.

David Barnard:

And Jens.

Jens:

Yeah, I'm head of product at RevenueCat and Jacob stole all my thunder. That's what we've been thinking about. Of course, what does this mean for RevenueCat the product, but then also again all of our customers because in the end that's what we're here for, helping developers make more money.

 Jacob Eiting:

Jens did spreadsheets, Nico did equations. So between Gabriel, David and I, we just have to do hot takes. It's going to be a fully informed session.

David Barnard:

All right, and then I'm David Bernard, growth advocate RevenueCat. So I host a Sub Club podcast, run the community, and I do a bunch of just random stuff like staying up all night reading European regulations to help our developers make more money and understand what's going on.

All right, so I wanted to kick it off with what is the DMA? So I'm going to just read a couple of highlights and we'll go around the horn to kind of fill in any details I missed. But essentially the Digital Markets Act, the DMA, designate certain large tech services as "gatekeepers", which must comply with the new obligations and rules by March, 2024. So that's why we're hearing the news yesterday is because the compliance was mandated as of March, but the gatekeepers were only announced six months ago, although most of the gatekeepers probably knew that they were going to be announced as gatekeepers.

And then just to give folks a taste, I'm going to read one of the provisions, a short one from the DMA. So this is on the provision for alternate in-app purchases and out of app payments. "The gatekeeper shall not require end users to use or business users to use to offer or to interpolate with an identification service, a web browser engine or payment service or technical services that support the provision of payment services such as payment systems for in-app purchases of that gatekeeper in the context of services provided by the business users using that gatekeeper's core platform services."

 Jacob Eiting:

I've already quit making apps.

David Barnard:

Hot takes. Let's go around the room. What is a DMA give it to us in simpler terms. Jacob, you start. I know you're going to be the spiciest take.

 Jacob Eiting:

Well, okay, so when was this passed? This was like 2022?

David Barnard:

All of '22.

 Jacob Eiting:

I still don't understand how the laws work in Europe. I ask every time I'm with a European person and it doesn't usually help, but this is an EU law, meaning it was passed in Brussels at the European Union level to regulate, I guess it's because it de-regulates commerce. Don't ask me about the politics of it, I don't really understand that. But essentially this was a regulatory move to essentially limit the power of a handful of mostly American companies and folks on the list are like Meta, Google, Apple, ByteDance I believe made the list and there's a couple others and it has a bunch of stuff across different verticals, but specifically there were provisions in here that were meant to hit at Apple's earned monopoly on the app stores, which there's been agitation from folks like Tim Sweeney at Epic and others that the 30%-

David Barnard:

Spotify especially.

 Jacob Eiting:

Spotify. Yeah, I guess in terms of the EU constituents, they're probably the biggest one that's complained that this is just highway robbery. It's unfair. We need the government to come in and Apple's not being forced by the markets to compete at a fair number here. And so my understanding is the DMA was meant to force Apple to respond to market demand. Well, I don't know, respond to what I guess respond to what European regulators wanted. So that's my take. Jens, can you give a slightly more balanced take on it? I don't know.

David Barnard:

As a European-

 Jacob Eiting:

You're the closest geographically to Brussels.

Jens:

I believe possibly my representatives had a say in this.

 Jacob Eiting:

Why did you vote for this Jens? Please explain that.

Jens:

So I think the positive take of this is obviously instilling competition, fostering competition in the payment space where you can basically say, well if you want an iPhone you have to go through Apple. And then the question is kind of like back in the day with Windows and the Internet Explorer, is there some kind of unfair tying going on of the store and device and the platform? So I think that's kind the intention. The intention is just more competition, provide alternative options so that there's some real choice going on where right now if you want to be on iOS, you have to be on the app store if you want to be on the app store, you have to use in a payment. So that is I think the positive spin.

 Jacob Eiting:

Create a market within iOS, right? Within?

Jens:

Exactly, exactly. Because obviously there is a market between iOS and Android and also if you look at iOS versus Android, Android has always had a bit of a different rule set. Even though Google over time has tried to I guess make Google play more of the only avenue and kind gotten closer to Apple's regulations, but certainly iOS is still the more locked down environment. So I think that's kind of the positive spin on the regulation itself, at least the intent of the regulation. Let's put it like that.

David Barnard:

Nico, Gabriel, anything to add to that summary of the intent and other provisions of the DMA?

Gabriel:

I personally leave the payment stuff to the experts. From our perspective, we're moving from a place where Apple has monopolized the paperwork and the extra sort of information you need to supply when you're submitting, releasing your apps, and that continues. There's just more of it. So it's seeming like with the installation sheets, the labeling that has to happen, is still very much controlled by Apple. There's more hopefully on the other side of all that extra work that you get out of it, but it's still comes with headaches and it's still very much controlled by Apple. We view it from that perspective, more work, more hassle, more paperwork and not fun stuff that comes with getting your apps out the door.

Nico:

I guess my overarching comment would be that I do believe that the EU likes to regulate and you can judge that one way or another. I think in this case specifically it does come with more options. So you can default to the status quo, which means it does not harm if you just consider where we are today, but then it opens up an alternative and I'm sure we're going to talk about that a lot and how good or bad it is and when it actually makes sense to opt for that. But I do believe that in this case actually there will be innovation coming from it, which is weird, right? Because usually EU regulation is maybe counter that and I think that in this case we will actually see some new things that are not possible today and I think that is a positive.

David Barnard:

We all probably agree the intent behind the DMA is good. I think a lot of our hot takes on the DMA being bad is more just the bureaucracy of it all. I mean personally and even professionally, I wish for more competition and more openness and everything else, and I think that was the intent of the DMA, but part of the reason I read that excerpt is that anytime you do regulate, it's such dense wording. You're trying to cover cases you can't predict and otherwise, but I do think this opens a door and I think to Nico's point and one thing to recognize too is this is the start of negotiations. This is not the end of negotiations. So as we talk through the details here, the EU is going to have a chance to say, "No Apple, actually we're going to fine you $2 billion if you don't change it in this way based on third party compass." Now that's going to be litigated over months and years, but this is a starting point, not the end point.

 Jacob Eiting:

Kind of skipped over summarizing what actually impacts the DMA like Gabriel was alluding to. There's kind of multiple parts of this. One is there's a whole new mechanism for deploying apps, essentially side loading, but it's very regulated, it's very controlled. It's not like enterprise distribution where you could just download an app that's signed with some kind of cert. There's this intermediary marketplace thing that they created which requires all these, we could do a whole podcast just on what it takes to create the marketplace. Then I think the second big pillar that's probably of concern for this audience is the new business terms. I think that's also up for debate. And then I guess thirdly there's, which would probably be my most exciting thing to talk about would be the Meta game of what's going to happen in the Meta strategy of the EU versus Apple versus Epic, et cetera.

