Apple to Allow In-App Third-Party Payment Options for First Time in the Netherlands

[BootsWalking]

That's only if the developers lower the price. It's the developers who set the price that you see and that you pay.

I'd imagine most developers would still charge the same for IAP items even if they had the commission fees lowered.

But I'm happy to be wrong.

😛

That's why I included the word 'potential' in 'potential 15% to 30% reduction in IAP prices' 🙂

As to the crux of your argument, consider this - developers knew they'd have to pay Apple 15% to 30% when they devised their IAP pricing, so they added 15% to 30% to their internal income goal to derive their IAP pricing, which naturally comes at the expense of extra marginal demand on the price/demand curve. Why then would they choose not to reduce their IAP price by 15% to 30% with Apple's commission removed if doing so would be a net neutral or positive effect on total income when accounting for the improved demand intersection on the price/demand curve?

 

[MudHolland]

There are streaming apps created by shady companies who ask their cam models to encourage their fans to buy tokens on their official website, in clear violation of Apple's policy. Most of them also make it so if you use Apple Pay, the number of tokens you purchase is about 30 to 40% fewer than if you buy them directly. As if that's not bad enough, the link to buy tokens on their official site will selectively leak your credit card information to scammers, especially if the cards are foreign.

This kind of ruling will let similar scams take place out in the open without the unsuspecting having any kind of recourse in case they are scammed. Most people will be easily led to buy tokens outside of App Store and under the watchful eyes of Apple when developers make the tradeoff skews so much to one side. Except the hidden risk isn't explained to you until it's too late.

The security vs. freedom argument is really a red herring. It's always about finding the right balance between the two. Today it's dating apps. Tomorrow it'll be any app that incurs recurring payments. And before you know it, there is no longer any kind of policing in the App Store and you're out there to fend for yourself against pirates and looters (figuratively speaking).

It feels like you're not really looking at the context here: this is about the Netherlands. People here don't have creditcards. We have one of the most advanced payment systems of the world, and innovative payment ways for splitting costs (yay for the cheap Dutch).

Having the wiggle room to get generally accepted payment methods like iDeal (direct link payment method into bank accounts where no third party gets any information except for the price and payment succesful information) could find their way into apps that people here use.

This feels like the Whatsapp-discussion all over again: "People don't use whatsapp anyway". Well, frankly, here we do. Everybody. EVERYBODY, including companies. We even have the verb 'to app someone', which means to send a whatsapp message. That's right: app has become something different than an application. I'm not saying it progress, or that it's good, just that people in other countries have different habits and usages.

 

[Carnegie]

Pathetic attempt on apple’s side to circumvent the law. Of course if this is an actual legal loophole it will be fixed by the regulator and apple won’t be allowed to do this for long.

It isn't a loophole; it's recognition of basic intellectual property rights. We have international intellectual property agreements (e.g. the Berne Convention and the WIPO Copyright Treaty) to ensure such things. As far as I'm aware, the Netherlands is a party to such agreements.

It's one thing to say a foreign company doing business in your country has to allow alternate payment processing methods. It would be quite another to say that foreign company has to give up basic rights that it has under international copyright law in order to do business in your country - e.g., that it can't require payments (pursuant to common licensing terms, e.g. as percentages of certain kinds of monetization) from other business in exchange for granting them the right to use its intellectual property.

It would be pretty audacious for the Netherlands to do the latter. That could reasonably be viewed by the U.S. as a trade violation. Would the U.S. think it was worth making a fuss over? Maybe not. But hopefully it would and hopefully it would demand that the Netherlands reverse course or face trade retaliation. Respecting each others' basic intellectual property rights is an important element of prosperous international trade. There are reasons the Netherlands regulators didn't impose the terms you're suggesting, and this is likely a big part of those reasons.

 

[gnipgnop]

That's why I included the word 'potential' in 'potential 15% to 30% reduction in IAP prices' 🙂

As to the crux of your argument, consider this - developers knew they'd have to pay Apple 15% to 30% when they devised their IAP pricing, so they added 15% to 30% to their internal income goal to derive their IAP pricing, which naturally comes at the expense of extra marginal demand on the price/demand curve. Why then would they choose not to reduce their IAP price by 15% to 30% with Apple's commission removed if doing so would be a net neutral or positive effect on total income when accounting for the improved demand intersection on the price/demand curve?

Because the former scenario is what the business world does the most often. They don't move manufacturing to countries with lower standards of living to cut prices. They do it to increase profit on the same prices.

