DMA for Dummies with Archie Stonehill, Head of Product at Stash

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archol Stonehill welcome to the podcast thank you thank you for having me finally finally doing it I feel like I have to talk to you in an English accent which I don't know you know you have this inexplicable American accent for some I know it's just so fake anyways archol Stonehill you were formerly a Mackenzie consultant which is of course Testament of your hard work determination ability to learn things super super fast and communicate well right yeah and expertise in video game development yeah and expertise in everything really at a at a fast bace so now that we got Eric Crest throwing up in his mouth let's talk about your other experiences so you're uh you're a former um partner of makers fund principal they never made partner you're almost a partner at makers fund a principal where we met because you were uh uh bored of Observer at my

startup I was yeah at least I'm correct on something and currently you're a chief product officer of stash so what is stash would you mind telling us yeah um so stash is a startup in the kind of gaming direct consumer um platform space so we provide uh kind of a complete set of solutions to help gam sell develop sell and interact with their players directly outside of intermediated platforms like the App Store so ankes payments web shops launches all that all right and stash has also been uh going hard into the podcast scene so You' released a couple of big podcasts first one was Mitch jaski high production values well made interesting content yes yes we have a podcast called secret stash we've released two now so the first one was with Mitch lasy who's was like my number one guest when they asked me who we'd want to do it um he's like a legendary executive and investor in the games industry the second one is

with our Founders uh who include like Justin Khan who founded twitch Robin CH who sold his company to Zinga and then Dan bolman SE Google powerful powerful crew but we're not here to talk about stash uh we're here to talk about dma so why are we talking about dma like aren't you like what's what's the point of this so I think that this has been like a really exciting thing for the industry over the last year but the kind of you've seen a massive shift in govern policy in big Tech broadly and that is manifesting in a bunch of different ways in different countries and really uh games are at the heart of it because um governments across like the EU CH uh South Korea Japan Etc and even the US have been looking at like how digital markets operate and assessing that there is like some unfairness there and I think game developers are not surprised by that because they've experienced a really kind of tightly controlled distribution landscape for our entire industry's

lifetime um but governments are kind of For the First Time really taking aim at assessing whether or not um these are like illegal business practices for example like B App Store distribution um policies that we have to deal with uh and the dma is like probably the most visible and most like immediate application of that it's a piece of legislation in Europe called the digital markets act that came into enforcement on March 7th 2024 yeah and it came with big promises it promised good times for advertisers Publishers and web stop Wenders there's like three things that allowed apps to link ads to webstar web stores and offer thirdparty payments the second promise was allowed Sid loading and thirdparty app stores and the third promise was to give developer access to more complete data from platforms then when it went through Apple got its greedy hand on it

and they proposed the following reduce fee for alternative app stores to 177% with a 3% processing fee introduce a runtime fee of 50 cents for yearly downloads exceeding 1 million and then subject thirdparty app stores to Apple's rigorous checks scare screen so the way I'm like like I'm a dummy I don't know what happened it promised everything and then Apple came in and like you not going to get anything is this like uh the summary of it so uh Apple's fighting it but I think that this is a nice way to talk about like why this is very different from maybe where we were like 5 years ago so then this is true to ler stand in America but equally it's I we're seeing a shift but like the way that governments are interacting with the app stores now is completely different from how it's been done for the last like 40 years and so there's

definitely resistance to it but there's like the EU has a lot of teeth now so the kind of conventional way that governments have regulated po like competition policy um at least since like the' 70s uh has been like about consumer interest doctrines so it's like as long as um a kind of consolidation of Market power benefits consumers almost always in the form of like lower prices because of economies of scale governments have been okay with that that was not always the case how government's thought about competition and um the problem with that model is like it's then very hard to police someone like an apple which gives in theory it gives away um distribution services for free right it doesn't charge consumers for Distributing their apps um similarly with Google right Google can say we do we do we give we give people search for free how is that not good for consumers but like that's kind of a very superficial way of evaluating whether or not these markets are like ing or promoting Innovation and