David Barnard:

So we've got an overview. The DMA big European regulation, well-intentioned is going to absolutely change some things. This is a starting point. So now let's talk about Apple's response to the DMA because that is exactly how it's going to play out, is how Apple responded to the DMA. And then I think we can also intertwine some opportunities where the EU may actually force some changes that will create even more opportunity. So yeah, let's start with at a high level those three things. What are the big changes with marketplace? What are the big changes with fees and what are the other big changes that enables? Let's start with the most simple one then is the fees. And Jake, if you started that, so you can just-

 Jacob Eiting:

Choose Your Own Adventure. Choose Your Own Adventure in the European Union by Tim Apple can't wait.

David Barnard:

You can choose these new capabilities or you can default to the status quo.

 Jacob Eiting:

There's two new business models, there's the old business model and then there's the new business model. If you want to be distributed in one of these third party stores, you have to use the new business model. I think, correct me if I'm wrong, if I'm overstating, however, you cannot use a third party store and still use the new business model.

David Barnard:

Decision tree, step one.

 Jacob Eiting:

So every developer gets to make this choice. Do I choose the new business model or do I stay on the old business model? Apple has not indicated that this is a two-way door. David's got some rumors he's heard that maybe it's a two-way door, but we have not heard anything. And so I think the first thing is what is this new deal and is it good for developers or not?

Nico:

We've talked about this before also I think at different points that there's already been a trend of mobile first companies starting to move some of their conversions online to circumvent the Apple cut and that is a natural motion. There's been sweetheart deals with some of the bigger companies. So I think that this has been a long time coming and to me it opens up a lot of doors, but you can stick with what is there, but you also can opt into your own payment methods, which means a lot of payment companies will come after this RevenueCat will have some kind of role in it. And I think it is going to be interesting to understand what other options it opens up that were not suited for the existing Apple Store payments and specifically because I've been working with a few companies that are prosumer and have somewhere consumer applications distributed to their app store but then also have team functionality or B2B parts of their product.

And for those, it's always been really hard to move from a solo product to an actual multiplayer product. And I think specifically for that, this could be a game changer because if you can start adding seats and use your company's credit card on mobile to create company accounts, it is very different than having to do it with your Apple ID where you have your personal credit card and things like that. So I think it just opens up different alternatives. It won't make sense for everybody and I think the tricky part is actually figuring out for who it makes sense, but I do believe more options in this specific area are a good thing that will lead to innovation in terms of the types of products that we can charge for and how we can charge for them. I'm excited about it.

Jens:

So maybe it will be worth summarizing the new fee structure first. At first glance it kind of looks attractive because the numbers that you see first when you read through Apple's documentation are 10% and 17% that basically replace the 15 and 30% typical Apple cut. However, then when you read the fine print, it actually starts to get a little bit more murky. So firstly for the payment itself, Apple now charges 3%, so that means you end up at 13 and 20%-

 Jacob Eiting:

If you're using IAP.

Jens:

Yeah, exactly. If you're using an purchase,

 Jacob Eiting:

Which in that scenario that Nico is describing wouldn't be the case, right?

Jens:

Yeah, yeah, right.

David Barnard:

Let's take one step back. I think forming it as this decision tree is actually really helpful because then it separates all the different kind of models that you can blend and then we can go through the details of each of those models. So the first decision tree, as Jacob said was you can stay with the old or you can switch to the new, but one you switch to the new there's actually four separate models. And so let's start with the overview of those four models and then we'll dig into the details of each of those four models. So the first model is that you stay distributed through the app store and you keep billing with Apple, and that's what Jens was alluding to. So that one, we'll get into the details, but that's an option.

The second option is you can be on the app store and use alternative payments. The third option is that you can be in a marketplace with third party payments. And the marketplace app, we need to dig into that, but Marketplace app has all these different regulations and everything else. The fourth option is that you can actually be both in the app store and be on a marketplace app. And so it gets really complex and this is the part that I think is going to be maybe most helpful for the listeners today is breaking down these four different options and the benefits and drawbacks of each because this is the decision developers are specifically going to have to make. It's like, okay, if I accept the new terms, there's four Choose Your Own Adventures, what are the things that happen in each of these four so that I can make an informed decision on whether this could potentially be good for my business.

 Jacob Eiting:

Those aren't formal choices though, like they are with choosing the business model. That's like a thing you have to select. And then the other four, these are four things you can float between different techniques.

David Barnard:

Yeah. So then let's start with that first one and Jens that's where you were kind of at is that the very first option is that you accept these new terms, you stick with the app store, you stick with app store billing. So then what's the deal that you get by accepting these new terms but staying in the app store and staying with app store billing?

Jens:

If you do the math, you see that it's going to be basically the 30 and 15% that Apple standard rates dropped to 20 and 13%, so that means 20% instead of 30% for pickups and subscriptions in their first year and 13% instead of 15% for developers in the small business program and subscriptions from their second year. However, and that's kind of where a lot of the questions I guess come in. In all of these options, this core technology fee comes in and this core technology fee is 50 euro cents per first annual install per year once you've hit a million installs threshold.

And the interesting thing there that's very easy to miss if you're just reading how this metric is called, is that this includes not only I tap the button in the app store to install, it also includes app updates. So basically for any app that continuously ships app updates, you can kind of think about this as the number of people in the EU that have the app on your iOS phone. I mean that's basically what will count against this metric there. So obviously if you're a small developer who is nowhere close to hitting a million in downloads, basically you can ignore that, but as soon as you cross that threshold, it can become very expensive very quickly because again, that's a 50 euro cents for every install then after that threshold.

 Jacob Eiting:

You put some scale numbers on this Jens and a dock, how many EU iPhone users are there?

Jens:

I mean certainly between 100 and 200 million, probably something of that order.

 Jacob Eiting:

If you're an app that's beyond 1% or 2% penetration into the market, you're going to be in this range.

Jens:

Exactly. It's certainly not your average indie app, but there's definitely enough apps and I think this core technology fee, you can clearly read this as trying to dissuade bigger companies to go on this new model. Because for bigger companies it's going to get really expensive really quickly, and that is I think a little bit of the poison pill in this whole arrangement because that's just going to mean whatever it is going on a third party app store is probably just not going to be attractive for a big app because it's going to be really, really expensive to accept those new terms. And then any third party app marketplace won't have big apps, so therefore does that doom them already? But okay, maybe I'm kind of going too far into interpretation and we should zoom back out and look at the other three models that David outlined.

David Barnard:

Yeah, but before we move on to that one, and we talked about this a lot internally yesterday, and so Jacob, I want your take on this is that even if you're an indie accepting these new terms in the hopes of saving some money on Apple's fees, yeah, you save 2%, you do open yourself up to risk and I think that's the biggest thing for folks thinking about this is that offside chance, but if your app goes viral for some reason Apple features it. If you get a lot of press or whatever by signing up to these new terms, you risk that if you do grow your business, if something happens, you introduce a hot new feature, whatever happens, you're taking a lot of risk.

 Jacob Eiting:

We had a very interesting discussion yesterday about something, I think it's discussed a lot in society. It's like how do you quantify and deal with tail risk, right? How do you as a developer enter into a debate of, well, I can have 2% discount, which relative to Apple's 2% of 15 is not insubstantial. It's like maybe 12% or something of the whole amount of fees reduction, but now you're accepting this potentially catastrophic risk that if your app goes viral, which your app's not going to go viral, I can tell you that. I love you, I want you to be successful, but I can say to everybody, your app's not going to go viral and I'll be right 999 times out of 1000, but everybody's a temporarily embarrassed [inaudible 00:19:45] millionaire. So it's not very easy to think about this risk. We see a lot of apps here.

