Apple to Collect 27% Commission on Third-Party App Payment Systems in the Netherlands

[turbineseaplane]

I don't think it falls down on policies, but just realities of costs of doing business being different.

I don't disagree with the EU deciding on this as policy.

I'm just struggling to see how anyone wouldn't agree there are differences in the actual realities of delivering real tangible products vs digital goods.

Surely you agree those are two different processes at least in terms of how long it can take, return issues, costs of doing tangible business, on and on..

Real world "things" are different if I'm selling you an iOS Digital App vs toothpaste that has to be manufactured, shipped, stocked, distributed again (sometimes), shelved, sold, delivered and possibly returned if there's an issue.

Lots more humans and vehicles and the like involved in real world stuff.

It doesn't mean business policy can't be very similar for it though - for sure!

 

[hans1972]

I think we all know the op. What is being discussed is the business practice not the legal validity of the agreement. That ship has sailed.

PS: Or maybe we don’t. Apple is not a comissionaire in formal terms. Devs don’t pay Apple a commission of the sale. Apple Pay’s devs for their supplies at 70% of the listed price - taxes. Devs are in this model formally App Store suppliers and referral generators considering it’s the sole distributor of software programs on 50% of smartphones circulating in the US.

But the Store does not follow a business practice of the kind suggested by the agreement. In effect the practice with its IAP policies work like a billing Broker / Middleman smartphone users and Businesses of any kind enforced by the power of controlling the distribution of software programs to 50% of Americans pockets.

In practice comparisons with any standard retail business are nonsense.

Have you read the developer agreement?

In fact, it literally states Apple is appointed commissionaire and/or agent by the developer.

Apple is selling, distributing and marketing the app on behalf of the developer. For this, Apple takes a commission since they are the developer's commissionaire and agent.

Apple is not buying the app from the developer and then reselling it to customers. Apple tried that argument in court and lost.

 

[Sophisticatednut]

The transportation medium does tremendously change the timelines, costs and risks that are borne -- among many things we could probably single out as important differences.

Oh but does it?
If I go to apple and purchase a program that I get by usb stick and it counts as physical goods.

But if the same transfer happens over a usb cable I connect to their computer?
Did it now become difrent?

If i give them my phone on the spot for them to do the transfer is it different?

Or I send it to them by mail?
Or they send the software by mail?
Or over the Ethernet cable?
This distinction is completely arbitrary just because it’s not a physical medium doing the transfer even tho my rights differ wildly in the USA. But EU concluded the difference is completely meaningless to the consumer and should maintain the same rights as before

 

[turbineseaplane]

Oh but does it?
If I go to apple and purchase a program that I get by usb stick and it counts as physical goods.

But if the same transfer happens over a usb cable I connect to their computer?
Did it now become difrent?

If i give them my phone on the spot for them to do the transfer is it different?

Or I send it to them by mail?
Or they send the software by mail?
Or over the Ethernet cable?
This distinction is completely arbitrary just because it’s not a physical medium doing the transfer even tho my rights differ wildly in the USA. But EU concluded the difference is completely meaningless to the consumer and should maintain the same rights as before

I agree with you on "rights" and "business policy" and business interactions standards and all of that sort of stuff.

I'm just saying it costs more and takes longer and is more complex (generally) to deal in real products that you can touch/hold/pickup

You must agree with that at least, no?

I don't know if you've run any businesses or not, but I certainly have..

Life is a lot more difficult and time consuming running restaurants or selling retail goods that get stocked on shelves vs selling digital goods (I've done all of these things and more in my life)

 

[Sophisticatednut]

I don't think it falls down on policies, but just realities of costs of doing business being different.

I don't disagree with the EU deciding on this as policy.

I'm just struggling to see how anyone wouldn't agree there are differences in the actual realities of delivering real tangible products vs digital goods.

Surely you agree those are two different processes at least in terms of how long it can take, return issues, costs of doing tangible business, on and on..

Real world "things" are different if I'm selling you an iOS Digital App vs toothpaste that has to be manufactured, shipped, stocked, distributed again (sometimes), shelved, sold, delivered and possibly returned if there's an issue.

