Apple Would Rather Pay Up to €50 Million in Fines Than Address 'Gatekeeper' App Store Behavior, Says EU Chief

[fmillion]

Why cap the fines?

Make it 50 million euros per week with no cap. Hell, make it an ever-increasing amount. Each week they don't comply, add on another 10 million euros. So 50 mil the first week, then 60 the second, 70 the third, etc.

If I told you "I will fine you $100 if you steal a $1500 Mac", wouldn't you just steal it? The $100 fine would be worth the $1500 value gain.

If I told you "I will fine you $5000 per week, with the amount increasing by $1000 every week, until you return that $1500 Mac", you're definitely not going to keep it.

The only way Apple will change is if the cost of not complying is higher than the gains for not complying. By not complying, they make 27% commission on payments - plenty to cover a fee here and there.

 

[theotherphil]

No. The Spotify thing isn't meant to be a general purpose device -- it's specifically a Spotify Premium consumption device.

And the HomePod isn’t a general purpose computing device but API’s were provided for other music providers.

Anti-trust violation when Spotify are by far the largest music streaming service?

 

[BaldiMac]

Why cap the fines?

I would assume because that's the law. I think that the animosity is more of a message board thing than anything between Apple and the ACM. It's not like Apple came into the Dutch market and started breaking the law. They were just running a business. Dating app provider suded. The ACM decided that Apple had begun to dominate the market, so they are requiring them to change how they do business. No one expects a trillion dollar corporation to turn on a dime.

Obviously, this is all a part of the Epic Games et al. push to try and break Apple's control of the App Store.

 

[Sophisticatednut]

And how does one obtain a dominant position without significant market share or size? I’m not saying you need to be a literal monopoly, but I don’t see how a firm can dominate a market without- y’know- being a significant player in that market. Which implies sone level of significant market share.

You measure the effects according to an objective standard that is un

“[the dominant position] relates to a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave independently of its competitors, its customers and the consumers.

dominant position does not prevent competition

the concept of abuse of a dominant position, as a behaviour “which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operators, has the effect of:
Hindering the competition still existing in the market or the growth of that competition”.

Examples of abusive practices typically include:

• predatory pricing
• loyalty rebates
• tying and bundling
• refusals to deal
• margin squeeze
• excessive pricing
• exclusive dealing
• refusal to supply

a dominant firm might not be allowed to engage in the same practices as non-dominant firms.

 

[huge_apple_fangirl]

You measure the effects according to an objective standard that is un

“[the dominant position] relates to a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave independently of its competitors, its customers and the consumers.

Right, but if I have 10% market share, it will be hard for me to prevent competition. You still have not explained how a firm can be dominant without significant market share. Giving an example of market abuse does not refute my fundamental point. Maybe the definition of a dominant firm in the EU does not literally include the words "and has x% market share" but that doesn't change the fact that you need market share to engage in those behaviors.

 

[Abazigal]

It’s certainly ironic that on one hand, people used to claim that Apple would die at the hands of Android’s majority market share (and some still do), and here we are arguing about whether Apple is a monopoly or not.

My view is that Apple has a monopoly on iPhones, the same way McDonald’s has a monopoly on Big Macs or Coke has a monopoly on coke. It’s not a traditional monopoly in the sense of the term, and Apple shouldn’t be penalised for the ineptitude of blackberry and Microsoft in building up their own mobile ecosystems.

This gives Apple the right to run their ecosystem as they seem fit, and it is through this entire saga that we see the true intentions of certain iOS app developers who desire such a change for concessions which are of little benefit or utility to consumers.

Apple does not want consumers to have second thoughts about navigating the App Store and paying for in-app purchases. Apple mjanagement makes App Store decisions with the entire iOS app ecosystem and Apple user base in mind. This is why comparing the App Store to Google Play can introduce distractions. One can’t say “well XYZ seems to work on Google Play so Apple should do it on the App Store” because the App Store is better at bringing in revenue for developers versus what we see with Google Play.

It’s also telling that while the main overriding desire is really to sidestep the 30% cut (in addition to benefiting from Apple having aggregated the best users in the world), this has been a fairly under-emphasised point. As though the developers themselves are mindful not to draw too much attention to this matter for fear of appearing too mercenary themselves.

They simply don't think they should be required to pay Apple anything or even use the App Store to transact business on the iOS platform via apps.

 

[robco74]

Apple isn't a monopoly in terms of marketshare. However, compared to Android, iOS is a much more profitable platform, including ad revenue for "free" apps. Current App Store policies allow Apple to charge for access to this more lucrative customer base. I think that is where the concerns lie.

Apple may not have a majority of users, but they do have the ones that advertisers want to show ads to, and their users are more willing and/or able to spend money.

 

[I7guy]

Why cap the fines?

Make it 50 million euros per week with no cap. […].

And while we’re at it fine speeders $1,000,000 per mile an hour above the speed limit.

 

[mrow]

Im not trying to be nitpicky but € comes after the numbers, like 300€.

Wrong.