 

[Carnegie]

That they can do this shows they are a monopoly that requires governments to stop them.

With regard to its intellectual property, yes, Apple is absolutely a monopoly. That's how intellectual property rights, by design, work - they grant legal monopolies. If you want to use Apple's IP, you need its permission. And it is allowed to impose a range of terms in exchange for granting such permission, to include charging a commission if someone wishes to use its IP in certain ways. It may allow certain uses without any charge, or with some minimal up front charge. It may allow certain uses with a flat per transaction or per unit fee. It may allow certain uses with a percentage fee. The terms Apple has been imposing are fairly typical when it comes to licensing intellectual property.

 

[t0rqx]

This will open the path for many. Great for developers. Not so, for Apple.

 

[BootsWalking]

Because the former scenario is what the business world does the most often. They don't move manufacturing to countries with lower standards of living to cut prices. They do it to increase profit on the same prices.

Except we're talking about developers and a sales commission cost of doing business, not manufacturing that involves region-specific costs. A more comparable analogy would be how retail stores have to pay a fee for credit card processing and structure that into the cost of their goods and services, and how they give a rebate equal to that amount to consumers who use a store-branded credit card (ie, avoiding the third-party credit card fee and passing that savings on to users).

 

[gnipgnop]

Except we're talking about developers and a sales commission cost of doing business, not manufacturing that involves region-specific costs. A more comparable analogy would be how retail stores have to pay a fee for credit card processing and structure that into the cost of their goods and services, and how they give a rebate equal to that amount to consumers who use a store-branded credit card (ie, avoiding the third-party credit card fee and passing that savings on to users).

It doesn't really matter. The most common practice in the business world today is for cost savings to go to profit and for increased costs to be passed to the consumer. Retail isn't a very good analogy because all retail goods have huge markups relative to their actual cost to manufacture etc. Savings on credit card transactions are really tiny versus the markup.

 

[Havoc035]

This will open the path for many. Great for developers. Not so, for Apple.

It's a little early to tell what the outcome will be and whether someone will actually benefit from it don't you think?

 

[Cosmosent]

And so it begins ... more to follow !

 

[BootsWalking]

It doesn't really matter. The most common practice in the business world today is for cost savings to go to profit and for increased costs to be passed to the consumer. Retail isn't a very good analogy because all retail goods have huge markups relative to their actual cost to manufacture etc. Savings on credit card transactions are really tiny versus the markup.

So retail isn't a good analogy because of the markup but your country-specific manufacturing labor costs is a good analogy to what a developer charges for IAP because of...reasons?

There is a long precedent for companies passing transaction cost savings onto their customers, including the credit card scenario I've already outlined.

 

[gnipgnop]

So retail isn't a good analogy because of the markup but your country-specific manufacturing labor costs is a good analogy to what a developer charges for IAP because of...reasons?

The original response was about the likelihood of companies passing along savings to consumers. I cited manufacturing because it's an example of a company saving costs without passing along savings to consumers. Manufactured items are what people buy in retail, correct? So how is citing the retail store offering its own credit card changing anything about the dynamic per the manufactured retail goods?

IMO, all the stuff about payment processing has little or nothing to do with consumers or the prices they pay. The ACM itself doesn't even make a consumer oriented argument in its ruling.

Also, the ACM appears to be deliberately ignoring that smartphones have internet access.

"Various dating services exist on the Dutch market, which offer their services through apps. Since most consumers own an Android-based smartphone or an iPhone, most dating apps use the Google Play Store and Apple’s App Store. In order to maximize their reach, dating apps must therefore be available in both of these stores. After all, consumers also wish to reach other consumers with different types of smartphones.

On iPhones, dating apps can only be offered through the App Store, which makes dating-app providers highly dependent on Apple. Dating-app providers thus have little choice but to accept Apple’s conditions. ACM therefore establishes that Apple has a dominant position."

ACM obliges Apple to adjust unreasonable conditions for its App Store | ACM

The ACM has ordered Apple to adjust the unreasonable conditions in its App Store that apply to dating-app providers. The District Court of Rotterdam has partially suspended the order subject to periodic penalty payments that ACM had imposed on Apple.

www.acm.nl

Wouldn't Android/iPhones both have access to the internet? Yes. Does Tinder have a web site version of it's service? Yes. So it's not actually correct for the ACM to claim that Android/iPhone users of Tinder have to rely on app stores.