Lots more humans and vehicles and the like involved in real world stuff.

It doesn't mean business policy can't be very similar for it though - for sure!

Absolutely there is a difference in how things are delivered. But we don’t have difrent rights if it’s sent by mail or airplane.
Sending a car on freight train over the Atlantic or hand delivery of a camera from the shop 5 min away.

 

[turbineseaplane]

Absolutely there is a difference in how things are delivered. But we don’t have difrent rights if it’s sent by mail or airplane.
Sending a car on freight train over the Atlantic or hand delivery of a camera from the shop 5 min away.

100% agree with you

 

[hans1972]

This means multiple things

1. Software sold on the AppStore is provided with a perpetual software license
2. The moment apple sells this product to a consumer they have relinquished their rights and ownership of the software
3. The moment apple/reseller sells you an iPhone, both parties with the sale relinquished any ownership and control of any software included we in the sale such as iOS

This makes it hard to claim any rights when legally speaking it’s not theirs anymore.

How is this relevant between Apple and developers?

It only gives more freedom to customers.

 

[Sophisticatednut]

I agree with you on "rights" and "business policy" and business interactions standards and all of that sort of stuff.

I'm just saying it costs more and takes longer and is more complex (generally) to deal in real products that you can touch/hold/pickup

You must agree with that at least, no?

I don't know if you've run any businesses or not, but I certainly have..

Life is a lot more difficult and time consuming running restaurants or selling retail goods that get stocked on shelves vs selling digital goods (I've done all of these things and more in my life)

Absolutely. But you provide different prices to complete that delivery.

You might take 10$ to deliver it by mail or 0$ if they come and pick it up.

Some instances you might charge a 5$ to install it for them in the store etc etc

But it would be completely normal if you told a suplier that you take a 30% cut for any of their product( office CD, iPod, car repair service) you deliver to their consumers of the list price by Fedx.

And in the office program CD/iPod, service manual. They might have a number or website links to request extra services that you don’t take a cut of unless they come to you

But it would be completely weird and not legal if you said that for every goods you sell in your physical store you retain the right for 30% cut of any extra l sales customers later completed in the lifetime of the product

And in the office program on Cd/iPod service manual. The number/ website must only refer back to your store to complete any further purchases and they aren’t allowed to talk to or point to any other provider but you.

But fire some reason we accept it when it’s digital

 

[turbineseaplane]

@Sophisticatednut

We totally agree at this point

 

[Sophisticatednut]

How is this relevant between Apple and developers?

It only gives more freedom to customers.

This includes B2B an B2C as this ruling was caused by a lawsuit between oracle and another business.

And it’s relevant in the form of apple tried to claim distribution rights after the transaction.
Apple doesn’t have a right to future sales in the sold copy.

 

[Nuno Lopes]

Have you read the developer agreement?

In fact, it literally states Apple is appointed commissionaire and/or agent by the developer.

Apple is selling, distributing and marketing the app on behalf of the developer. For this, Apple takes a commission since they are the developer's commissionaire and agent.

Apple is not buying the app from the developer and then reselling it to customers. Apple tried that argument in court and lost.

I’m not disputing the terms used by the agreement. All I said is that Apple bills the customer, I assume you have also looked at the billing statements sent to users, and than pays the suppliers of the product or service. This is how this model works in practice. If Apple wants to call herself a comissionare who am I to say otherwise.

In another line of business I’ve hired at times real state agents. They send me clients, and I eventually close deals, I bill the client and pay a fee/commission for the sale as per their billing of that service to me.

Meaning 100% of the revenue is mine, the agente service is my expense to pay in accounting terms. The revenue of the agent , the commissioner, is the commission.

But may be in the US things happen usually the other way around when commissions are involved. Commissionares bill and receive 100% of the sale, enters in their books, and than pay the supposed seller. Not familiar this practice as the norm.

PS: Apple is not buying first. If that is what they argued I’m not surprised they lost the argument. There no proof of it.

