Apple Ordered to Change App Store in Europe Again

[BaldiMac]

And the question isn't whether I can calculate it within the principle defined for them.

No. The question I asked quite literally is how you would calculate it.

 

[Rogifan]

The developers should leave then if they do t like it. Why are you speaking on behalf of the devs anyway? I don’t understand MR posters who watch every penny a company makes and it’s a negative.

I don’t understand posters who defend a $3T corporation that makes $30B in profit every quarter as if it’s some company that won’t make payroll if they don’t collect their 30% App Store rent. 🤷‍♀️

 

[surferfb]

The terms have been defined… as you can read across the 60~ or so pages.
EU has explained the principles for WHY

”fees should match the actual value of connecting developers with users.”​

Apple thinks it's 13-27%, depending on the size of the developer. Given I am told frequently on here that apps can't survive if they're not on iOS, 13-27% seems reasonable to me - I mean, their business would fail without Apple users, right? So clearly Apple is providing a lot of value. But if the EU thinks differently then they should determine what is acceptable.

Eu have explained the principles for HOW

”Demonstrate that your fees are proportionate and time-limited.”​

Apple just hasn't done the work to justify their current approach against these clear criteria…
What they're really asking is for EU to set their prices for them, which crosses the line from regulatory guidance into business management.

The EU clearly wants to be in the business of managing Apple, so they should have at it! I mean, they're dictating what APIs have to be offered to developers, what Apple is and isn't allowed to charge for, what features have to be shared with competitors, what apps are allowed to be set as default. Hell they are even forcing Apple to make AirPlay and AirDrop work on Android. Why not dictate the percentage Apple is allowed to take? Why is that a line too far?

 

[Sophisticatednut]

All of the holding doesn’t mean anything is crystal clear. The eu is playing whack a
Mole or try it before you buy it.

I would definitely say it’s crystal clear.
and falling inline with what I have argued for the last 3~ years or so.

Apple is the one who plays whack a mole and hope their data less pleading will change the law somehow

 

[christophermdia]

Increase device prices, void warranty service if an app was installed outside the App Store as Apple cannot be responsible for devices that are damaged due to "Unknown Sources", make it difficult for continuity across devices, etc ... there are many ways apple could make it difficult for the EU to operate from the rest of the world that they cant enforce easily. Apple is responsible for their phone working as intended, a phone. If users want a media consumption device, let them pay to unlock this capability.

 

[WarmWinterHat]

Increase device prices, void warranty service if an app was installed outside the App Store as Apple cannot be responsible for devices that are damaged due to "Unknown Sources", make it difficult for continuity across devices, etc ... there are many ways apple could make it difficult for the EU to operate from the rest of the world that they cant enforce easily. Apple is responsible for their phone working as intended, a phone. If users want a media consumption device, let them pay to unlock this capability.

I can rebuild my car with parts from anywhere I want, while under warranty. If I have an issue, the dealer has to honor the original warranty unless they can prove my parts caused the problem.

Why should iPhone/iPad be the special snowflake? If Apple can't prove the damage, they shouldn't get out of warranty requirements. Apple doesn't start scrolling through my app if I bring in my MacBook for an issue...what I have installed is none of their business, under the warranty or otherwise.

 

[verdi1987]

Trump, it’s time for 666% tariffs

And whom do those tariffs ultimately get passed down to?

 

[bluecoast]

Then don't make the argument. Last thing the internet needs is more made up facts.


I agree.

Well here you go, ChatGPT (free) says :

In Apple’s fiscal Q2 2024 (ending March 30, 2024), Europe accounted for approximately 26.58% of the company’s total quarterly revenue. This equated to $24.12 billion out of $90.75 billion in global revenue for that quarter .

I dunno if it’s true or not but Gemini (free) agrees with it - the same quarter - as I asked it also. It also correctly mentioned that the EU isn’t specifically broken out of what Apple defines as ‘Europe’.

Since the EU is a big chunk of Europe let’s assume that it’s a big chunk of that 26.58%. So I doubt that Apple is going to walk away from approximately just over a fifth of its revenue.

