Apple Defends App Store Changes in the Netherlands as Fines Reach €30 Million

[CarlJ]

@4jasontv look your arguments make sense if the iPhone was some random device, or if it was like the iPod use to be. But our phones are more and more becoming our primary computing device... do you really think that two companies should control the future of how software gets distributed and monetized?

More competition would be good, agreed. What are you calling your new company and when will your first phone be ready for sale?

 

[theotherphil]

Please tell me why shouldn’t people label you a Apple Fanboy when you make such poorly thought out agreements to defend Apple while I raised such valid points to improve products that I paid top dollar to own.

Is that the go to response nowadays when people have differing opinions? "Apple Fanboy"? Grow up.

 

[Nuno Lopes]

Or maybe it simply meant that $2 for an app was never a sustainable business model to begin with.

True. But how do customers go from that to 20 times more every year is incredible for “wallpaper apps” … I understand some businesses are very quiet over this. With less App Store noise and more signal would not be able to compete.

 

[jbrwTP7u]

Why do dating services even need apps, they could run their services through websites and keep 100% of the profit from any fees they charge. 100% is more than 70%.

Freeloading, they want a platform that has a good reach and probability to charge customers. TLDR they want benefits of Apple ecosystem without paying them. Vultures.

 

[Abazigal]

True. But how do customers go from that to 20 times more every year is incredible for “wallpaper apps” … I understand some businesses are very quiet over this. With less App Store noise and more signal would not be able to compete.

I think the challenge facing Apple is that it’s hard to decide what is a “right” subscription fee to charge for a particular app or service. At the end of the day, the consumer decides, and Apple at least allows users to track and revoke subscriptions if they feel they are being unfairly charged.

 

[prime17569]

Correct me if I am wrong (please be civil), but I think that there are a few things that still need to be decided in the courts (depending on country) before we can say whether what Apple is doing is legal or not:

0. What makes a platform a platform? Is it the ability to install third-party software? Similarly, was the iPhone a platform before the App Store? Can a car infotainment system be considered a platform? What about a console, such as the Xbox or PlayStation?

1. Are app markets the same as regular markets, i.e. are they not a component of the device but instead a distinct thing that can be regulated like any other market can?

2. As an extension of 1, if the platform owner controls the app market (e.g. Apple controls its market with the App Store Review Guidelines) are they allowed to compete within it?

3. Is it illegal to charge a 30% commission? If so, what is a fair commission rate that a platform owner must charge? What constitutes a "fair" commission rate?

4. Legally, can a platform owner take a commission from developer revenues at all? In the same vein, if a developer creates an app with the platform owner's SDK, are they considered to be licensing the platform owner's IP (under current IP law, you're allowed to charge for use of your IP)? What if the developer creates their own SDK, UI frameworks, and development tools for the platform and builds an app with it? What then?

5. What defines a "dominant position" and makes it distinct from a full-on monopoly? When does a platform owner cross that threshhold?

6. As an extension of 0 and 1, is making one app market the de facto market anticompetitive? Must a platform be host to, or have the capability to be host to, multiple app markets?

7. Is ecosystem lock-in anticompetitive? Must a platform owner ensure that their products do not lock users into their ecosystem?

These are just a sample of the questions that need to be answered worldwide and we don't have laws on the books everywhere yet that answer them. This is probably why there's so much confusion.

 

[I7guy]

Why do always give the example of Epic? They are just one exception. 98% developers on App Store don’t even make their investment back.

Do you have citation on the 98%? Every dev is an exception and has their own gripe. With millions of devs apple can’t possibly please them all at the same time. And yet apple is taking steps to give back.

Please tell me why shouldn’t people label you a Apple Fanboy when you make such poorly thought out agreements to defend Apple while I raised such valid points to improve products that I paid top dollar to own.

Because your valid points are , in your humble opinion and not necessarily valid from someone else reading your post.

 

[BaldiMac]

Naturally. But did they also created the iPhone to play maths lessons or dating arrangements? No, don't think they even thought of that. They made a device to run/play apps, people bought the device because of it. Charge then for distributing Apps and selling Apps if that is what is for sale, say case in case games.

