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

[BaldiMac]

Google and Apple each prevent multiple "app stores" on their respective operating systems but Google isn't as strict about users going elsewhere (sideloading).

The difference is that Google forces Google Play not only on their own OS but also on the android-compatible OSs of their competitors. Apple doesn't interfere with their competitors in the smartphone market.

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.

Yep. My opinion is that the bad would far outweigh the good on iOS. Pricing is already low and new types of apps would likely be fringe use cases even if Apple fully supported them. (More likely, Apple would drastically limit APIs available to non-App Store apps.)

 

[webkit]

The difference is that Google forces Google Play not only on their own OS but also on the android-compatible OSs of their competitors. Apple doesn't interfere with their competitors in the smartphone market.

A difference is that Apple isn't giving competitors a core OS if they want it while Google is. Android users are also free to potentially avoid the Google Play Store by sideloading.

Apple doesn't give competitors iOS, and also doesn't give iOS users the opportunity to avoid the App store by sideloading.

 

[robco74]

Yes, Google allows sideloading. Epic tried to go that route. Almost no users installed their app. Sideloading is a distraction.

 

[CarlJ]

Apple doesn't give competitors iOS, and also doesn't give iOS users the opportunity to avoid the App store by sideloading.

People weren’t born as iOS users, it isn't some sort of natural state. The differing nature of the two ecosystems - “walled garden” vs “anything goes” - has been quite clear for a long time. If you wanted sideloading, and you chose iOS, that’s a failing on your part, not Apple’s.

 

[pasamio]

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.

80% of apps on the App Store are given away for free as well which means Apple doesn't make anything off them either. However in a capitalist system nobody is entitled to make money from their investment, that's the risk part of the equation.

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?

A revenue sharing arrangement is a relatively common way of monetising intellectual property, even Epic use such a model with their own IP. If you create your own SDK, UI framework and development tools then you are obviously able to license your intellectual property however you wish but you're still building it relying on the platform and still bound by what ever license agreement exists for usage of said platform.

Now if you build directly on the hardware without relying upon any software components then that changes the equation but how do you write a UI without calling into some sort of graphics library? How do you write a networking library without interfacing with the kernel to get to the hardware somehow? You're still leveraging the platform's IP by doing many of these tasks.

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.

We are seeing plenty of competition between operating systems because there is a way each app can be programmed to work across operating systems: they're web apps. You're using one right now! We are definitely seeing increasing competition where Chromebooks and it's web first approach is eating into Microsoft's Windows marketshare, it makes the switching cost to Linux or Mac much cheaper as many apps are online or SaaS. Arguably much of the mobile revolution is also supported by web apps that can work appropriately on mobile devices.

Web apps mean that it is really easy for a new OS developer to work, however monetising that is much harder.

Arguably before that Java was a cross platform development system but it became write once test everywhere, not so good.

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 is however the one company that likely has engaged in antitrust monopolistic behaviour by threatening not to license their Google Mobile Services suite to mobile phone OEMs that were looking to install the Fortnite launcher.

However to me it's crazy that the minority platform of iOS is the one that sees all of this scrutiny when it's Android that has eviscerated the mobile phone operating system market by undercutting the competition and even potentially engaging it antitrust behaviour to block competing app stores. Everyone is spending all of this effort to hand the mobile device space to Google in the name of "competition". Apple represents the alternative choice to Google's ecosystem and yet the focus is on making Apple more like Google.

 

[BaldiMac]

A difference is that Apple isn't giving competitors a core OS if they want it while Google is.

Sure. But it's not anti-competitive to not give something away.

Android users are also free to potentially avoid the Google Play Store by sideloading.

Apple doesn't give competitors iOS, and also doesn't give iOS users the opportunity to avoid the App store by sideloading.

Correct. And again, neither of those things you listed for Apple interferes with their competitors in the smartphone market.

 

[Nuno Lopes]

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

What does that even mean ...

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

.... in the realm of analogies?

You know that Apple opened in app payment exception to its App Store policies introducing the concept of reader apps back in 2020.

What motivated the change in policies? For the sake of their hearts?

It seams that now they allow Music digital services to put a link in app leading users to their website for further info and payment.

Again why was that?

Japan Fair Trade Commission closes App Store investigation

Apple will let developers of “reader” apps around the world link to an external website to set up or manage an account beginning early next year.

www.apple.com

You are of course entitled to your opinion over if Apple has a dominant market power or not. But it seams that your opinion do not go with the schedule of events.

The way I see it none of these changes would come to fruition if they had no dominant market power enough to condition these business access to their customer on their smartphones ... and Apple digital services such as iCloud Storage, Apple Music and Apple TV+ were found not in direct competition with third party business as big as Spotify, Netflix, Amazon and many others.