Meanwhile, Siri can barely set a timer correctly.

 

[WilliApple]

Tarrifs are BS, period, from any party. It's nothing but relabeled taxes.

And whom do those tariffs ultimately get passed down to?

Im joking lol

 

[I7guy]

I would definitely say it’s crystal clear.

I wouldn’t, imo.

and falling inline with what I have argued for the last 3~ years or so.

the original regulations were overreach. This is a moving target.

Apple is the one who plays whack a mole and hope their data less pleading will change the law somehow

The eu is the playing whack a mole.

 

[Naraxus]

Surprise surprise. The EU is retroactively & selectively applying rules to its Apple piggy bank once again.

 

[racerhomie]

Very important post!!!! You get it. The US Corporate Overlords brainwashed their sheep 🐑

They are called synonyms my dear

 

[surferfb]

Well here you go, ChatGPT (free) says :

In Apple’s fiscal Q2 2024 (ending March 30, 2024), Europe accounted for approximately 26.58% of the company’s total quarterly revenue. This equated to $24.12 billion out of $90.75 billion in global revenue for that quarter .

I dunno if it’s true or not but Gemini (free) agrees with it - the same quarter - as I asked it also. It also correctly mentioned that the EU isn’t specifically broken out of what Apple defines as ‘Europe’.

Since the EU is a big chunk of Europe let’s assume that it’s a big chunk of that 26.58%. So I doubt that Apple is going to walk away from approximately just over a fifth of its revenue.

Meanwhile, Siri can barely set a timer correctly.

Apple's "Europe" market segment includes the EU, all non-EU European countries (UK, Switzerland, Norway, etc.), all of the Middle East, all of Africa, and India. Both the UK and India are larger than any single EU country.

I've seen estimates anywhere from 7-15% of global revenue for the EU specifically, but Apple has never broken it out, other to say that EU makes up 7% of App Store revenue; I'll leave it for others to determine for themselves whether they think that is relevant for estimating the percentage of total revenue the EU represents.

All of this is moot though, because I strongly suspect Apple wouldn't leave the EU even if the Commission said Apple has to let users install Android on their phones, and they're certainly not leaving because of the DMA, as bad of a law as they (and I) think it is.

I bet Steve would have considered it though. Hearing him tell the Commission "Have fun explaining to your citizens why they can't buy iPhones anymore" would have certainly been entertaining.

 

[BaldiMac]

Well here you go, ChatGPT (free) says :

In Apple’s fiscal Q2 2024 (ending March 30, 2024), Europe accounted for approximately 26.58% of the company’s total quarterly revenue. This equated to $24.12 billion out of $90.75 billion in global revenue for that quarter .

I dunno if it’s true or not but Gemini (free) agrees with it - the same quarter - as I asked it also. It also correctly mentioned that the EU isn’t specifically broken out of what Apple defines as ‘Europe’.

Since the EU is a big chunk of Europe let’s assume that it’s a big chunk of that 26.58%. So I doubt that Apple is going to walk away from approximately just over a fifth of its revenue.

Meanwhile, Siri can barely set a timer correctly.

So, if the EU is 7% of $90.75 billion, that would mean EU revenue is around $6.35 billion for that quarter.

For comparison (in billions):
Greater China $16,372
Japan $6,262
Rest of Asia Pacific $6,723
Rest of European segment (EAME): $17,773

All of that is based on the assumption that the EU's share of App Store revenue is similar to their share of total revenue. That makes logical sense to me, but it's certainly not definitive.

https://www.apple.com/newsroom/pdfs/fy2024-q2/FY24_Q2_Consolidated_Financial_Statements.pdf

 

[jlc1978]

Developers aren’t consumers?

I split the customer base in two segements.

Do we know that most/all developers were charging 30% more? And they’re still charging the same price?

Well, I quick check I did a while back showed no price drops and Mac developers often charging the same in the store r from them, so the answer is "Yes."

he EU essentially said "prove your fees are reasonable" and Apple responded "just tell us what reasonable means" - which misses the entire point of principles-based regulation.