I think that the dma's framework is a massive Divergence from that way of thinking about competition policy it looks at competition as like an inherent good in and of itself and um does a couple things to address that so the first is it starts by designating certain core platform Services as like fundamental infrastructure of the internet type entities so this would be something like ABS distribution it says like this is a public good utility that needs to be operated in a way to like promote competition um and then it designates Gatekeepers that operate these core platform Services which are very large companies that have massive influence um and then it places a certain set of obligations on those Gatekeepers to demonstrate that they are creating Fair reasonable non-discriminatory policies that aren't preferencing their own products or like um you know blocking competition and stuff like that um and it designated Apple and Google Gatekeepers both in their operating systems and in their App Store distribution payments and stuff like that so so um The Gatekeepers then

have the legal obligation to prove they are complying with these obligations which is like very different from how you might think a lot of kind of legal cases work right like the owners is normally on the prosecution to prove harm in this case they they kind of need to demonstrate that they're in compliance um and the eu's enforcement mechanism for this is particularly interesting because it's done not at the member state level like so a lot of EU legislations passed and then you can sue in court in Germany to enforce it this is actually done like at the commission level and the only real precedent for that is gdpr um and I think a lot of people would be familiar with like how visible gdpr has been as a piece of legislation like this is the kind of like level we're talking about and this means that it will not be held up in courts for years um it can be done with fairly like quick executive Authority and the potential punishments if the the if um uh these big tech companies are found to be non-complying with the dma are like huge so it's five I think 5 to 10% of global turnover can be fed and um

yeah so they these these uh enforcement began on March 7th I think it took 3 weeks for Apple for the EU to announce its first investigations into non-compliance and the thing that they were looking at most is App Stores um so there's been a lot of resistance from Apple to some extent similar level resistance from Google but the EU is also signaled it's not messing around it's launched these investigations which they are signaling will be done by the end of the year um and I think it's highly likely that aspects of their new compliant policies are to be found to be non-compliant with their obligations as Gatekeepers got it so when Apple said that it will reduce the fee for alternative app stores to 177% with a 3% so basically 20% that is their sort of a we're being nice here's what we're going to do and then when they said they're going to introduce a runtime fee of0 50 cents for yearly downloads exceeding 1 million so 50 Cent for every download that goes

over 1 million that is their like proposal as a as a good faith actor right well so I I mean I don't know about that I can't comment on the their faith as actors but Apple's response was to so this is all about giving developers choice so the EU said you need to give developers Choice the thing that The Regulators are uncomfortable with is like deciding a price so the EU The Regulators don't want to like look at the App Store and be like all right they do provide services they provide discoverability they provide distribution they provide like a and that has value um H is 30% a fair fair fee for that like who knows the governments governments aren't really comfortable being like n 30% seems High um what they say though is all right well if you're going to offer your services in app store distribution um for a certain price you need to have a competitive market to set that price so they're much more comfortable saying all right if you're not willing to kind of negotiate on price or we don't want to be price setting you you then need to be like allowing competitive app stores a chance to price compete with you um and so you need to give devillers a choice

is basically what the eu's position was the way that Apple responded to that is said like all right we'll give them a choice so they gave him so in the EU now you can you can elect into these Al alternative terms so you you have two terms you can choose one is stay things are dist through the App Store alone use our payment system 30% fee second is the alternative terms which is what you were describing and that immediately switches you into a different economic model so the first aspect of that is a reduced Commission on the App Store you said and a and no commission for downloads outside of the App Store so 20% versus 30% on the App Store uh and nothing if you download the app outside of it plus as you said 50 cents per install now that begins on the a millionth install via the App Store but begins on the first install outside of the App Store so um that's your new model which actually is not that bad for a lot of games uh and games are maybe the one kind of app category where this these economic terms kind of make sense think

about it like this if your game makes more than $5 per user per year right you actually start saving money by switching until time to times even if you don't even if you only distribute to the app store right but but but you don't know if your game is going to make that because isn't this applied only to new products like you can't switch to this model right you can switch to it today oh you you can switch your existing game so if I'm like I have raid Shadow Legends and it has like high I'm surprised they have already yeah got it okay yeah this podcast is brought to you by apps flyer in today's Digital World understanding your apps Journey from Discovery to download is more than just insightful it's essential enter apps flyer the leader in Mobile attribution and marketing analytics that allows you to measure the full potential of your marketing efforts making every ad dollar work smarter with apps sler that's your new reality dive deep into Data driven insights that reveal exactly where your users come from from and how they