I didn't follow, because you're taking this in an irrelevant direction. Apple invested to create a platform and that has benefits. What they intended when the released the first iPhone doesn't change that.

Made up as much as yours. Haven't crossed someone living the Apple Store saying ... look I bought an App Store. Have you?

Except I didn't make anything up. I used an analogy.

Maybe too simplified.

I think it made my point quite clearly.

I guess straw man is you equating a music player and music with everything else that the App Store applies its commercial policies to.

No, that's an analogy. A strawman is when you set up an imaginary adversary that's easy to refute.

98% developers on App Store don’t even make their investment back.

Source?

My comment was more on them not respecting courts and laws. If they don’t agree with the verdict they can challenge it but such disregard for laws doesnt look good.

It's not "disregard for laws" to ask a court to resolve a disagreement with an independent regulator.

 

[prizm]

These working ladies on these apps need all the money they can get. Taking 1/3 of the cut from a prostitute is harsh. And no, I'm not being funny. The Netherlands is full of call--girls. It's legal.

 

[BaldiMac]

These working ladies on these apps need all the money they can get. Taking 1/3 of the cut from a prostitute is harsh. And no, I'm not being funny. The Netherlands is full of call--girls. It's legal.

What does that have to do with anything? Apple doesn't require IAP for outside services.

 

[Nuno Lopes]

I think the challenge facing Apple is that it’s hard to decide what is a “right” subscription fee to charge for a particular app or service. At the end of the day, the consumer decides, and Apple at least allows users to track and revoke subscriptions if they feel they are being unfairly charged.

In terms of challenges maybe start by not concealing the prices of the apps and services the App Store sells? In think this predicates the ability of users to decide. Just have a quick browser and check if you can easily find the correct pricing of anything before download the app.

I can provide you with a way to have an idea of the price in the App Store before downloading and agreeing with any kind of license ... I say an idea because even then the prices listed may not be consistent with the actual price practiced in app.

Then probably move on to requiring the user to approve the transition to monthly subjection payment when the trial ends instead of doing it automatically in some cases?

Except I didn't make anything up. I used an analogy.

Neither have I. Indeed Apple requires a revenue share of dating arrangement services as well as remote music lessons (one to many) ... and many other things that aren't apps per si. Did not needed to use an analogy this time.

No, that's an analogy. A strawman is when you set up an imaginary adversary that's easy to refute.

I did not set up imaginary adversary, neither such setup is a precondition of a straw man argument. Your analogy simply did not addressed the concern at hand ... it diverted the discussion to a different subject that is hard to refute ... hence its a straw man argument.

Unfair? If I create a device to sell and play music, than it is certainly fair to charge other companies who want to sell and play music on that device. Making an investment to decrease long terms costs isn't "unfair competition".

This analogy was created to refute this:

Take a music app, for example, or any other app that has to give royalty for content anyways and then pay Apple as well. Then given the fact that Apple can come in at any moment and create a competing app without those limitations, then it is unfair competition.

Apart from Music to Music it does not address the challenge presented and moves the discussion to a tangent issue presented as refutal. That is called a straw man argument.

Cheers.

 

[djphat2000]

You really like brushing in broad strokes, don't you

Yes, Apple is a for profit company.

However, Apple's decision to maximize profit with the App Store - that Phil Schiller warned the Apple executives in an email 10 years ago! - is damaging the Apple brand in the eyes of regulators and developers.

What I - and many others here argue - is that Apple's short term insistence on profit maximization on the App Store will cost them significantly more in the long run.

"maybe".
I think there are those that argue that Apple has charged developers "less" over time. It was once 30% for all. Now it's as low as 15% for those under $1 million in yearly revenue. It's still pretty darn near free for those that don't charge for the apps at all. And it's full on 70% profit for the stuff with IAP's. That well, never end. Not like it took years to develop a lollipop hammer or gold bars to sell for $.99 and up. Or worse, when you subscribe to something and just pay forever. Developers are doing fine. They just want to be more fine, like everyone else.

