Apple still hasn't made Dutch App Store changes despite $28M in fines

AppleInsider · February 21, 2022 6:08PM

Apple has yet to implement -- or even respond to -- App Store feedback from Dutch regulators despite the country's antitrust watchdog levying a $5.7 million fine for the fifth consecutive week.

App Store on iPhone

On Monday, the Authority for Consumers and Markets again fined Apple 5 million euros for refusing to change its in-app subscription policy to allow outside payment methods. The ACM has been levying weekly fines since Apple missed a Jan. 15 deadline to make the changes.

Reuters reported on Monday that Apple has not made any new proposal to comply with the Dutch ruling.

"We have clearly explained to Apple how they can comply...," ACM said in a statement. "So far, however, they have refused to put forward any serious proposals."

Apple also did not respond to a request for comment from Reuters.

Back in December 2021, Dutch regulators ruled that Apple broke competition law and must make changes to its App Store policy, including allowing the use of non-Apple payment methods by software makers in the Netherlands.

Apple claims it is already in compliance with the Dutch regulations because it now allows dating apps in the country to use third-party payment methods if they are resubmitted to the App Store.

However, Apple said it still intends to charge a 27% commission on in-app purchases using third-party payment methods -- only slightly lower than the company's standard 30% cut. The Dutch regulator rejected Apple's moves, claiming that it still places an unreasonable burden on developers and does not mark compliance.

Dutch regulators can fine Apple a maximum of 50 million euros for the noncompliance. As of Monday, the Cupertino tech giant has been fined 25 million euros.

Read on AppleInsider

DAalseth · February 21, 2022 6:20PM

Maybe Apple has decided that €50 million is just the cost of doing business.

pizzaboxmac · February 21, 2022 7:01PM

DAalseth said:

Maybe Apple has decided that €50 million is just the cost of doing business.

I agree. They seem to have had enough of being bullied.

foregoneconclusion · February 21, 2022 7:11PM

The ACM has never provided an explanation as to why they believe an additional SKU that supports 3rd party payments rises to the level of "unreasonable". Consumers have to choose between multiple SKUs on a regular basis in both hardware and software.

techconc · February 21, 2022 7:15PM

DAalseth said:

Maybe Apple has decided that €50 million is just the cost of doing business.

Yeah, just to do a little perspective on this. Using the back of the napkin math... Apple made $34.6 Billion USD profit last quarter. Convert to Euros, that's 30.6+ Billion Euros. Divide by 90 (days in the quarter) and that's 340+ million Euros profit per day or roughly 14+ million Euros per hour they make in profit. So, the maximum fine represents the profit Apple makes in about 3 hours. I suspect they can't be bothered by such nonsense.

kempathonnodge · February 21, 2022 7:15PM

€50m is Much cheaper than the cost of setting a precedent of allow third party payments. They have complied with the letter of the law… It’ll be interesting to see if they ever hand over the money.

urahara · February 21, 2022 7:15PM

AppleInsider said:

...
However, Apple said it still intends to charge a 27% commission on in-app purchases using third-party payment methods -- only slightly lower than the company's standard 30% cut. The Dutch regulator rejected Apple's moves, claiming that it still places an unreasonable burden on developers and does not mark compliance.
...

What would a reasonable burden be which also marks compliance?
Hypocrites. My almost 50% of taxes (Germany) is a burden!
Let the free market to create efficiencies! Government only slows the innovations.

I wish Apple had in their T&C the paragraph allowing them to stop providing the service to the company/developer who is involved in a legal battle. "If you are unhappy with the Apple's service, stop using it while you are 'negotiating' the new terms".

KTR · February 21, 2022 8:36PM

I personally think apple should close down the Netherlands store, till all this is sorted out.

rorschachai · February 21, 2022 9:21PM

KTR said:

I personally thin apple should close down the Netherlands store, till all this is sorted out.

Let them use web apps. Then they can use any payment system they want and don't have to pay Apple a cent for any of it. Isn't that what they want?

KTR · February 21, 2022 9:44PM

rorschachai said:

KTR said:

I personally thin apple should close down the Netherlands store, till all this is sorted out.

Let them use web apps. Then they can use any payment system they want and don't have to pay Apple a cent for any of it. Isn't that what they want?

