Apple Hit With €500M Fine as EU Enforces Digital Markets Act

[jakey rolling]

If the EU is staying mum in the hopes that Apple will over commit and end up making more concessions than they would otherwise need to, then I appreciate Apple continuing to make only the smallest of concessions each time and continuing to push back against the DMA until we get more clarity from the EU about just what it is they really want.

It is already pretty clear what the EU really wants. It wants large companies that hold dominant market positions to stop abusing those positions for the purpose of entrenching themselves into new markets or adding new barriers to entry in existing markets. Apple or any other gatekeeper could figure out on their own quite easily if a given policy is likely to run afoul of the law if they just ask themselves two simple questions:

1: "Do I have a dominant enough position in any of the markets the DMA lists as "gatekeepers" that I would be subject to the law?"

2: "Would a reasonable person conclude that the main intention of this policy is to make it artificially more costly or burdensome for a developer or customer to avoid my own products or services?"

If the answer to both of those questions is "yes", that policy will very likely violate the DMA.

If Apple decides, in bad faith, to continue to avoid asking question #2 and coming up with policies that are obviously still intended to leverage their dominant position to discourage competitors or to lock their customers into their own products and services, then I appreciate the EU for continuing to fine Apple at every corner until they make at least some semblance of a good-faith attempt to comply.

 

[turbineseaplane]

@jakey rolling

Well said ... net/net, the EU would like Apple to change how it has been conducting itself.

Apple doesn't like that.

It's a rock and a hard place, but if they want to keep operating in the EU, they need to adjust their behavior.

or don't! And stop selling there.
Fine by me either way honestly.

 

[Dr McKay]

But you did imply that someone would suggest leaving the market. So your 745M was just you adding up everybody tangentially connected to "Europe" but also not in the EU?

I specifically said the continent of Europe. You’re the one who keeps bringing up the EU 🤷

 

[leonremi]

If the EU doesn’t want Apple to be charging developers of third party app stores via the core technology fee, they could just say this part out loud, tell Apple once and for all just what it is they want Apple to do, and settle it once and for all.

If the EU is staying mum in the hopes that Apple will over commit and end up making more concessions than they would otherwise need to, then I appreciate Apple continuing to make only the smallest of concessions each time and continuing to push back against the DMA until we get more clarity from the EU about just what it is they really want.

Apple has deliberately tried to circumvent the DMA and got caught.

 

[surferfb]

Apple has deliberately tried to circumvent the DMA and got caught.

No, Apple deliberately complied to the law to the least extent possible, and argues that the EU has deliberately pushed the boundaries of the DMA beyond what was written into the law. A court will decide which one of them is correct.

 

[turbineseaplane]

No, Apple deliberately complied to the law to the least extent possible, and argues that the EU has deliberately pushed the boundaries of the DMA beyond what was written into the law. A court will decide which one of them is correct.

Feels like we can wrap things up with this (in bold)

 

[surferfb]

Feels like we can wrap things up with this (in bold)

I actually suspect there will be some sort of agreement before it gets to court, but we'll see.

 

[surferfb]

@surferfb

No?
lol

Why the laugh?

More to say?

That was laughing with you, not at you!

 

[turbineseaplane]

Will everyone agree to be quiet about this once it's decided?

Or do we have to endure the Apple vs EU dance in perpetuity no matter what happens?

😞

 

[surferfb]

Will everyone agree to be quiet about this once it's decided?

Or do we have to endure the Apple vs EU dance in perpetuity no matter what happens?

😞

I suspect it'll quiet down significantly except for once or twice a year when the EU doesn't get new features and people in the EU complain.

 

[turbineseaplane]

I suspect it'll quiet down significantly except for once or twice a year when the EU doesn't get new features and people in the EU complain.

I hope Apple pulls out.

Much like folks who thought Trump had good ideas with tariffs needed to see, first hand, that it wasn't good... I'd like those Apple shareholders who think them pulling out of the EU would be just fine to find out..

Maybe they would be!
Let's find out!
I'm happy to be wrong.

(I'm not a shareholder, so don't care one bit)

 

[surferfb]

I hope Apple pulls out.

Much like folks who thought Trump had good ideas with tariffs needed to see, first hand, that it wasn't good... I'd like those Apple shareholders who think them pulling out of the EU would be just fine to find out..

Maybe they would be!
Let's find out!
I'm happy to be wrong.

(I'm not a shareholder, so don't care one bit)

Not a shareholder either, but there is literally no way Apple pulls out of the EU, with the potential exception of if the EU mandated encryption backdoors. Otherwise Apple will be there.

As a non-shareholder, it would be entertaining though!

I actually suspect that Apple's days of being targeted for regulation are numbered. The regulators will declare victory and will move on to regulating AI companies, or whatever the next big thing is - they always seem to be fighting the last battle, and I personally think it's pretty clear the future isn't actually "apps for everything".

Apple will plug away making a lot of money but not attracting the attention, kind of like Microsoft today.