The European Union’s Interinstitutional Style Guide(for EU staff) states that the euro sign should be placed in front of the amount without any space in English, but after the amount in most other languages.

 

[huge_apple_fangirl]

And while we’re at it fine speeders $1,000,000 per mile an hour above the speed limit.

Aren’t there places in Europe that do something like that? Charge as a percentage of income? Maybe in Germany.

 

[Glideslope]

Aren’t there places in Europe that do something like that? Charge as a percentage of income? Maybe in Germany.

No, I think it’s Slovakia.

 

[FreedomPenguin]

You mean we have a working legal system? Apple just ignores the applicable laws and verdicts?

I just don't get why all the fanboys keep screaming about this specific instance (dating apps in the Netherlands)... It's a goddamn precedence, much more is to come... Apple knows this and evidently tries to postpone this as much as they possibly can.

The whole EU is clearly preparing to make the App Store and the Play Store a much more open marketplace. They did the same for Internet Explorer when it actively hindered innovation and competition. Please don't force americanization on us more than is already happening, thank you.

America is far superior than any other country. We do things right, and we know how to make money.

 

[Sophisticatednut]

Right, but if I have 10% market share, it will be hard for me to prevent competition. You still have not explained how a firm can be dominant without significant market share. Giving an example of market abuse does not refute my fundamental point. Maybe the definition of a dominant firm in the EU does not literally include the words "and has x% market share" but that doesn't change the fact that you need market share to engage in those behaviors.

You don’t need to have 10% market share. They only look at the actions and out of said actions on the market.

EU approach to prohibited conduct do focus more on the analysis of economic effects.

A dominant firm with market power would have the ability to set prices above the competitive level to sell products of an inferior quality or to reduce its rate of innovation below the level that would exist in a competitive market. Under EU competition law, it is not illegal to hold a dominant position, since a dominant position can be obtained by legitimate means of competition, for example by inventing and selling a better product. Instead, competition rules do not allow companies to abuse their dominant position.

If the dominant company can establish an objective justification for its conduct, such as achieving a legitimate objective of protecting or enhancing a public interest, defending its commercial interest or generating efficiencies not otherwise available, assessed on the basis of proportionality, there will be no abuse.

Compare this to US definition

Monopoly power is power characterised as significant and durable market power. The Supreme Court has held that unlawful monopolization consists of two elements: the possession of monopoly power and the willful acquisition or maintenance of the power, as opposed to its development as a consequence of superior product

 

[Sophisticatednut]

Aren’t there places in Europe that do something like that? Charge as a percentage of income? Maybe in Germany.

Multiple nation does that. Fines based on income in Germany, Finland and Denmark.

 

[deevey]

The only way Apple will change is if the cost of not complying is higher than the gains for not complying. By not complying, they make 27% commission on payments - plenty to cover a fee here and there.

They did comply, just not the way ACM wanted them to.

 

[Sophisticatednut]

That's not the law. That would be a crime.

Well when a company does serious crimes then the board the ceo and associates should be criminally charged as representatives of the company

 

[laptech]

Geezus people!!! for goodness sake will you please stop using the term 'Apple is not a monoply' when you are trying to argue your point about apps and the app store. The question raised by Epic's counsel was that Apple has a monopoly on the app store', but for some reason many members have twisted this to use in their arguments as 'Apple is not a monopoly'. Please stop with the misinformation.

 

[I7guy]

Geezus people!!! for goodness sake will you please stop using the term 'Apple is not a monoply' when you are trying to argue your point about apps and the app store. The question raised by Epic's counsel was that Apple has a monopoly on the app store', but for some reason many members have twisted this to use in their arguments as 'Apple is not a monopoly'. Please stop with the misinformation.

The iOS App Store is a legal monopoly.

 

[I7guy]

You don’t need to have 10% market share. They only look at the actions and out of said actions on the market.

EU approach to prohibited conduct do focus more on the analysis of economic effects.

A dominant firm with market power would have the ability to set prices above the competitive level to sell products of an inferior quality or to reduce its rate of innovation below the level that would exist in a competitive market. Under EU competition law, it is not illegal to hold a dominant position, since a dominant position can be obtained by legitimate means of competition, for example by inventing and selling a better product. Instead, competition rules do not allow companies to abuse their dominant position.

If the dominant company can establish an objective justification for its conduct, such as achieving a legitimate objective of protecting or enhancing a public interest, defending its commercial interest or generating efficiencies not otherwise available, assessed on the basis of proportionality, there will be no abuse.

Compare this to US definition

Based on the above, apples business is not a monopoly or anti-competitive which is why this shoe horned legislation is difficult.

 

[AdonisSMU]

I think Apple can easily pay the fine and get away with it. They have the money for it. It's really not worth going over the regulations over dating apps.

Another good alternative. Apple can also easily pull the dating apps from the market and they don’t even have to deal with it.

The best solution is to ban dating apps in The Netherlands. Has Google also been sued over the same things? Isn't Android more popular in The Netherlands? I don't know some times these moves from countries in the EU are not helpful and strike me as posturing or grandstanding.