Yet not all Retail Stores buy the products sold first. Meaning the Store does not own their stock, that is of the suppliers. They can actually pay suppliers only after the Store sells the product. The practice is called Consignement.

 

[I7guy]

And you do understand if apple leaves Uk or EU it will have little to no impact whatsoever? This is not USA with millions of employees and billions of tax revenue as one of the biggest companies in your nation. Apple have little to no political impact, and threats will not go down well.

Only income apple bring is through VAT that will just be covered by other products. And some sales peoples salary in random stores around the union that also will be covered by competing businesses that will take their place and other jobs.

And these regulators and the Supreme Court of EU aren’t elected and as untouchable as US supreme courts of justice.

But we both know apple won’t kill 50% of their revenue for not even a rounding error in EUs economy,

Think you underestimate the effect that apple leaving the UK would due to government idiocy.

 

[I7guy]

Since Apple created iOS, every app running on their store belongs to them.

But every app running and downloaded to OUR iphones and iOS belongs to The person who purchased it.

I can’t understand how this can be so hard to understand

The ip is apples even if the app belongs to the consumer.

 

[AppliedMicro]

The ip is apples even if the app belongs to the consumer.

Not really.

The content that the end user purchases with an in-app purchase is (usually) third-party IP: The app developer's or content publishers', not Apple's.

Apple merely provides the program code to unlock that third-party content/IP to end users.

The abstract concept of in-app purchases can hardly be classified as protected IP, when it's readily available on other platforms and from other app platform operators.

And the program code to do so was arguably already "delivered" to the end user upon downloading the app from the App Store. And it's not as if app developers and content creators had to rely on Apple's in-app purchase mechanism, processing and program code (nor their IP). Quite the contrary! Some developers would love to roll out their own in-app purchasing code and process.

...if only they were allowed to do so. That's the crux of the matter: Apple has (so far) just gotten away with forcing all developers to use their in-app purchase code and process by contractual means.

 

[Maximara]

But may be in the US things happen usually the other way around when commissions are involved. Commissionares bill and receive 100% of the sale, enters in their books, and than pay the supposed seller. Not familiar this practice as the norm.

Commissions vary here in the states. For instance when I bought my house the commission fee was taken out and what was left applied to the value of the house. Sort of what happens with FICA with regards to your pay check - unless you are own boss that is take out up front. Back in the old days you had to pay the government after you got all your money (The Spirit of '43 cartoon shows this) but they realized how much a pain in the rear that was for them and so set it up where that was taken out before you got your money and most (but not all) businesses have followed suit.

 

[I7guy]

Not really.

The content that the end user purchases with an in-app purchase is (usually) third-party IP: The app developer's or content publishers', not Apple's.

Apple merely provides the program code to unlock that third-party content/IP to end users.

The abstract concept of in-app purchases can hardly be classified as protected IP, when it's readily available on other platforms and from other app platform operators.

And the program code to do so was arguably already "delivered" to the end user upon downloading the app from the App Store. And it's not as if app developers and content creators had to rely on Apple's in-app purchase mechanism, processing and program code (nor their IP). Quite the contrary! Some developers would love to roll out their own in-app purchasing code and process.

...if only they were allowed to do so. That's the crux of the matter: Apple has (so far) just gotten away with forcing all developers to use their in-app purchase code and process by contractual means.

Anything that uses apple ip apple is entitled to be paid for. An app uses apple ip and that is why there is a fee collected.

 

[Nuno Lopes]

The ip is apples even if the app belongs to the consumer.

Are you saying the Netflix or Facebook apps, just as examples … are Apple IP? How far goes the definition of Apple IP?

 

[AppliedMicro]

An app uses apple ip and that is why there is a fee collected.

...it's only that that fee isn't really collected where or for what's actually delivered.

That's the clever thing Apple did (and so far got away with):

Leveraging the fact that developers somewhere have to use Apple's IP (to publish a consumer-downloadable iOS app)
to invariably "tax" developers elsewhere on delivering works/content from their own (not Apple's) IP to consumers.

Are you saying the Netflix or Facebook apps, just as examples … are Apple IP? How far goes the definition of Apple IP?

