Apple Must Let Dating Apps Offer Alternative Payment Methods in App Store, Dutch Regulator Says

[AppliedMicro]

Apple IMHO offers just that, a great (not good), cost efficient in-app payment system with fair and competitive pricing. Most other digital stores are at 30% so why not Apple?

They're 30% where they are tied to a platform - or controlled by a software operator.
They're often much less when there is competition.

Apple charges the 30% to cover:

• the payment processing
• the development/upkeep/upgrades of the App Store (employing devs)
• all of the customer service for the App Store (paying salaries)
• all of the development tools that devs use to write apps (employing ore devs)
• marketing of the app store (paying more salaries)
• developing hardware that attracts a large audience for the devs

So basically they're funnelling from their ludicrously profitable app store and in-app sales towards developing and marketing ...other things (third-party apps, hardware). Well, they don't have to do that.

You're completely right there though. And generally companies to do just that: Do as they please with their pricing and decide how they're recouping costs from customers.

It's (usually, in non-socialist states) only when there's a lack of competition that governments will intervene by way of competition law. And that's what we have for mobile app: Developers of mobile don't have much choice in supporting smartphone OS platforms and through which mobile app marketplaces to sell their apps. And governments and courts of law are increasingly becoming aware of that and recognising that fact.

If dev costs go up to cover the "store" then the little guy gets squeezed out.

Get squeezed out (by App Store fees) or get squeezed out (from the market). Seems about right.

 

[Sophisticatednut]

Because Apple charges for use of it's intellectual property.

Apples IP have nothing to do with the value of goods in the app. Why doesn’t apple take 30% of Netflix sales? Or Amazon sales? But takes a cut if you can buy a book or download a skin?

So maybe Tesla should be barred from entered the market?

They are 100% free to enter, just like Microsoft

And if the independent dealership wants to charge 100 euros for changing a light bulb they can. Is anybody limiting those fees? No the market would speak with their $$$. The ios app store isn't an essential thing, don't try to make the argument it is.

Dealerships are equally essential as iOS AppStore. The difference is Ford is forbidden to sell the light to independent dealers for 100€, but close to cost of production

What high commissions? Their are industry standard. What is it your business how much Apple (or the diner down the street, or the car manufacturer) makes. If you don't like some companies prices, product, business practices, etc, vote with your dollars.

Industry standard doesn’t mean anything. And isn’t an argument for the status quo.
Voting with your dollars isn’t relevant if the practice is anticompetitive towards developers and other companies.

 

[123]

Edit: why do you devalue intellectual property? Because it’s apple?

I don't. But there are limits. Namely when some company's alleged intellectual property is deemed more valuable than the property rights of their customers. Nestle tried to block competitors as well as their customers from using alternative pods in Nespresso machines. They've lost most cases. Rightfully so. The same card is played by Apple a lot. However, it will be torn to pieces by EU interoperability regulations, there is no doubt about it.

IP rights and competition laws are on the opposite side of the spectrum, but they have the exact same goal: to foster innovation. In the case of the former, by preventing a company's research results from being used/stolen by the competition, thereby justifying and protecting costly R&D investments. In the case of the latter, by not allowing anti-competitive behavior that would lead to inefficient markets in which the dominating player doesn't need to innovate anymore.

It is usually desirable to find a middle ground between these principles. However, in Apple's case here, there is no IP to even be protected. They created a platform and this is nice, nobody wants to steal it. But that doesn't mean Apple should be allowed to prevent others from creating their own pieces to interoperate with it. It is quite clear what will happen. Apple will lose this battle at some point unless they can prove that all their measures to lock down the platform are necessary for the platform itself, and not just to prevent competition (and thereby innovation). They will not be able to convince anyone, at least not in Europe.

 

[I7guy]

They're 30% where they are tied to a platform - or controlled by a software operator.
They're often much less when there is competition.
[…]

Because basically the “competition” likes to come in after the fact and charge peanuts because they did not have any skin in the game. Did they spend billions developing the hardware and software around the iPhone? It’s real easy to use someone else’s dime to undercut their fees.