Not, IMHO, an unreasonable ask given the EU's directive:

The EU provided clear principles - fees must be limited in time, scope, and proportional to actual value provided.

Which is pretty vague - there was a one time fee for a sale, limited to the price of the item. As for actual value, if a company is making millions what is a proportional fee and how do you collect it. Fr me, a sliding scale, based on an App's annual revenue, much like EPIC charges, might be reasonable, or a per d/l fee plus a hosting fee.

Apple's issue is it can't shutdown the App Store in the EU because it would kill iPhone sales there and the uproar from iPhone owners, governments and companies would be immense; yet at the same time they want to preserve the App Store's revenue.

They would do absolutely nothing. If Apple charged developers zero to be on the AppStore while sideloading was allowed it would be fully legal

I would be surprised if they didn't claim it was an abuse because it prevented competing stores from being established.

 

[PlayUltimate]

Didn’t it come out in court testimony? And accidentally, at that. It was supposed to be redacted.

Apple being paid by Google was reported back in 2018; albeit it was only $9.5B at the time. It was not a secret. MacDailyNews link from 2019

 

[Sophisticatednut]

No. The question I asked quite literally is how you would calculate it.

Well for example I would Define the Specific Service and define what the "initial acquisition/matchmaking" service is from the rest of my services to find what the value of initial purchase is:

1. Estimate the average cost of app discovery algorithms for a new user.
2. the average Server costs for initial download/installation.
3. the average Cost for the customer acquisition infrastructure (search, recommendations for first-time users)

Then I would calculate what the actual Costs
Are for me:

1. The Technical infrastructure costs specifically for provide for user-app matching
2. Time-limited to the initial connection (not ongoing relationship)
3. Exclude costs already covered by developer fees, hosting, payment processing, etc etc

Apple thinks it's 13-27%, depending on the size of the developer. Given I am told frequently on here that apps can't survive if they're not on iOS, 13-27% seems reasonable to me - I mean, their business would fail without Apple users, right? So clearly Apple is providing a lot of value. But if the EU thinks differently then they should determine what is acceptable.


The EU clearly wants to be in the business of managing Apple, so they should have at it! I mean, they're dictating what APIs have to be offered to developers, what Apple is and isn't allowed to charge for, what features have to be shared with competitors, what apps are allowed to be set as default. Hell they are even forcing Apple to make AirPlay and AirDrop work on Android. Why not dictate the percentage Apple is allowed to take? Why is that a line too far?

The issue is this. Apple isn’t showing any proof for this value outside of it is so…

that it is for Apple to determine and justif the fee it considers adequate to remunerate facilitating the initial acquisition something which Apple has not contested. To be considered as remuneration for facilitating the initial acquisition, a commission fee should (i) be related both in time and in scope to the initial acquisition; (i1) be commensurate to the initial value of the matchmaking function and must take into account any direct or indirect remuneration received from business users for facilitating the initial acquisition'S; and (iii) not remunerate the gatekeeper for its gatekeeper value.

The Three-Part Legal Test

Part (i): "Related both in time and in scope to the initial acquisition”

1. Time: The Fee must be tied to the moment of first user-app connection, not ongoing
2. Scope: The Fee must only cover the matchmaking service, nothing else

• Apple's failure:CTF charges for every download forever + alternative payment fees are ongoing

Part (ii): "Commensurate to the initial value of the matchmaking function"

1. Fee must match the actual value of introducing user to app
2. Must account for other payments Apple already receives for this service

• Apple's failure: €0.50 per install regardless of app value + 13-27% alternative payment fees bear no relationship to discovery value

Part (iii): "Not remunerate the gatekeeper for its gatekeeper value"

1. Can't charge for general platform control/access
2. Can only charge for the specific introduction service

• Apple's failure: CTF and alternative payment fees are classic gatekeeper rent-seeking

What This shows for Apple's Current case in the document:

Core Technology Fee (€0.50 per install):
- ❌ Fails time test: charges for every download, including repeat users
- ❌ Fails scope test: charges for apps never discovered through Apple
- ❌ Fails gatekeeper test: pure platform access fee

Alternative Payment Fees (13-27%):
- ❌ Fails time test: ongoing transaction fees, not initial acquisition
- ❌ Fails value test: no relationship to matchmaking service
- ❌ Fails gatekeeper test: charging for permission to use competitors

The "Tripple Dipping" Problem:
The phrase "must take into account any direct or indirect remuneration received" means Apple can't charge acquisition fees AND platform fees AND payment fees for the same service. They're already getting paid through developer program fees, so additional acquisition fees must account for that.