I agree, I dnt understand why the government there don't see that. Pure greed IMO. Apple created the app store, did think it would be successful. Or make all developers pay a monthly fee of $95 plus 5% transaction fee?

bloggerblog · February 21, 2022 10:15PM

However, Apple said it still intends to charge a 27% commission on in-app purchases using third-party payment methods -- only slightly lower than the company's standard 30% cut. The Dutch regulator rejected Apple's moves, claiming that it still places an unreasonable burden on developers and does not mark compliance.

How's this a "burden on developers"? Developers will just tag an extra amount for hosting on their bill. I cannot go to my internet provider and utility providers and say the costs are adding a burden on my business. I'll just tag the costs to my other costs and profits.

mcdave · February 21, 2022 10:23PM

Just pay the fines. If they compromise the store, they’re screwed.

MacsWithPenguins · February 21, 2022 10:31PM

Haha. I don’t know … all I can think of is Austin Powers:

I think it’s interesting to see where this goes, because I don’t think the Netherlands understands that those few millions in cash is the cheaper alternative. It’s basically Apple signing up to pay for a weekly cellular data plan, except it’s not cell data.

chasm · February 22, 2022 1:53AM

As others have said, since the fine has a limit, I think Apple has decided that it is worth the money to buy time and send a message that they don't give a shit what the regulator thinks. It's not that Apple won't comply with its interpretation of the law -- by the regulator's own admission Apple has put forward at least two serious proposals and has implemented the option of third-party processing. But asking them to set this up within a month of the first ruling was a joke and the regulator knows that.

I'm sure the company is weighing up their legal options. Since I don't know Netherlands law, I can't comment on whether Apple has the option to take that path -- but it should be on the regulator to explain:

a) why 27 percent is not different than 30 percent minus the cost of payment processing. Apple would **LOVE** a chance to explain in detail everything they do for developers in court -- remember, a US court has already ruled that Apple is still entitled to commission for sales out of the App Store. So far, all the regulator has said about it is that their arbitrary opinion is that it's not enough -- no explanation at all of why or what figure it thinks would be right, and why.

b) why the "web apps" route -- which has always been available to developers -- isn't a perfectly valid option. Since Apple openly offers that option, I concur with that part of their interpretation of the law: when it comes to offering at least one alternative, they have always done so.

c) why Apple shouldn't just withdraw dating apps from the App Store outright, FORCING developers to create their own stores and payment systems, and

d) What Holland will do to ensure that no app, developer, or third-party payment system is in any violation of any Duth laws or regulations, since the responsibility for keeping dating apps safe will now fall to them. What's good for the goose is good for the gander, right?

applguy · February 22, 2022 4:54AM

I have to believe that Apple will keep the store open, even with fines, as long as it remains a profitable venture. I do wonder if Apple would shut down the App store in a country if it wasn’t profitable.

davidw · February 22, 2022 5:47AM

chasm said:

As others have said, since the fine has a limit, I think Apple has decided that it is worth the money to buy time and send a message that they don't give a shit what the regulator thinks. It's not that Apple won't comply with its interpretation of the law -- by the regulator's own admission Apple has put forward at least two serious proposals and has implemented the option of third-party processing. But asking them to set this up within a month of the first ruling was a joke and the regulator knows that.

I'm sure the company is weighing up their legal options. Since I don't know Netherlands law, I can't comment on whether Apple has the option to take that path -- but it should be on the regulator to explain:

a) why 27 percent is not different than 30 percent minus the cost of payment processing. Apple would **LOVE** a chance to explain in detail everything they do for developers in court -- remember, a US court has already ruled that Apple is still entitled to commission for sales out of the App Store. So far, all the regulator has said about it is that their arbitrary opinion is that it's not enough -- no explanation at all of why or what figure it thinks would be right, and why.

b) why the "web apps" route -- which has always been available to developers -- isn't a perfectly valid option. Since Apple openly offers that option, I concur with that part of their interpretation of the law: when it comes to offering at least one alternative, they have always done so.

c) why Apple shouldn't just withdraw dating apps from the App Store outright, FORCING developers to create their own stores and payment systems, and

d) What Holland will do to ensure that no app, developer, or third-party payment system is in any violation of any Duth laws or regulations, since the responsibility for keeping dating apps safe will now fall to them. What's good for the goose is good for the gander, right?

As for a)

As far as the ACM is concern, Apple commission has nothing to do with Apple not being in compliance. The main issue is that Apple is only allowing the dating app developers only one of the choices of payment in their app. The developer can either choose iTunes or their own payment system or a link to their website. ACM is demanding that Apple allow dating app developers a choice to use at least their own payment system and a link. Not a choice of one or the other, in their app. And maybe even allowing them to also use iTunes, as a choice. The original court order did not make any mention of Apple's commission.