 

[4jasontv]

The original response was about the likelihood of companies passing along savings to consumers. I cited manufacturing because it's an example of a company saving costs without passing along savings to consumers. Manufactured items are what people buy in retail, correct? So how is citing the retail store offering its own credit card changing anything about the dynamic per the manufactured retail goods?

IMO, all the stuff about payment processing has little or nothing to do with consumers or the prices they pay. The ACM itself doesn't even make a consumer oriented argument in its ruling.

Also, the ACM appears to be deliberately ignoring that smartphones have internet access.

"Various dating services exist on the Dutch market, which offer their services through apps. Since most consumers own an Android-based smartphone or an iPhone, most dating apps use the Google Play Store and Apple’s App Store. In order to maximize their reach, dating apps must therefore be available in both of these stores. After all, consumers also wish to reach other consumers with different types of smartphones.

On iPhones, dating apps can only be offered through the App Store, which makes dating-app providers highly dependent on Apple. Dating-app providers thus have little choice but to accept Apple’s conditions. ACM therefore establishes that Apple has a dominant position."

ACM obliges Apple to adjust unreasonable conditions for its App Store | ACM

The ACM has ordered Apple to adjust the unreasonable conditions in its App Store that apply to dating-app providers. The District Court of Rotterdam has partially suspended the order subject to periodic penalty payments that ACM had imposed on Apple.

www.acm.nl

Wouldn't Android/iPhones both have access to the internet? Yes. Does Tinder have a web site version of it's service? Yes. So it's not actually correct for the ACM to claim that Android/iPhone users of Tinder have to rely on app stores.

It also assumes Netherland customers can either own an android OR iPhone device. Not both.

 

[MysticCow]

It’s a misnomer, because those apps were NEVER INTENDED to be for “dating.” They were for sex, sex, and more sex.

Anyone using Tinder, Grindr, Growlr, etc for serious dating needs…well you’re just doing it wrong, ok? 🙂

 

[MysticCow]

It feels like you're not really looking at the context here: this is about the Netherlands. People here don't have creditcards. We have one of the most advanced payment systems of the world, and innovative payment ways for splitting costs (yay for the cheap Dutch).

Having the wiggle room to get generally accepted payment methods like iDeal (direct link payment method into bank accounts where no third party gets any information except for the price and payment succesful information) could find their way into apps that people here use.

This feels like the Whatsapp-discussion all over again: "People don't use whatsapp anyway". Well, frankly, here we do. Everybody. EVERYBODY, including companies. We even have the verb 'to app someone', which means to send a whatsapp message. That's right: app has become something different than an application. I'm not saying it progress, or that it's good, just that people in other countries have different habits and usages.

It has been assimilated into your culture. I can understand that. Our culture doesn’t use it.

It doesn’t invalidate anyone or any culture. Just different.

 

[BootsWalking]

The original response was about the likelihood of companies passing along savings to consumers. I cited manufacturing because it's an example of a company saving costs without passing along savings to consumers.

But even that assertion doesn't comport with the data. The rise of China's manufacturing is credited with exporting significant amount of deflation to the developed world, especially the USA. That wouldn't be the case if corporations weren't passing on at least some of their exported-manufacturing savings to consumers.

Manufactured items are what people buy in retail, correct? So how is citing the retail store offering its own credit card changing anything about the dynamic per the manufactured retail goods?

Both credit cards and Apple's IAP commission represent transaction costs independent of the manufacturing and development costs of the companies selling products to end consumers.

IMO, all the stuff about payment processing has little or nothing to do with consumers or the prices they pay.

That's a hard case to make when stores today already reduce the cost consumers pay (via credit-card rebates) when consumers use payment processing provided by the stores instead of third-party credit-card companies.

Also, the ACM appears to be deliberately ignoring that smartphones have internet access.

"Various dating services exist on the Dutch market, which offer their services through apps. Since most consumers own an Android-based smartphone or an iPhone, most dating apps use the Google Play Store and Apple’s App Store. In order to maximize their reach, dating apps must therefore be available in both of these stores. After all, consumers also wish to reach other consumers with different types of smartphones.

On iPhones, dating apps can only be offered through the App Store, which makes dating-app providers highly dependent on Apple. Dating-app providers thus have little choice but to accept Apple’s conditions. ACM therefore establishes that Apple has a dominant position."