interact with your app app sler where your app's potential meets performance I mean you have to apply but 100% I think you'll see a lot of the core games and a lot of the Str uh strategy Casino Etc switch to it the weird thing is is it really then changes how you have to think about your operating model because now you have a disincentive to get like large top of funel installs which is kind of the opposite from how everyone's been responding to idfa right idfa made everyone be like all right you just got to bring everyone in and then find your users then now you really have to try and figure out who who to bring in right because you're you're going to pay 50 cents per install so it's it's probably going to require some adjustments in terms of how mobile Studios operate who do you pay that 50 Cent per install well who do you think Apple obviously why why it's for their core technology fee right it's their core core technology services that that they God damn it these guys are capitalist through and through I've been quite surprised by how I say

hostile that tone of their response has been to this stuff like um but we've seen this a similar case in America well it somewhat similar like I don't know if you want to stick with the em but I think it's helpful to look at the American case where you have a bunch of stuff going on in America but America think is far less likely see a p of legislation like the dma there is an app called the open app market but not's hopeful so so let's talk about the acronyms a little bit because there dma uh MDMA dmcc doj d a what what doesn't fit in so D DM almost always refers to digital markets and that's kind of the thing that we're talking about here so so what you just described are like is like the alphabet soup of competition policy regulators and there's many more so yeah uh so digital is a really key one because what's being recognized here is that like regulating digital markets needs to be done in a way that is different from how governments have been doing it the last big antitrust case of of Technology was Microsoft in the browser Wars in 20 in 1990s and that's

really the only one in the last 40 years so digital is key markets is also key so DM like this is about how services are distributed through the internet and like unlike in the you know physical IRL realm where like you know governments have a strong say in how prices are charged on roads that you ship goods in and stuff like that like these digital markets are like privately owned by Apple or Google or Microsoft or whoever the case may be and so but they're really trying to do is like enhance competition and innovation in digital markets um and then the a the C's C is often consumers or competition um and so the big piece of legislation to be aware of like in the in Europe dma is the like leader in this in terms of timeline uh it's the test case if it goes well I think you could see a lot more copycats throughout the world um and then in the UK you have the dmcc digital markets consumers and competition bill I think um that is going to pass I think in Parliament like there's a lot of confidence in it it's been through a

bunch of the rounds of amendment stuff like that that's a very interesting one to watch cuz that one has serious teeth and has an interesting intersection with the eu's like um kind of with the UK's oversight of mergers uh and then in America you and you also have similar legislation to those two acts in South Korea and Japan and Australia now um India is also passing one um Brazil so really I think that if you if if you leave America right all of these are American companies so if you're in the EU you look at like Google and apple and you're like all right these guys don't pay any tax they don't they don't work here there's some people in Ireland but like they don't really do that much for us so that's why you've seen a bit of like aggressiveness on behalf of global actors these are American companies so America you know there's political reasons it's tougher to pass legislation on this stuff there that said American antich policy has transformed over the last four years and um there's been like a collection of new kind of crusading uh antitrust uh ERS um that have taken

office there and they're trying to use the courts in America to make changes so that's the doj the Department of Justice got it and yes there has been a change in the antitrust um I don't know these terms but I remember that there was this lady that was really fighting back Lena Khan yes correct I remember from twig that this lady was fighting hard against the acquisition of Activision by Microsoft and she's part of the uh of that um you know the the New brandise Movement the new rise movement they the the Hipster the Hipster uh antitrust activists got it the hip the Hipster antitrust so so um there's nothing wrong with antitrust it's actually very good law have an trust yeah it's like it it really is against these monopolies that that we have become so used to and are in full Mercy of them then and the whole

idfa thing just just proved how tough they are on the industry and how much randomization they can have so um you know thumbs up for for antitrust but but what does it mean like um what is the uh what is the sort of a context the history like how do we get here is is Lena Khan the uh the start of the antitrust Crusade against the big Corp or like what is it this podcast is brought to you by data AI now you're asking didn't they get acquired by sensor Tower they did and that's awesome here's why what do you loved using data. or sensor Tower the combined company will offer customers even stronger and more detailed insights on the full Digital customer Journey exciting times lie ahead as sensor Tower data Jo enforces go to data. or sensor to.com and get on board with undeniably the best data partner in the business now back to the episode