There are apps that we've done case studies with and look for them that have gone viral, that monetization wasn't their biggest thing. So they have a relatively low LTV, tons of downloads. This was the beauty of the old models. Apple bore all the costs, they took care of everything. This developer just shared their revenue at 15%, maybe 30, and it was all upside for them. Under this new model that could literally sink. I ran some analysis on situations like this with some customers of ours, there are customers millions of dollars in the hole on CTF, on the core technology fee.

I have to imagine Apple's not going to come take your company. I imagine they're probably going to have a, okay, this was beyond your control, whatever. But as a developer, it's going to happen. Somebody's going to accept these terms, somebody's going to end up becoming a viral hit and then they're going to owe Apple millions of dollars and I'm sure Apple will let them out the back door, I hope maybe. But it does create this really, and this is the whole reason we liked the rev share model. Just developers just had basically no risk and now you're introducing risk. Honestly, I don't know how to think about it. It's really hard to underwrite tail risk events like that.

David Barnard:

What's your perspective on this specific, I know you're kind of bullish on alternate payments and side loading and things like that, but as a venture capitalist who wants to see your portfolio companies succeed at a high level, do you see any of those portfolio companies taking this deal? And we'll talk about the other deals later, but what do you think about this deal specifically?

Nico:

I think what I tried to do yesterday with the formulas is figure out, because the way I think about it is, if you're upset about it, stick with the status quo. For most companies, this is the right choice, especially if it's big volume, low average revenue per user. It doesn't make sense. The companies it does make sense for those that convert the users to a high degree and then have a high yearly plan and don't have that many free users that retain after the first year. That is basically what comes out of it. And we don't have to be specific about it, but basically if you have a yearly plan and the conversion rate and you multiply both and it's bigger than five, then it makes sense. This is what the numbers say. And then for the second year renewals, it's basically 25 euros per user that remains, and this includes the free and the paid users that you have to have in the annual sub, same or more to benefit from it.

And what that means is there's a small percentage of companies that have really high conversion that have almost no free users or a hard pay wall with none, and for those companies they can save five plus percent of their margins, which is a lot, right? It can be a big benefit. Plus there's one last thing that I want to say to this is you have a considerable unknown, which is if we do have new app stores emerging, which is going to take time, it's a chicken and egg problem, nobody's going to want to do it initially because there's no distribution. Slowly some of the pioneers will do it and it will create something that will offer the developers the ability to distribute with lower fees, which is another added benefit that it's really hard to foresee at the moment. This small universe of high conversion, high subscription companies, which is the majority of the companies I'm working with, they can benefit from it, but you have to really look at the numbers.

As long as there's a really significant free component to the app, it gets more difficult. But I do believe that this will also lead us to think about this in a new way. How much value do you really get from the free users that stay with you for longer than a year if they don't convert? And we can look into this, we can dig into this, we can look at the numbers and it might need some [inaudible 00:23:16] to how we use the paywall and adjust features, but I think there is going to be companies that will benefit from it. It's going to be a small cohort.

 Jacob Eiting:

Something you said there, Nico, which we were talking about this morning on Twitter, and this is the unknown, is you can put up a hard paywall, you can discourage users from using on free. You can eliminate your free plan, but you can't make them delete the app. You can't, "This app will self-destruct if you do not convert in 10 days." And so that's the big unknown on how many people actually are going to delete their apps. It's not zero, it's probably a majority. The decay rate of people deleting apps. I don't know. Somebody, maybe Gabriel knows. I don't know and maybe it doesn't compound to much, but I think that's the thing I'm having a hard time quantifying.

Nico:

Agreed.

David Barnard:

And I actually just launched a hard paywall in my app yesterday and could tell you it would not be a very good opportunity for me. I mean even on the high end, you're talking like a 25% I think is what I'm landing at for my app over the last 24 hours of a trial start rate. So that means 75 out of every 100 people, I'm paying 50 cents for them to install and they don't even start a free trial. So the math on this does start to get difficult when you're a free app to download. Nico, how are you thinking about the risk of even these very high performing, high monetization apps who are a free download where you're doing a lot of user acquisitions through paid ads and you have very tight control of purchasing very high intent users and then converting those users well? There's still that risk because you're a free app that you could just have a ton of downloads from low intent users, so that's a risk even for highly monetized apps.

Gabriel:

RevenueCat's new product should be insurance against-

 Jacob Eiting:

Yeah, that's the thing. I honestly think this is something somebody should sell a policy against, right? I'm not sure who is going to have the data to undermine it.

Nico:

I dare to think that even there must be some protection mechanism from Apple for this, not maybe for the case of a well-funded, well monetizing company that has the resources, but they do not want a small developer going viral and then being bankrupt that is anti their positioning.

 Jacob Eiting:

They take your house.

Nico:

Right. That's not what they want to get out of it, so there's going to be some protection. I'm positive maybe it's going to be difficult to understand it at first, but I would be very surprised if that is not the case.

There is cases where it's not clear. I will not say that after 24 hours I have a perfect view on it. I just have the view of for these companies it does make sense and for some companies there's a big question mark because we have to understand the data better. So understanding how many free users are still around after a year, understanding the conversion rates better, making sure that we have the right pricing and such, I don't have the perfect answer for it yet. We just need to dig into it to see if it does make sense and it might not make sense initially and that's okay. The question is does it make sense at a data point in time and under what circumstances does it make sense and could it make the business better? And that's a question that as a result from the iOS changes on paid acquisition, there was a year or two where people struggled a lot, but a lot of the companies that I work with came out much stronger.

There's a higher organic growth component. They found more creative ways to do marketing. We're not pouring money into Meta, although that is still part of the strategy for many of them, but it's just not as important of a component and I think that here there will be a similar education. We will just have to learn what are the criteria that gives us an advantage if we adopt a new model and really understanding those levers and I think there's going to be a big, big gray area and there's going to be an even bigger, it does not make sense area and in the gray area, I think probably the default is we don't do it.

 Jacob Eiting:

The case you mentioned Nico, that to me seems like I would take a risk on as an entrepreneur is the multi-seat mode discussion. So if you, I'll use Notion as an example or something like this where you're a multiplayer SaaS app and your whole thing is predicated on seats and there's really no reason to go viral, there's really no consumer motion to it. I think that might actually net out where you're paying, maybe your customer LTV is $30 a month or something like this. You can really easily bear that 50 cents a year.

Nico:

You can even argue that for some of those companies, the more at first consumer motion is actually a top of funnel for the enterprise motion and from that perspective it can make sense. Part acquisition cost-

 Jacob Eiting:

How about people that trickle in are worth that 50 cents?

