Apple in Breach of EU Competition Law, European Commission Finds

[msp3]

>imagine the market leader (with a near monopoly) getting the government to shut down the competition claiming it’s “anti-competitive”

Only in the Orwellian EU protectionist police state…

 

[Kierkegaarden]

I have never seen any legal action relating to supermarkets shelf stocking fees. The fees are a red-herring. If the government tries to step in and regulate them, I sense a SCOTUS challenge.

Good point. And what about the massive slotting fees that grocery store distributors charge? The manufacturer could market directly to the grocery store, but they know the grocery store will prefer to order through the distributor. The distributor is charging a fee for this because they are providing a value.

Yes, what business is it of the government to decide what a reasonable fee is? I agree this will almost certainly end up in the Supreme Court. Not the EU case, obviously — but I think they are watching what happens in the US.

 

[pasamio]

What I would like is a way to set Spotify as the auto play app when I connect to Bluetooth speakers (or a car), or better yet stop auto play from happening. It usually forgets within minutes of not using Spotify that I was listening to a song there and just starts the music app (and sometimes it takes pressing play a few times before Music gives up control). The most obnoxious (yet very rare) behaviour is when it stops playing midway through a song and just decided to switch to Music. I tried deleting the Music app but then the phone refuses to play any music on some of the speakers and cars

Not just Spotify, even Apple's own Podcasts app suffers from this where I'll be listening to a podcast in the car, get out to grab a coffee, pay with an app, get back in the car and it'll start playing the first track in my music collection. It's crazy annoying!

Agree with the EU. Apple forcing everyone to use ApplePay for in-app purchase is anti-competitive. If they are worried about security/data privacy. Create a standard/code of conduct for other payment processors to adhere to before allowing them to operate within the AppStore. ApplePay is easy and convenient, so I suspect most app devs would choose it anyway.

I've wondered about what having an authorised third party payment ecosystem would look like and how that would tie into the 15%/30% revenue sharing arrangement that exists. Apple might be forced to go this way but I don't see them exactly jumping at the opportunity to reduce their margin from the deal. Would Apple still be able to take the full amount or would they be required to reduce it to enable the payment vendors to compete. Does that just open them up to yet another argument that other payment processors can't compete with Apple on price because Apple includes their payment processing in their margin? (ultimately what Spotify is arguing right now)

I would not be surprised if Apple starting charging to host subscription based apps that do not offer IAP or requiring those that link to outside purchase to offer the same price as an IAP.

I think in part the equivalent of this in the iBookstore situation, the MFN clause, got them into trouble in that market. It's possible that if they did it more generically maybe they wouldn't get hit by it, it seemed like the publishers had been conspiring and then Apple essentially proposed something that met their conspiracy which lead to it's own conviction.

That'll be the week after they pull out of China...

To the best of my knowledge China hasn't threatened them with fines for monopolistic behaviour and for the most part seems to be content with requiring that the data for Chinese citizens resides in China and that Apple remove apps that disrupt the happiness of the Chinese people.

That said China, and the many Chinese native apps, are conspicuously absent from complaints. It's not like the CCP is regulation adverse (just see the current shake up out of Ant Finance) so why haven't they decided that Apple's App Store is a monopoly that needs to be destroyed? What are Chinese apps managing to do that others can't?

And Apple are increasingly resembling the Microsoft of the 00s and it’s not a good look. I’m sad that they’ve become this way.

Like Microsoft, it’s using its size to wipe out any far smaller competitors and give its own services unfair advantages. This is a problem given Apple’s size, as the EU ruling points out.

Perhaps you meant Microsoft of the 90's where they threatened OEMs that they would refuse to sell them Windows if they bundled Netscape with their hardware?

Apple seem to be making concessions to make it easier to leverage third party apps as defaults in their ecosystem. I can understand for Apple getting the product working for first party would be a priority but so long as they continue ensuring the broader ecosystem is capable of being used as different default apps then I think Apple understands that it's better to try to keep everyone in the tent as much as possible.