 

[Michael Scrip]

Get squeezed out (by App Store fees)

Developers know about the fees before they sign-up to become a developer. It's well documented. It's not a surprise.

So if a developer can't make ends meet and they blame it on the fees... they either need to charge more for their app... or find a new job.

Again... the fees are known. Developers must factor that into their business planning.

I haven't heard a developer say "I lost my house because of those dang App Store fees..."

 

[I7guy]

i...], there is no IP to even be protected. [...]

Is this your opinion or a fact where you can provide a citation?

 

[AppliedMicro]

No, it has been like that fee for decades when every store was a distribution site for software.

Please look up what popular platforms such as kagi, eSellerate, FastSpring, Stripe or Paddle are charging or have been charging and report back before making that claim.

I'm talking online license sales and payment processing, not brick&mortar here (and yes, before the advent of smaller smartphone software transactions some of them had a relatively high minimum fees - in what used to be a much smaller market 10+ years ago).

By competitive market you mean Apple shouldn't control it's own app store? Right? This gets back to prevailing commissions and use of intellectual property.

When there's a lack of app marketplaces for a dominant platform such as iOS, and Apple acts as a single gatekeeper to distributing apps to that platform at all, some governments will try to curtail that role - and enact legislation to allow more competition (be it through alternative purchase mechanisms, processor or alternative app stores).

30% is an industry standard, just not to your liking?

It's not for online software sales in a competitive market.
Again: Please compare commission rates for software sales for operating systems whose developer doesn't mandate all sales and purchases go through their own system.

A smartphone is not needed to open a bank account. A low-end phone with a cellular connection and web browser can do the same thing as the highest-end smartphone.

It's not necessary to open some bank account. Especially not with brick & mortar banks. It's increasingly necessary at many banks, especially new online banks - you often can't even operate (or log in) to their accounts without a smartphone app. Even though the US with their outdated banking system may lag in that regard compared to Asian - or even European - markets.

Even brick & mortar banks are rapidly closing physical locations or hiking prices for in-branch transactions. New online banks have not only decreased prices for many customers but also provide innovative functionality and security features.

While having a smartphone isn't really necessary, the costs of not having one (in terms of transaction fees and lost time spent) are steadfastly increasing.

A smartphone may be a necessity, but an iphone isn't

Agree - but there aren't many alternatives in terms of OS. Especially when you consider on which platforms and marketplaces "essential" apps are offered.

 

[I7guy]

Apples IP have nothing to do with the value of goods in the app. Why doesn’t apple take 30% of Netflix sales? Or Amazon sales? But takes a cut if you can buy a book or download a skin?

Because they are reader apps?

They are 100% free to enter, just like Microsoft

Sure, they can. It's a free market with competition...

Dealerships are equally essential as iOS AppStore. The difference is Ford is forbidden to sell the light to independent dealers for 100€, but close to cost of production

Apple does not provide fee tiers either, except for the small business program.

Industry standard doesn’t mean anything. And isn’t an argument for the status quo.

In the US it hasn't been overturned.

Voting with your dollars isn’t relevant if the practice is anticompetitive towards developers and other companies.

In the US apple's business model is not anti-competitive; so voting with your dollars is relevant.

 

[123]

Is this your opinion or a fact where you can provide a citation?

Feel free to cite App Store patents alternative stores and payment processors would violate.

 

[AppliedMicro]

Developers know about the fees before they sign-up to become a developer. It's well documented. It's not a surprise.
(...)
Again... the fees are known.

Yes, customers know and the fees may be known.

That doesn't stop government from regulating them after the fact when a platform/service has become so big that they can set anticompetitive prices.

Now, whether Apple's "App Store" business and pricing actually is anti- or super-competitive, is open to interpretation (and different ones, depending on whom and in which jurisdiction you ask).

I'll just say that governments and courts are at least slowly (but surely) warming up to the idea.

 

[Michael Scrip]

Yes, customers know and the fees may be known.