Apple's rule of not allowing developers to notify the users of other means of payment (aka online) is something I don't agree with. And that recent ruling in the US shouldn't be challenged and most likely will be the law of the land for them going forward. Other than that. You pay to play. 27% commission if you want to run your own payment system, 30% if you use Apple's. I think that's perfectly fair. They have all found ways to try and make more money directly while being on the stores shelfs. Apple is within their right to collect all fees owed to making this thing in the first place.

Remember Phil also said "can't innovate anymore my a$$!" too.

 

[BaldiMac]

Neither have I.

You did. You made up motivations for Apple creating the iPhone and for people buying an iPhone that fit your point.

I did not set up imaginary adversary, neither such setup is a precondition of a straw man argument.

You did. In your response to me, you accused "people pro Apple stance" of engaging in logical fallacies rather than addressing the arguments directly.

Your analogy simply did not addressed the concern at hand ... it diverted the discussion to a different subject that is hard to refute ... hence its a straw man argument.



This was made to refute this:



What is the relationship? Apart from Music to Music ... none!!! That is called a straw man.

Seems pretty clear to me. The poster claimed it was unfair that music apps pay a commission to Apple while Apple doesn't have to pay the same commsision with Apple Music. I disagreed and claimed that it is certainly fair for Apple to benefit from it's investment in creating the platform.

And that ignores the fact that Apple also pays a commission for Apple Music subscriptions through Google Play which controls a large majority of the potential market.

 

[webkit]

@4jasontv look your arguments make sense if the iPhone was some random device, or if it was like the iPod use to be. But our phones are more and more becoming our primary computing device... do you really think that two companies should control the future of how software gets distributed and monetized? History hasn't really been good to companies that do that. Microsoft being a case in point -- Linux destroyed them on the server side and Apple destroyed them in mobile. And anyways looks like the trend across the world is for government to interject. It's a matter of time.

A problem is with how software/apps work with operating systems. If each app could be programmed once to work across ALL operating systems equally, we would be seeing more competition with multiple operating systems, multiple app stores, etc. For better or worse, it doesn't work that way and app developers tend to concentrate on the high volume operating systems which can make it more difficult for new OS developers to break into the market.

It's kind of like the job market... you can't get a job because you don't have experience and you don't have experience because you can't get a job. With OS, you can't get the volume because you don't have the apps and you can't get apps because you don't have the volume.

There are also the competitive (or anti-competitive) actions that some companies take to try to keep their volume once they achieve it. This is potentially where a government can step in.

 

[Nuno Lopes]

You did. You made up motivations for Apple creating the iPhone and for people buying an iPhone that fit your point.

If you say so. I simply stated current practices.

You did. In your response to me, you accused "people pro Apple stance" of engaging in logical fallacies rather than addressing the arguments directly.

Well. You made a straw man argument that is considered a fallacy.

Seems pretty clear to me. The poster claimed it was unfair that music apps pay a commission to Apple while Apple doesn't have to pay the same commsision with Apple Music. I disagreed and claimed that it is certainly fair for Apple to benefit from it's investment in creating the platform.

What the op was mentioning in simple terms is the fact that the Apple uses its device/OS business to establish itself as the middle man between all app producers and digital services and their customers requiring 15%/30% the revenue generated within their apps, and then use that as the budget to produce services in direct competition with them. So basic applying leverages for businesses to potentially and indirectly bet against themselves. With the added advantage of not being conditioned to such revenue share to reach their customers.

This is not at all at balance with analogy you setup as refutal. Basically sustaining the right of Apple to create and build music devices to play and sell music, which of course is not in question!

Companies businesses were split before because of similar behaviour. Not saying that its necessary for the moment ... but still its not uncommon.

Yes, I did accuse you and other of using all sorts of fallacies as the means for refutal. Such practice is quite clear.

PS: Now I think the source of our difference in points of view is that you do not believe that any applicable leverage of this kind may be anti competitive. You might even find that anti-competitive is not part of your lexicon.

