New EU rules may force change in how Apple promotes own apps in App Store
Apple and other tech giants may have to alter how they promote their own apps on platforms they control, with the EU competition head hinting at rule changes that could be revealed before the end of 2020.
The European Union is working on updating the Digital Services Act, a set of rules dictating how platforms like the App Store are protected, as well as governed. As part of the reformation effort, which could include alterations to how content is handled, there could be rules that advise how platform owners present services they also operate.
European Commissioner for Competition Margrethe Vestager told CNBC on Friday that changes will include elements concerning self-preferencing. "With power, with strength comes responsibility and part of that is, for instance, that you don't promote yourself when your services (are) in competition with other services," Vestager suggested.
For Apple, the rules would limit how it would promote its own apps and services through its storefronts, such as the App Store. For example, Apple may be prevented from actively promoting Apple Music as a service it offers ahead of rivals like Spotify.
According to Vestager, the exercise isn't really to do with the size of the platforms, more attempting to make sure there's fair competition. "That is the point, that if you have grown into this size that you actually do exercise control on yourself and that you enable other people to their business in a way that is fair and square," the competition chief added.
Apple is already under investigation by the European Commission, with probes looking into its Apple Pay and App Store activities.
The new legislation from the European Union and regulator the European Commission is anticipated to be presented to the European Parliament before the end of the year, potentially on December 9, but it will take time for it to be ratified by EU countries if the parliament agrees to the measures.
As well as competition, the regulatory refurbishment also covers areas including handling misinformation and deceitful content, the potential sharing of customer data with smaller rivals, and digital taxation, among other topics.
Apple and other major companies potentially affected by the rules were invited to discuss the proposals with the European Union in November. At the time, it was believed the session would not be particularly consequential, as the draft rules have largely been finalized, and were unlikely to undergo major edits at this late stage.
The European Union is working on updating the Digital Services Act, a set of rules dictating how platforms like the App Store are protected, as well as governed. As part of the reformation effort, which could include alterations to how content is handled, there could be rules that advise how platform owners present services they also operate.
European Commissioner for Competition Margrethe Vestager told CNBC on Friday that changes will include elements concerning self-preferencing. "With power, with strength comes responsibility and part of that is, for instance, that you don't promote yourself when your services (are) in competition with other services," Vestager suggested.
For Apple, the rules would limit how it would promote its own apps and services through its storefronts, such as the App Store. For example, Apple may be prevented from actively promoting Apple Music as a service it offers ahead of rivals like Spotify.
According to Vestager, the exercise isn't really to do with the size of the platforms, more attempting to make sure there's fair competition. "That is the point, that if you have grown into this size that you actually do exercise control on yourself and that you enable other people to their business in a way that is fair and square," the competition chief added.
Apple is already under investigation by the European Commission, with probes looking into its Apple Pay and App Store activities.
The new legislation from the European Union and regulator the European Commission is anticipated to be presented to the European Parliament before the end of the year, potentially on December 9, but it will take time for it to be ratified by EU countries if the parliament agrees to the measures.
As well as competition, the regulatory refurbishment also covers areas including handling misinformation and deceitful content, the potential sharing of customer data with smaller rivals, and digital taxation, among other topics.
Apple and other major companies potentially affected by the rules were invited to discuss the proposals with the European Union in November. At the time, it was believed the session would not be particularly consequential, as the draft rules have largely been finalized, and were unlikely to undergo major edits at this late stage.
Comments
Okay, they have their iWork products like Pages, Numbers, Keynote, GarageBand. But they're up against Microsoft in this category, and MS wins in the completeness category. I use the Apple products for relatively routine and unsophisticated tasks, but any interaction with others means I need to use Word, and sometimes Google's products.
But, really now, Apple's products at best compete with Windows products.
User's generally mix and match their software to meet their preferences, or, if users of Apple products are choosing to complement their Apple device with other Apple services, this is also not extraordinary. Customers often buy new products from brands for which they have prior experience. Secondly Apple offer a level of integration in their services that companies like Spotify are either slow or simply refuse to offer. Pandora and iHeartRadio are both very fast at implementing new playback features, such as Apple Watch and CarPlay support.