EU have stated in the regulation and guidance :
if you want to charge for introductions, fine - but (1) charge only for actual introductions, (2) charge only once per introduction, (3) charge only what the introduction is worth, and (4) don't disguise platform control fees as introduction fees."

Apple's current model violates all four principles. They're charging platform access fees and calling them acquisition fees, which is exactly what the DMA prohibits

 

[I7guy]

Well for example I would Define the Specific Service and define what the "initial acquisition/matchmaking" service is from the rest of my services to find what the value of initial purchase is:

1. Estimate the average cost of app discovery algorithms for a new user.
2. the average Server costs for initial download/installation.
3. the average Cost for the customer acquisition infrastructure (search, recommendations for first-time users)

Then I would calculate what the actual Costs
Are for me:

1. The Technical infrastructure costs specifically for provide for user-app matching
2. Time-limited to the initial connection (not ongoing relationship)
3. Exclude costs already covered by developer fees, hosting, payment processing, etc etc

The issue is this. Apple isn’t showing any proof for this value outside of it is so…

The Three-Part Legal Test

Part (i): "Related both in time and in scope to the initial acquisition”

1. Time: The Fee must be tied to the moment of first user-app connection, not ongoing
2. Scope: The Fee must only cover the matchmaking service, nothing else

• Apple's failure:CTF charges for every download forever + alternative payment fees are ongoing

Part (ii): "Commensurate to the initial value of the matchmaking function"

1. Fee must match the actual value of introducing user to app
2. Must account for other payments Apple already receives for this service

• Apple's failure: €0.50 per install regardless of app value + 13-27% alternative payment fees bear no relationship to discovery value

Part (iii): "Not remunerate the gatekeeper for its gatekeeper value"

1. Can't charge for general platform control/access
2. Can only charge for the specific introduction service

• Apple's failure: CTF and alternative payment fees are classic gatekeeper rent-seeking

What This shows for Apple's Current case in the document:

Core Technology Fee (€0.50 per install):
- ❌ Fails time test: charges for every download, including repeat users
- ❌ Fails scope test: charges for apps never discovered through Apple
- ❌ Fails gatekeeper test: pure platform access fee

Alternative Payment Fees (13-27%):
- ❌ Fails time test: ongoing transaction fees, not initial acquisition
- ❌ Fails value test: no relationship to matchmaking service
- ❌ Fails gatekeeper test: charging for permission to use competitors

The "Tripple Dipping" Problem:
The phrase "must take into account any direct or indirect remuneration received" means Apple can't charge acquisition fees AND platform fees AND payment fees for the same service. They're already getting paid through developer program fees, so additional acquisition fees must account for that.

EU have stated in the regulation and guidance :
if you want to charge for introductions, fine - but (1) charge only for actual introductions, (2) charge only once per introduction, (3) charge only what the introduction is worth, and (4) don't disguise platform control fees as introduction fees."

Apple's current model violates all four principles. They're charging platform access fees and calling them acquisition fees, which is exactly what the DMA prohibits

It’s absolutely no wonder this is a moving target. Regulations such as this beg to be misinterpreted.

 

[Ender17]

AI assistants are increasingly going to become our primary computing interface, I contend.

Google have a highly functional genAI personal assistant in Gemini.

Apple have Siri, a punchline to a joke.

Let's hope that Apple announce a partnership at WWDC between them and Anthropic or something.

Or maybe let ChatGPT take over completely from Siri.

AI assistants are the new self driving car, perpetually a few years away

 

[Sophisticatednut]

I wouldn’t, imo.

the original regulations were overreach. This is a moving target.

