Apple Calls Out EU for Contradictory App Store Rules Under DSA and DMA

[Sophisticatednut]

The EU is not a world government. Its jurisdiction is the EU. Its laws cover business in the EU or with EU entities not business elsewhere.

So why should EU be able to fine an American company based on business it does in Australia for example? Something that has nothing to do with the EU?

Surely you would think it equally fair for the US government to fine European companies based on business that occurs only in Europe? Or maybe China to do the same for money made by Europeans in South America?

Make a little money in China and a lot in South America. Break some arbitrary law in China and they get take what you make in a different part of the world? Sound fair? It’s only fair if the EU is the one doing it to someone else.

It’s simple. Fines aren’t written in the books. Fines aren’t percentage based, but a closer to a formula based. So a company in eu will be fined according to what the infraction is calculated to be.

[EU Commission Fine Formula (simplified)

F(V, g, T, e, A, D, L, S, GT) =

        ⎧  V × ( g × T + e )
        ⎪      × A × D
        ⎪      × (1 − L) × (1 − S),
        ⎪
        ⎨      if   V × ( g × T + e )
        ⎪           × A × D
        ⎪           × (1 − L) × (1 − S)  ≤  0.10 × GT
        ⎪
        ⎩  0.10 × GT,   otherwise

Where:
    V  = value of sales affected by the infringement (€)
    g  = gravity rate (0–0.30)
    T  = duration in years
    e  = entry fee rate (0.15–0.25)
    A  = aggravating / mitigating factor (e.g. 1.2 for aggravating, 0.8 for mitigating)
    D  = deterrence multiplier (for large firms)
    L  = leniency or settlement reduction factor (e.g. 0.3 = 30% reduction)
    S  = settlement reduction fraction
    GT = global total turnover (worldwide revenue)

Interpretation:
The function F() outputs the lower of:
   • the calculated fine based on economic gravity and duration, or
   • the legal maximum (10% of total global turnover).

Fine = min([ V × (g × T + e) × A × D × (1 − L) × (1 − S)  ],[ 0.10 × GT ])
The "min" means the fine cannot exceed 10% of global turnover.

Example:
If both companies have:
V = €1,000,000,000
g = 0.15
T = 4
e = 0.15
A = 1
D = 1
L = 0
S = 0

Then:
Fine (before cap) = 1,000,000,000 × (0.15×4 + 0.15) = €750,000,000

Company A (large): GT = €400,000,000,000 → 10% cap = €40,000,000,000 → final fine = €750,000,000
Company B (small): GT = €4,000,000,000 → 10% cap = €400,000,000 → final fine = €400,000,000 (capped)

Assuming we have company. A and company b that have done the exact same crime but different total revenue.
From the 2006 Fining Guidelines, paragraph 13 (bold added):

“The Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly relates in the EEA.”

So:

• It’s not global sales.
• It’s the turnover from the specific products or services that were part of the infringement,
• and only within the European Economic Area (EEA) (EU + Iceland, Liechtenstein, Norway).

 

[Sophisticatednut]

That’s all well and good but where is the precedent to apply this to Apple, google Microsoft in the eu in the form of the DMA. There isn’t the DMA is legislation that threaded the needle to curb apples influence.

The two cases are the jurisprudence that is underlining the legal basis for understanding how the anticompetitive laws are understood.
If a company selling bananas was defined to have a dominant market and conceptualized that bananas as the tevelevant market not it being a fruit.. it’s kind of easy to understand why the Apple is targeted for its behavior.

(Bananas) United Brands (1978) > defines dominance and abuse in physical infrastructure markets
(Medicine) Hoffmann-La Roche (1979) > systematizes the concept of dominance and abuse
(Software) Microsoft (2007) > applies that logic to digital ecosystems
(Digital sales) Google Shopping (2017) > identifies self-preferencing as a modern abuse
(Digital markets) DMA (2022) > codifies these patterns into standing, ex ante obligations for digital gatekeepers

It just shows that the DMA is not a significant difference from existing jurisprudence, but just the culmination of 50+ years of EU jurisprudence on dominance, fairness, and the maintenance of contestable markets.

 

[I7guy]

The two cases are the jurisprudence that is underlining the legal basis for understanding how the anticompetitive laws are understood.
If a company selling bananas was defined to have a dominant market and conceptualized that bananas as the tevelevant market not it being a fruit.. it’s kind of easy to understand why the Apple is targeted for its behavior.

View attachment 2577866
(Bananas) United Brands (1978) > defines dominance and abuse in physical infrastructure markets
(Medicine) Hoffmann-La Roche (1979) > systematizes the concept of dominance and abuse
(Software) Microsoft (2007) > applies that logic to digital ecosystems
(Digital sales) Google Shopping (2017) > identifies self-preferencing as a modern abuse
(Digital markets) DMA (2022) > codifies these patterns into standing, ex ante obligations for digital gatekeepers

It just shows that the DMA is not a significant difference from existing jurisprudence, but just the culmination of 50+ years of EU jurisprudence on dominance, fairness, and the maintenance of contestable markets.