Nico:

So that's an unknown. It's also a new model. We'll have to see more, but I believe in that. And then the second part I mentioned just quickly is right now we assume there's going to be no other marketplaces because it's going to be super hard to get it kickstarted, but somebody's going to build it and some people are going to, Fortnite is a good example, right? Epic is going to do it. They're going to start experimenting and from that there will be more audience and once there's alternative marketplaces with big audience, the math changes again, because yes, you still have the same cost on the app store, but you have lower costs on the new app store and so it nets again, more positively for the business. It's just a more long-term consideration.

David Barnard:

Let's wrap up this section with Gabe and then we'll do step number two on the choose your end adventure and then step number three will be marketplaces where we can dive deep on what that could mean. So Gabe, any thoughts on sticking with the app store but just getting lower fees?

Gabriel:

Yeah, I mean you said wrap up. Hopefully it doesn't open cans of worms. My question for everyone is are there any parallels to draw from the Android side? And I hate bringing that up. I know we have an iOS leaning crew here myself included.

 Jacob Eiting:

No, we're equal opportunity app store people. We love both.

Gabriel:

But things have been a little more in this direction on the Android side for a while. Is there something to learn there? Do you all have opinions from that side of the house?

 Jacob Eiting:

My opinion would be that if you were to just draw out what is the ability to have alternative stores on Android mean for iOS, the answer is very little. I think that's the answer. As optimistic as I am, and I think my take for the last 24 hours has been like Apple didn't get this monopoly by cajoling the government. They didn't get this by having a monopoly on some finite resource like railroads or cables under the sea. They got this by building the best phone and everybody buying it and nobody wanting to buy anything else. It's going to be very, very hard to force people to do something when I think consumers have in a lot of ways voted. It's not a perfectly free market, but I think people have this sense that Apple's un-killable that the only way that the iPhone's ever going to be toppled, that the app source ever going to be toppled as if the government or we forced them to through regulation or whatever, but it's historically not been the case.

Technology has not lasted that long. Nokia and Rim ruled the world and eventually people were like, "This sucks." Apple was like, "How about we do it less sucky?" And 10 years later those two companies are gone. I don't think there's any reason that won't happen and maybe this just opens that up. So what Nico was saying is like maybe Epic store does rock and everybody wants to use it. Okay, then maybe I'll take my words back and the DMA was really important for opening up that light. Maybe it's undue burden to expect a competitor to build the phone, then build the app store. Maybe that's the world it should be, but again, why didn't Epic just build an Android device? You could just buy one and make it the Fortnite phone and all of that stuff. And the answer is because most of the money is on the iPhone and the iPhone users and it's the best device. That's why this is getting into the meta Meta. I don't want to get too ranty on-

Jens:

Then maybe to add on even there's a certain aspect of people buying iPhones because the experience is more controlled and there's maybe fewer degrees of freedom but also less crap.

 Jacob Eiting:

There are options. You can go buy an Android phone and do all kinds of crazy stuff. You can get your emulators on there, you can do your piracy or whatever else stuff you want to do. You can get the epic side loader. It exists, but it's not successful because the experience isn't there and you can blame Apple. You can't blame Apple for that. I don't even think you can blame Google for that because the scare modalng for side loading on Android's pretty minimal. It's pretty like, "Oh yeah, be careful", but that's it, and it still hasn't taken off.

Nico:

I think the reason for that is there was a question in the chat asking why hasn't any of the alternative app stores on Android taken off, and I think it's just the question of incentives for some of the players that are able to pull this off because for most of the companies I work with, even if they're cross-platform, they have maybe 20% of the revenue coming from Android, and oftentimes it's even from geos that have a lower subscription pricing and revenue per users. I think it's a very different incentive at this point to figure out app store that works on Apple than it was to do it on Android, and I think there's going to be a lot more resources put behind it.

 Jacob Eiting:

Yeah, it's 20% of, so it's five times more revenue. It's not like 500 times more revenue. So I have to think there should be enough there to get something started and it hasn't seemed like that's the case, but I don't know. I can't.

David Barnard:

Well, let's skip over Choose Your Own Adventure two because this one is just-

 Jacob Eiting:

We'll have a blog post that explains everything.

David Barnard:

Yeah, check the blog post because it'll explain all this in depth, but Choose Your Own Adventure number two would be to stick with the app store, but use alternative payments. You can either do in-app alternative payments or you can link out to the web. The payment terms are very similar to sticking with the app store. You still pay a commission and then you still have the core technology fee and everything else. So that's kind of a spin on what we've already been talking about. But yeah, let's jump ahead to these marketplaces because I do think this is a really important part of this regulation and like y'all were saying, it is the long-term, maybe biggest crack that's going to form because of the DMA, but the first thing to understand about marketplace is, there's going to be so many caveats along the way, but the first thing to understand about these marketplaces is one, Apple has to approve any marketplace and the marketplaces are the only place that you can side load.

So this is not opening up side loading where any random app can be hosting that random app on their random website and you can just download it. The side loading has to come through approved third party marketplace apps. Those marketplace apps have to put up a million dollar line of credit with Apple, that Apple is saying is a way to ensure that consumers are protected, that it's not some fly-by-night company launching this marketplace app, but somebody with some amount of resources to support the developers and support this marketplace app so that if consumers get scammed, if there's problems, there's some level of recourse versus a fly by night marketplace app that just scams a bunch of people. There's been a lot of condemnation of that, but that part of it I do think is actually very much like Apple protecting consumers in the EU.

Now you can debate do they need that protection? Should it just be total open side loading like the Mac, whatever, but that's how Apple has defined this next opportunity in the Choose Your Own Adventure is that a big company like Fortnite can create this marketplace. You as a developer can then choose to participate in that marketplace. A couple of more caveats before we open up to discussion. In the fine print, we found all sorts of other gotchas. One is that the marketplace itself has to pay the core technology fee, so if all Epic did was create a marketplace app and only sell Fortnite, every download of the marketplace incurs a core technology fee and every update of the marketplace app incurs a technology fee and then every install and subsequent annual update of Fortnite incurs a core technology fee. It's just going to be very expensive.

 Jacob Eiting:

It basically just prevents a fake store, right? With one app in it. That's the intent of that I think.

David Barnard:

This is maybe again, the more interesting thing to talk about here because there could be marketplaces that limit installs to not incur the technology fee. Maybe there's some prerequisite to get into this marketplace app, and so this is maybe the less risky way to take advantage of the DMA is to set up a marketplace that protects against this core technology fee sinking your business. So let's talk about this. The last thing on the core technology fee, and then actually Jens, if you want to jump in with any details I've missed before, we do our punditry all around, but core technology fee is the only fee that you pay, so inside those marketplaces you can use any payment provider you want. You don't pay Apple any commission, you don't pay Apple any billing fee. The only thing you pay Apple in these marketplaces is the core technology feed. Did I miss anything else?

 Jacob Eiting:

And if you use IAP, right, you can still IAP.

David Barnard:

No, you cannot use from my understanding, no-

Nico:

No IAP.

 Jacob Eiting:

And they're not charging commission, so they're not that.

David Barnard:

They're not charging commission?

Jens:

They're only taking the core technology fee in that case.