It is funny how people on here defend Apple no matter what. The EU charge is right. Apple is competing in the appstore and due to the fees, other similar services cost more. Why should Spotify or anybody else have to lower their standard price just so they can make the price look the same due to the Apple fee but get less money than Apple?

lol, its fine to love the brand but sometimes it is also ok to criticize them when they are doing wrong.

Conversely at what point should Spotify be expected to be able to leverage Apple's device, Apple's operating system and Apple's SDK's to build an app to reach customers of Apple's devices? At what point does Spotify get the right to have access to all of that for nothing? At what point does a hardware vendor lose the ability to choose what software runs on their device and are forced to support and maintain?

I think you’re right, apple *does* deserve to run their platform the way they want to, even to grant themselves an advantage. However, no company has a right to control such a massive portion of the app store market. They may have earned it fair and square, they may have worked hard to be the best, but it doesn’t really matter because EU citizens deserve to set the rules of the economy, and what’s in the citizen’s best interest is more competition in the app store market space, which is dominated by basically identical two stores: apple’s and google’s.

I feel badly that apple and google will lose out despite having done nothing wrong, but they have been profiting from a system poorly designed for a digital economy. And while that may be a policy shortcoming, not an apple shortcoming, it nonetheless is important that the EU protect the right of the citizen, even if it comes at the expense of the two market dominant corporations.

The challenge is a lack of competition in the mobile phone operating system market. Google's Android is the monopoly provider of mobile device operating systems for smartphones and tablets, almost all of the alternative operating systems from Nokia, RIM and Microsoft have died due to Google's undercutting of the market at launch which gave it explosive market share advantage becoming number one in the market roughly a decade ago only a couple of years after it's launch. Now there is Android with Apple being the only major non-Android smartphone device.

Ideally if these vendors are upset at how Google and Apple run their operating systems then they should take the time to invest in their own operating system platforms and reap the benefits.

No, They made the money when they sold you the device.

So if they sold the device at a loss, then what they are doing would be acceptable?

Ridiculous. Spotify and others license Apple APIs and software. They also pay for the Apple devices they use. So do their customers with iOS devices.

Considering this, where will it ever be ok to for a company to bill for products and digital services that one does not even sell, much less distribute or produce, just because it owns the billing cash register that no one can.

Part of the licensing arrangement includes revenue sharing for profits from customers who subscribe from app leveraging that intellectual property. To me if you want an example of crazy consider that Steam also charge 30% to merely be a distribution platform and billing platform. Yet some how plenty of folk put their games on Steam.

You keep your phone “locked” by paying attention to what you download and install.

who cares what epics does with the Epic store. If you want to use Epics apps you get them from their store. Easy peasy. Is it as convenient? Nope but certainly not that hard.

Epic's Game Store on the desktop buys exclusive access to content produced by other companies going so far as to remove those games from competing stores (case in point Ubisoft's Anno was removed from Steam after Epic paid Ubisoft to make it exclusive). It's quite bothersome that I have the App Store, Microsoft's updater tool, EA's Origin launcher, Steam, GOG and obviously Epic's launcher. I quite like how on iOS there is a single store front that has all of the apps, they update out of a single place and I don't have to remember who bought whom to figure out which launcher an app came from.

 

[1258186]

This seems like a never ending process. The EU need to make a decision.

 

[Yojimbo007]

….and losing money at the same time… They buisness model is flawed.. and they want government to come to their rescue.

 

[I7guy]

This seems like a never ending process. Just get on with it EU and force Apple to change.

May not happen like that.

 

[1258186]

May not happen like that.

Probably not. Knowing the EU they will huff and puff and end up doing nothing.

 

[I7guy]

Probably not. Knowing the EU they will huff and puff and end up doing nothing.

Whether or not anything is happening and whether or not Apple is actually doing anything illegal or contrary to anti-trust laws, it sure is sending a message to Apple.

 

[Nuno Lopes]

Part of the licensing arrangement includes revenue sharing for profits from customers who subscribe from app leveraging that intellectual property. To me if you want an example of crazy consider that Steam also charge 30% to merely be a distribution platform and billing platform. Yet some how plenty of folk put their games on Steam.