I thank you for that. It’s even more apparent the eu went on a witch hunt over the years defining dominance as influential.

Because certainly Apple with 28% does not control the market, except apples customers are loyal repeat customers.

 

[Sophisticatednut]

I thank you for that. It’s even more apparent the eu went on a witch hunt over the years defining dominance as influential.

Because certainly Apple with 28% does not control the market, except apples customers are loyal repeat customers.

That why you should go and read some bits about it. Apple absolutely dominates the market as the biggest phone brand and revenue cut in the apps market. I have you the case name. Even the Wikipedia would probably be enlightening enough for you.

And a “Witch hunt” makes it sound like Brussels is chasing popularity, when really EU antitrust law has been chasing market structure since the 1970s.

EU didn’t suddenly “define dominance as influence.” It has effectively defined dominance structurally by whether a company can act independently of market forces practically since the beginning. The DMA didn’t invent a new rule just to target Apple; it’s the codification of long standing EU competition logic about access, fairness, and contestable markets. It’s consistent jurisprudence from the physical market to the digital one. 🤷‍♂️

But you know this throughout our many conversations. That Dominance in EU law has never been about being popular or influential. Because if it was it would be monopoly laws… and they don’t have any such laws.

 

[I7guy]

That why you should go and read some bits about it. Apple absolutely dominates the market as the biggest phone brand and revenue cut in the apps market. I have you the case name. Even the Wikipedia would probably be enlightening enough for you.

And a “Witch hunt” makes it sound like Brussels is chasing popularity, when really EU antitrust law has been chasing market structure since the 1970s.

EU didn’t suddenly “define dominance as influence.” It has effectively defined dominance structurally by whether a company can act independently of market forces practically since the beginning. The DMA didn’t invent a new rule just to target Apple; it’s the codification of long standing EU competition logic about access, fairness, and contestable markets. It’s consistent jurisprudence from the physical market to the digital one. 🤷‍♂️

But you know this throughout our many conversations. That Dominance in EU law has never been about being popular or influential. Because if it was it would be monopoly laws… and they don’t have any such laws.

Influential and popularity does not mean dominate as the eu defines it. With 28% of the market in devices the fact the apple customers buy apple products and services in droves is not dominating. It boils down to popularity. Nobody is “forced” to buy an iPhone or Mac or cloud services or AirPods or Apple Watches.

People WANT to buy them because of their inherent value to the purchaser. Functionality, fit and finish, support, warranty that’s where Apple dominates. In customer satisfaction.

 

[vantelimus]

"A position of economic strength enabling a firm to prevent effective competition being maintained and to act to an appreciable extent independently of its competitors, customers and consumers."

The problem is less with the details of how the EU defines dominance, but in how they define markets. The process by which markets are defined under Article 102 of the TFEU is manipulable for political purposes which have little to do with actually fostering competition. It allows regulators to define a market around a single firm’s closed ecosystem, thus they guarantee a finding of dominance. The analysis in Apple's case is tautological: because Apple controls its own ecosystem, it is dominant in it. This, despite Apple being a minority vendor, with a majority of EU customers choosing other ecosystems. Worse, the EC has only presented circumstantial evidence of high-switching costs without presenting an analysis showing that its formal criteria have been met. There is no critical loss analysis or measure price elasticity. They have not quantified switching costs. They've not demonstrated user captivity, nor consumer harm. They have shown no evidence of coercion by Apple. On so many measures, they have failed to established their own criteria.

It is diabolical in the way the EU constructs its laws and the dominance framework to confuse those who don't understand logic. It creates a self-contained loop:

1. Define the market narrowly around a single company's product. (Dominance is pre-baked into definition of market. Creates a market and assumes it is real without sufficient external justification.)
2. Observe that the firm controls their own product. (Tautological: Observes a fact baked into the definition in step 1.)
3. Declare dominance. (Begging the question: Dominance was definitionally baked into the observation in step 2)
4. Interpret high customer retention as proof of dependency. (Non-falsifiability: customer retention is interpreted as capture instead of customer preference; low switching rates are interpreted as lock-in instead of loyalty; phone replacement cycles are treated as lock-in instead of part of the temporal dynamics of the marketplace).

The result is EU protectionism under the guise of protecting competition... all thanks to the amount of power given to politically motivated regulators to define markets.

 

[whatnot]

It is diabolical in the way the EU constructs its laws

😂😂

 

[MilaM]

I think the argument is completely going over your head. Or you are intentionally being obtuse. Why should the EU fine based on revenue not made within the EU? It's a ridiculous argument to say well it's a global company so they can fine based on global business, even business that is outside of their jurisdiction.