Nico:

Did you say that we cannot do in-app purchases in the?

Jens:

No, you cannot do in-

 Jacob Eiting:

Not using Apple's.

David Barnard:

But in the third party marketplace store, you can use Apple Pay to pay with your face processed via Stripe and RevenueCat.

Nico:

Yeah. Exactly. I mean it doesn't matter really.

Jens:

This is interesting that this is explicitly allowed to use Apple Pay. I was kind of surprised when I saw this in the docs that they explicitly talk about using Apple Pay and how you have to use Apple Pay, but it didn't seem like prohibitive.

 Jacob Eiting:

Yeah, like they would make a weird rule like, oh, third party can't use Apple Pay. It would seem like a dumb thing they would add.

Jens:

I guess one more-

David Barnard:

Minutia is that there is going to be at least two scare sheets in these steps, so you see the scare sheet for downloading this marketplace app and then through the noted authorization process from what I understand, Apple is going to kind of document some things and there will be a second scare sheet when you're installing an app from this third party marketplace that is kind of an Apple system sheet that tells you about what's happening in the app. But all in all is kind of like what you were saying, Jacob is like, is that fairly reasonable to prompt, I mean Apple, the wording of it, the design of it's maybe over the top. But it's two hurdles to get to a completely free and open ecosystem on iOS. One scare sheet to download the marketplace app, one scare sheet to download the app itself, and then you can do pretty much anything that's allowed via these notarized apps. So what do we think?

Gabriel:

There's a lot of angles here, and again, I would leave the payment stuff to the experts. I think going back slightly, one of the most interesting things for us is all those rules around setting up the new marketplaces and one of the results of that being that a lot of these big names that might be interested in distributing more directly to their users really can't. You need to set up a marketplace that is designed as an outlet, not just for your own app, but others, and there would be potentially this big shift in larger teams and companies to distribute directly to their users if they already have sites that have a lot of traffic, that kind of thing. Just make it super easy to get more folks onto mobile, not possible. So to make this all happen in a big way, we talked about someone in the comments like a Netflix or Spotify, there are some big names there that could do a sort of niche or vertical specific maybe marketplace, but when you look broader scope for large companies, it's hard to see how they would expand beyond more traditional ways of distributing.

I think that's how we view it right now. There's just so many guardrails on this that I think eventually things will expand and get there, but it will be extra slow I think because of some of the red tape, of course.

 Jacob Eiting:

Yeah, Netflix is an interesting one because Netflix has a real cogs problem. They can't charge $9.99 or whatever on IAP because they have to pay a bunch of fees for their licensing of content. You can always just jack the price up, but they don't like to do that either, so they've just said, "Forget it. We drive enough traffic." You could see a world where they're like, okay, let's build the Netflix app store, which TBD. I wonder how strict Apple's going to be and be like, all right, the Netflix app store is just for Netflix. We're not going to allow this, right? This is not really an app store. This is just a special thing for Netflix, but Netflix also is doing app distribution. They have games now and stuff like this, so they're kind of already playing in this space, so you could see them building this.

The question for Netflix would be is all of those steps going to compound to 30% that you're losing already? And I'm like, 30% comes at you real fast and you compound a couple gates. You have this crazy install thing, which, okay, so just think about when you're doing consumer anything every click, you're losing 10% of your users, especially if I'm doing this targeted to install Netflix, I have to install Netflix's app store, get a big scary sheet, and I'm like, "Okay, I'm a normie. I don't know what this is, but it looks scary", and then you have to navigate inside their thing and get a click again and it's like another big scary sheet and Netflix has got to be like, "No, it's okay. It's cool. It's Netflix's virus, it's fine", and by the time you get to the end of this chain, again, it's like Netflix could do this now on Android, I don't think they have, and maybe Nico's point about it just being one fifth the revenue, that's just not enough incentive for them to do this.

As a developer, I'm just thinking like, God, I got to make this stupid app store work. I got to do all this. I got to maintain all this crap. I got to do all this billing. Now we got this exposure to the CTF and all this crap for what? So we can charge $9.99 instead of $13 on the app store. Netflix is doing fine without charging the payments at all. I guess this gets into the Meta of, I think that was Apple's point. I think this was the purpose of the way they've complied was that to induce maximum pain while staying as close within the regulations as they can because frankly they've got a monopoly on their users' time and dollars and they don't want to let that go.

David Barnard:

That's where I think this as a starting point for negotiation is really interesting because maybe the most straightforward thing for the EU to do to make the DMA more impactful is say "Apple, you can't charge 50 cents. That's not a fair and reasonable fee. You can only charge 10 cents." And if that's the case, then the calculus of how all this works out looks really different.

 Jacob Eiting:

I'm going to go full Milton Friedman here and just be like, that's what markets are for. Basically we now have a duopoly of the EU and Apple, which are probably similarly sized in market cap being like 50, no one. It's the same thing. They're both incorporations of people trying to achieve something. What we're trending, and this is where I'm going to really put on my tinfoil hat, is we have created a perfect track for regulatory capture because what's going to happen is Apple's going to dance to use dance, they're going to make it work, they're going to do all this work. They're going to build this super complex thing that they alone can comply with that's built for them to be alive.

While, yes, we've now created space for new entrants at the low end, anybody who gets anywhere close to this gatekeeper thing is going to have the ceiling that they can't penetrate because now they have to be a gatekeeper as well. Meta is already considered a gatekeeper. It's this gatekeeper law inception where if Meta has an app store, now their app store also has to allow extra app stores or something like this.

Nico:

The things that we don't know yet, which makes it a bit harder to really understand the opportunity or the possibility of new marketplaces is like, what is that burden actually? I know we know high level what new marketplace have to do that to have the million. There's specific checks that they have to do before they distribute software. We have to understand how costly that is for them to understand if it could make sense, and then there's also some questions around these scare sheets. How aggressively are they actually being pushed in user's face? Is there some ability to adjust it somehow at your own language? I think there's some things that are not 100% defined, so it's hard to understand. I spent time with Monit talking about this yesterday, the founder of Backbone, the mobile marketplace, a controller and the software piece of it.

I think there is specific examples again where this makes a lot of sense, right? There's full price gains that are now being released on the iPhone that's trending now, for example, it's going to iPhones $20, right? It's not like high volume yet these type of games on the app stores, but you already have a significant number of users that are using the Backbone to play games and they have the software layer that already downloads a lot of apps with that, right?

Is there a world where you say, look, guys, we can offer you higher margins. We make our margins on it as long as the costs are somewhat under control, it is for us very well possible to have a marketplace on top of our existing user base that actually enables gaming distribution, and I think there's some people that are specifically positioned already that they can take advantage of this potentially, and then there's some of the bigger players like Epic that just do it because it's ideologically what they think should be done, but as soon as we have marketplaces that do get to scale and offer a real alternative to the app store for a specific niche, then the calculus becomes much more attractive.