That doesn't stop government from regulating them after the fact when a platform/service has become so big that they can set anticompetitive prices.

Developers set their prices... not the platform.

So if developers know that fees are a factor... they need to set their app prices accordingly.

 

[AppliedMicro]

Developers set the prices... not the platform.

I meant commission rates charged by the platform operator - but you probably knew that

 

[I7guy]

Please look up what popular platforms such as kagi, eSellerate, FastSpring, Stripe or Paddle are charging or have been charging and report back before making that claim.

Does the above have their own platforms? They are certainly free to develop their own platform and go on from there. Paddle was all set to undercut Apple's commission but the courts put a stop to that.

I'm talking online license sales and payment processing, not brick&mortar here (and yes, before the advent of smaller smartphone software transactions some of them had a relatively high minimum fees - in what used to be a much smaller market 10+ years ago).

When there's a lack of app marketplaces for a dominant platform such as iOS, and Apple acts as a single gatekeeper to distributing apps to that platform at all, some governments will try to curtail that role - and enact legislation to allow more competition (be it through alternative purchase mechanisms, processor or alternative app stores).

Apple is not a dominant player, except by revenue, certainly not by market share. Even so the US courts are letting Apple's business model stand in what will certainly be a few years of appeals.

It's not for online software sales in a competitive market.
Again: Please compare commission rates for software sales for operating systems whose developer doesn't mandate all sales and purchases go through their own system.

You are defining your own market, this has already been done in Epic vs. Apple.

It's not necessary to open some bank account. Especially not with brick & mortar banks. It's increasingly necessary at many banks, especially new online banks - you often can't even operate (or log in) to their accounts without a smartphone app. Even though the US with their outdated banking system may lag in that regard compared to Asian - or even European - markets.

I don't know where you get your information. I can transact business with my bank, stock brokers, doctors, etc using a website. An iphone is still not a necessity.

Even brick & mortar banks are rapidly closing physical locations or hiking prices for in-branch transactions. New online banks have not only decreased prices for many customers but also provide innovative functionality and security features.

Ok.

While having a smartphone isn't really necessary, the costs of not having one (in terms of transaction fees and lost time spent) are steadfastly increasing.

My transactions with my bank are the same for in-person, app or website. Requiring an app to do business would disenfranchise those who don't want an app, so my guess is a web browser is all that is needed.

Agree - but there aren't many alternatives in terms of OS. Especially when you consider on which platforms and marketplaces "essential" apps are offered.

There are dozens of phone manufacturers. Each can develop their own app and app store.

Now what winds up by happening here and how Apple will deal with this yet remains to be seen.

 

[Michael Scrip]

I meant commission rates charged by the platform operator - but you probably knew that

Yeah that's what I was talking about. The developer knows that Apple keeps a 15% or 30% commission from each sale.

So is that enough to dissuade a developer from making an app in the first place?

Or will the developer go on to create and sell their app anyway... despite the commission fees?

The developer just has to adjust their pricing to meet their financial goals.

But if developers are getting crushed by fees... they're probably not doing it right...

 

[Abazigal]

I wonder if platforms like PlayStation and Switch should be made to allow developers to sell games without having to pay them their 30% cut as well. Would this help to bring down the cost of doom eternal such that it doesn’t cost $60 on my switch console?

 

[icanhazmac]

So basically they're funnelling from their ludicrously profitable app store and in-app sales towards developing and marketing ...other things (third-party apps, hardware). Well, they don't have to do that.

You're completely right there though. And generally companies to do just that: Do as they please with their pricing and decide how they're recouping costs from customers.

It is interesting to me that you chose to focus on only 1 of 6 things I stated the 30% could go towards when the 5 other things are legitimate costs that Apple needs to cover that are directly tied to the operation of the app store.