Apple believe they are in compliance because they are allowing dating app developers the choice of their own payment system or a link to their website.

This is the original wording in the court order.

https://www.acm.nl/sites/default/files/documents/summary-of-decision-on-abuse-of-dominant-position-by-apple.pdf

>The order subject to periodic penalty payments

20. ACM orders Apple to put an end to the violation established by ACM. Apple must adjust its conditions in such a way that, with regard to their dating apps that they offer in the Dutch App Store, dating-app providers are able to choose themselves what market participant they want to process the payments for digital content and services sold within the app. [suspended], and, in addition, they must have the ability to refer within the app to other payment systems outside the app.<

https://www.theverge.com/2022/2/14/22917514/apple-netherlands-dating-apps-external-payment-processors-in-app-commission-acm

>Under Apple’s proposed policies, which were detailed in early February, dating app developers using alternative payment systems are charged a 27 percent commissionby Apple, a small discount on the 30 percent commission it takes when developers use Apple’s own in-app payment system. Developers who want to use alternative payment systems will need to provide a separate app binary to be distributed via the Dutch App Store. The ACM’s ruling follows a complaint from Match Group (owners of Tinder and other dating services), Reuterspreviously reported.

Interestingly, the ACM’s notice posted today doesn’t specifically mention Apple’s intention to collect a 27 percent commission on in-app payments made through alternative payment systems. <

Here's John Gruber take on it.

https://daringfireball.net/2022/02/going_dutch

>On January 24 — 11 days prior to Apple’s publication of these updated guidelines — the ACM issued this:

In addition, Apple has raised several barriers for dating-app providers to the use of third-party payment systems. That, too, is at odds with ACM’s requirements. For example, Apple seemingly forces app providers to make a choice: either refer to payment systems outside of the app or to an alternative payment system. That is not allowed. Providers must be able to choose both options.

Apple’s new guidelines state, in the very first paragraph (emphasis added):

To comply with an order from the Netherlands Authority for Consumers and Markets (ACM), Apple allows developers distributing dating apps on the Netherlands App Store to choose to do one of the following: 1) continue using Apple’s in-app purchase system, 2) use a third-party payment system within the app, or 3) include an in-app link directing users to the developer’s website to complete a purchase.

Neither the ACM ruling nor Apple’s updated guidelines seem ambiguous here, but clearly Apple’s guidelines don’t comply with “Providers must be able to choose both options.”<

So far, Apple has not changed their policy concerning dating app developers choices of payment system in their app. That is the reason why AMC is continuing to fine Apple for not being in compliance.

Plus John Gruber take on the commission in the same article.

>It’s obvious many developers wrongly assumed that Apple’s commissions were for payment processing alone. Were regulators like the Dutch ACM similarly wrong? Is the point of the ACM’s ruling merely that dating apps should have the option of processing payments however they choose, while paying the same effective commission to Apple? Or was their intention to provide dating apps the option to process payments on their own to avoid Apple’s commission? I know a lot of people reading this are going to think “Of course their intention was to allow developers to avoid Apple’s commission!” They feel so strongly against Apple’s App Store commission that even their thoughts have exclamation marks. But give the ACM’s ruling a close read — they don’t make that argument at all.<

As for b)

This the original court order outlining why the ACM thinks "Web App" is not suitable for dating apps. From the same link as above.

https://www.acm.nl/sites/default/files/documents/summary-of-decision-on-abuse-of-dominant-position-by-apple.pdf

>6. This decision concerns dating-app providers that offer apps in the App Store. For these providers, offering an app is critical since consumers use dating services primarily on their smart mobile devices, and consumers prefer using apps: apps are appealing because, in that way, several functionalities specific to smart mobile devices can be used that are available in apps, but that are not available (or available to a lesser degree) on mobile websites. For example, think of push notifications, data storage, GPS, the speed of the service. For dating app, this is very important.<

John Gruber goes into more detail about this in his "Daring Fireball" article . (linked above)

IMO- It appears that the ACM acknowledges that Apple IP do provide dating app developers some valuable services. And therefore, Apple should not have to provide these services for free, thus no mention of Apple commission in their court order. Or any mention (so far) of Apple continuing to collect a commission, as a (or one of the) reason why Apple in not in compliance.

larryjw · February 22, 2022 11:03AM

Do regulators think that running an App Store should be done for free?