The eu is the playing whack a mole.

Sure we can agree to disagree on the amount and if it’s an overreaching.
But we have both argued in what the regulations actually say, the reasoning for it etc. And it seems that I’m fairly accurate along the legal line 🤷‍♂️

Well, I quick check I did a while back showed no price drops and Mac developers often charging the same in the store r from them, so the answer is "Yes."

There’s a bunch of games and software that is available on the Mac AppStore that have had a lower price for their IAP if it’s purchased from their website or was bought somewhere else that allowed more flexibility such as steam.

Not, IMHO, an unreasonable ask given the EU's directive:

If you say to me that your apple is worth a million, and I ask you how you came up with that number… why would ask me how to calculate your answer

Which is pretty vague - there was a one time fee for a sale, limited to the price of the item. As for actual value, if a company is making millions what is a proportional fee and how do you collect it. Fr me, a sliding scale, based on an App's annual revenue, much like EPIC charges, might be reasonable, or a per d/l fee plus a hosting fee.

Nothing of that is vague and have been clearly defined. As is outlined in the document. Apple is asked to value the initial acquisition, not everything else.

Apple's issue is it can't shutdown the App Store in the EU because it would kill iPhone sales there and the uproar from iPhone owners, governments and companies would be immense; yet at the same time they want to preserve the App Store's revenue.

Well it can, it just doesn’t make sense to shut it down when they have a 101 ways to get paid for it inside the scope of the law 🤷‍♂️

I would be surprised if they didn't claim it was an abuse because it prevented competing stores from being established.

What law or regulation would support that notion? Can’t find it in neither antitrust law or the DMA or others that would classify
an AppStore with zero fees as predatory pricing.

This Epic pays developers to use their store and still they get back to steam because they can’t compete on the service quality.

It’s absolutely no wonder this is a moving target. Regulations such as this beg to be misinterpreted.

Have you read the document and looked at apples arguments? The target is stationary and hasn’t changed since 2022 and you must try really hard to misinterpret this regulation. Apple has simply argued itself in to a legal corner and they can’t seem to get out in any good way. Almost like they dug themselves a giant hole they couldn’t get out and when realized it went for broke.

 

[surferfb]

Well for example I would Define the Specific Service and define what the "initial acquisition/matchmaking" service is from the rest of my services to find what the value of initial purchase is:

1. Estimate the average cost of app discovery algorithms for a new user.
2. the average Server costs for initial download/installation.
3. the average Cost for the customer acquisition infrastructure (search, recommendations for first-time users)

Then I would calculate what the actual Costs
Are for me:

1. The Technical infrastructure costs specifically for provide for user-app matching
2. Time-limited to the initial connection (not ongoing relationship)
3. Exclude costs already covered by developer fees, hosting, payment processing, etc etc

The issue is this. Apple isn’t showing any proof for this value outside of it is so…

The Three-Part Legal Test

Part (i): "Related both in time and in scope to the initial acquisition”

1. Time: The Fee must be tied to the moment of first user-app connection, not ongoing
2. Scope: The Fee must only cover the matchmaking service, nothing else

• Apple's failure:CTF charges for every download forever + alternative payment fees are ongoing

Part (ii): "Commensurate to the initial value of the matchmaking function"

1. Fee must match the actual value of introducing user to app
2. Must account for other payments Apple already receives for this service

• Apple's failure: €0.50 per install regardless of app value + 13-27% alternative payment fees bear no relationship to discovery value

Part (iii): "Not remunerate the gatekeeper for its gatekeeper value"

1. Can't charge for general platform control/access
2. Can only charge for the specific introduction service

• Apple's failure: CTF and alternative payment fees are classic gatekeeper rent-seeking

What This shows for Apple's Current case in the document:

Core Technology Fee (€0.50 per install):
- ❌ Fails time test: charges for every download, including repeat users
- ❌ Fails scope test: charges for apps never discovered through Apple
- ❌ Fails gatekeeper test: pure platform access fee

Alternative Payment Fees (13-27%):
- ❌ Fails time test: ongoing transaction fees, not initial acquisition
- ❌ Fails value test: no relationship to matchmaking service
- ❌ Fails gatekeeper test: charging for permission to use competitors

The "Tripple Dipping" Problem:
The phrase "must take into account any direct or indirect remuneration received" means Apple can't charge acquisition fees AND platform fees AND payment fees for the same service. They're already getting paid through developer program fees, so additional acquisition fees must account for that.