 Jacob Eiting:

Then we get what we want, which is like the app store to actually concede some things, right? Then I'll be happy. Then you know what? I'll move to Brussels. I'll wear my little blue shirt with gold star ring. I will go full EU. Congratulations, it worked. I'm just like, how long are these cycles going to take? It's been years for us to get anything, and so now we go back to the end moot again and we have to do another cycle, and then literally I think what's going to happen is Sam Altman or somebody's going to build an AI phone that's going to obsolete the iPhone and then this is going to be the biggest waste of energy of all time.

Obviously I wake up in cold sweat at night thinking our app's going away. Is the iPhone going away? And I don't think I see an immediate path to that, but it would be naive to think that this model exists forever, and I think stuff like the DMA, what's happening now called it in enshittification to use that term, it's like we're seeing the in enshittification of the app store. The unintentional positive here is that this will create, I think, hopefully opportunity. Maybe a company with an already present base like Backbone then can then lever that into a store, which then can maybe lever that into a device. It could be the same case for Epic, and that's what actually breaks Apple's monopoly, but that's a lot of bank shots. Yeah.

David Barnard:

I want to pull on two threads that Nico brought up one earlier and one just now, is that these third party marketplaces probably make the most sense in two specific cases out of the gate, right? Evolving over time, maybe things change whatever, but out of the gate so far I'm seeing two things based on Nico's comments is one is that if you're a AAA game and you charge up front, so I can envision under these rules a AAA game store launching as a third party marketplace, you pay $50 upfront for your AAA game. Nintendo could launch the switch store with Backbone as a controller and you pay $30 upfront for the game. Now that gives you, I mean, a decade of your 50 cents a year is $5. That's still lower than the $30.

 Jacob Eiting:

Can marketplaces be paid upfront? That's a weird caveat.

David Barnard:

No, it's totally free. It's the market exact way-

 Jacob Eiting:

I know but how do you enforce the download on that? I guess this is the only reason to download it is because you've paid $30 or something like this, right?

David Barnard:

Yeah. You can only download the app if you've paid the $30 into, because the marketplace, I mean from my understanding, again, maybe there's other details, but my understanding is the marketplace has full control over the business model within the marketplace, so Nintendo could come along with a Nintendo Switch marketplace app. It could all be paid upfront, their premium game, $60 for Tears of the Kingdom and with a $60 upfront payment, that 50 cent platform core technology fee, even if you have to pay it recurring, is a tiny little fee.

 Jacob Eiting:

But you also have to barrel the looky-loos though you have to pay for everybody's CTF for the marketplace download, but probably net that out.

David Barnard:

For the marketplace download, yeah, the marketplace has to be the free download, but then subsequent downloads can be limited. So that's I think a really interesting opportunity created by the DMA that could be done immediately under the current rules with the current fee structure.

The second one that I think Nico kind of alluded to is a more B2B marketplace where when you know you're going to have a much higher LTV and you can design the store around those kind of limits, maybe you have to sign in with your corporate account before you can download an app. Maybe there's some other hurdle to enforce the not downloading unless you already have an account with that provider, whatever. There could potentially be this opportunity for high LTV, especially B2B, but maybe even high LTV consumer marketplace where there's some other kind of gate to protect against that core technology fee, and again, with some limits on the looky-loos downloading it and starting a free trial and never paying you a penny. There's potential for these high LTV apps to join a marketplace where there are some limitations in place and that could happen today even with all of the fees and hurdles you have to jump through, we'll see. No comments from the peanut gallery.

 Jacob Eiting:

I am so confused as Miguel and I were talking about yesterday is like they made it just too confusing for any one human brain to really wrap their head around and I think that was the point. 15, 30%. I can get that. That I understand there's one too many variables. There's too many non-linear relationships between things. I think that's made it very difficult. I will stand up and say that everybody on this call do not switch to the new business model. I do not. It's at best a bad idea. At worst, a huge distraction. At least wait, let somebody else do it. Because Nico's talking about a lot of companies that are sort of these very specific cases, they tend to be bigger. They know who they are and they're going to be able to test this in inappropriate way.

If you're our legion of indie app developers and Apple's right, 99% of developers don't get all lured by the 2%. I don't know if you'll be able to switch back. I don't think it's a worthwhile trade if you are in this space, when Nico's talking about where certain companies are kind of screwed by the current terms, it prevents them from doing certain things, then it might be worth doing the math on, but again, I think it's a pretty risky bet. I wouldn't be the first company to stick my neck out on it, let's put it that way. I'd want to figure out how it plays out a little bit.

David Barnard:

One thing in the Meta we haven't discussed yet is that we're also just talking about the EU, so we pulled RevenueCat numbers, and from all of our customers, app store specific, EU specific revenue is 12%. So even Nintendo coming out with a Switch store, that's a lot of work to build the marketplace to do all that kind of stuff to maybe move the needle on 12% of your revenue. And then of course with Switch, they're selling hardware and probably making some profits on that at this point in the console evolution and all that. So it's like a million different caveats. But yeah, I think it's interesting that you also have to filter through the views of like, this is not a global thing. We're only talking about five to 15% of the total revenue, and then you're talking about all these hurdles to jump through, all the new code and other things you have to do to be able to do these things. Jens, you were going to say something.

Jens:

Yeah, I was just going to comment both Jacob's and your comment. So I think on Jacob's comment, I would completely agree with what Jacob said. I think the big wild card there is the third party app stores, third party app marketplaces or whatever. I think that's the only thing that could really change the game, but I also think the likelihood of that happening and happening quickly are relatively low. Maybe Epic's going to launch the Fortnite store, so we'll see what happens with that. I mean, I ran some numbers and it doesn't seem like a very attractive proposition.

David Barnard:

Hey, they already spent a hundred billion dollars finding Apple.

Jens:

Yeah, exactly.

David Barnard:

Blow another a hundred billion just to make a point.

Jens:

It's ideological more than anything. So that's going to happen. That's one aspect. I also think some of this will be litigated in some way or another. I mean, of course Tim Sweeney is already cursing over on Twitter about this and might take Apple to court over this, which I'm sure Spotify is going to do the same. So I think that's the second aspect. I think there, David, what you said. I mean, yes, it's EU only, but I bet that a bunch of regulators across the world are also basically watching this space and kind of seeing what happens and seeing is this experiment successful or not? And I learned from that because maybe not so much in the US because obviously, I mean for one thing, Apple is a US company, but the world is big outside of the US as well. So we'll see what happens. I think there, that's really the mathematics.

 Jacob Eiting:

Yeah. You have to presume this is the response model they'll use. There was an open market stack in the US that was kind of very similar. They didn't get a lot of traction, but if it ever did, they would be-

Jens:

And I mean I think Apple is going to keep behaving this way and doing the minimum that they can. I think that's become very, very evident over the last two or so years. It's a little bit of a shame because in the end, probably the worst thing is that we end up with our business models that are completely fixed and fixated by regulatory bodies with no ability to have any flexibility. But we'll see what happens. Again, I think there's probably a few more moves to watch here before, I mean that doesn't seem to be a first mover advantage here to try and take advantage of this.