so yeah I think it is a really interesting story because a century ago is there was very similar parallels to where we are now so like the modern Energy Trust movement comes from the um regulation of the oil Market um and uh Oil Barons oil remember reading about that standard oil was the big one right um so um what happened was like the oil like there was so much consolidation in the oil Market that they passed something called the Sherman Antitrust Act this is Rockefeller company so if everyone know rock JD Rockell and um this act basically like you know is set the precedent for like how antitrust is thought about today which is like it's in the people's interest and government's interest to maintain competition um because monopolistic pricing power is kind of detrimental to Consumer interest so from I was passing in 1890 and then really came into force in 1911 when Standard Oil was broken up by the Supreme Court and Bre think he broke up to like 11 or 13 comp companies um this is a huge I'm actually writing an article about like why it's an

interesting parallel now one of my favorite anecdotes for this is that when Rockefeller himself was told that the Supreme Court had broken up Standard Oil in their ruling first thing he said was buy Standard Oil like the the share price because he knew and he was quite right that the broken up entities were collectively worth a lot more as companies than the single entity was so he became far wealthier when they broke up Standard Oil and I actually think you would see a similar thing happen today I don't think you'll see breakups but this was kind of like the the Sherman kind of policy of you know being wary of monopolistic kind of Market concentration for for Monopoly sake was enforced until like the 1980s where you had a new doctrine which basically recognized that like sometimes monopolies can be beneficial to Consumers because bigger companies can lower prices Etc and that's really where we've been living for the last 40 years um is that there's a the the kind of thinking is so long as kind of consolidation benefits consumers almost always in the form of price R it's a good thing and that has basically gutted

any government regulation of antitrust because almost every merger for example can be argued to have pricing benefits for consumers at least in the short term and in the short term is the important point exactly like economies are scale are great but then when you have monopolistic Market power you can block any competition right yeah and then you start skimming and I think this is where we are a little bit right which is like there's many benefits to the way the St system works at the same time it's also led to like really really aggressive and I actually think aggressive pricing and a lack of innovation like I think a good parallel here is steam versus uh the app stores like steam has its problems for sure but it's more competitive than that the App Store on iOS is and if you look at something like Boulders Gate 3 like Boulders Gate 3 was finan was a hugely ambitious game which was financed largely on Early Access revenues and um steam was very reluctant to adopt Early Access they had a much more curated

approach to the content they allowed on the platform until it popped up like in the early 2010s and was kind of a competitive threat to steam because it was this Indie distribution work in progress thing so steam kind of reluctantly launches their Early Access program as a way to compete with it and then because of that you get all of these indie game developers making amazing games because they can Finance them through Early Access and and I think it's an example and you know who benefits the most from that steam right since steam ends up benefiting massively from a game like B Gate 3 I think it's like a nice illustration of the Kinds of Kinds of benefits you get when there's a competitive market um because you know you arguably wouldn't have had bers Gate 3 without it competing with steam we we don't know what we would have had on Apple I think we can actually see some things we didn't get right super apps being a big example um and so yeah and so the new doctrine that is like lenina Khan is a big proponent of it the other two that are in the government in America that are part of this Thomas woo um who's on Biden's Economic Council and

um Jonathan caner who's head of antitrust at the Department of Justice so who's leading the case against Apple like these are three people associated with this kind of new not new way it's like the old way of thinking about antitrust um uh but like Reviving that I think the Activision case was like an unfortunate introduction for L Khan to the games industry because it was not the one like it was sorry the activ casy it was just like yeah like love love the thinking but like this isn't the merer to block um I think that the games industry will probably have a much better reception to some of the cases being pursued by the doj now like apples interesting and how come we're hearing so much about App Store changes yeah so this is because like um so in the EU you've had the dma in America you have well in America you also have the civil cases get epic with epic which are really important so like everyone PR knows epic suit Apple and Google it lost most of the Apple case but it didn't lose one count which was um out out of

app payments and it won in a really unprecedented ruling against Google so uh it run all the counts and we can talk about why if that's interesting but like even in from the Apple case they had to now allow for link outs so the thing you've seen the most kind of progress on so far is web shops like there's a couple different ways to monetize your app without paying for without charge consumers using Apple's like payment services um web shops have been the like most a s and like linkout policy has been like enabling that sorry dog walking around so and just so that we understand exactly what these mean so uh by saying link out that is allow apps to link ads to web store to offer third party payments right yeah yeah so not necessarily uh so this is kind of something that you see in rise in the last like 3 4 years is like charging for inapp goods outside of the app environment so like play is built to 7 $660 million Revenue stream where it

