# Apple's app fees suppress software competition

Markdown copy of https://realalpha.app/s/apples-app-fees-suppress-software-competition/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Tim Sweeney](https://realalpha.app/people/tim-sweeney/) · Tim Sweeney is founder and CEO of Epic Games. · Created Unreal Engine and co-created Fortnite, and has led Epic Games since founding it in 1991.
- Host: [Lex Fridman](https://realalpha.app/people/lex-fridman/) · Host, Lex Fridman Podcast · Robotics and AI researcher at MIT; started the show in 2018.
- Show: Lex Fridman Podcast
- Episode: [Tim Sweeney: Fortnite, Unreal Engine, and the Future of Gaming | Lex Fridman Podcast #467](https://realalpha.app/v/477qF6QNSvc/), Apr 30, 2025
- Moment: 3:28:41 to 3:35:02 of the episode (6 min), playing on https://realalpha.app/s/apples-app-fees-suppress-software-competition/; the episode from there: https://realalpha.app/v/477qF6QNSvc/?t=12521

## Quote

> “Why should Apple be adding a **30% junk fee** to all commerce you do?”
> — [Tim Sweeney](https://realalpha.app/people/tim-sweeney/) at [3:31:16](https://realalpha.app/v/477qF6QNSvc/?t=12676) · Lex Fridman Podcast

## Takeaways

1. A device owner should be able to install apps directly.
2. Sweeney calls Apple's 30% fee a junk fee on commerce.
3. Competing stores could improve app discovery and prices.

## About this segment

Tim Sweeney argues that Apple blocks users from installing apps directly and charges developers fees that distort the market. He says competing stores could improve prices and give users better choices.

From “Tim Sweeney: Fortnite, Unreal Engine, and the Future of Gaming | Lex Fridman Podcast #467”, Apr 30, 2025. [Watch the full episode](https://realalpha.app/v/477qF6QNSvc/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[3:28:47](https://realalpha.app/v/477qF6QNSvc/?t=12527) fact that amongst many other things you've been uh philosophically and spiritually battling monopolies in general, one of which is the Apple marketplace that charges 30% from developers. Can you speak about this, this idea that you believe that Apple and other companies' valves should not be charging that kind of revenue cut? Sure. Well, let's start from a very basic principle of computing. The first computer I owned was an Apple II Plus, designed by Steve Wozniak and marketed by Apple and then an IBM PC.

[3:29:33](https://realalpha.app/v/477qF6QNSvc/?t=12573) And in those days, anybody could write code. Your computer literally turned on with a programming language prompt in front of you. You had to actually do work to not write a program and to instead run somebody else's program. That was incredibly empowering. And anybody could write a program. Anybody could put it on a floppy disk. Anybody could share it with their friends. anybody could make copies of that put it in a store they could sell it they could build a business around it and they were completely uh able to without seeking any big tech corporations permission do whatever they want even from ibm remember ibm was the dominant computer company on earth at the time that they released ibm pc as an open platform and you know so it's really been firmly implanted in my mind that this is this was a magical and wonderful time of unmatched

[3:30:21](https://realalpha.app/v/477qF6QNSvc/?t=12621) economic progress for technology in the entire world. And over time, big companies have realized that they could shut down and just block software makers from releasing software on their own and block software makers from doing business with customers directly. And I've always viewed this practice is terribly abusive because when you buy a computer you you spend or a phone um you spend good money on it it's your money you spent on that phone and now you own that phone and there's absolutely no reason that apple should block you from installing apps uh from other developers directly if you want going to their web page or writing your own apps without their permission and running them yourself without having to get a developer account without having to go through their bureaucracy.

[3:31:15](https://realalpha.app/v/477qF6QNSvc/?t=12675) And there's no reason that any consumer who gets an app shouldn't be able to do business directly with the developer of the consumer. You already bought that phone. Why should Apple be adding a 30% junk fee to all commerce you do? And why do they selectively apply it to some things and not others? I've always viewed this as deeply abusive and that it shuts down the competitive engine that once fueled the app and software economy.

[3:31:40](https://realalpha.app/v/477qF6QNSvc/?t=12700) It's still a vibrant competitive engine on Windows and on the Internet, but it's no longer with mobile apps because these stores have popped up and they don't provide any useful value to the user. Yes, they're a search function to find software, but there's no reason other companies couldn't build a better one. And I bet if you had Steam or if you had Valve build Steam for iPhone, I bet Steam for iPhone would be a much better app store than the iOS app store and a lot of people would use it.

[3:32:07](https://realalpha.app/v/477qF6QNSvc/?t=12727) and that Apple would be forced to build a better app store in competition and that everybody would improve their products as a result. But, you know, Apple and Google shutting down the competitive engine that drives the software economy has massive implications for everything. And, you know, one of them is reshaping the nature of mobile apps to be really offensive to gamer sensibilities. You know, if you go on console, the best console games you see listed on the storefronts um the best console games that you see reviewed are awesome games uh that really have a lot of creative merit the ones that sell the best are really enormous values for their money and are the product of an immense amount of work um you don't see that on iphone the top apps on iphone the top games on iphone at almost all times are these ridiculously greedy high monetizing

[3:33:00](https://realalpha.app/v/477qF6QNSvc/?t=12780) you know whale games which are pervaded with pay-to-win and loot box practices you know they have a sort of a legalized a form of gambling and you know these games are not driven by fun they're driven by manipulation of the players uh to greedy ends um yeah and you know it's very hard for for the fund-based games to actually succeed there um and you know the cost of operating these online games now are enormously high so you have a game that's based on fun it's not loot box heavy you know you have to pay 30 percent of your revenue to apple in order to just get access to the platform. And 30% is way, way, way more than most buying companies making profits right now. And so if that fee is more than the profit from a natural company, then they can only stay in business by raising prices. So these 30% fees are raising prices of all digital goods. It's

[3:33:50](https://realalpha.app/v/477qF6QNSvc/?t=12830) just inflationary as a force in the economy. That's just the first direct tax. But then to reach users, when a user searches for, before Apple blocked Fortnite on iOS, when a user search for fortnite the first result was always some competing game like that's utterly anti-user like you search for steam for a game and if that game's on steam it's the first result always because steam's not getting and shitified with advertising apple is and you know they do that so they can make even more than 30 so if you want to be the search the first search result for your game you're probably paying more like 45 if you want to reach users on social media you're paying another 20 So literally something like 70% of the revenue for a game is just going into junk fees to acquire users and get them in your game.

[3:34:37](https://realalpha.app/v/477qF6QNSvc/?t=12877) And the money that's left over is only enough to fund these, you know, games with rather abusive practices that do not look to normal gamers like games for the most part. Now, there are some exceptions. There are some great games on iOS and there are some games with good practices. But, you know, the engine has been really corrupted in a way that competition would fix. If you unleashed lots of competing stores on iOS,