Are they really that stupid?

I think we can all answer that question with certainty.

cjlacz · February 22, 2022 11:57AM

There is at least one part of Gruber’s post I disagree with. That’s that the percent reduction should be higher than 3% because that takes into account the real cost of small transactions. He cites Stripe as an example, but from what I’ve seen it seems higher than what a developer could get, depending on sales.

Apple has probably negotiated with credit card companies for special rates. So that 3% represents the real costs to them. There is no reason they should reduce the cost by 5% to cover the developers cost of using an external processor when their own cost is only 3%. That’s assuming the numbers here are accurate, but I doubt they are too far off.

Apple also has to support special App Store features only for the Dutch market. Extra employees and processes just to check for and make sure these payments to Apple are being made. It wouldn’t surprise me if they include those extra overhead costs in the amount of discount either.

radarthekat · February 22, 2022 1:34PM

davidw said:

chasm said:

As others have said, since the fine has a limit, I think Apple has decided that it is worth the money to buy time and send a message that they don't give a shit what the regulator thinks. It's not that Apple won't comply with its interpretation of the law -- by the regulator's own admission Apple has put forward at least two serious proposals and has implemented the option of third-party processing. But asking them to set this up within a month of the first ruling was a joke and the regulator knows that.

I'm sure the company is weighing up their legal options. Since I don't know Netherlands law, I can't comment on whether Apple has the option to take that path -- but it should be on the regulator to explain:

a) why 27 percent is not different than 30 percent minus the cost of payment processing. Apple would **LOVE** a chance to explain in detail everything they do for developers in court -- remember, a US court has already ruled that Apple is still entitled to commission for sales out of the App Store. So far, all the regulator has said about it is that their arbitrary opinion is that it's not enough -- no explanation at all of why or what figure it thinks would be right, and why.

b) why the "web apps" route -- which has always been available to developers -- isn't a perfectly valid option. Since Apple openly offers that option, I concur with that part of their interpretation of the law: when it comes to offering at least one alternative, they have always done so.

c) why Apple shouldn't just withdraw dating apps from the App Store outright, FORCING developers to create their own stores and payment systems, and

d) What Holland will do to ensure that no app, developer, or third-party payment system is in any violation of any Duth laws or regulations, since the responsibility for keeping dating apps safe will now fall to them. What's good for the goose is good for the gander, right?

As for a)

As far as the ACM is concern, Apple commission has nothing to do with Apple not being in compliance. The main issue is that Apple is only allowing the dating app developers only one of the choices of payment in their app. The developer can either choose iTunes or their own payment system or a link to their website. ACM is demanding that Apple allow dating app developers a choice to use at least their own payment system and a link. Not a choice of one or the other, in their app. And maybe even allowing them to also use iTunes, as a choice. The original court order did not make any mention of Apple's commission.

Apple believe they are in compliance because they are allowing dating app developers the choice of their own payment system or a link to their website.

This is the original wording in the court order.

https://www.acm.nl/sites/default/files/documents/summary-of-decision-on-abuse-of-dominant-position-by-apple.pdf

>The order subject to periodic penalty payments
20. ACM orders Apple to put an end to the violation established by ACM. Apple must adjust its conditions in such a way that, with regard to their dating apps that they offer in the Dutch App Store, dating-app providers are able to choose themselves what market participant they want to process the payments for digital content and services sold within the app. [suspended], and, in addition, they must have the ability to refer within the app to other payment systems outside the app.<

https://www.theverge.com/2022/2/14/22917514/apple-netherlands-dating-apps-external-payment-processors-in-app-commission-acm

>Under Apple’s proposed policies, which were detailed in early February, dating app developers using alternative payment systems are charged a 27 percent commissionby Apple, a small discount on the 30 percent commission it takes when developers use Apple’s own in-app payment system. Developers who want to use alternative payment systems will need to provide a separate app binary to be distributed via the Dutch App Store. The ACM’s ruling follows a complaint from Match Group (owners of Tinder and other dating services), Reuterspreviously reported.
Interestingly, the ACM’s notice posted today doesn’t specifically mention Apple’s intention to collect a 27 percent commission on in-app payments made through alternative payment systems. <

Here's John Gruber take on it.