For anyone to compare the App Store with anything one needs to establish what it is. People say it is following the tradition of any digital or analog store. But is it?

Answer this question as clear as possible please.

Apple require third parties to use its in-app purchase device only for the sale of digital materials.That is, assets in digital form, streams or otherwise, features, content, whatever digital material. Another way to think about this, non analog things.

But in a flip of a switch, a change in their policy, they could.

Whats the rationale for not requiring say Best Buy, Amazon, your Grocery Store … to implant its in app purchase device in their App?

Just know that technically the App Store does not control directly or indirectly the end-to-end the delivery of anything but App. In other words, the App Store does not provide a distribution platform for anything but Apps, just like Steam. Not for eBooks, not for Video, Streams, not for audio stream, not for emails, not for digital messages … nothing but Apps …. To distribute and deliver this, other platforms are needed, multiple platforms, tailored, created and serviced by third parties, not the App Store, not even Apple (example: Spotify is a audio distribution service).Yet Apple forces a revenue share over these digital services, charges over things that don’t deliver in any shape or form. Give me an example of a store that does this?

Please think about this and then compare to the Stores that you know.

If the App Store markup was about licensing the use of iOS API to third parties ... notice that Best Buy, Tesco or Amazon’s App just as examples, leverage as much on Apple intelectual property as as say Spotify or any other digital service with an App on the App Store.

Furthermore this intelectual property was licensed to use by all device users, I mean how will they be able to use third party apps if these apps don’t have access to iOS APIs. Isn’t this like selling a car without Tires while hiding the fact that ain’t does not Tires?

The App Store is what I call a Meta Store. The first of its kind. The Store of all Stores, all around one cash register, digital or analog, powered by iOS, App Store and the device you own in your pocket. All “hidden” at the back of the best cameras, the best displays, the best whatever people look for when looking for a smartphone. It can charge Amazon sales through their App, whatever goes through apps, again its a Meta Store. This Meta Store is in 50% of Americans pockets as far as I know.

This Meta Store has no direct competitor, store or otherwise.

If there is no rationale to regulate this, don’t know what kind of commercial relationships have.

Cheers.

EDIT: Regulation is not about being currently illegal or not. Also this is not a new thing, it has been in operation for more than 10 years.

EDIT: Another note. If you are thinking ... 'Oh just use web apps'. Well in iOS web apps are fundamentally a back door to this model, a keyhole ... Apple fully controls that keyhole too. Is the least web app friendly thing on the planet. All protecting you, all to protect your fundamental human rights like Privacy and Security, .. right?. Welcome to the Matrix.

 

[jlc1978]

I think in part the equivalent of this in the iBookstore situation, the MFN clause, got them into trouble in that market. It's possible that if they did it more generically maybe they wouldn't get hit by it, it seemed like the publishers had been conspiring and then Apple essentially proposed something that met their conspiracy which lead to it's own conviction.

I think they are two different situations. In the bookstore case, the companies conspired to keep prices higher than what might have been absent the price fixing. That hurt the consumer.

Apple is not conspiring to set prices. The developer is free to set whatever price they want, as long as it is above 99 cents or some equivalent. They can offer free apps as well. If anything, the app store kept prices lower since it presents the consumer with all the available options for software, driving competition between developers. In the end, the consumers benefit and that is what monopoly laws are designed to ensure.

It will be interesting to see if smaller developers cut prices now that Apple reduced their fee or simply pocket the difference. That would be a real consumer benefit from Apple's move. I would not hold my breath waiting for that to happen.

Spotify chose to charge a higher price and now complains about unfairness. If Apple cut their IAP to 0% do you think they'd drop the App Store subscription price below their web price since an IAP would not incur any transaction fees that a web purchase would? This is simply a money grab on their part and want to shift costs to Apple in a desperate attempt to lose less money; since Apple would now essentially provide a free service to them as well as they would now get more data on customers to help sell ads.

If Spotify really cared about the little guy they'd pay rights owners more; but I'm sure they can come up with a hundred reasons why that wouldn't be fair to them.

This seems like a never ending process. The EU need to make a decision.

That tends to run contrary to how they operate.