David Barnard:

Yeah, this is probably a good place to wrap up all the whole conversation and tie it in a nice little bow. I think it was a good point, Jens, is that this is again just one more step in a multi-year, multi battlefield war that's going on between Apple and developers and consumers and regulators. What's the end game for Apple? And this is what's so frustrating to me is just that Gruber had a good line in one of his posts recently. He said the last thing you want to do if you're a sports team in a high stakes sporting event is off the refs. And that's what Apple's doing. It's like they're just inviting more regulation. South Korea has already responded to Apple's "compliance" in South Korea saying that they don't think Apple's actually complying and are threatening to fine them. Apple's pissing off a lot of people. They're squandering developer goodwill, they're pissing off regulators. Consumers are starting to hear it.

 Jacob Eiting:

Doesn't seem super tenable. Did you see the screenshot I showed yesterday?

David Barnard:

My 14-year-old son is like, "Apple sucks." He just sees all the YouTubers complaining about he wants an Android phone.

 Jacob Eiting:

Tim Sweeney responded on my tweet today, "Well, why not build a new phone?" He says, "It costs $300 billion." I'm like, Apple's worth 3 trillion. That's a 10 x return. Build a new phone for $300 billion. I think that is the natural cycle of it, right? Platform takes over, earns a monopoly, becomes shitty and unresponsive between other things. Somebody goes like, "Okay, there has to be a better way", and then somebody invents the better way. And then we continue on into the future and it's great.

Nico:

Can I add two last things that I think may be interesting to hear? The one is another opportunity that we haven't touched upon, and this is just I guess my mind, but I'm thinking, okay, since we have the sales quo and we know Apple is cheeky, it's really interesting. I had a lot of developers be really upset with Apple about this and I understand it, but it's clear what Apple's incentives are, right? And of course they're trying to, as much as possible, avoid to lose revenue and this is a way that they can comply but also make it very difficult. So we have to find a way to take opportunities out of it other than the ones that we discussed. I think there's one here, which is 600 new APIs that are being released, which I think is something not to be dismissed, and I don't know exactly what the innovation from that will be, but I'm sure there's going to be entrepreneurs out there that will figure that out, and I think that's going to be quite interesting.

It also will be good for your businesses, and I think on the marketplace aspect is something I think because yes, it's really hard and we will have to kickstart it from some position of power, and it could either be existing players, big players that just do it ideologically, but also this is where venture can be very helpful. These are the types of things that you can actually fund with venture capital where it's maybe very hard economically for the first 4, 5, 10 years to actually get to a place where you can have the scale. But that is something that venture could enable and I would love to talk to people that are building it.

 Jacob Eiting:

Yeah, I mean trillion dollar swings, right? There aren't many trillion dollar swings.

Nico:

Right, yes.

Gabriel:

The API call is a good one it's sort of an area we didn't get to touch on too much for my closing take. It was cool to see Apple announced so many new APIs sort of under the hood here. That kind of bodes well for us and what we're building collectively us not just Runway, but then zooming out to the Meta. I think this singularity event, the iPhone coming into existence that Jacob talked about before, a lot of this does feel like just shuffling things around some different numbers to distract everyone and figure out where to move. But it's little steps and I think that's one of the take homes for us so far. It's not a big shift yet. It's a move in a direction, but for the really big stuff, I think there might be a bigger singularity event that's on the horizon.

 Jacob Eiting:

Getting my AI brain chip, I'm already pre-ordered, doesn't even have apps.

David Barnard:

Jens, for the benefit of the listeners on the Sub Club podcast and people who are watching this on YouTube after the fact, you've been answering a lot of great questions in the Q&A. Are there any that you feel like are particularly salient that we kind of didn't hit? Or maybe questions folks who aren't live and don't have access to the chat that would be especially interesting to answer live or maybe even kick around as we wrap up?

Jens:

There's a bunch of questions around what we will do, so I'll get to those later. There's a bunch of people asking whether this business model is per app or per developer account. My understanding from reading this is that because it's an amendment to the developer agreement that is probably per developer, so you can't opt in, some of your apps opt out. Some of the other apps, there are more questions around is this reversible or not? So here we said earlier, maybe it might be eventually reversible, but right now the documents that Apple release say it's a one way decision.

 Jacob Eiting:

I think they can't make it reversible, right? It's like insurance. You can't buy insurance after the fact. You know what I mean?

David Barnard:

I heard rumors that it will be reversible, but then thinking through, even if Apple did by the letter of the law to have complied to the EU or whatever, make it reversible, the business implications of making it reversible are pretty daunting. Again, I haven't found it in the fine print, but somebody told me that if you're installed from a marketplace, the app store can't overwrite that app. And if you're installed from the app store, the marketplace app can't overwrite that app.

Jens:

[inaudible 00:56:30]

David Barnard:

If you're trying to move somebody from marketplace to the app store or from the app store to the marketplace, you have to specifically say, "Please go delete the app store version." And then you have to have some data loss prevention mechanism in place there and then say, "Go to the marketplace and download it." So even if it were reversible, the business implications of trying to reverse this decision are pretty daunting.

 Jacob Eiting:

Here's a question that I think might be easy to hit, but do we think Google Play will change this rules in a similar manner? They fall under the gatekeeper restrictions, right? Do they need to do anything in addition to what they already do to come into compliance?

David Barnard:

Eric Safir had a really good post on this and was talking about how because they already do allow side loading and actually are way less restrictive about how they do the side loading there are things that apply, but a lot of what we talked about today don't apply because they're already open in those ways. Jens, I know you read that post. Is there something specific you wanted to call out?

Jens:

Yeah, I'm not 100% sure, but my guess is that they'll probably have to allow alternative in-app payments as well. But-

David Barnard:

They're already doing that with billing choice.

Jens:

Yeah, exactly. Exactly. So that's basically that.

 Jacob Eiting:

How does Google look like the ones who didn't make a big mess of this, right? Usually that stuff's complicated.

David Barnard:

I think Google's actually doing some really smart stuff.

 Jacob Eiting:

I'm going to go trade in my iPhone y'all. Time to get on Android.

David Barnard:

This is what I was kind of hoping Apple would do to comply with the DMA was actually following Google's footsteps because with billing choice, Google is saying, and maybe I'm going to get the details wrong, Jens, you may have dug a little deeper into this, but they're saying, okay, you can have alternate in-app purchases, you can use third party credit cards, you can do whatever payments you want. All we're going to say is that on the paywall you have to have both Google Play billing and your third party billing and let users pick. And then they do also still charge, I think a commission on the third party billing, but that is complying even more so with the letter of the law and also does create user choice, but is also still kind of good for Google. A lot of users are just going to pick Google billing. Anything else to add on Google billing choice Jens?

Jens:

No, I think that's it. And what's been established there, and I think that's just not going to change unless a regulator steps in, is that both Apple and Google basically say, well, if you're using our app store for everything except payments, we'll basically take off a very small percentage of our commission. So for Apple here, it's 3% for Google's been 4%, I think, which just means economically speaking, for the most part, it doesn't make a lot of sense for developers unless they have specific reasons. Let's say for example, you use a third party payment provider that provides alternative payment methods that are very important for your user base or whatever, right? Then that is something to consider. But in most cases, like Apple and Google actually have a pretty wide range of different payment methods in different countries now so that it's unclear, but I mean there's certainly choice there. I would agree with that.

