France plans to take Apple and Google to court over 'abusive commercial practices'

AppleInsider

The French government will be taking legal action against Apple and Google for alleged "abusive commercial practices," France's finance minister has declared, accusing the tech firms of taking advantage of the country's app developers with unfair contracts and unjust app store pricing schemes.

Apple's Opera store in Paris, France

Minister Bruno Le Maire spoke to RTL Radio on Wednesday about the French government's intention to fight both Apple and Google in court, reports Bloomberg. Le Maire claims that when developers and "sell" them to Google and Apple, "their prices are imposed, Google and Apple take all their data, Google and Apple can unilaterally rewrite their contracts."

"All that is unacceptable and it's not the economy that we want," continued the minister. "They can't treat our startups and developers the way they do."

Le Maire's office advises an investigation by the ministry's fraud office found there were "significant imbalances" in the relationship between developers who create the apps and the companies operating the app stores, between 2015 and 2017.

A similar investigation into Amazon conducted by the Finance Ministry last year suggests the fine would be in the low millions. Currently under review by a tribunal, the Finance Ministry is looking to fine Amazon 10 million euros ($12.4 million) over the matter.

AppleInsider has contacted Apple about the minister's comments, but has yet to receive a response.

The relationship between Apple and France has become turbulent in recent months. In February, a Parisian court blocked an attempt by Apple to stop the protest group Attac from staging demonstrations concerning Apple's tax affairs in the iPhone maker's retail outlets in the country.

In January, the French government was reported as investigating claims that Apple's battery management software that slows down iPhones with worn batteries is a form of planned obsolescence.

bshank

Let me guess. Imbalance is defined as Apple and Google have a lot of money, but startups don’t. Wouldn’t startups by definition not have as much money as a well established company?! I guess it’s up to Apple and Google to make their App stores public so any startup can just use them to avoid those pesky startup costs?

edited March 2018

airnerd

I just always figured that if I started something and wanted to put it on the largest stage in the world, no matter if that is in technology or art or theater, that I am going to have to pay a price for that kind of exposure.  So yeah, start ups have to bend to Apple and Googles "will".  If you don't like it, come up with a better model and beat those companies at their own game.  It's been done many times before.  Just the price of doing business.

esquirecats

I'd be very interested to see where this goes. However what does strike me as curious is that France seems to be alone in these particular complaints, I find that unusual as there is no shortage of countries that have levied various complaints against tech companies, nor countries that are trying to assist start ups in every way possible.

A country must keep a holistic perspective and even-handedness when enforcing these complaints - otherwise they risk harming the industry they are attempting to protect. If too overbearing then there will never be a "French Apple", which ultimately means that true innovation will come from abroad.

darelrex

"Unfair contracts and unjust app store pricing schemes?" That's pretty vague. Never mind the fine; what I want to know is, what permanent changes to the App Store is France planning to require?

gatorguy

darelrex said:

"Unfair contracts and unjust app store pricing schemes?" That's pretty vague. Never mind the fine; what I want to know is, what permanent changes to the App Store is France planning to require?

Absolutely zero details offered yet. So far everything known was via that interview. 

techconc

I'm not sure I understand the basis of this argument. Developers set their prices. Nobody is forcing developers to publish for either platform. Apple and Google have their own stores and they get to set the rules. Apple and Google should respond by banning French developers from participating in their stores. That seems like a fair response....

[deleted user]

"Le Maire claims that when developers and "sell" them to Google and Apple, "their prices are imposed, Google and Apple take all their data..."

wut?

thrang

Which laws are being broken?

racerhomie3

France has much bigger problems to deal with.

dewme

So exactly what kind of economy does the French government want? They seem to frequently be at odds with nearly every foreign business that tries to setup shop in their country and in the EU and seemingly want to micromanage everyone else's business. Maybe they're not getting a fair shake in the media but they certainly are frequently portrayed as a constantly whining contrarian society who really dig big parades.

lordjohnwhorfin

They only pretend to care about startups because it gives them a shot at nibbling some of Apple's cash. I seriously doubt this comes in reaction to a single complaint by an actual software startup; rather, it's a reaction to seeing astronomical amounts of cash escaping their claws.

boltsfan17

techconc said:

I'm not sure I understand the basis of this argument. Developers set their prices. Nobody is forcing developers to publish for either platform. Apple and Google have their own stores and they get to set the rules. Apple and Google should respond by banning French developers from participating in their stores. That seems like a fair response....

I don't get it either. Maybe France can develop their own hardware, OS, and App Store for French developers. 

anton zuykov

airnerd said:

I just always figured that if I started something and wanted to put it on the largest stage in the world, no matter if that is in technology or art or theater, that I am going to have to pay a price for that kind of exposure.  So yeah, start ups have to bend to Apple and Googles "will".  If you don't like it, come up with a better model and beat those companies at their own game.  It's been done many times before.  Just the price of doing business.