https://daringfireball.net/2022/02/going_dutch

>On January 24 — 11 days prior to Apple’s publication of these updated guidelines — the ACM issued this:
In addition, Apple has raised several barriers for dating-app providers to the use of third-party payment systems. That, too, is at odds with ACM’s requirements. For example, Apple seemingly forces app providers to make a choice: either refer to payment systems outside of the app or to an alternative payment system. That is not allowed. Providers must be able to choose both options.
Apple’s new guidelines state, in the very first paragraph (emphasis added):
To comply with an order from the Netherlands Authority for Consumers and Markets (ACM), Apple allows developers distributing dating apps on the Netherlands App Store to choose to do one of the following: 1) continue using Apple’s in-app purchase system, 2) use a third-party payment system within the app, or 3) include an in-app link directing users to the developer’s website to complete a purchase.
Neither the ACM ruling nor Apple’s updated guidelines seem ambiguous here, but clearly Apple’s guidelines don’t comply with “Providers must be able to choose both options.”<
So far, Apple has not changed their policy concerning dating app developers choices of payment system in their app. That is the reason why AMC is continuing to fine Apple for not being in compliance.
Plus John Gruber take on the commission in the same article.
>It’s obvious many developers wrongly assumed that Apple’s commissions were for payment processing alone. Were regulators like the Dutch ACM similarly wrong? Is the point of the ACM’s ruling merely that dating apps should have the option of processing payments however they choose, while paying the same effective commission to Apple? Or was their intention to provide dating apps the option to process payments on their own to avoid Apple’s commission? I know a lot of people reading this are going to think “Of course their intention was to allow developers to avoid Apple’s commission!” They feel so strongly against Apple’s App Store commission that even their thoughts have exclamation marks. But give the ACM’s ruling a close read — they don’t make that argument at all.<

As for b)
This the original court order outlining why the ACM thinks "Web App" is not suitable for dating apps. From the same link as above.
https://www.acm.nl/sites/default/files/documents/summary-of-decision-on-abuse-of-dominant-position-by-apple.pdf

>6. This decision concerns dating-app providers that offer apps in the App Store. For these providers, offering an app is critical since consumers use dating services primarily on their smart mobile devices, and consumers prefer using apps: apps are appealing because, in that way, several functionalities specific to smart mobile devices can be used that are available in apps, but that are not available (or available to a lesser degree) on mobile websites. For example, think of push notifications, data storage, GPS, the speed of the service. For dating app, this is very important.<
John Gruber goes into more detail about this in his "Daring Fireball" article . (linked above)

IMO- It appears that the ACM acknowledges that Apple IP do provide dating app developers some valuable services. And therefore, Apple should not have to provide these services for free, thus no mention of Apple commission in their court order. Or any mention (so far) of Apple continuing to collect a commission, as a (or one of the) reason why Apple in not in compliance.

Excellent explanation and overview. I do think the ACM should have worded it differently to achieve their goal. Rather than “allow developers to choose…” they should have been more accurate with “allow dating application end-users to choose…” I suppose they could reissue their directive.

It’ll be interesting to see the next steps by both parties.

beautyspin · February 22, 2022 3:09PM

DAalseth said:

Maybe Apple has decided that €50 million is just the cost of doing business.Under the EU’s Digital Markets Act (DMA) proposal, for example — which is speeding towards adoption — platforms that are judged to be “gatekeepers” and found to be breaking a list of pre-set, operational ‘dos and don’ts’ could face penalties of up to 10% of their global annual turnover.
Which — in Apple’s case — would mean a fine that’s closer to €25BN than €25M (so certainly harder for Cupertino to shrug off).

sdw2001 · February 22, 2022 5:36PM

techconc said:

DAalseth said:

Maybe Apple has decided that €50 million is just the cost of doing business.

Yeah, just to do a little perspective on this. Using the back of the napkin math... Apple made $34.6 Billion USD profit last quarter. Convert to Euros, that's 30.6+ Billion Euros. Divide by 90 (days in the quarter) and that's 340+ million Euros profit per day or roughly 14+ million Euros per hour they make in profit. So, the maximum fine represents the profit Apple makes in about 3 hours. I suspect they can't be bothered by such nonsense.

Exactly. I'll go even further...I don't see anywhere that Apple has actually paid any of the fines. What will the Netherlands do about it? Send it to collections? Put people in jail? I hope Apple really is ignoring them. In fact, I think they should threaten to pull out of the country completely. Apple is currently worth 50% more than that country's entire economy (1.6 Trillion to $1 Trillion). Let that sink in.

Apple still hasn't made Dutch App Store changes despite $28M in fines

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