charges for its in-game items via web web shops and scope's done it too and then similarly you have like Spotify and Netflix are like parallels here where they are a lot of the engagement happens in the app so in some way you've got to get consumers to buy something they used in the app but outside of the app web stores yeah all of us use many apps and most of these apps monetize outside the App Store like you make your subscription to your mental health your recovery your gym app outside the App Store and it was absolutely normal for as long as I remember and now this is like a big thing like I don't get it so it's about friction right and so um the the apps you're describing like yes a lot of them you subscribe to outside of the App Store and the reason for that is because they don't want to pay 15% a lot of them have cut sweetheart deals uh so I think Netflix was not being was charging was being charged 0% maybe for its wow yeah it was either Netflix it was really bad it came out during the

Epic trial so they've had preferential deals a lot of them wow but the thing about those app is the engagement happens outside of the App Store too so you also watch Netflix in your Chrome in your Chrome browser on your PC so it's easier to it's more integrated into the engagement flow that monetization channel think about like a slot game on from Playa or like SC game is like like unless you're crossplatform and that's a big part of this too you have to get consumers to visit a totally new environment to make these purchases and unlike subscriptions where the purchase event happens hopefully just once you have to get them to do it again and again again so it's a because of microtransactions so it's a lot harder for games to do this than it is for subscription Services um but that's why 70 plus% of Revenue that Apple and Google generate from the App Stores is generated from games um so you know that's the thing that everyone cares about here is games and when we're talking about link outs does that also mean side loading and third party app store so can you

just talk about what is side loing and what is well third party app store like for those who don't have an Android device never one in their hands so they're different right so so one is about where you're buying things the other is how you're Distributing getting your apps I like to think about this in like three parts right so it's like how are you paying for things in the app how are you paying for things that you use in the app but outside of the app and then how are you accessing the app uh or how you downloading the app so on Google you've been in theory able to download things from non-play store stores forever um on Apple you've never been allowed to officially download apps except through the App Store so side loading is the downloading of applications outside of an app store either direct from a developers website like you do on a PC or a Mac um or through an alternative app store that you Sid load um which you know there's a couple of those coming um and if you distribute outside of the App Store you don't have to pay app store commissions like the commissions are all linked to um the App Store distribution services

side loing will be one to watch like it's one to watch very closely there's a lot of like user experience like blockers that Apple and Google erect to make it a harder experience to S side load an application but it's it would be a it would be a huge unlock if it took off so basically the the the thing that Apple did is the subject third party app stores to Apple's rigorous checks scare screen would mean that if I'm browsing through Instagram I see an ad for a game game I'm like oh great I'm going to download the game but it's taking me to a website where I can download that game actually this is really interesting question so and this this ties back to link out so as well as the all of these policies there's another very important set of policies called anti- steering policies and these policies block you from steering users to Alternative payment methods or alternative install methods from within an app that Apple has distributed so if I have an app that I've distributed to players through through the App Store I have real limits

on what I can do within that app to inform users about or link them to anything that is competitive with that app store or the all the in-house payments this is why you are not allowed without and this is one of the things that has already changed and is is really being figured out now is you are not allowed to direct users from within an app that Apple has distributed to a web shop or an alternative downloads channel so I do not believe I could be wrong about this and I interested to look it up because if Instagram was directing users to download Instagram from Instagram's website that would be a clear violation of the store policy if I am doing an advertisement on Instagram for my app that is not Instagrams unclear to me actually if that's compliant uh I think that's a very interesting thing to look up um so yeah so anti steering is the blocker there cuz I understood in a way that because I I installed Instagram through the App Store that means inside Instagram I cannot link out to anything that is