Even if it were proper to focus only on the last one which would be considered at least a partial subsidization of iOS devices, so what if they funnel dollars? Both Microsoft and Sony sell the consoles at cost or at times it has been reported at a loss, only to make up the revenue through games and online subscriptions. Loss leaders are even a common practice at retail, something at cost to get people in the door in hopes they purchase something else. Cell providers have done this for years, free phone with a 2 year contract, etc.

Get squeezed out (by App Store fees) or get squeezed out (from the market). Seems about right.

No one ever addresses my point about where they believe Apple should recoup the costs listed in my previous post for the development, support and promotion of the app store when most apps are free. Should Apple grossly increase the dev fees from $99 to $9999? Should Apple increase the cost of iOS devices to cover the cost? Should Apple do away with free apps and start all apps at $4.99 and take a cut from that? Please tell me.

Apple and others (google, sony, microsoft) have legit costs to cover for the app store, please tell me where you want them to get that money from?

 

[Michael Scrip]

No one ever addresses my point about where they believe Apple should recoup the costs listed in my previous post for the development, support and promotion of the app store when most apps are free. Should Apple grossly increase the dev fees from $99 to $9999? Should Apple increase the cost of iOS devices to cover the cost? Should Apple do away with free apps and start all apps at $4.99 and take a cut from that? Please tell me.

$99/year for the Application Fee and 15% or 30% from each purchase is pretty sweet. It allows basically anyone to become an iOS developer and sell apps to a potential billion users with relatively little upfront costs. All you really need is a Macintosh.

But there's nothing stopping Apple from making the Application Fee $500,000/year with a flat $50,000/month to be in the store.

If Apple did that... most developers would be begging Apple to go back to the old way.

 

[AppliedMicro]

Does the above have their own platforms?

We both know they don't. That's the reason Apple gets to charge supra-competitive commissions on apps store sales.

They are certainly free to develop their own platform and go on from there(...)
There are dozens of phone manufacturers. Each can develop their own app and app store.

The barriers to entry (one of the major ones being lock-in effects) are so high that - as a matter of fact - nobody does enter that market in any competitively relevant way anymore. Just as no one hasn't in the computer desktop operating system market for the last 20+ years.

It says something when even Microsoft threw the towel with their smartphone OS.

You are defining your own market, this has already been done in Epic vs. Apple.

I'm offering one possible definition. The Netherlands may define it differently than Apple.

I don't know where you get your information

First-hand.

My transactions with my bank are the same for in-person, app or website. Requiring an app to do business would disenfranchise those who don't want an app, so my guess is a web browser is all that is needed.

My credit card company requires using their app to receive statement - unless I pay them 26$ for the privilege of receiving paper statements. Which, then, I'd have to physically receive. There's no website anymore. Could I choose a different company? Sure.

It's similar for my bank account: I have a free online bank account that's only manageable through a smartphone app (which is available on exactly two app marketplaces). Could I switch my bank? Sure - but there is no bank that offers paper statements by mail for free (where I live, let alone nearby), so I'd pay dozens of dollars more to bank without a smartphone.

As I said: The costs of not having one are only increasing.

 

[AppliedMicro]

when the 5 other things are legitimate costs that Apple needs to cover that are directly tied to the operation of the app store.

Honestly, the argument is overblown. While Apple doesn't disclose specifics, the costs of running the App Store itself are small compared to revenues, so that margins are sky-high (much higher than the hardware business).

And that's true tenfold for in-app purchases, where Apple doesn't do much payment processing and flipping a switch.

Both Microsoft and Sony sell the consoles at cost or at times it has been reported at a loss, only to make up the revenue through games and online subscriptions

Apple doesn't sell their devices at a loss though. Quite the contrary.

No one ever addresses my point about where they believe Apple should recoup the costs listed in my previous post for the development, support and promotion of the app store when most apps are free. Should Apple grossly increase the dev fees from $99 to $9999? Should Apple increase the cost of iOS devices to cover the cost? Should Apple do away with free apps and start all apps at $4.99 and take a cut from that? Please tell me.

I think I already did state it on this thread: They're free to operate on a cost-covering or even profitable basis by charging per-app, per-submission and per-download fees to cover costs.