 

[BaldiMac]

A problem is with how software/apps work with operating systems. If each app could be programmed once to work across ALL operating systems equally, we would be seeing more competition with multiple operating systems, multiple app stores, etc. For better or worse, it doesn't work that way and app developers tend to concentrate on the high volume operating systems which can make it more difficult for new OS developers to break into the market.

It's kind of like the job market... you can't get a job because you don't have experience and you don't have experience because you can't get a job. With OS, you can't get the volume because you don't have the apps and you can't get apps because you don't have the volume.

There are also the competitive (or anti-competitive) actions that some companies take to try to keep their volume once they achieve it.

I'd add that multiple companies build Android-compatible OSs.

 

[webkit]

I'd add that multiple companies build Android-compatible OSs.

Yes, but their foundation or platform is still one OS and that's what the apps are developed for. There as basically two mobile operating systems on the market right now: Android which has nearly 71% share and iOS which has a little over 28% share. It's basically a duopoly.

 

[BaldiMac]

Well. You made a straw man argument that is considered a fallacy.

Nope. That's not even what you originally said.

What the op was mentioning in simple terms is the fact that the Apple uses its device/OS business to establish itself as the middle man between all app producers and digital services and their customers requiring 15%/30% the revenue generated within their apps, and then use that as the budget to produce services in direct competition with them.

Correct. Apple created a platform where apps are offered for sale and requires a commission on IAP.

With the added advantage of not being conditioned to such revenue share to reach their customers.

Because then invested billions to create the platform! Why shouldn't they benefit from that?

FWIW, Spotify currently doesn't offer IAP, so they are benefiting from the platform in exchange for little more than the $99 developer fee. (They do pay Apple 15% of legacy subscriptions before the removed IAP.)

This is not at all at balance with analogy you setup as refutal.

I disagree. I think your description is "at balance" with what I said.

Some might find such practice anti-competitive.

It can absolutely be considered anti-competitive to leverage dominant market power across vertical markets. Music is a perfect example. I would argue that they don't currently have dominant market power. Depending on the market of course.

 

[BaldiMac]

Yes, but their foundation or platform is still one OS and that's what the apps are developed for. There as basically two mobile operating systems on the market right now: Android which has nearly 71% share and iOS which has a little over 28% share. It's basically a duopoly.

That's kind of self-fulfilling prophecy there. If you define all compatible OSs as being the same, then of course different OSs can't be compatible.

In reality, each manufacturer releases there own version of (small "a") android. These are different OSs that are compatible. The "duopoly" comes into play when Google forces almost all of those competing manufacturers to use Google Play across close to (your number) 71% of the market. That's the real anti-competitive behavior in the smartphone market.

 

[CarlJ]

What does that have to do with anything? Apple doesn't require IAP for outside services.

If that is, indeed, where this is going (I've seen a number of vague references to it), I can imagine a scenario where the dating service wants to charge the parties involved a rather more substantial fee (i.e. rather than perhaps $10/mo to subscribe to the service, instead, perhaps $20 to arrange each "date" - I'm making up numbers, no idea of the real ones), with the dating app company wanting to use the most frictionless, easy, in-app payments (because easy makes people more likely to spend - credit card companies have known this for years).

In this scenario, they don't want to lower their chances of the parties involved giving up (or working around their system) because they find it to be a hassle, but they also don't want Apple to take 15-30% of a more substantial (and lucrative) charge... so they lodge this complaint. (Another possible factor might be not wanting to declare to Apple straight out what the IAP is for, for a variety of reasons.) In this case, it wouldn't so much be that they're complaining about Apple taking a cut of today's (hypothetical) $10/mo, but rather Apple taking a cut of a near-future $20+ per transaction. Anyway, if this is the case, and they entirely prevail, I would expect to see the dating apps roll out a substantially different new pricing structure eventually.

I have no idea if this scenario is what's happening, or if it's just that dating apps in the Netherlands, at random, are the one of the first of many niche markets to complain (or there's always the other possibility, that somebody else who really wants Apple's commission to go away has picked "Netherlands dating apps" out of a hat as being a good obscure corner to start with to set a precedent and is pushing/funding behind the scenes).