 

[Sophisticatednut]

Based on the above, apples business is not a monopoly or anti-competitive which is why this shoe horned legislation is difficult.

Are they a monopoly? Doesn’t matter.
Are they anti competitive on the relevant market? Yes they are are as the relevant market is dating apps for iOS. Same for music as for dating apps. And likely other apps

Statement of Objections on Apple's rules for distribution of music streaming apps

The Commission preliminary finds that Apple has a dominant position in the market for the distribution of music streaming apps through its App Store. For app developers, the App Store is the sole gateway to consumers using Apple's smart mobile devices running on Apple's smart mobile operating system iOS

• The mandatory use of Apple's proprietary in-app purchase system (“IAP”) for the distribution of paid digital content. Apple charges app developers a 30% commission fee on all subscriptions bought through the mandatory IAP. The Commission's investigation showed that most streaming providers passed this fee on to end users by raising prices.
• “Anti-steering provisions” which limit the ability of app developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to use music subscriptions purchased elsewhere, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper. The Commission is concerned that users of Apple devices pay significantly higher prices for their music subscription services or they are prevented from buying certain subscriptions directly in their apps.

Vestager, in charge of competition policy, said in 2021 of April :

“App stores play a central role in today's digital economy. We can now do our shopping, access news, music or movies via apps instead of visiting websites. Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store. With Apple Music, Apple also competes with music streaming providers. By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition. This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”

 

[AdonisSMU]

The iOS App Store is a legal monopoly.

A monopoly on who exactly? People freely switch between iPhone and other Phones all the time. Having a 20% market share is not a monopoly or even a dominant position.

 

[AdonisSMU]

Are they a monopoly? Doesn’t matter.
Are they anti competitive on the relevant market? Yes they are are as the relevant market is dating apps for iOS. Same for music as for dating apps. And likely other apps

Statement of Objections on Apple's rules for distribution of music streaming apps

The Commission preliminary finds that Apple has a dominant position in the market for the distribution of music streaming apps through its App Store. For app developers, the App Store is the sole gateway to consumers using Apple's smart mobile devices running on Apple's smart mobile operating system iOS

• The mandatory use of Apple's proprietary in-app purchase system (“IAP”) for the distribution of paid digital content. Apple charges app developers a 30% commission fee on all subscriptions bought through the mandatory IAP. The Commission's investigation showed that most streaming providers passed this fee on to end users by raising prices.
• “Anti-steering provisions” which limit the ability of app developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to use music subscriptions purchased elsewhere, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper. The Commission is concerned that users of Apple devices pay significantly higher prices for their music subscription services or they are prevented from buying certain subscriptions directly in their apps.

Vestager, in charge of competition policy, said in 2021 of April :

Yeah but if people don't like it they can buy something else. With dating apps, they have options to not operate on the platform as well. No one has a right to push apps to your phone if you don't want it or what you built isn't compatible.

 

[I7guy]

Are they a monopoly? Doesn’t matter.
Are they anti competitive on the relevant market? Yes they are are as the relevant market is dating apps for iOS. Same for music as for dating apps. And likely other apps

Statement of Objections on Apple's rules for distribution of music streaming apps

The Commission preliminary finds that Apple has a dominant position in the market for the distribution of music streaming apps through its App Store. For app developers, the App Store is the sole gateway to consumers using Apple's smart mobile devices running on Apple's smart mobile operating system iOS

• The mandatory use of Apple's proprietary in-app purchase system (“IAP”) for the distribution of paid digital content. Apple charges app developers a 30% commission fee on all subscriptions bought through the mandatory IAP. The Commission's investigation showed that most streaming providers passed this fee on to end users by raising prices.
• “Anti-steering provisions” which limit the ability of app developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to use music subscriptions purchased elsewhere, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper. The Commission is concerned that users of Apple devices pay significantly higher prices for their music subscription services or they are prevented from buying certain subscriptions directly in their apps.

Vestager, in charge of competition policy, said in 2021 of April :

And your point is what? All app stores on every platform, across the board, are going to be regulated by the EU. Seems to me the EU is looking for laws to suit a single use case -- because the EU hates a powerful, popular platform.

In the US the court did not find Apple had an illegal monopoly on the app store, so Congress went to work trying trying to get legistlation passed to force Apple to open up the app store. Ridiculous.

 

[BaldiMac]

Well when a company does serious crimes then the board the ceo and associates should be criminally charged as representatives of the company

Off topic as usual. Apple isn't accused of any crimes. This is a civil case.

I was saying that a government that throws people from other countries in jail when the law calls for fines against the corporation are themselves committing a crime.

Geezus people!!! for goodness sake will you please stop using the term 'Apple is not a monoply' when you are trying to argue your point about apps and the app store. The question raised by Epic's counsel was that Apple has a monopoly on the app store', but for some reason many members have twisted this to use in their arguments as 'Apple is not a monopoly'. Please stop with the misinformation.

Every corporation has a monopoly on their own store, so "Apple has a monopoly on the App Store" is a meaningless argument.