So I don't understand how do you conclude that they have no dominant market power while referring to the Music. Maybe you can elaborate.

PS: Now that Apple entered the fitness game maybe Peloton will be considered a "reader app" who knows. It seams to be a category purposely built to avoid anti-competition issues. No? What make reader apps different to the referred dating apps in terms of using Apple APIs and Apple benefiting from its investments?

Anyway. Will see.

 

[Abazigal]

So you are the @BaldiMac I have been compared to in the past week. Pleasure to make your acquaintance.

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.

Which I feel is in itself a red herring. The problem isn’t that Apple doesn’t need to charge itself a 30% cut (which would decrease to 15% after the first year). The problem is Spotify’s unsustainable business model that led to this issue in the first place. They knew that Apple would take 30%. They knew that labels would take 70%. Spotify chose to enter the market nevertheless and devalue music to a $10/month buffet fest.

Not to mention it’s not like Spotify derives all their revenue from iOS. There’s users from android, windows, those who subscribe directly from the website, all of which sidestep iTunes. I won’t be surprised if the number of people still using iTunes to pay for Spotify isn’t anything more than a rounding error, yet Spotify makes it sound like Apple is eating off a huge chunk of their profits.

All this just points to an increasingly desperate Spotify throwing everything against the wall in a bid to contain Apple and provide a convenient scapegoat for their own failings.

And maybe that points to the bigger issue at hand that people should be debating - that perhaps music stream is an unprofitable business model that needs to be subsidised by platform owners.

 

[BaldiMac]

What does that even mean ...

Here's help to follow the conversation.

BaldiMac: "It can absolutely be considered anti-competitive to leverage dominant market power across vertical markets. Music is a perfect example."
NL: "You simply seam not consider the described practice as anti-competitive at any scale. Why pretend you do?"
BaldiMac: "I specifically commented that I do consider it anti-competitive at a market-dominant scale."

You know that Apple opened and exception to its App Store policies, changed them in the middle of a law suit not requiring digital business operating in the Music streaming market to offer their services to be subscribed in app ... right?

What motivated the change in policies? For the sake of their hearts?

Now they even allow them to put link leading users to their website for further info and payment.

Again why was that?

Japan Fair Trade Commission closes App Store investigation

Apple will let developers of “reader” apps around the world link to an external website to set up or manage an account beginning early next year.

www.apple.com

You are of course entitled to your opinion. But it seams that your opinion do not go with the events. None of these changes would come to fruition if they had no dominant market power enough to condition these business access to their customer on their smartphones.

I'm aware that they changed the policy. I agree with the complaint. And I agree with the solution.

So I don't understand how do you conclude that they have no dominant market power. Maybe you can elaborate.

Sure. Again. It depends on the market you are talking about. On average, they have less than 30% of the smartphone market and are in second place to Samsung. In US antitrust language, it's hard to consider that to be significant and durable market power. If Apple raised prices, they would like lose market share. That's how markets are supposed to operate.

 

[Nuno Lopes]

Let's recap from previous step:

Most of the apps I've written sell on the App Store or use In App Purchase and I have no problem with it and actually love it. But it doesn't make sense for every business model. 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.

Your answer..

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".

I suposed you knew then that they changed the policies right? Maybe you did not remember when you went on the rhetoric over Apple having the right to benefit from its investments when such was not at all at stake by the observation?

Anyway how do you then conciliate your stance above with now the following?

I'm aware that they changed the policy. I agree with the complaint. And I agree with the solution.

and ...

Well Apple does not have a monopoly in mobile devices 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.

How can you agree with the complaint if you consider that Apple does not have a dominant market position. If I considered that they have no dominant market position in the mobile space enough to condition these industries access to their customers I would not agree at all with the complaints.

I really would like to understand your point of view. As it stands there seams to be some duplicity in your statements.

PS: Furthermore, why do you agree with these complaints focused on these industries and not others when the same App Store practice was is being applied across all kinds of digital businesses? Including dating.

 

[BaldiMac]

Let's recap from previous step:



Your answer..



I suposed you knew then that they changed the policies right? Maybe you did not remember when you went on the rhetoric over Apple having the right to benefit from its investments when such was not at all at stake by the observation?

Anyway how do you then conciliate your stance above with now the following?



and ...

Ahh... there is the root of your confusion. Just because I consider an action fair on its own, does not mean that it is right or legal in all circumstances and all markets.

How can you agree with the complaint if you consider that Apple does not have a dominant market position. If I considered that I would not agree at all with the complaints.

I really would like to understand your point of view. As it stands there seams to be some duplicity in your statements.