I believe he just thinks that Apple should be free to decide when, where and how much they charge developers - as long as those developers use some of Apple's IP somewhere.

Or in other words: that they should be free and unrestrained in how they monetise (use of) their IP.

 

[Sophisticatednut]

Think you underestimate the effect that apple leaving the UK would due to government idiocy.

And UK( Uk and EU are different) can’t overrule the courts. So what do you think will happen?
0 economic damage, <0.1 unemployment increase from closed stores.

Developers will still develop. And fines will still be payed for copyright violation.
Apples largest contribution to their economy is likely paying fines and lawyers fees.
Plus apple EU HQ is in Republic of Ireland and is independent from Uk.

The ip is apples even if the app belongs to the consumer.

first sale exhaustion contradicts this … so what now? Unless UK wants a constitutional crisis to change that super court ruling from late 2021

Anything that uses apple ip apple is entitled to be paid for. An app uses apple ip and that is why there is a fee collected.

Not if apple don’t own the right to that copy after point of sale.

Have you seriously never heard of first sale exhaustion or similar legal wording?

 

[huge_apple_fangirl]

I found this post from a user on AppleInsider:

Folks who thought the 30% commission is merely for collecting and processing payment are now learning the truth. Only 3% of that commission was related to payment processing. The other 27% is an implicit agreement that covers Apple’s costs of maintaining all the infrastructure and technology, but also access to users.

Yes, the 30% commission is what Apple is really fighting for. Regulators going after IAP or the App Store are missing the forest for the trees. Apple's fundamental position is that by by virtue of its investments into iOS, silicon, APIs, hardware, marketing, etc. it has cultivated an extremely valuable set of customers and if you want to tap into that you need to give them a cut. IAP and the App Store are just the methods they use to collect that rent. Regulators can (and will) go after them all they want and Apple will just find a new way to collect its commission (as I said before, if sideloading is enforced Apple will go after it at the Dev Account level).

No one (regulators, courts, lawmakers, etc.) has actually come out and said "Apple is not entitled to a commission". They've just gotten into fights with Apple over the current ways Apple collects it. Apple can credibly argue that, given that it is owed a commission, mandating IAP and the App Store are a good idea because they make it simple for Apple to collect it and are simple for consumers. But those are just proxy battles over the fundamental issue. And once regulators have forced Apple to cede its payment and distribution exclusivity, they'll have to actually address the elephant in the room. And I think getting Apple to actually lower its commissions is going to be much, much harder than going after IAP or the App Store. I can see two ways to do that:

1. Straight up cap the fee. This is complicated because there's no "right" answer. What exactly is Apple entitled to anyway? Ten years ago 30% was fine. Now it's not. Is the answer 5%, 10%, 20%? iOS isn't really a utility. It's much easier to say "add another store for competition" than make a value judgement like that.
2. Go after Apple's "monopoly" on dev accounts. Basically say Apple can't be the only one providing APIs, tools, notarization. This would "work" but it would basically be a nightmare to implement and doesn't even make sense. Apple makes the platform, it makes no sense for a third party to provide the accounts and signing.

IAP and the App Store are the comparatively easy pickings. Regulators will go after them first and find themselves right back in square one, with no easy way to move forward.

 

[Sophisticatednut]

Anything that uses apple ip apple is entitled to be paid for. An app uses apple ip and that is why there is a fee collected.

A good question also is why apple hasn’t demanded payment from cydia developers or alt store developers that sell apps for the last 13 years for not paying the use of their Ip? Not a single lawsuit over Xcode and iOS license violation ever has been ruled in apple’s favor

 

[AppliedMicro]

Yes, the 30% commission is what Apple is really fighting for.

…and what most developers (of the ones speaking out or taking action against Apple) are fighting against.

It‘s ultimately not about payment processing etc. It‘s about costs. And access to customers.
Though I doubt that many developers would mind paying Apple a 5% or even 10% commission rate on in-app (in their current form).

 

[huge_apple_fangirl]

…and what most developers (of the ones speaking out or taking action against Apple) are fighting against.