They have, understandably, chosen not to do so, in order to maximise the appeal of their OS platform, attract developers and optimise revenue and margins.

 

[I7guy]

We both know they don't. That's the reason Apple gets to charge supra-competitive commissions on apps store sales.

That's the reason these payment processors don't charge a hefty fee. They didn't spend years and billions of dollars building platform for over 1 billion customers.

The barriers to entry (one of the major ones being lock-in effects) are so high that - as a matter of fact - nobody does enter that market in any competitively relevant way anymore. Just as no one hasn't in the computer desktop operating system market for the last 20+ years.

The barriers are very high, but that has nothing to do with Apple.

It says something when even Microsoft threw the towel with their smartphone OS.

Microsoft didn't know how to produce a product that the people who wanted their product bought enough of it en-masse.

I'm offering one possible definition. The Netherlands may define it differently than Apple.

It's not Apple that defined the market, it was the US courts.

First-hand.

My credit card company requires using their app to receive statement - unless I pay them 26$ for the privilege of receiving paper statements. Which, then, I'd have to physically receive. There's no website anymore. Could I choose a different company? Sure.

Well thank goodness there is android then and the dozens of android manufacturers. Hope your bank develops app that are architecturally neutral.

It's similar for my bank account: I have a free online bank account that's only manageable through a smartphone app (which is available on exactly two app marketplaces). Could I switch my bank? Sure - but there is no bank that offers paper statements by mail for free (where I live, let alone nearby), so I'd pay dozens of dollars more to bank without a smartphone.

Again, the bar is a smartphone that supports apps, not an iphone.

As I said: The costs of not having one are only increasing.

Frankly this is a perfect opportunity for a class action suit. Not to support even the PC? Some lawyers gold mine. However, be that as it may, apps are available on many devices other than iphone. If apple went out of business tomorrow, the world would move on and Samsung would reap a gold mine.

 

[AppliedMicro]

That's the reason these payment processors don't charge a hefty fee. They didn't spend years and billions of dollars building platform for over 1 billion customers.

Yes. But spend years and billions of dollars is what most monopolists or oligopolists did.

Microsoft didn't know how to produce a product that the people who wanted their product bought enough of it en-masse.

The issue wasn't (IMO) the product itself. They did have quite an attractive product - per se!

It was the availability of apps. It's a chicken-and-egg situation and network effect at play.

It's not Apple that defined the market, it was the US courts.

Some US court, for the time being.
Other jurisdiction (among them the many outside of the US) will have their own.

Well thank goodness there is android then and the dozens of android manufacturers. Hope your bank develops app that are architecturally neutral.

While there's dozens of hardware manufacturers, that's somewhat irrelevant to getting the app.
Other than Apple's App Store, they're available on Google Play only.

Frankly this is a perfect opportunity for a class action suit. Not to support even the PC? Some lawyers gold mine. However, be that as it may, apps are available on many devices other than iphone.

So far, the lawsuits rather seem to Apple

(Side note: There's no such thing as a class action lawsuit in my jurisdiction)

 

[I7guy]

Yes. But spend years and billions of dollars is what most monopolists or oligopolists did.

It's also what many other businesses do. Build proprietary platforms.

The issue wasn't (IMO) the product itself. They did have quite an attractive product - per se!

It was the availability of apps. It's a chicken-and-egg situation and network effect at play.

But this has little to do with anything about this conversation. Microsoft couldn't figure out how to make their windows phone a viable option for consumers in enough volume.

Some US court, for the time being.
Other jurisdiction (among them the many outside of the US) will have their own.

Don't know. But Apple could certainly have a case with SCOTUS if some lower courts finds differently than the federal court.

While there's dozens of hardware manufacturers, that's somewhat irrelevant to getting the app.
Other than Apple's App Store, they're available on Google Play only.

That is not Apple's fault. There are literally multiple app stores where consumers download apps. That your bank only decides to offer an app on two platforms is the failing. Maybe the courts should force them to develop for every downloadable platform?