 

[Nuno Lopes]

Nope. That's not even what you originally said.

Well, that butterfly has sailed.

Correct. Apple created a platform where apps are offered for sale and requires a commission on IAP.

No you aren't agreeing. Your summary is not inline with the letter. Again using fallacious strategies to establish the grounds for refutal. Geez man stop using these tactics.

Because then invested billions to create the platform! Why shouldn't they benefit from that?

Again another straw man argument. No one is arguing that Apple is not entitled to benefit from its investments.

I disagree. I think your description is "at balance" with what I said.

What you said after in a more detailed explanation. Not with what you initially used as a counter argument. You simply seam not consider the described practice as anti-competitive at any scale. Why pretend you do?

It can absolutely be considered anti-competitive to leverage dominant market power across vertical markets. Music is a perfect example. I would argue that they don't currently have dominant market power. Depending on the market of course.

Well Apple does not have a monopoly in mobile devices but definitely has a dominant market position. Two different concepts. A position that is using to leverage its entry on other markets that was not a player previously by conditioning in my view third party access to their customers on theirs smartphones.

Not long ago Apple was not a player in the following markets:

- Finance ... payment processing outside the confinements of its platform. Is now even entering in financing through its own credit card.
- Fitness ... remote gym lessons and devices ...
- Gaming ... Gaming industry by establishing itself has an agent and producer
- TV / Video Digital Broadcasting ... agent and producer
* - More generally it is an indirect player on any market by establishing itself as the middle man / the agent of any business reaching their customers on their smartphones of choice through controlling the installation of their apps... case in case the iPhone. Basically requiring payment not for the distribution and sale of Apps, but as an Agent to their customers.

Yet today is a massive player in all of them. None of this would be possible without a dominant position of the iPhone in the smartphone market reaching billions of people and its control over which apps can or cannot be installed on user devices with a strong grip in payment and users credit cards. That is why they prefer to pay fines to keep the grip.

Now this really not the behaviour of someone building a device to play and sell music competing against the likes of others as you tried to portray. But an expansionist conglomerate system based on the power of *.

Cheers.

EDIT: None of the above described services were or are particularly innovative or better per si. Meaning they entered a market already populated against very good third party services also serving as their Agent in the iPhone ... go figure. Now you may think that is all derived from a balanced playfield of competition. But I digress considering that it used OS features that already established players were denied access to. As another example is by looking what happened with HomePod. A device that was built exclusively around Apple digital services that has nothing but a marginal presence because it lacks third party enrichments valued by users ... hence not really such help as leverage to Apple digital services ... just a nice to have. An example what happens to Apple ventures when not enriched by digital services at large.

 

[BaldiMac]

If that is, indeed, where this is going (I've seen a number of vague references to it), I can imagine a scenario where the dating service wants to charge the parties involved a rather more substantial fee (i.e. rather than perhaps $10/mo to subscribe to the service, instead, perhaps $20 to arrange each "date" - I'm making up numbers, no idea of the real ones), with the dating app company wanting to use the most frictionless, easy, in-app payments (because easy makes people more likely to spend - credit card companies have known this for years).

In this scenario, they don't want to lower their chances of the parties involved giving up (or working around their system) because they find it to be a hassle, but they also don't want Apple to take 15-30% of a more substantial (and lucrative) charge... so they lodge this complaint. (Another possible factor might be not wanting to declare to Apple straight out what the IAP is for, for a variety of reasons.) In this case, it wouldn't so much be that they're complaining about Apple taking a cut of today's (hypothetical) $10/mo, but rather Apple taking a cut of a near-future $20+ per transaction. Anyway, if this is the case, and they entirely prevail, I would expect to see the dating apps roll out a substantially different new pricing structure eventually.

