Apple must make changes to in-app payment requirement, Dutch antitrust agency says
Amsterdam legislators have declared that Apple requiring developers to use its in-app payment service in the App Store is anti-competitive, and changes must be made.
The declaration comes two years after an examination started. Initially, it was a wider examination, but along the way it was cut down and focused mainly on dating market apps, spawned by a complaint from Match.com's parent group.
According to a report from Reuters on Thursday, The Netherlands' Authority for Consumers and Markets (ACM) told Apple of its decision in September. Reportedly, there is no fine associated with the behavior, but Apple must make changes to the in-app payment service.
The investigation focus was on the in-app payment system and how Apple charges commissions of between 15% and 30%. Speaking at the start of the investigation in 2019, then-ACM board member Henk Don said that the authority had received multiple complaints.
"To a large degree, app providers depend on Apple and Google for offering apps to users," Don said. "ACM has received indications from app providers, which seem to indicate that Apple abuses its position in the App Store. That is why ACM sees sufficient reason for launching a follow-up investigation, on the basis of competition law."
ACM declined to comment on the matter to Reuters, but did say that the ruling was under "legal review."
The decision follows South Korea's law enacted to prevent similar behavior by App Store holders.
It also follows Judge Gonzales' ruling in the Epic vs. Apple case, where she stopped short of mandating third-party payment processors in-app. Instead, she ruled that developers could steer users to external payment methods. It remains to be seen how Apple will implement this, as it has until late December to do so.
The same Dutch authorities have launched an antitrust investigation into technology firms which limit access to NFC services in phones. Apple was not named in the initial description of this investigation, but it appears to follow criticism of how the company refuses to allow competitors access to its Apple Pay system.
Read on AppleInsider
The declaration comes two years after an examination started. Initially, it was a wider examination, but along the way it was cut down and focused mainly on dating market apps, spawned by a complaint from Match.com's parent group.
According to a report from Reuters on Thursday, The Netherlands' Authority for Consumers and Markets (ACM) told Apple of its decision in September. Reportedly, there is no fine associated with the behavior, but Apple must make changes to the in-app payment service.
The investigation focus was on the in-app payment system and how Apple charges commissions of between 15% and 30%. Speaking at the start of the investigation in 2019, then-ACM board member Henk Don said that the authority had received multiple complaints.
"To a large degree, app providers depend on Apple and Google for offering apps to users," Don said. "ACM has received indications from app providers, which seem to indicate that Apple abuses its position in the App Store. That is why ACM sees sufficient reason for launching a follow-up investigation, on the basis of competition law."
ACM declined to comment on the matter to Reuters, but did say that the ruling was under "legal review."
The decision follows South Korea's law enacted to prevent similar behavior by App Store holders.
It also follows Judge Gonzales' ruling in the Epic vs. Apple case, where she stopped short of mandating third-party payment processors in-app. Instead, she ruled that developers could steer users to external payment methods. It remains to be seen how Apple will implement this, as it has until late December to do so.
The same Dutch authorities have launched an antitrust investigation into technology firms which limit access to NFC services in phones. Apple was not named in the initial description of this investigation, but it appears to follow criticism of how the company refuses to allow competitors access to its Apple Pay system.
Read on AppleInsider
Comments
The regulators are not going to demand Apple provides its services for free.
So, if Apple can no longer charge for use of their service by making it part of payments, they wil charge developers another way.
Make them pay more for the developer license, pay per app submission, pay per download, etc.
They could have a free tier for small developers.
From a consumer perspective it just means that you’re having to deal with a separate payment system for all of these out-of-band subscriptions and you’re handing out your personal and financial information to many more people. In other words, consumers are taking on more complexity, inconvenience, and privacy/security risk so that App developers can skim a little more profit from you. Yes, they can be nice and pass along some of their savings to you, but they don’t have to. They can charge whatever they want and with addictive games the sky is the limit.
In the end, these out-of-band app subscription payment services aren’t screwing Apple nearly as much as they are screwing their customers.
If these will have to start paying many will just leave and users will have to use their website.
Then even more developers will not think it worth the trouble, and money, to be on the AppStore.
This downward spiral might force Apple's take to go below break-even.
Then what?