 

[leonremi]

No, Apple deliberately complied to the law to the least extent possible, and argues that the EU has deliberately pushed the boundaries of the DMA beyond what was written into the law. A court will decide which one of them is correct.

That’s called malicious compliance. And it’s basically one way on trying to circumvent the law.

 

[jakey rolling]

Not a shareholder either, but there is literally no way Apple pulls out of the EU, with the potential exception of if the EU mandated encryption backdoors. Otherwise Apple will be there.

That would be the UK. Who are decidedly no longer part of the EU.

 

[jakey rolling]

No, Apple deliberately complied to the law to the least extent possible

Yes, yes. Just like in the last comment thread, Apple was deliberately "delaying" paying taxes (indefinitely, or until the tax burden went away, whichever came last). Just like Bart and Lisa would deliberately comply with a "no fighting" rule by simply swinging their arms around while walking closer and closer together until those swings landed.

"...complied to the least extent possible", in this context, is the same thing as "...didn't comply."

 

[surferfb]

That’s called malicious compliance. And it’s basically one way on trying to circumvent the law.

No, it's not malicious compliance any more than the EU pushing the regulation further than what is written is "malicious enforcement".

Malicious compliance would be Apple saying "fine, you can download apps from the web now, but we're doing no security screening on anything unless it came from the App Store. And if a user gets their device hosed, or get scammed out of money, when they call us to complain we're giving them their MEP's contact info and explaining how we told the EU this was going to make things worse for users but they forced us too"

Apple is changing how it operates, working with its (European) lawyers to do so with the least harm to its business and users. If the EU says "the changes you made aren't good enough" that's a difference in opinion, not malicious compliance. A court will determine who is correct.

Apple has also been very clear that in its opinion, the EU has been constantly moving the goalposts - They will tell Apple to do something, Apple will do it then be told "actually no, you need to do more than we even wrote into the law". MALICIOUS ENFORCEMENT

 

[surferfb]

Yes, yes. Just like in the last comment thread, Apple was deliberately "delaying" paying taxes (indefinitely, or until the tax burden went away, whichever came last). Just like Bart and Lisa would deliberately comply with a "no fighting" rule by simply swinging their arms around while walking closer and closer together until those swings landed.

"...complied to the least extent possible", in this context, is the same thing as "...didn't comply."

No it's not. Apple has spent million of dollars and thousands of engineering hours to comply. They've made a massive amount of changes, that 99% of its users don't want, that Apple thinks make their products worse for the vast majority of their users.

The idea they're not complying because the EU Commission doesn't understand tech, thinks 30% of a market makes you a monopoly, and thinks IP rights don't apply if you're a big American company is ridiculous.

 

[steve09090]

Again, it's criminal. Commercial law is a branch of civil law.

You’re super confused now.

You said if it was a fine, it’s Criminal. But you can get a fine from commercial law, (which this was) and you said Commercial Law was Civil Law. That's what you said.

So by your own admission, fines can be given for Civil Law. Which is the case in this situation. Commercial Law can be either.

But let’s clear this up. Industrial Laws, Commercial Laws, Environmental Laws and many others can have both Criminal and Civil elements to them. So calling out someone else on being wrong when you don’t actually understand this, is a little harsh don’t you think?

 

[davide_eu]

No, it's not malicious compliance any more than the EU pushing the regulation further than what is written is "malicious enforcement".

Malicious compliance would be Apple saying "fine, you can download apps from the web now, but we're doing no security screening on anything unless it came from the App Store. And if a user gets their device hosed, or get scammed out of money, when they call us to complain we're giving them their MEP's contact info and explaining how we told the EU this was going to make things worse for users but they forced us too"

Apple is changing how it operates, working with its (European) lawyers to do so with the least harm to its business and users. If the EU says "the changes you made aren't good enough" that's a difference in opinion, not malicious compliance. A court will determine who is correct.

Apple has also been very clear that in its opinion, the EU has been constantly moving the goalposts - They will tell Apple to do something, Apple will do it then be told "actually no, you need to do more than we even wrote into the law". MALICIOUS ENFORCEMENT

So, asking third parties to pay even if the application is not downloaded by their store "is compliance"? EU, please push harder!

 

[Ethosik]

firstly I haven’t. Secondly the App Store isn’t a government so it’s not the same thing.
If two companies aren’t doing the right thing they can fix it themselves in court.

My HOA isn’t a government either. I still must comply with their rules. Not break them and whine about it.

 

[Ethosik]

Funny how people seem to not understand the difference between laws and corporate policies.

My HOA isn’t a government either. I still must comply with their rules. Not break them then whine about it.

 

[Abazigal]

So, asking third parties to pay even if the application is not downloaded by their store "is compliance"? EU, please push harder!

Correct me if I'm wrong, but the DMA doesn't expressly forbid Apple from charging app developers for apps downloaded outside of the App Store. This came about because people like to compare the 30% App Store cut to the 3% charged by payment processors, which led to Apple decoupling that 3% fee from what would be known as a platform fee.