There's a difference between speaking in general and speaking about specific markets and policies. In that case, it was a bad and inconsistent policy with significant impact on a vertical market where Apple also competes.

 

[BaldiMac]

So you are the @BaldiMac I have been compared to in the past week. Pleasure to make your acquaintance.

Hey! That was a really strange series of posts.

 

[Nuno Lopes]

Ahh... there is the root of your confusion. Just because I consider an action fair on its own, does not mean that it is right or legal in all circumstances and all markets.

There's a difference between speaking in general and speaking about specific markets and policies. In that case, it was a bad and inconsistent policy with significant impact on a vertical market where Apple also competes.

I'm aware of your duplicity. The question was how do you justify your duplicity considering that you answered @sherwinzadeh and myself regarding the issues at hand one way .... to then end up agreeing that these issues indeed exist, agree with the complaints of anti-competitive practices, agree with the changes in the policies that came into fruition because of it.

The policies always where App Store policies, specifically the ones concerning in app purchases, the markets being discussed did not change from this afternoon to now.

Why is the same reasoning not applicable to dating apps considering that the conditioning is the same and what is being sold is not the app itself like Games are ... but actually non digital experiences? So in that sense compared with say Spotify and Netflix offering digital experiences confined to the device, could theoretically make more sense the conditioning to be lifted.

Yeah. I agree, a very weird series of posts indeed.

 

[bb9]

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%.

Spyware? They need to track you.?

 

[bb9]

Do business need to justify their prof margins to tje government? Can the government define the profit margins of businesses? By forcing Apple to add a side loading feature, Apple now must expand its security team (and likely other department) and there are associate costs. Apple can show them the formula and ask the government to foot the bill if they do not like 27%.

I do hope Apple will give me an option to hide all apps offering side loading - I do not want to accidentally download those apps / codes.

 

[freedomlinux]

The difference is that Google forces Google Play not only on their own OS but also on the android-compatible OSs of their competitors.

Side-question, but ... is this true?

I have a bunch of Amazon tablets, though they say "FireOS" instead of Android, that don't come with the Google Play store.

And in China, there is no Google Play store available at all.

 

[webkit]

Correct. And again, neither of those things you listed for Apple interferes with their competitors in the smartphone market.

Ok, but how is Google interfering in the smartphone market by offering Android to smartphone OEMs? Smartphone makers are free to go with Android or a completely different OS.

If that's your definition of "interfering" then Apple must be interfering in the app market by offering (actually, requiring at a cost in order to reach iOS users) developers to use the App store to market their own apps.

 

[pasamio]

Side-question, but ... is this true?

I have a bunch of Amazon tablets, though they say "FireOS" instead of Android, that don't come with the Google Play store.

And in China, there is no Google Play store available at all.

Partially true. Android is open source and anyone can leverage it to put on their devices which many of the Chinese manufacturers do and Amazon has done. However what isn't included in that is Google Mobile Services, aka "the best of Google". GMS is what provides the Play Store, Google Chrome, YouTube, Mail, Maps, Photos, Messages and a number of support APIs including location services, Google Pay, Wear OS, enhanced security/auth features and some ML features.

Amazon have their own services that provide many of these but the coverage isn't great and there are quirks when dealing with them compared to the Google versions (keeping in mind something as simple as location services differ between the distributions). Developing for FireOS is extra testing for a very small base and is why their app store is light compared to the Google Play Store.

Many of the Chinese phone manufacturers bundle GMS for their international devices however in China almost all of those services are blocked anyway and they have their own versions. In many cases apps like WeChat also provide the app experience on their own providing those services.

Part of Epic's suit against Google includes a unique claim that Google threatened OnePlus over plans to ship Fortnite with their devices. Similarly the same article suggests that LG had a contract “to block side downloading off Google Play Store this year.” If proven true, this shows Google engaging in the same behaviour that got Microsoft into trouble with Internet Explorer (part of the Netscape claims were that Microsoft interfered with OEMs looking to pre-install Netscape).

Ok, but how is Google interfering in the smartphone market by offering Android to smartphone OEMs? Smartphone makers are free to go with Android or a completely different OS.

If that's your definition of "interfering" then Apple must be interfering in the app market by offering (actually, requiring at a cost in order to reach iOS users) developers to use the App store to market their own apps.

Google interfered in the smartphone operating system market resulting in the alternative operating systems all disappearing. Back when the iPhone launched in 2007 there was Symbian from Nokia, Microsoft shipped Windows Mobile and later Windows Phone, Blackberry had their own OS and Palm also had their own operating systems, including eventually WebOS. Android doesn't hit the scene until 2008 and within three years becomes the dominant operating system with over 50% of the marketshare eviscerating Symbian (the market leader), Blackberry and Windows Mobile/Phone (Phone 7 came out late 2010).