 

[robertosh]

This is easily fixed by Apple: allow Spotify to link to their website for payment.
I’d like apple to explain how that would be a bad thing.

Even easier, just charge $12,99 for Apple Music

 

[ksec]

I wish apple pulled out of Europe just to make MR's Apple Supporter Happy.

 

[ksec]

Good point. And what about the massive slotting fees that grocery store distributors charge? The manufacturer could market directly to the grocery store, but they know the grocery store will prefer to order through the distributor. The distributor is charging a fee for this because they are providing a value.

Yes, what business is it of the government to decide what a reasonable fee is? I agree this will almost certainly end up in the Supreme Court. Not the EU case, obviously — but I think they are watching what happens in the US.

You have multiple Grocery store to choose from. And low entry barrier for competition. The State doesn't force its citizen to only buy from one Grocery Store either.

It is always these over simplify analogy that seems so obvious, and yet they are wrong in almost all cases.

>Yes, what business is it of the government to decide what a reasonable fee is?

It is when it is a monopoly. Go and ask Visa and MasterCard, why the US are paying up to 4% in some cases while the European using the same card and same network has a much lower rate. The same goes to AUS as well.

 

[jlc1978]

You have multiple Grocery store to choose from. And low entry barrier for competition. The State doesn't force its citizen to only buy from one Grocery Store either.

You also have multiple phone OS' to chose from, the barriers to entry for developers is low, and the state forces no one to use a specific OS either.

 

[CthuluLemon]

At what point does apple pull out of europe?

After Apple pulls out of the U.S., seeing as the European market has 200,000,000+ more people, i.e. never. There would be a shareholder revolt at the mere suggestion of doing so.

 

[Nuno Lopes]

You also have multiple phone OS' to chose from, the barriers to entry for developers is low, and the state forces no one to use a specific OS either.

Digital businesses are run towards customers not OSs. If one in two your customers are using an iOS device, their choice, you don’t have the option. People don’t buy a smartphone based on who they will pay for apps and their digital services, they don’t really care. Yet they are falling into a trap!

A trap?

The in app purchase policy and process created by Apple is built in a way that totally and absolutely confuses customers. He or she have no idea that is moving out of the App (a place) to the App Store (another place) in order to pay. Users may think that is Spotify that is billing, it is not. Than if they go to the Apple Music … exactly same thing, yet they simply see a lower price, ”Oh Spotify is more expensive they think”. There is no customer awareness of what is going on, and any attempts to inform the customer in the App (a thing that is not Apple property) are forbidden by policy, with the risk of being expelled from installing their App on their customers devices.

This is called entrapment, not to commit a crime of course as none is being committed by the user. But to choose Apple Music.

This system is ethically wrong in so many ways man.

 

[ksec]

You also have multiple phone OS' to chose from, the barriers to entry for developers is low, and the state forces no one to use a specific OS either.

You have TWO OS to choose from. The OS platform is the State. And the so called Grocery Store is the App Store. And there is only one Grocery Store allowed.

 

[Td1970]

Epic's Game Store on the desktop buys exclusive access to content produced by other companies going so far as to remove those games from competing stores (case in point Ubisoft's Anno was removed from Steam after Epic paid Ubisoft to make it exclusive). It's quite bothersome that I have the App Store, Microsoft's updater tool, EA's Origin launcher, Steam, GOG and obviously Epic's launcher. I quite like how on iOS there is a single store front that has all of the apps, they update out of a single place and I don't have to remember who bought whom to figure out which launcher an app came from.

Again. Use the Apple way if you want.
But allow the other way for people that don’t think it bothersome to use mult stores.

Why pay the Apple tax? you host the app. Don’t use shady apps. They make it to the App Store on a fairly regular basis anyways

 

[Td1970]

And if Epic purchases exclusivity rights to a popular app, I would be forced to “unlock” my device to allow side loading.

Doesn’t Apple do this now. Force you to be locked? So your upset that some one else is following apples lead.

 

[jlc1978]

You have TWO OS to choose from. The OS platform is the State. And the so called Grocery Store is the App Store. And there is only one Grocery Store allowed.