EU have stated in the regulation and guidance :
if you want to charge for introductions, fine - but (1) charge only for actual introductions, (2) charge only once per introduction, (3) charge only what the introduction is worth, and (4) don't disguise platform control fees as introduction fees."

Apple's current model violates all four principles. They're charging platform access fees and calling them acquisition fees, which is exactly what the DMA prohibits

A whole lot of after-the fact rationalization for the EU taking away Apple's ability to charge developers for the hard work Apple does that allow developers' businesses to function like a two bit socialist republic.

Do you think Apple is providing developers something of value by creating and maintaining iOS and the associated APIs? If the answer is yes, why is 13-27% of the money they made (money they would not have made if Apple did not provide iOS and those APIs) not fair renumeration, when 30% is the industry standard across multiple app stores in multiple industries? Where would you set it? Why is Apple wrong? And if they are, why can't the EU be bothered to give a number they'd accept when they micromanage things like Apple's API choices, default apps, onboarding experience, and engineering decisions? All of that is ok to regulate but picking a number is getting too involved?

The EU's declaration that Apple can't charge developers for the underlying intellectual property that makes their apps function is ludicrous and an affront to the free market. No one is forced to develop for iOS, iOS has < 30% of the market in the EU, and yet the government declares "Apple's property is free to all who want access to it".

With a thought process like that, it's no wonder the only EU consumer tech company of note literally makes its billions exploiting the hard work of others. Apparently freeload, freeload, freeload is the name of the game in the EU. (Why is it not surprising they're also at the front of the line demanding to freeload from Apple)

 

[AppliedMicro]

A whole lot of after-the fact rationalization for the EU taking away Apple's ability to charge developers for the hard work Apple does that allow developers' businesses to function like a two bit socialist republic.

Apple are free to charge for their hard work.

They’ve just decided to “sell” it at a yearly $99 developer subscription.

Do you think Apple is providing developers something of value by creating and maintaining iOS and the associated APIs?

Of course - and they also decided on a price as compensation for their hard work.

Where would you set it? Why is Apple wrong?

Apple should set their prices at a competitive level.
As is to be determined by free and open markets.

 

[surferfb]

Apple are free to charge for their hard work.

They’ve just decided to “sell” it at a yearly $99 developer subscription.


Of course - and they also decided on a price as compensation for their hard work.

You know full well the $99 developer fee is set at a level to encourage students and hobbyist developers with the expectation that said developers would be participating in Apple's (inherently reasonable) compensation rules.

Kind of like how paying membership fee at target doesn't allow you to just take stuff off the shelf without paying for it.

 

[PlayUltimate]

EU have stated in the regulation and guidance :
if you want to charge for introductions, fine - but (1) charge only for actual introductions, (2) charge only once per introduction, (3) charge only what the introduction is worth, and (4) don't disguise platform control fees as introduction fees."

How does one define what an introduction is worth? If due to my introduction a company earns $100,000, how much was my intro worth? If due to my introduction a different company earns $1,000, how much was my intro worth? Is it the same? Should it be the same?

 

[AppliedMicro]

You know full well the $99 developer fee is set at a level to encourage students and hobbyist developers with the expectation that said developers would be participating in Apple's (inherently reasonable) compensation rules.

"Student and hobbyist developers" like Uber, Facebook, Amazon, Spotify, Google, ChatGPT 😶


I don't take issue with Apple giving away "a place" in the App Store to small-volume apps from student and hobbyist developers for (as good as) free.

Kind of like how paying membership fee at target doesn't allow you to just take stuff off the shelf without paying for it.

Then again, I can decide to switch to Walmart tomorrow at no cost and little effort.