I have no idea if this scenario is what's happening, or if it's just that dating apps in the Netherlands, at random, are the one of the first of many niche markets to complain (or there's always the other possibility, that somebody else who really wants Apple's commission to go away has picked "Netherlands dating apps" out of a hat as being a good obscure corner to start with to set a precedent and is pushing/funding behind the scenes).

I'm pretty sure the initial complaint came from the Match Group (Tinder, Match, etc.) who are part of Epic's coalition. It's about large corporations feeling they are entitled to a bigger piece of the pie.

 

[webkit]

The "duopoly" comes into play when Google forces almost all of those competing manufacturers to use Google Play across close to (your number) 71% of the market. That's the real anti-competitive behavior in the smartphone market.

Google and Apple each prevent multiple "app stores" on their respective operating systems but Google isn't as strict about users going elsewhere (sideloading). Uniformly allowing sideloading would change the app store duopoly situation quite a bit, especially with Apple/iOS. Of course, this could end up being both good and bad for consumers.

 

[theotherphil]

Google and Apple each prevent multiple "app stores" on their respective operating systems but Google isn't as strict about users going elsewhere (sideloading). Uniformly allowing sideloading would change the app store duopoly situation quite a bit, especially with Apple/iOS. Of course, this could end up being both good and bad for consumers.

Google does indeed allow other app stores on android. What they were caught doing is mandating where other manufacturers licensed and used android, they were to install the Play Store on all devices.

This created a situation where the Play store is tied to Android which is available in the aftermarket - eg, it is available for sale/ licensing by third party manufacturers to use on their devices. This is exactly what MS was sued for with IE being tied to Windows installations that were sold/ licensed to third party manufacturers.

The big difference with Apple is that iOS is not sold/ licensed to third party manufacturers to install on their hardware. The App Store is not available, and has never been available, on any third party device. Therefore the App Store is an integral component of iOS, not a seperate product/ market. This is why these cases calling for additional app stores will be won by Apple.

They may lose here and there on alternate payments but they will still be able to collect commissions on any sales from within an app, regardless of whether they use a different payment processor. It may even end up costing developers more in the costs of the auditing and book keeping required to offer that service vs the 3% processing discount Apple offers.

 

[BaldiMac]

No you aren't agreeing. Your summary is not inline with the letter. Again using fallacious strategies to establish the grounds for refutal. Geez man stop using these tactics.

Instead of the personal comments, just explain what you think is different. I think we both described the same thing with different words.

Again another straw man argument. No one is arguing that Apple is not entitled to benefit from its investments.

That was literally the argument that I responded to. They said it wasn't fair that a third-party music app should have to pay a commission on iOS when Apple Music does not.

What you said after in a more detailed explanation. Not with what you initially used as a counter argument. You simply seam not consider the described practice as anti-competitive at any scale. Why pretend you do?

I specifically commented that I do consider it anti-competitive at a market-dominant scale.

Well Apple does not have a monopoly in mobile devices

Correct.

but definitely has a dominant market position.

I disagree overall. Maybe in some markets. The have around 30% of the global market. They aren't even in first place in many markets.

Two different concepts. A position that is using to leverage its entry on other markets that was not a player previously by conditioning in my view third party access to their customers on theirs smartphones.

Correct. As I said, if you consider them to be market dominant, than leveraging that to compete in vertical markets can be anti-competitive.

Not long ago Apple was not a player in the following markets:

- Finance ... payment processing outside the confinements of its platform. Is now even entering in financing through its own credit card.
- Fitness ... remote gym lessons and devices ...
- Gaming ... Gaming industry by establishing itself has an agent and producer
- TV Broadcasting ... agent and producer
* - More generally it is an indirect player on any market by establishing itself as the middle man / the agent of any business reaching their customers on their smartphones of choice through controlling the installation of their apps... case in case the iPhone.

Yet today is a massive player in all of them. None of this would be possible without a dominant position in the smartphone market reaching billions of people and its control over which apps can or cannot be installed on user devices and a revenue share.

Yep.

It's not really the behaviour of someone building a device to play and sell music as you tried to portray.

I didn't portray that at all. I provided a simplified analogy. Quite common.