Ultimately Google gave away the basic operating system and all of the former Windows Mobile based OEMs shifted to shipping Android devices (and why wouldn't they, at the time Google charged no fees compared to buying Windows Mobile for up to $15 per device). Part of I believe some of the EU concern is that Google over time has moved functionality out of AOSP (or let it remain stagnant) as Google's Mobile Services bundle is expanded with extra functionality and features. The EU being the friendly chaps they are have fined Google over illegal tying relating to GMS as well and more recently reports of investigation over voice assistants.

Smartphone manufacturers are at this point stuck with only one option: Android. Mozilla's Firefox OS failed, WebOS was a late entrant and failed now relegated to running TV's, Microsoft's Phone OS is dead and Nokia's Symbian and Maemo platforms are dead. Even on the open source side the OpenMoko work fell away to Android. The challenge for the OEMs is that much of what consumers associate with Android is provided by Google Mobile Services which means they're tied to licensing that or shipping devices where something as simple as Maps doesn't exist out of the box. A customer is going to return that quick smart.

Android undercut the smartphone operating system market and gave Google a monopoly in that market. The challenge in attacking Apple as being a part of the "duopoly" ignores Google's role in removing all of the other competition in the space. Attacking Apple for being a "monopoly" is awkward because they are the only remaining competitor to Google.

This video on YouTube on smartphone OS marketshare I think demonstrates just how quickly Android killed everything else on the market and how Apple's iOS has slowly gained the marketshare it has over time. That's no mean feat when you consider their devices are generally more expensive than most smartphones on the market so they're not winning by undercutting the market, they're winning by being the better product.

 

[Abazigal]

Ok, but how is Google interfering in the smartphone market by offering Android to smartphone OEMs? Smartphone makers are free to go with Android or a completely different OS.

If that's your definition of "interfering" then Apple must be interfering in the app market by offering (actually, requiring at a cost in order to reach iOS users) developers to use the App store to market their own apps.

It’s hard to fight with free, much less a free OS that comes with a complete suit of services (all of which are also free of charge).

It’s funny that Apple is both at fault for being a monopoly (despite having just 10% market share) and doomed because of this minority market share relative to android. Google basically killed off all possible competition in the market, and they get away Scot free.

 

[pasamio]

It’s hard to fight with free, much less a free OS that comes with a complete suit of services (all of which are also free of charge).

Google Mobile Services isn't free any more, it can cost from $2.50 per device up to $40 per device. It used to be free and I probably should have thrown that in the earlier post with a note that this means that OEMs are now potentially paying more than what Microsoft used to charge for buying Windows Mobile which was up to $15 per device. Exact pricing is generally confidential as another post indicates ZTE paid up to $31 per device for Windows Phone.

 

[Nuno Lopes]

Ok, but how is Google interfering in the smartphone market by offering Android to smartphone OEMs? Smartphone makers are free to go with Android or a completely different OS.

The duplicity of Google is the worst.

Apart from the App Store policies in my opinion, Apple is fairly consistent.

 

[Johns12]

It’s hard to fight with free, much less a free OS that comes with a complete suit of services (all of which are also free of charge).

It’s funny that Apple is both at fault for being a monopoly (despite having just 10% market share) and doomed because of this minority market share relative to android. Google basically killed off all possible competition in the market, and they get away Scot free.

I don't see how Google at this point "gets away Scot free". They have been fined and are being investigated on many fronts.

 

[Sophisticatednut]

Yes. My original point was that some developers will choose to repackage an Android app in there was an option to have it run in "compatibility-mode" on an iPhone.

Well I’m sorry but that’s impossible. Android apps still need to be redone from scratch in Xcode usuing iOS APIs and approved UI design according to apple’s guidelines

 

[Sophisticatednut]

I always found it strange that Apple can't collect 30% of advertising revenue.

Oh they tried with apple iAD. And developers essentially told them to pound sand.

 

[Sophisticatednut]

Yes, many developers have made a ton of money building apps for a platform Apple created, using a store model that Apple created. Prior to the App Store, publishing apps for mobile phones was a lot more complicated, and a lot less profitable. Now some developers want free and unfettered access to the platform without contributing anything back. Apple has opened a lot of doors for small and independent developers.

Not sure about the EU, but in the US, being fined is not the end of the process. Every individual, or company, has the right to contest the fine in court. They have been found to be violating a recent decision, with legal questions that need to be decided in a court of law, under the due process to which Apple is entitled.

Well without apple’s AppStore developers would just have used android phones instead. In an alternative reality where apple doesn’t exist , android would still dominate, developers would use google play store and make money.

Apple is irrelevant and not responsible for developers revenue. Developers are who made the iPhone profitable.