Oh the horror! You are actually proposing startups should invent something new and disrupting! How dare you! Despicable and absolutely inhumane! EU should ban that type of speech altogether.  /s

jimh2

At no time in the history of computing has it been simpler to sell your applications. The App Store is so easy to use: develop, upload your app and set the price. 30% to Apple and the rest to you. No inventory to maintain, no sales tax to collect and pay out and updates are easy. Back in the days of retail and catalog sales 30% cut would have been a dream and you had to have a box with artwork, media, and printed instruction manual and hope that you got shelf space (near impossible except for large publishers). No one is forcing anyone to make apps and sell them. As for Google side loading is possible so there really is nothing to complain about.

cropr

Owning an app developing company I do understand the argument of France.  The complaint is that app developers for iOS and Android are forced to accept the rigid rules of these stores.  If you develop for e.g. Mac you can choose to use the Mac app store or you can choose you own pricing policy and distribution channel.

The technical rules for an app development are not the issue: they ensure that the user experience is great.   The commercial rules are a different story.  As an app developer I cannot give discount during launch (to create a critical mass for my app), I cannot use coupons,  I cannot do cross selling (you bought my first app, now you can a discount on my second), I cannot freely define prices, I have stupid currency restrictions ...  These limitations can seriously impact the profitability of an app. 

Off course there are ways to circumvent this.  Since 2016 all my new apps are free to download.  They use data that is stored on a paying cloud service where I have full control.  Very similar to the web based client I developed for PC and Mac.  In this way I even get rid of 30% cut Apple and Google are asking.   I do have to provide my own paying service, which I did anyhow for the web based clients and which costs about 2.5% iso. 30% Apple and Google are charging.   But this scheme is only possible for cloud based services where the real value is in the cloud data.

If France would go to Vestager, the famous European Commissioner in charge of competition, France might have a point.  If the EU commission finds that a mobile app developer has no choice but to accept the commercial rules of the App Store and/or the Play Store, these commercial rules might be perceived as anti competitive behaviour.  The fact that App Store and Play store have very similar commercial rules, might even be interpreted as forming a cartel, which is not allowed

uroshnor

cropr said:

Owning an app developing company I do understand the argument of France.  The complaint is that app developers for iOS and Android are forced to accept the rigid rules of these stores.  If you develop for e.g. Mac you can choose to use the Mac app store or you can choose you own pricing policy and distribution channel.

The technical rules for an app development are not the issue: they ensure that the user experience is great.   The commercial rules are a different story.  As an app developer I cannot give discount during launch (to create a critical mass for my app), I cannot use coupons,  I cannot do cross selling (you bought my first app, now you can a discount on my second), I cannot freely define prices, I have stupid currency restrictions ...  These limitations can seriously impact the profitability of an app. 

Off course there are ways to circumvent this.  Since 2016 all my new apps are free to download.  They use data that is stored on a paying cloud service where I have full control.  Very similar to the web based client I developed for PC and Mac.  In this way I even get rid of 30% cut Apple and Google are asking.   I do have to provide my own paying service, which I did anyhow for the web based clients and which costs about 2.5% iso. 30% Apple and Google are charging.   But this scheme is only possible for cloud based services where the real value is in the cloud data.

If France would go to Vestager, the famous European Commissioner in charge of competition, France might have a point.  If the EU commission finds that a mobile app developer has no choice but to accept the commercial rules of the App Store and/or the Play Store, these commercial rules might be perceived as anti competitive behaviour.  The fact that App Store and Play store have very similar commercial rules, might even be interpreted as forming a cartel, which is not allowed

So some of the things you assert do not seem to be true based on my experience:

- yes you don’t set an exact price, you select a price tier 
- you can change pricing , and change it for specific time windows, so if you want to offer a launch discount you can
- you can bundle apps into a discounted bundle
- you can cross sell to new versions , although IAP is the most effective way of doing this

The 30% is not a card processing fee, that covers App Review, hosting, download bandwidth and a bunch of other things a credit card transaction does not provide.

anton zuykov

cropr said:

Owning an app developing company I do understand the argument of France.  The complaint is that app developers for iOS and Android are forced to accept the rigid rules of these stores.  If you develop for e.g. Mac you can choose to use the Mac app store or you can choose you own pricing policy and distribution channel.

The technical rules for an app development are not the issue: they ensure that the user experience is great.   The commercial rules are a different story.  As an app developer I cannot give discount during launch (to create a critical mass for my app), I cannot use coupons,  I cannot do cross selling (you bought my first app, now you can a discount on my second), I cannot freely define prices, I have stupid currency restrictions ...  These limitations can seriously impact the profitability of an app. 