outside the Apple ecosystem yeah so this is like this is this is where it gets interesting very because everything you download on Apple has to be downloaded through the App Store so and so there has to be a sense of which this can't be the case because then you can't download anything CU even Chrome you download Chrome initially App Store yeah it has to be like a word of mouth even then like what would be the no but Chrome is is itself down at the app so it it cannot be the case like browsers have to be the exception here but it's something that I don't think we've seen for long enough to figure out like where like how this is going to shake out that's an essential question right like how can you direct users to your alternative app store um but regardless I actually think anti- steering is I've spoken to like the EU Regulators people's and and like the American judge uh judicial system as well as the doj have signal like link out is anti steering policies are by far the most vulnerable part of the kind of like status quo App Store policies in

terms of government action because it's fairly clearly quite anti-competitive to say you're not allowed to like tell your users about this competitive service um so you so link out policies like the this was where epic won right so epic won this case um that the Court ruled that it was anti-competitive for epic to prevent um informing or or directing users to competitive payment channels A's response to that was his 27% fee so they they said all right yeah you can link out uh to your Al enter payment Channel um but a you have to go through a like um submission process with us and we have to approve it B you we you can only do it in these with this kind of language and C we'll charge you 27% on everything you sell through anyone who's linked out right as opposed to 30% and when you combine that with outside payment fee like it doesn't make sense I think 36 app developers opted into this since it came into effects in January but that is been appealed by epic in April and they've had hearings on it the last kind of two weeks the judge in

America seems very very skeptical of Apple's compliance with her ruling in this case so I think you could see even America like linking out to Alternative payments like this is where I would watch the most vulnerability for sure yeah that's that's oh God damn it but I think that this is what is kind of exciting and different about this moment in government policy is like that is a fair response after like years of you know kind of disappointment but we are kind of seeing a different level of government involvement here and then really not kind of bending like the EU has signaled it's going to be very aggressive in enforcing the dma and the US judicial system I mean apple is the subject of the biggest big Tech antitrust lawsuit since the 1990s right now announced in April and even the Epic case like the judge seems like she's very much on the side of Epic Microsoft meta in thinking apple is not being compliant so I I think we if we are two defeatist it doesn't S us and when we're

looking outside us and EU in terms of international policy changes you mentioned India like what's happening there is everything basically like I like gdpr like it starts with EU and then it just Cascades everywhere from there or yeah and why why does it happen that way yeah so I think that the EU is is uh kind of a good bureaucratic Institution for experimenting policies like so bureaucratic institution that is a healthy way to describe EU well they're technocrats right so and the other thing is is it's like very technocratic like Brussels you know kind of nerds kind of and so it is a good place for like lots of policy thinking experimentation but actually probably the first movie is was South Korea and South Korea has a clear incentive here because it's where the oems are right like Samsung all of those companies are not getting a piece of this pie and so the South Korean government was kind of the first to take Serious action here

and that's still being litigated the other big big Market to watch is J is um Japan um so Japan has expressed real skepticism and is is looking at the eu's dma the UK's dmcc all these policies are kind of learning from one another and so the Successful Failure of the D the the problem with South Korea when they passed this is like they're not quite big enough to do this alone so Apple and Google came back which where we first saw this 27% response where they said that's fine we we we won't charge like we won't charge from p saying but we'll charge for a bunch of other made up fees and it'll be 27% and then like you know the South Korean government's not not quite big enough to be like no no no the EU government probably is um so it's one of the reasons you see EU taking leading action is because it's a big enough market to like have some Force here when you said South Korea is not getting a piece of the pie what pi are we talking about well the App Store well think about it right so like um South Korea is where like Samsung is LG you meant like it's an Android market yeah

well no it's more like the developers of android devices are many of them are South Korean and they are not getting any of this rev share and so the South Korean industry like business Community has a lot to gain from a more competitive App Store Market because those companies are in theory very well positioned to launch competitive app stores or payment products so if you think about the domestic interests of Industry South Korea as a kind of like economy would better a lot from seeing a more open App Store EOS system cuz they would launch their Samsung app store on Apple well no or just like I mean so I I don't think you'll see that happen because they can't make it work on Android yet but like if a lot of the stuff that came out during the Epic trial against Google was like all this kind of not shady stuff but like pretty dodgy stuff that Google was doing to prevent like Samsung being able to compete effectively with Google's Play Store like paying developers not forcing them to sign these agreements that like ban exclusivity paying developers not to Launch on the stores so like a lot of these practices that have under