It may be a while before the details of the ruling are published. Apple has asked the Rotterdam District Court for an injunction to block the publication of the ruling during its appeal.
A court spokesman confirms there is a current case to block publication, but did not know when a decision is expected to be made. The court proceedings are closed to the press and the public at Apple's request.
Before anyone jumps in with "Apple can't have a monopoly since Android has the majority share of the market" note that in the only relevant market, that of Japan, iOS holds a 70% controlling share with a 30% minority going to Android.
repeating this doesn't make it true, as long as there is no other way to install software on an Apple device, Apple has a monopoly over the software distribution on that device. It doesn't matter if you can buy another one or that only a few people are using it, it is a monopoly. The same is true for Google and the Play Store, Sony and the PlayStation store, Nintendo and their Switch store. It is not true for Apple on macOS or Microsoft on Windows.
It could even be argued that Apple requirement to have a developer license and that applications on macOS have to be signed and notarised that is creating a monopoly.
Apple doesn't have a monopoly. They have a system in which you agree to participate when you buy your device. Don't like their walled garden approach? By a Samsung. Buy a Pixel. There are numerous viable alternatives to iOS. If you want to install apps from third parties, get one of those alternatives. Or create a movement to get Apple to change its mind. But no, you want government to force Apple to change its own product with no evidence it will help consumers or that it's violating any laws.
Now, the commission. Why is it "absolutely insane?" Obviously, the market disagrees. Apple is in business to make money. They charge what the market will bear and what will be good for their business. This is why the commission is 15% in some cases...because the good PR and goodwill with small developers will make Apple more money.
Opinions like the one you've stated are not based on reality or the law. It's just a tantrum.
Sidenote; Had Apple controlled a 70% of the US market the Epic/Apple ruling would likely have fallen on the side of Epic and not Apple based on the judge's comments accompanying the decision. Yes Apple might have been found in violation of US antitrust laws after all the evidence was heard.
I fully expect Apple's AppStore will not go unscathed, and neither Apple nor Google's appstore will exist as is 24 months from now. Both have been on a roll banking $B's in profit over the past decade in app commissions, but things will be changing, and significantly so. The hayday is coming to an end.
They'll both remain highly profitable app stores, but not without serious competitors stealing away some statistically relevant percentage.
I hope your are rich enough to live in your dream world.
"If your restaurant doesn’t have its own delivery team, GrubHub will take care of it, but at a cost. They ask for an additional 10% cut per order, bringing the total rev-share to 23.5% on average." I don't know if Apple gets any of this money when people use their iOS app.
I regularly walk by a health food store that has a sign that says case purchases at 20% over wholesale. This means individual product costs are even more. The store needs to pay rent, salaries and other things and the cost above wholesale is what they use to pay these things. This store doesn't manufacture anything, they simply sell things. Why should any app store be any different?
As for your declaration that YOUR iPhone is yours to do as you wish, I suggest you read this statement on Apple's website, https://www.apple.com/legal/sla/
"Your use of Apple software or hardware products is based on the software license and other terms and conditions in effect for the product at the time of purchase. Your agreement to these terms is required to install or use the product."
And if Apple has only success because they use their market power on iOS, I mean they just advertised their services in the settings, than they can go bankrupt for all I care.
Right, some of these cultists will eat you alive for even THINKING like that. The same ones that riled up against Microsoft’s inclusion of IE. Same ones that stand up against Google’s tracking/privacy issues on Google’s device (apparently Apple can do whatever they want since it’s THEIR phone, but when it comes to Google consumers come first).
Wonder what they would think if auto manufacturers made it a requirement to buy parts for their vehicles only through them. What if businesses no longer wanted to give people breaks and/or vacation time? It’s their business, let them run it however they want.
The instantly in some of these thoughts is mind boggling.
Based on courtroom testimony in the Apple/Epic trial it IS relatively cheap to operate Apple's AppStore. As little as 22% of what Apple keeps as their cut from app sales is enough to pay for it. The other 78% may be pure profit for them.
Translation: For a $5 purchase on the AppStore the developer typically gets $3.50. That leaves $1.50 for Apple. From that Apple uses .33 cents to support the service, servers, and all other necessary infrastructure. That leaves Apple with $1.17 in pure profit from the $5 app sale for simply enabling the transaction. Every developer would love having that impressive a margin.