So far, the lawsuits rather seem to Apple

Yah, of course. Always go after the deepest pockets.

(Side note: There's no such thing as a class action lawsuit in my jurisdiction)

Too bad, seems like a solid foundation for a great lawsuit.

 

[icanhazmac]

While Apple doesn't disclose specifics, the costs of running the App Store itself are small compared to revenues, so that margins are sky-high (much higher than the hardware business).

Kind of killed your own point here, Apple doesn't disclose the specifics so you cannot say with any authority that the costs are "small" compared to the revenue generated. Apple needs to pay developers, customer service staff, bandwidth, storage, app approval staff, iOS dev support staff, etc. etc. etc.

Not to mention the development and support of iOS itself which is then given away "free" with the device. Perhaps Apple should charge more for iOS devices so that the costs of the operating system can be recouped?

Apple doesn't sell their devices at a loss though. Quite the contrary.

It was just an example of others that might funnel funds around, it is a very common practice so IF Apple is doing it too.... who cares?

They're free to operate on a cost-covering or even profitable basis, by charging per-app, per-submission and per-download fees to cover costs.

Cost covering?!?! Silly statement, no one works for free.

Profitable by charging a fee for the app, submission and download costs... that is what they are doing with the 30% and also funding the other things I mentioned. I am not an app dev nor do I support an app store but when you hear the list of things iOS devs get for $99 + fees (if they charge for the app or have IAP) I think they have it pretty good given they can set their own prices.

As a consumer I truly appreciate the one stop shop aspect of the Apple app store. If I have any problems I call Apple, when I have to pay, I only pay Apple, not some two-bit, no name processor chosen by a dev to save a couple of $$. When an app doesn't work, I call Apple, I get refunded... have fun with that when every little dev has to provide their own customer service and have even more fun if you want a refund.

Just for fun, what do you feel Apple should charge? Do you have an educated opinion on this or are you just one of the many repeating that 30% is just too high without knowing anything about the costs of operating an app store on the scale of Apple's (or Google, or Sony, or Microsoft) ?

 

[AppliedMicro]

Yah, of course. Always go after the deepest pockets.

Naturally. Monopolists usually have big pockets - unless they‘re regulated. Probably even when they‘re not operated for profit.

But I doubt it‘s about big pockets. I mean, is there any indication it would benefit government budgets if they broke up Apple‘s „monopoly“ on iOS in-app purchases?

Microsoft couldn't figure out how to make their windows phone a viable option for consumers in enough volume.

…due to a lack of apps on their „app store“. And missing out on a first-mover advantage thatmAppke and Google leveraged*. That‘s my opinion - bud judging from their latest development toolkit efforts - seems to also been theirs. And one of the main reasons for that was Apple‘s and Google‘s free distribution model for developers.

It‘s not about Microsoft or Blackberry or Firefox or Jolla. It‘s about market dynamics that tend to converge to a dual-OS market that‘s all but impenetrable for any newcomer.

 

[I7guy]

Naturally. Monopolists usually have big pockets - unless they‘re regulated. Probably even when they‘re not operated for profit.

Except Apple is a monopoly in the same way Citibank or JP Morgan are monopolies.

But I doubt it‘s about big pockets. I mean, is there any indication it would benefit government budgets if they broke up Apple‘s „monopoly“ on iOS in-app purchases?

Other business would benefit without sweat equity or investment capital while Apple would lose.

…due to a lack of apps on their „app store“. And missing out on a first-mover advantage thatmAppke and Google leveraged*. That‘s my opinion - bud judging from their latest development toolkit efforts - seems to also been theirs. And one of the main reasons for that was Apple‘s and Google‘s free distribution model for developers.

It‘s not about Microsoft or Blackberry or Firefox or Jolla. It‘s about market dynamics that tend to converge to a dual-OS market that‘s all but impenetrable for any newcomer.

There is no law that reads that a potential new market for a business has to be easy-peasy to enter and the new business will automatically do well. Automobile manufacturing comes to mind as one example.