tremendous scrutiny Have Been instrumental in preventing the success of like a a Samsung app store for example on Samsung devices which I I think were their best positioned to win step into the future of game monetization with exola exola empowers developers and Publishers to market sell connect and optimize their games globally from payment solution to a full suit of tools designed to grow your game's Revenue while fostering a lawyer player base exola is games gateway to worldwide success with exola the world is your playground visit exa.com today and find all the solutions that will help you to power your games into success everywhere who is this good for like I'm just trying to understand is this for those who have the resources to manage relationship with stores or those who have the resources to build their own stores like like is this good for the epics and the Microsoft of the world uh but most of the publisher will basically

be under the boat of Apple no matter what happens I think this is a real TBD so right now because of the landmines that Apple and Google have ad like erected here and that because the because it's it's basically the big guys are the only ones that can viably do this right now because they have to experiment and there's risk and you have to play the core technology fee and so right now it is not really viable for startups to be massively in inovative in their distribution model for example because it's just expensive not really the case for maybe distribution startup so like I do think you're seeing some competitive stores really take a swing at this skeptical of that as a kind of pure play thesis I think that there are very exciting like cuz these policy restrictions are like pretty restrictive so for example in Asia you have super apps right like a single app where you have games and wallets and chat we do not have that in the west because app stores Ban store within store policies so I think you could see some product Innovation for startups there but really I think the most exciting most

excitement should be with existing games with large amounts of Revenue where you don't really have any other initiative that could boost your margins by 15 to 20% and so you know if you are like an outscale midcore game that's not really growing shifting you know 50% of your spend to a 3% cost Channel instead of a 30% cost channel is huge uh and so they can afford to and have the reason to do this that's the other thing I'll say is like getting a higher monary Revenue only man as if you have revenue and so that's one that's another reason this is really most exciting for incumbents but I do think Apple EP epic Microsoft like the potential store competitors it's interesting to watch um I think the economic case there is questionable but or or at least uncertain got it and and it's it's it's if they start their so when they launch their stores they will still have to win this this legal battle so that they don't have to pay so much for one like 50 Cent per install as well as 20% of of all the fees and then it becomes a good

case for Microsoft and epic right well I think the challenge the EU like not huge for app stores but like in in fact I think the the economic case is already there even with the existing policies for an alternative distribution model uh the problem is you have like alternative app stores and alternative content so the 50 Cent per install fee sucks but once you paid it and you do have to pay that annually um so it's an annual fee not a one Fe which sucks what what yeah so it's every time Bonkers this is this is absolutely Bonkers like what the hell cuz updates count as inst stools and you can so each each install has to pay this once per year and when you update your app that counts install so you basically yeah so if the user uses your app in year you'll pay 50 cents for it if you've updated it yeah so if you don't update it through the cloud and you update it through if they push an update uh and a user has let's say I download an app in 2024 and it and I stopped using it and then I open it in January

2025 and they've and they pushed an update and to open it I installed a new update bam that's new install that yeah so then I have to pay and the thing that talks about this is It's a fee that's owed before any revenue and that's the nice thing about the commission structure is like it it it basically only charges developers who are making money and this is what I think is so questionable about the core technology is like it completely it just transforms the risk profile distri app right because if your app goes viral next thing you know you could owe Apple $50 million you um so like well not 50 million but like 10 million and you you're a startup that that will bankrupt you right so um yeah but but I think that like then again once you've done that you don't owe Apple anything on any Revenue you make through that app and so if I am making $25 per install um you know I'm saving a lot of money by just paying that 50 Cent fee cuz I'm paying 50 cents instead of whatever it is like a third of 25 um yeah7 8 I don't know

this is such a weird risk calculation that you have to be doing no it's actually not that complicated though cuz just think about it like this like let's say your choices are distribute through apple and pay 30% or distribute through um alternative app and pay 50 cents right so and you have a doll your app and you know your app makes roughly $10 per install or at least you can Target this towards users that like will pay that I mean then you're saving you know $25 because but isn't it isn't it that you have to make this choice so so before that if you don't have to pay the core core technology fee if you're downloading it from the App Store like you are right now but if you start sideloading it then you start paying the core the core technology fee right close but this is where it gets complicated so you you can opt into the alternative terms or so you can either stick with how things they are if you opt on alternative terms you can still distribute through the App Store and on apps you distribute through the app App Store you pay two fees you pay the A