It‘s ultimately not about payment processing etc. It‘s about costs. And access to customers.
Though I doubt that many developers would mind paying Apple a 5% or even 10% commission rate on in-app (in their current form).

Yes, but those developers haven’t argued for mandating a lower cut (which would be difficult to do).

They’ve argued against Apple’s current mechanisms for enforcing the cut. As Apple has shown in the Netherlands, getting rid of that will just lead to Apple to create a new mechanism. Basically, Apple might lose the battle but they’re winning the war.

 

[Abazigal]

Yes, but those developers haven’t argued for mandating a lower cut (which would be difficult to do).

They’ve argued against Apple’s current mechanisms for enforcing the cut. As Apple has shown in the Netherlands, getting rid of that will just lead to Apple to create a new mechanism. Basically, Apple might lose the battle but they’re winning the war.

Any cut they end up negotiating (be it 15% or 10% or even 5%) would still be higher than the 3% they need to pay payment processing companies. It makes sense to just go all the way, and so here we are.

Devs want the 30% cut tossed out the window altogether, while Apple is effectively fighting to keep that 30% in its entirety. No middle ground. Both have drawn their respective lines in the sand, and show no signs of capitulating.

I believe this is why Apple is adopting such a seemingly unrepentant stand - because they know the outcome of this lawsuit will set the precedent for all subsequent legal battles around the world.

I kinda saw this coming way back when the epic trial started. I predicted that the lawsuit would cause Apple to dig in, and when it won its lawsuit against Epic, it would have zero incentive to capitulate to any further developer demands. Why should Apple relent at all, if even Epic with billions in their war chest, can’t influence Apple?

Ironically, the best solution would have been to continue supporting and encouraging the slow and measured trajectory of change along which Apple was moving. Consumers simply don’t care about a 30% fee they don’t believe they will ever see, and most don’t actually dislike closed, sandboxed app ecosystems. That’s why, you realise, I have constantly argued in favour of Apple over developers since day 1. Because things are a lot more nuanced than “Apple is greedy and developers should be paid more!”

And once you have established the precedent of a developer suing Apple over anti-trust concerns and losing, the 30% fee will never go away or be reduced, because again, what reason does Apple have to do so now that the law is on their side?

This is how the rebellion ends - Apple will fight, and Apple will win (because I don’t believe anti-trust arguments against Apple will hold up to scrutiny), and when they do, their victory will stand as a symbol of Apple’s unassailable authority over iOS and the App Store, and they will have no incentive to make any further concessions to developers.

 

[I7guy]

Are you saying the Netflix or Facebook apps, just as examples … are Apple IP? How far goes the definition of Apple IP?

Yes. Some code in the Netflix and Facebook iOS apps are undoubtedly apple ip.

...it's only that that fee isn't really collected where or for what's actually delivered.

That's the clever thing Apple did (and so far got away with):

Leveraging the fact that developers somewhere have to use Apple's IP (to publish a consumer-downloadable iOS app)
to invariably "tax" developers elsewhere on delivering works/content from their own (not Apple's) IP to consumers.

I believe he just thinks that Apple should be free to decide when, where and how much they charge developers - as long as those developers use some of Apple's IP somewhere.

Or in other words: that they should be free and unrestrained in how they monetise (use of) their IP.

Okay. We’ll see. Beating a dead horse at this point.

And UK( Uk and EU are different) can’t overrule the courts. So what do you think will happen?
0 economic damage, <0.1 unemployment increase from closed stores.

Developers will still develop. And fines will still be payed for copyright violation.
Apples largest contribution to their economy is likely paying fines and lawyers fees.
Plus apple EU HQ is in Republic of Ireland and is independent from Uk.

first sale exhaustion contradicts this … so what now? Unless UK wants a constitutional crisis to change that super court ruling from late 2021

Not if apple don’t own the right to that copy after point of sale.

Have you seriously never heard of first sale exhaustion or similar legal wording?

Okay. We’ll see. Beating a dead horse at this point with repetitive, going round in circles arguments.