Because it's a fine and not a tax. When you get a speeding ticket in a foreign country, they will in many places base the fine on your income, at least in Europe. As a foreigner you will not get a better treatment just because you have no income in the country where you committed the crime.

There is a very easy way for Gatekeepers to avoid fines: follow the law.

 

[MilaM]

Influential and popularity does not mean dominate as the eu defines it. With 28% of the market in devices the fact the apple customers buy apple products and services in droves is not dominating. It boils down to popularity. Nobody is “forced” to buy an iPhone or Mac or cloud services or AirPods or Apple Watches.

People WANT to buy them because of their inherent value to the purchaser. Functionality, fit and finish, support, warranty that’s where Apple dominates. In customer satisfaction.

You are simplifying a problem that is much more complex in reality. When you go into a store you do indeed have a choice as a customer to buy different "flavours" of smartphone from different companies. No one is disputing that. The issue is, that your choice at the store comes with a lot of strings attached which will influence countless buying decisions after that over many years. You will buy apps, accessories, cloud services, transact financial services, use government services, using this phone. The DMA tries to ensure, that those subsequent buying decisions happen under fair circumstances. That's why it's called "Digital Markets Act".

 

[MilaM]

This happens ALL THE TIME in the non-tech space. The “Google pays Apple” structure is literally just a grocery store slotting fee at larger scale. When Kroger does it with cereal, no one screams collusion.

Apple to Oranges. No customer is forced to buy things in one grocery chain all the time. There is a healthy competition between stores and the "switching cost" for the customer is zero. This is what keeps the retail industry and the manufacturers of goods sold in those stores in check.

 

[I7guy]

You are simplifying a problem that is much more complex in reality. When you go into a store you do indeed have a choice as a customer to buy different "flavours" of smartphone from different companies. No one is disputing that. The issue is, that your choice at the store comes with a lot of strings attached which will influence countless buying decisions after that over many years. You will buy apps, accessories, cloud services, transact financial services, use government services, using this phone. The DMA tries to ensure, that those subsequent buying decisions happen under fair circumstances. That's why it's called "Digital Markets Act".

And precisely my point is that “act” targeted Apple because of its popularity and influence. Fair circumstances means competition exist if one doesn’t like apples way of doing business. Which is vertical integration.

This is why many of us believe Apple was targeted. Some of us do believe that government should keep its nose out of a business that is running and complying with an existing framework of laws to begin with.

 

[Abazigal]

Meanwhile...

Brussels knifes privacy to feed the AI boom

Draft proposals obtained by POLITICO show EU is breaking sacred privacy regime to placate industry.

www.politico.eu

Brussels' shift on privacy comes as it frets over Europe's waning economic power. Former Italian Prime Minister Mario Draghi namechecked the General Data Protection Regulation as holding back European innovation on artificial intelligence in his landmark competitiveness report last year.

Finally, it wants to reform Europe's pesky cookie banner rules by inserting a provision into the GDPR that would give website and app owners more legal grounds to justify tracking users beyond simply obtaining their consent.

But Finnish center-right lawmaker Aura Salla — who previously led Meta's Brussels lobbying office — said she would “warmly” welcome the proposal “if done correctly,” as it could bring legal certainty for AI companies. Salla emphasized that the Commission will have to “ensure it is European researchers and companies, not just third country giants that gain a competitive edge from our own rules.”

Everything has its price.

 

[Sophisticatednut]

Meanwhile...

Brussels knifes privacy to feed the AI boom

Draft proposals obtained by POLITICO show EU is breaking sacred privacy regime to placate industry.

www.politico.eu

Everything has its price.

well one thing is having the commission writing a potential law, it still requires parliament to approve it. And luckily it seems fairly dead in the water even if the council nd commission approve of such legislation and luckily the omnibus bill is still required to be divided up and voted on.

And precisely my point is that “act” targeted Apple because of its popularity and influence. Fair circumstances means competition exist if one doesn’t like apples way of doing business. Which is vertical integration.

This is why many of us believe Apple was targeted. Some of us do believe that government should keep its nose out of a business that is running and complying with an existing framework of laws to begin with.

Again if EU is targeting vertical integration ( something you can see all over their anti trust and legislation) then Apple is not targeted. Everyone in the DMA and it’s listed categories are related to vertical integration

 

[I7guy]

[…]

Again if EU is targeting vertical integration ( something you can see all over their anti trust and legislation) then Apple is not targeted. Everyone in the DMA and it’s listed categories are related to vertical integration

Pretty much Apple is the only one that had to update the core of nearly the entire o/s. It’s like going tuna fishing and catching a shark in the nets.

Apple was the model for what eh bones of the laws were.