So Apple can actually make a case for charging developers 27% of app revenue from say, the Alt Store. Why Apple doesn't do this is probably because there is no way of knowing how much money a developer would make if he does not use iTunes billing unless Apple is willing to commit to costly and cumbersome audits of a developer's receipts.

That's why the CTF is not entirely unreasonable, IMO. It solves a real issue for Apple - figuring out how much money to collect from developers who don't use the App Store or eschew iTunes. Apple may not know how much revenue a developer brings in, but they can probably track how many times an app is installed, and it's fairly straightforward to then multiply that by a flat fee for every developer from the EU.

 

[mrochester]

Correct me if I'm wrong, but the DMA doesn't expressly forbid Apple from charging app developers for apps downloaded outside of the App Store. This came about because people like to compare the 30% App Store cut to the 3% charged by payment processors, which led to Apple decoupling that 3% fee from what would be known as a platform fee.

So Apple can actually make a case for charging developers 27% of app revenue from say, the Alt Store. Why Apple doesn't do this is probably because there is no way of knowing how much money a developer would make if he does not use iTunes billing unless Apple is willing to commit to costly and cumbersome audits of a developer's receipts.

That's why the CTF is not entirely unreasonable, IMO. It solves a real issue for Apple - figuring out how much money to collect from developers who don't use the App Store or eschew iTunes. Apple may not know how much revenue a developer brings in, but they can probably track how many times an app is installed, and it's fairly straightforward to then multiply that by a flat fee for every developer from the EU.

You’ll anger the ‘Apple shouldn’t be charging anything’ crowd with this comment.

 

[BaldiMac]

1. "Delayed revenue and taxes were listed on Apple's US tax forms" - Listing deferred income on a tax form doesn't mean it was taxed. Apple specifically used check-the-box regulations to classify entities in a way that avoided current US taxation under Subpart F.

2. Yes, "forced" is exactly the right word. Apple explicitly stated they had no intention to repatriate under previous tax rates. The only reason they paid in 2018 was because the Tax Act made the payment mandatory, not optional.

3. "Booking profits in a stateless corporation was legal" - This misrepresents the EC finding. The illegality wasn't about stateless entities in isolation but about the preferential tax treatment Ireland gave exclusively to Apple through specific rulings.

4. "Money intended to be booked and taxed in the US" - This directly contradicts your own previous statements about deferring taxation indefinitely. You can't claim they were "intending" to pay US tax while simultaneously acknowledging they had no plans to repatriate.

5. The crux remains: Apple received preferential treatment from Ireland that allowed them to pay effectively zero tax anywhere on billions in profits generated in Europe for over a decade.

The EC ruling wasn't about taking money from American taxpayers - it was about enforcing consistent application of state aid rules that apply to all companies, European or American.

The Tax Act didn't "force" them to repatriate funding. It simply provided incentives in the form of lower tax rates. The rest of your post, you're simply repeating yourself without responding to my points. I've got nothing to add.

Which is completely irrelevant to this story. How Apple chooses to "list" their revenue in the US and how the IRS chooses to tax that revenue has no bearing whatsoever on how any other country anywhere calculates and taxes a company's revenue. None. There is no correlation here whatsoever.


The court that has relevant jurisdiction in this matter has ruled otherwise.


And again, as has already been explained to you, the court that has relevant jurisdiction in this matter disagrees.


A fact that is relevant to exactly nobody who matters.

I don't know what point you are making here. Of course, the jursidiction where you book your profits matters, because that is where you pay taxes. And yes, as I have said repeatedly, the EU courts reasonably determined that the Irish tax ruling in question constitutes illegal state aid per their laws.

Ignorance of the law has never been a defence. Apple has the money to get the best legal advice.
If you’re going to get cute with the taxman these outcomes are simply a cost of doing business.

Apple wasn't ignorant of the law. They followed the law. It was Ireland that broke the law.

As an aside, it's becoming strangely common for Apple to be punished for other people breaking the law. Google monopolies search in the US, Apple returns billions per year to Google. Google monopolizes app distribution in the EU, Apple is forced to allow third-party stores. Google monopolizes browsers, the EU forces Apple to open iOS to other browser engines (benefiting Google). I understand why, but it's kind of weird that all these laws/rulings benefit the company that actually broke the law. At least in the short term.

I mean, this whole thing basically played out like a three-card-monte dealer that picked the wrong mark and got hosed on a massive bet. Of course they would have "made different decisions."

You're acting like Apple did something obviously wrong. They basically went to the Irish tax authority and asked if a different corporate structure would still qualify for the "Double Irish" tax scheme that they'd been using for years. Ireland approved the new structure. The EU objected in 2014, and Apple quickly changed their structure again.

 

[jakey rolling]

My HOA isn’t a government either. I still must comply with their rules. Not break them then whine about it.

Except when those rules contradict your local laws. HOA rules get invalidated through legal judgements all the time.