reduced Commission of 20% not 30% and the 50 c fee per install above a million okay so but even that right let's say you are an app right now that makes five makes $10 install right and and you're think you should immediately opt into this because yes you will go from paying $10 you you you will go from paying $3 in commissions to Apple to um $250 because it's 20% plus the question is basically if you make more than $5 per install then the 10% commission saving starts being larger than the 50 fee so it's not hugely complicated math can you go back uh so this is the crazy thing so when they announced it the answer was no they've now they've now made a concession that you can go back one time so the when you regret why one time why Apple why because they want you to learn your lesson and never do it again right like I think a lot of this is about like not it'sing a theoretical Choice yeah

the prodal son returns home back to Apple now sit down and shut the up it's kind of like that it's kind of like that yeah yeah it's pretty wild oh my God so anticompetitive um Arie where where does the future lead us like what what is like you mentioned if you make more than $5 and also you forget to mention like the biggest winners here are the web shops um well the developers yeah the developers go to the web shops yeah so this is the important thing is that like the government policy aspect of this I find fascinating and is certainly very exciting but is also not necessary for direct consumer games to blow up plka has been doing this for years it's been building this product for 10 years and it's doing $700 million a year through its direct consumer channels in fact I think pla has declined in Mobile Revenue year on year for the last 3 years since 2021 but has basically offset that by growing its web shop Revenue so much and that web shop

Revenue they they pay a cost of sales on that of 3 to 4% instead of 30% and so um the no regulatory changes are necessary for plka to have already built the business its built $700 million all the regulatory changes are great and the other thing that what they're doing is they're just making like causing I think Apple and Google to exercise a little bit more caution in terms of how they're dealing with developers so you know whereas before they might have been a bit more handed with you know Banning your app or blocking you through review I think now they'll be a little more careful um I think the future is going to see this category continue to explode because a lot of non-regulatory factors are driving it like technology HTML 5 distribution crossplatform is huge here um that's been maybe the biggest driver of like alternative sale alternative payments revenues um but the regulatory stuff will continue to develop and I think in ways and favorable ways for Developers for for for app developers because the EU seems like it's got teeth I would definitely watch what happens in

the americ in the American court cases notably uh epic V Google like epic won that but the judge has yet to issue a remedy that should happen reasonably soon Apple V Google like we'll see whether they fall out on whether or not the 27% linkout policy is fair um and then the big big one in America is the Department of Justice case against Apple um so I think this has nowhere to go but up right I think this could be the thing that like rescues the mobile games industry it's like one of the reasons I went to work in this area is because I was looking at like just our industry off edfa and it was pretty bleak and I think this is probably the most exciting exciting development T and this could be as good for the industry as idfa was bad for for it wow so positive outcomes positive and you definitely you you've put your career on this yeah exactly exactly I'm a hero I'm try to rest uh bring us back to growth I think it's also I think I think Innovative developers should be thinking how do I

think about doing product Innovation based on this thesis right like if you can create a product premised on this economic model being slightly different from the kind of incumbents I think that I would find that company I would love to see a few pictures with you know smart developers thinking about how you design something around side loing or how you design something around you know web stores well those times are over you ain't funding anything right now you're just no I'm not I'm not you're now on the other side getting funded yeah yeah well hopefully you know so TVD on that one yeah well on that note Mr archal Stonehill this was a fantastic um dma for dummies episode and I think we'll need to get back to this as as the other court cases move forward as there's changes and especially as they are companies that are good examples that are taking advantage of the this change in the environment and

are following the $5 rule if you get $5 or more get your web shops up and if you guys are if anyone is interested in talking about this stuff as you can tell i' love talking about this stuff and so if anyone is curious to find out if if or how you can take advantage of this like I will talk your ear off about this and and it is individual two apps like this suits some apps beautifully um and other apps less so but I think that like it's something everyone should be thinking about so hit me up if you want to chat there you have people get your dmas web shops ready um if you have that type of a games that could sustain this change if not continue to be under the boat and uh and wait for better legislations that help everybody and not just those with high monetization awesome thanks be thank you for having me it's been a delight of course and on that note thank you every everybody for listening Archie's uh LinkedIn profile

in the description below as well as stash as well as the podcast podcast secret secret stash check it out the secret stash feedback is welcome yeah all right thank you everybody thanks bye-bye