 Jacob Eiting:

I'm just going to tag onto the wrap up here and just say, I posted yesterday a poll as to what people would choose, old model or new model. It was like 80/20 people, old model, new model. I just ran a new poll and I posted it in the chat. So everybody that attended the webinar here, after hearing my official recommendation, I just want to know how much weight that carries, and I'm curious what people think after learning a bit more about the rules, they're excited about the new model, the old model. So links on my Twitter for the poll.

David Barnard:

Nice. Jens, any other pressing questions?

Jens:

Yeah, so just from the questions panel, because they have a bunch of questions around what will RevenueCat do, will RevenueCat launch an alternative app store, will RevenueCat support alternative app stores will RevenueCat support alternative payments in app? So I think certainly we're discussing all of those. I think us launching an alternative app store is probably the one that is the least likely. Supporting alternative app stores to the extent that is possible and to the extent that they become relevant, I think that's absolutely going to be on the agenda. So maybe not the Epic store because we're focusing more on subscription apps than games per se, but if there's any feasible alternative app stores, then we will definitely do our best to support those. Alternative in-app payments, I think right now they don't look super attractive, but we are working on some things that just for more flexible billing across platforms. So that's something that's very much top of mind and where we should be able to move quickly as well to the extent it becomes relevant. Yeah, those were I guess the three very, very big questions about what will RevenueCat do.

 Jacob Eiting:

I have a more straightforward answer. I'm going to help developers make more money. Yes, whatever it takes, whatever it takes.

Jens:

Prevent them from making less money. Yeah.

 Jacob Eiting:

That's the whole goal.

David Barnard:

That's a good way to frame it. If we think it's going to make developers make less money, we probably won't go through all the effort to support a random store that we don't think is actually going to benefit developers. But if we see opportunities that really will help developers make more money, we're going to be working on it.

 Jacob Eiting:

My greatest failure in life will be if I clinging on to an existing business model to the point that I'm regulated by the EU. So make sure that we adapt to the changing market and respond to consumers.

David Barnard:

All right. Well, let's just go around the horn one final time and just kind of do a wrap up. Nico, what are your closing thoughts on this mess?

Nico:

My brain is wired in the way that I always try to understand what is the opportunity here. And so I think, yes, I agree with Jacob that nobody should rush and it has to be understood well, what this means, and even we don't understand it yet. There's a lot of nuances still to be defined. There's also still probably negotiations around the actual final terms. I think let's wait, but I do believe that every time there's change there's opportunity and there's going to be smart entrepreneurs or existing companies that will take those opportunities, and I'm excited about it. I think it really plays into the thesis. I think some companies will just remain the way it is, but I think for others, new marketplaces, prosumer high converting apps that also want to do team accounts and potential emerges of new marketplaces are things that for me, those are new themes that I will be looking into. And so I'm cautiously optimistic that there's going to be some benefits from this and also that the final result will be better than what we know today.

David Barnard:

Gabe?

Gabriel:

I think highest level, not as much of a massive shift as it might seem, but a move in that direction, like I said, I think maybe lower level, maybe nearer term extra work and kind of headache figuring this out for folks. I think that's an interesting challenge to think about that from the other side and how you can help folks with these changes.

David Barnard:

Awesome. Jens?

Jens:

It's interesting. Never a dull moment.

 Jacob Eiting:

Who would've thought?

Jens:

Yeah, yeah.

David Barnard:

Who would've thought?

Jens:

Yeah. No, I mean I think that's kind of it to me, but my advice for app developers would be, I mean, definitely keep up to date, but there's probably no need to rush to make any decisions, and it's certainly not the first move in this chain of events that has been unfolding for the last, at least two and a half years is an important step, a significant step, but more steps are going to come and this game is far from over yet. So that's my take here and we'll see what happens in this space, especially I think on the alternative app marketplace, that's what I think is the most interesting. Is there going to be anything that really makes a material difference there?

David Barnard:

And Jacob saved you for last, so you could rant.

 Jacob Eiting:

My boy, they butchered my beautiful boy, the app store. I'm all for competition. I want better deals for developers. I want Tim Sweeney to be able to do whatever he wants and make all the money he wants. I want everybody to be happy, obviously, but I can't help but be a little sad that we had kind of a pretty simple, kind of a pretty decent little deal and it helped a ton of people and it created this whole entire app economy. And I don't see immediately that what's happening is good for that.

What I see happening is creating more complexity. I see it risking the entire space. And I don't know, maybe it's the maturing of it, the in enshittification, whatever you want to call it. And maybe it's for the best and this will create the next thing and all of it's good, but I can't help lament a little bit the simplicity we might be losing with this model that's worked pretty well for a decade, even if not everybody's happy and whatever. You can't debate that it has created more wealth and more value and more software than anything we had ever tried before. And then to just murder it over 2% feels a little shortsighted. I don't know.

But maybe that's just being sentimental onwards into the future, and we'll be here for the next thing too. I don't think any of us want to spend our time prognosticating about European regulation. We just want to make apps. So the sooner we can get back to that, the better.

David Barnard:

All right, well, I'm going to wrap up with my hot take. Since I'm the host. I get to close it all out. But Jacob, I think your take is valid, and I am on the same page, but with a slightly different spin. So I started my career as an indie developer who exactly as you said, capitalized on this incredible business opportunity. Like sitting in my little condo in San Marcos, Texas in 2008, I shipped apps to the world and saw people buy in Saudi Arabia, in India and all over the world. And it was so simple for me to build that business and to build this career on the app store. And so personally, it's a longtime Apple fanboy that's struggling with my fanboyism, but then also as a longtime developer who's made millions of dollars and had millions of downloads on the app store, I'm sad too, but while you've spun it back around to the EU and to the regulation, I'm personally a lot more frustrated with Apple.

I don't think we would've gotten to this point, had Apple made more concessions to make it a better place, more opportunity. And again, Google's already leading on this front. They dropped the fee for subscription apps to 15%. That's actually probably a pretty good deal for most apps to not even worry about billing Apple's obstinance in sticking to this 30% is part of what's creating that in enshittification. And so as much as the EU laws are complex and hard to parse and all that kind of stuff, and we're regulating things into the ground, Apple had a choice here. And I personally think they're making the wrong choice. They're pissing off developers, they're pissing off regulators, and it's bleeding over into sentiment from consumers like my 14-year-old son. And I think that's, like you said, sad for the platform that we all actually kind care about.

 Jacob Eiting:

I'm going to start a phone company. It's time, it's the moment.

David Barnard:

It's been fun. Thank you for people who got this far on the podcast. Thank you, Nico, for joining. Thank you, Gabe for joining. Thank you Jens and Jacob for being here. And to be determined, this will probably not be the last webinar, probably not the last podcast where we discussed all the implications and let's see what the EU says. Let's see what Apple does. Let's see what Tim Sweeney does and we'll talk to you all again soon. Thank you.

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