Then there is a question of new complementary products. Should the HomePod have launched with tie-ins to all 3rd party music platforms - even though this would require the 3rd party to perform additional unpaid work, expose Apple's trade secrets and potentially delay their own entry into the market, and what if they refuse, should the launch be cancelled because a 3rd party refuses to join?
This whole argument seems moot - Spotify enjoys a significantly larger market share than Apple Music, and a mere 0.5% of Spotify's customers on iOS use the in-app payment feature. Since Spotify hasn't offered IAP for new users in years, that 0.5% are all at the 15% rate. That sounds like a pretty good deal for Spotify.
If you're asking about EU tech companies with controlled app stores serving up 3rd party applications along with the integration of their own first party app options give us an example of who you're asking about.
if there is one thing EU parliament should do, it is check their iq and their understanding of real world. They now started to act like Chicom who want to control everything from outside.
I vaguely remember a story from WW2 when Germany captured Denmark (my memory may be fuzzy but the story doesn't even have to be true to make my point.) The German occupiers spoke to the king and demanded that people wear a black armband if they belonged to a certain religion. Denmark ingeniously responded, "Okay, we will comply, but everyone across the country will wear a black armband." Suddenly the requirement was dropped. That would have been too much of an embarrassment to Germany.
That lesson could be applied here. For example, if a software purchaser has to explicitly indicate Apple's name in any search for Apple's software, even if the restriction applies only to Apple, then Apple could apply that same requirement to other company too. Microsoft and Valve might tolerate that, because they are well-known but smaller companies would suffer and call on the EU to demand that it go back to the old method. But Apple would say, "We are just treating everyone equally."
The truth is that the EU wants Apple's software treated "less than equally" and they are camouflaging it as "fairness."
I demand that Apple fight back. And one way Apple can fight back now is by permanently banning all products from Epic and Spotify. I've just had enough of it. Apple has no obligation to let these idiots on their stores. I hate when Apple shows a complete lack of courage.
Apple are under an obligation to offer a competitive playing field if the law says they have to.
The traditional platform owners controlled things like natural resources, land, rights of way, physical infrastructure, physical access to markets, licensing codified in laws, transportation systems, etc. Breaking the stickiness of traditional platforms meant replacing or displacing vast infrastructure and wresting political control from well entrenched elites who were in the pockets of those who called the shots. Today’s platform owners pale in comparison and have teflon like stickiness that can crumble in a heartbeat as soon as something better, cooler, and more in tune with the demographics driving purchase decisions arrives on the scene. Apple and Amazon don’t have to carve out or control vast infrastructure assets, resources, or deploy armies of lobbyists to lock in their platforms and exert their dominance. If Apple loses its “coolness” in a particular market they can wither and die in that market no time flat.
The old style platforms, like railroads and utilities, were very expensive and time consuming to establish and equally difficult to disassemble. Modern platforms like Facebook, Twitter, and the App Store were not difficult to build out, by comparison, they went up pretty quickly and could be disassembled just as easily. Nobody’s properties were taken over by eminent domain, nobody’s homes were bulldozed to lay down tracks, and nobody has to think about how to deal with the blight that ensues when the old infrastructure is abandoned. Facebook or the App Store would go away in a poof of virtual smoke. Easy come, easy go.
The valued asset in the App Store is the intellectual property represented in the apps themselves. Apple doesn’t own that, the individual developers do. The App Store is nothing like a coal mine where the valued asset is owned by the owner of the mine, who may also own or have a stake the rail system needed to move the coal. If the App Store vanishes, the intellectual property owners still have their assets and can move them to a new store.
Regulators and backward thinkers see the explosive growth of platforms like Facebook, Twitter, and the App Store and draw a false equivalence to monopolies of the past simply because of the sheer magnitude of the consumers seemingly locked into these platforms. The numbers appear huge, and they are, but the regulators are using the the wrong measuring sticks because they don’t understand network effects and are bedazzled by big numbers. They need to recalibrate to understand the new realities of new markets that are not constrained by traditional impediments to growth or traditional thinking. They are riding on the slow train of backward thinking and outdated expectations.
This is just one salvo by the EU in a never-ending salvo of attempts to control the marketplace to favour the local market's produce. It's the EU's right to demand an imbalance, but it's Apple right to leave the market.
It's clear you're not going to please everyone but let's not go overboard.