That are multiple versions of Android, as well as some lesser Linux based or custom OS' to chose from; there are plenty of grocery stores to chose from. That a significant number of users choose iOS shows that it delivers what customers want.

Digital businesses are run towards customers not OSs. If one in two your customers are using an iOS device, their choice, you don’t have the option.

Sure. Don't go into that business if you don't like the competitive landscape.

People don’t buy a smartphone based on who they will pay for apps and their digital services, they don’t really care. Yet they are falling into a trap!

A trap?

The in app purchase policy and process created by Apple is built in a way that totally and absolutely confuses customers.

Hardly.

He or she have no idea that is moving out of the App (a place) to the App Store (another place) in order to pay.

All they care about is getting what they paid for.

Users may think that is Spotify that is billing, it is not. Than if they go to the Apple Music … exactly same thing, yet they simply see a lower price, ”Oh Spotify is more expensive they think”.

Because Spotify decided to be butt headed about it; their issue not Apple's.

There is no customer awareness of what is going on, and any attempts to inform the customer in the App (a thing that is not Apple property) are forbidden by policy, with the risk of being expelled from installing their App on their customers devices.

Because Apple, like any other store, doesn't let a seller advertise they can buy the same product in a competitor's store. If Spotify doesn't like Apple's terms, don't create an iOS app; but Spotify wants access to their customer base and they want it for free and Apple to bear the costs of accessing that base and advertising a competitor's store.

 

[Ethosik]

Doesn’t Apple do this now. Force you to be locked? So your upset that some one else is following apples lead.

The only reason I use iPhones is that it is forced to be a locked system. If the government FORCED Apple to be an unlocked system like Android, what is the benefit? Android devices are far cheaper and really better hardware wise.

 

[Td1970]

The only reason I use iPhones is that it is forced to be a locked system. If the government FORCED Apple to be an unlocked system like Android, what is the benefit? Android devices are far cheaper and really better hardware wise.

So it’s what you want……

the benefit is iOS. Not locked down everything. But you do you.

 

[ksec]

That are multiple versions of Android, as well as some lesser Linux based or custom OS' to chose from; there are plenty of grocery stores to chose from. That a significant number of users choose iOS shows that it delivers what customers want.

The Platform is the State, then you have "at best" multiple State to choose from, not multiple grocery stores. Having all the user using the same grocery store inside the state does not equal to what customer want without giving them a choice. Your choice is telling the customer to move to another state if you want another grocery store. And that state currently holds ~70% of US citizens and 75% of U.S. total App Store revenues with zero grocery stores competition.

Sure. Don't go into that business if you don't like the competitive landscape.

And the same goes to EU market. That is how EU view Anti-Competitves. When you hold the majority market power, in revenue and profits, there are things you cant do. It is not the monopoly status that matters, it is the monopoly power. And if that is a business landscape Apple doesn't like, the same argument would suggest Apple should pull out of EU.

 

[Nuno Lopes]

Because Spotify decided to be butt headed about it; their issue not Apple's.

Will see. Maybe yes, maybe not.

PS: I’ll like a lot more Apple than some of their customers. At least they do it for their own gain. Now some of their customers defend their actions ….

 

[Nuno Lopes]

Because Apple, like any other store, doesn't let a seller advertise they can buy the same product in a competitor's store

I though Apple was the seller? You see, in a Stores the seller is the store. Only marketplaces the seller isn’t the markeplace, and those each seller pay for hosting, a rent the varies by square meters, not by volume of sales. Even those, you are free to share more info about pricing outside the marketplace as they pay for hosting. Than you have stores such as Amazon with “independent“ sellers, but it provides infrastructure to deliver the goods sold … unlike the App Store … oh by the way, the later does not gave the monopoly over it … Sellers are able to provide and deliver to your house the exact same product elsewhere.

Of your gonna pull on comparison to other stores better compare the all thing right? Cheery picking does not work.

Are you a customer, a supplier or from Apple? As a customer what would you loose? As a supplier, what is the problem if may opt for direct billing or as it is? If you are from Apple or an Apple shareholder, I understand.