Off course there are ways to circumvent this.  Since 2016 all my new apps are free to download.  They use data that is stored on a paying cloud service where I have full control.  Very similar to the web based client I developed for PC and Mac.  In this way I even get rid of 30% cut Apple and Google are asking.   I do have to provide my own paying service, which I did anyhow for the web based clients and which costs about 2.5% iso. 30% Apple and Google are charging.   But this scheme is only possible for cloud based services where the real value is in the cloud data.

If France would go to Vestager, the famous European Commissioner in charge of competition, France might have a point.  If the EU commission finds that a mobile app developer has no choice but to accept the commercial rules of the App Store and/or the Play Store, these commercial rules might be perceived as anti competitive behaviour.  The fact that App Store and Play store have very similar commercial rules, might even be interpreted as forming a cartel, which is not allowed

"In this way I even get rid of 30% cut Apple and Google are asking"
Does the cloud service you use, incur costs or is it free?
You do realize the reason you pay the price (at least, by following rules of Apple, if not by paying 30% cut) is because Apple gives you instant access to their customers (half a billion of them)? Otherwise you would be paying 50-70% of your revenue as commissions to distributors, to get anywhere near the numbers of customers Apple markets you to...and even then it won't be as convenient(aka TIME/COST).

What a weird combination of someone who works for himself and makes money doing that, and someone trying to argue that the rules you set up for the products/services should be restricted.... That is JUST a bit hypocritical and ironic, don't you think?

Imagine, someone uses the same logic in arguing that you should not be posting your app, as it creates unnecessary pressure on other developers (because they are less capable of developing good apps) . Going by what you have said, you should be supporting and opposing that at the same time.
SMH

edited March 2018

dewme

cropr said:

Owning an app developing company I do understand the argument of France.  The complaint is that app developers for iOS and Android are forced to accept the rigid rules of these stores.  If you develop for e.g. Mac you can choose to use the Mac app store or you can choose you own pricing policy and distribution channel.

The technical rules for an app development are not the issue: they ensure that the user experience is great.   The commercial rules are a different story.  As an app developer I cannot give discount during launch (to create a critical mass for my app), I cannot use coupons,  I cannot do cross selling (you bought my first app, now you can a discount on my second), I cannot freely define prices, I have stupid currency restrictions ...  These limitations can seriously impact the profitability of an app. 

Off course there are ways to circumvent this.  Since 2016 all my new apps are free to download.  They use data that is stored on a paying cloud service where I have full control.  Very similar to the web based client I developed for PC and Mac.  In this way I even get rid of 30% cut Apple and Google are asking.   I do have to provide my own paying service, which I did anyhow for the web based clients and which costs about 2.5% iso. 30% Apple and Google are charging.   But this scheme is only possible for cloud based services where the real value is in the cloud data.

If France would go to Vestager, the famous European Commissioner in charge of competition, France might have a point.  If the EU commission finds that a mobile app developer has no choice but to accept the commercial rules of the App Store and/or the Play Store, these commercial rules might be perceived as anti competitive behaviour.  The fact that App Store and Play store have very similar commercial rules, might even be interpreted as forming a cartel, which is not allowed

Not disputing some of the things you're saying, but isn't the Apple App Store model in total (and Google Play Store) a closed/proprietary system that requires an explicit contract between the owner of the system (Apple) and entities whose choose to participate in this closed/proprietary system under the terms and conditions set forth? The App Store is not like a public utility put in place by the government using taxpayer funds and for the betterment of society in general. I don't see the App Store as being any different than Atari's or Nintendo's proprietary expansion bus and interface protocols that must be licensed (with explicit terms and conditions) for game cartridge makers to participate in the game console's markets. In industrial and medical product markets many system vendors build proprietary expansion models that require explicit licensing to participate in the system and interoperate with other vendor's who have also licensed access to the proprietary system. 

I also don't see where app developers are forced to do anything at all. Nobody forces them to participate in Apple's closed/proprietary model. They choose to participate all on their own for one reason or another. Maybe they choose to participate because Apple is providing a huge marketplace, distribution infrastructure, storefront, and market access that they would not otherwise have if they decided to create everything on their own. But this is a business relationship between two business entities. To be successful both sides have to invest and both sides have to sacrifice to reach a mutually beneficial agreement with clear terms and conditions. Apple spent tens of billions of its money building out and sustaining their App Store, developer network, and securely connected infrastructure to support their side of this business relationship. Developers pony up 30% on their side to get in on the action.

It's a pay-to-play model and nobody is ever forced to play.

anton zuykov

cropr said:

I do have to provide my own paying service.

  Are you one of those companies, who develop their own services thinking they save money, leak customer data from time to time and get sued/fined and lose business because of the lack of trust. Sounds legit!

ike17055

Nothing new here. The social welfare states need the money, and will find any excuse to confiscate it from whoever has deep pockets. Plus, it is their standard routine to punish any player who sets the bar high with innovation, and thus makes the socialist-minded least-common-denominator mindset feel disrupted. Europe is all about “stability” at any cost, which generally leads to stagnation.