ACM obliges Apple to adjust unreasonable conditions for its App Store | ACM

The ACM has ordered Apple to adjust the unreasonable conditions in its App Store that apply to dating-app providers. The District Court of Rotterdam has partially suspended the order subject to periodic penalty payments that ACM had imposed on Apple.

www.acm.nl

Wouldn't Android/iPhones both have access to the internet? Yes. Does Tinder have a web site version of it's service? Yes. So it's not actually correct for the ACM to claim that Android/iPhone users of Tinder have to rely on app stores.

You make a good point, although some may argue that branding their dating service via custom apps is an essential aspect of their sales and marketing strategy. I'm not knowledgeable in the mobile site vs app engagement dynamics to make that argument myself but considering how many companies go through significant expense to develop non-trivial smartphone apps I'm inclined to believe there's material value in that endeavor for the companies.

 

[Anthony Sullivan]

As they always should have. F*** anyone here who says otherwise.

 

[mrochester]

I wonder what the commission is going to be for the apps that use a 3rd party payment processor?

 

[gnipgnop]

But even that assertion doesn't comport with the data. The rise of China's manufacturing is credited with exporting significant amount of deflation to the developed world, especially the USA. That wouldn't be the case if corporations weren't passing on at least some of their exported-manufacturing savings to consumers.

From 2000 to 2020, annual inflation in the U.S. was negative 10 times. From 1980 to 2000, annual inflation in the U.S. was negative 11 times. From 1960 to 1980, annual inflation was negative 7 times.

Deflation appears to have more of a connection to the stagnation of worker pay in the U.S. (starting in late '70s) than it does to China dominating manufacturing.

 

[LeeW]

Speaking as a user, I consider a potential 15% to 30% reduction in IAP prices charged by apps to be in my best interest.

You are assuming this is going to lead to a reduction in the App price, it's really not for the most part.

 

[erikkfi]

Apple always sees the loss of any money-making opportunity as "not in our users' best interest." Marketing and Legal go hand in hand with this company to an unusual degree.

 

[BootsWalking]

From 2000 to 2020, annual inflation in the U.S. was negative 10 times. From 1980 to 2000, annual inflation in the U.S. was negative 11 times. From 1960 to 1980, annual inflation was negative 7 times.

Deflation appears to have more of a connection to the stagnation of worker pay in the U.S. (starting in late '70s) than it does to China dominating manufacturing.

Deflation as the effect on the price of manufactured goods, as described in the second sentence of the article I referenced:

Is the "China price" back? After years of hearing about rising wages ending the era of the China price when cheap exports lowered the prices of global manufactured goods, it seems that China has a surprise for the world. Deflation, that is, falling prices, is an issue for the world's second biggest economy, just as it is for many others.

The actual USA inflation rate is composed of many things - the price of manufactured goods is only one part.

 

[now i see it]

In my experience, trying to get in touch with the developer of an iOS app is always impossible. They never respond back.

So if you’ve got a problem with a crap app and you want a refund but you purchased it directly from the developer — good luck getting a refund. Ain’t going to happen.

But if you purchase an app through Apple’s payment system as usual and there’s a problem with the app, it’s super easy to get a refund if it doesn’t work right.

From a customer’s perspective, purchasing an unknown app through Apple is definitely the way to go. But from a developer’s point of view it sucks.

 

[Michael Scrip]

I wonder what the commission is going to be for the apps that use a 3rd party payment processor?

I'm guessing it will be similar to what Google is doing in South Korea.

If the developer has Google process the payment... the commission fee is 15%

But if they use an external payment processor... Google's commission fee is only 11%

So here's the rub... once a developer pays 11% to Google and 2.9% + 30 cents to Stripe, PayPal or whoever... they're basically back to the original 15%

To everyone who thinks 3rd-party payments are the way to eliminate platform commissions and fees... it ain't it.

Platforms can (and will) charge a fee. We can debate how much those fees should be another time.

If I was to make a prediction about Apple... I'd say:

15% or 30% if Apple handles the payment
11% or 26% if someone else handles the payment

 

[dandy1117]

Consumer choice is good, I don't think as many believe that this will mean it makes the cost of apps cheaper, App providers will just say they need to charge the same because of their costs and so on.

For me I will continue to pay through the Apple store, I prefer that simplicity instead of managing many different payment options and the tracking that involves along with the difficulty in cancelling.

This assumes that app developers would be forced or incentivized to allow both in-app payments options. I suspect that many developers, especially large developers, would require payments via their alternative processor to create a cross-platform payment solution for all smartphone platforms.