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

[thejadedmonkey]

Please, explain further.

What are your beefs with the current App Store setup? Do tell us.

- the 30% cut?
- choice of payment methods?
- anything else?

The 30% cut. That makes sense when you're selling physical goods that take up physical space, and require physical maintenance. Visa charges 3%, as an example, of a company that charges a percentage of sales of goods and services that don't have a physical component.

The choice of payment method. Wouldn't it be nice to be able to buy something without giving Apple my credit card? Personally I don't mind Apple having it, but I'm sure some people do.

Anything else? Oh my yes.

Their app store review is a joke,

I worked for a startup. We made an iOS app. Apple needed us to send them a $500 prototype device before they would review the app for this prototype device. That's reasonable, except that we have logs, and they didn't even open the app once before approving it.

The company I work for now, released an update that you could not log in with. Full stop. Every single user who downloaded the app was locked out until we could fix the issue. Apple didn't catch the "bug", which means they didn't even try to log in, despite them having credentials.

Meanwhile, if we dare the upload an app binary that contains the words "HealthKit", our app gets flagged for not having the healthkit permissions enabled (and it rightfully shouldn't, since we don't use healthkit), and rejected. Our app will get rejected for having slightly out of date screenshots.

Finally, the private APIs that Apple uses aren't locked down, so if an app uses a private API, and Apple doesn't catch/stop them during the submission process, that app can use a private API, even if it exposes private data.

Outside of the developer experience, as a consumer the app store is also a mess:

• Can't search for legitimately free apps, or apps that aren't 90% ads
• Can't search for paid apps that aren't filled with ads.
• Can't search for apps without in-app purchases
• Apps that are 90% ads with in-app purchases are considered "free"
• Can't buy/download emulator apps, or other apps with legal but "not Apple approved" content.
• Can't buy/download apps that could allow you to buy things outside of the app store. I want to buy Kindle books from within the Kindle app. This goes to the point of payment method as well.
• Can't buy/download apps that offer a competing web browser engine. Every web browser is forced to use Safari's rendering engine, WebKit.
• Can't buy/download streaming game apps, and instead are forced to route them through a web browser. Did I mention that there's only Safari available to use?

 

[thejadedmonkey]

If you don’t need to, then what would be the downside of not supporting iOS? If the answer is “we’d lose customers”, then yes, you DO need to, right?

Since we wouldn't lose customers, I never really considered it. Likely we would get lower customer satisfaction survey results, but that's all. My industry is somewhat of a necessity, as far as western standards of living go - with or without an app.

 

[Unregistered 4U]

Please, explain further.

What are your beefs with the current App Store setup? Do tell us.

- the 30% cut?
- choice of payment methods?
- anything else?

I think I can answer this. “Because Apple’s doing it”

I think that pretty much covers it. Remove Apple from the equation and everything is fine

 

[Unregistered 4U]

Since we wouldn't lose customers, I never really considered it. Likely we would get lower customer satisfaction survey results, but that's all. My industry is somewhat of a necessity, as far as western standards of living go - with or without an app.

Yeah, if that’s all, I don’t think I’d even bother with an iOS app. Not worth the trouble for a percent of a percent change in survey results.

 

[Abazigal]

True. But this is not America where consumers voted for small government with close to zero consumer protections.

In EU we voted for bigger government, and consumer protection to prevent such practices.

If anything what Nintendo did with shutting down the Nintendo Wii U and 3DS eShops shows the potential consumer harm does with complete vertical integration.

Except I will argue that it’s the opposite here.

Apple isn’t facing much pushback in the US because US antitrust law tends to focus on harm done to the consumer, and it’s companies leading the charge on the war currently being waged against the App Store. Notice how users have not been polled on their thoughts and preferences on this matter? Developers know very well that users do not dislike a closed App Store model, don’t care about a 30% fee they will never see, and in general aren’t enthusiastic about the supposed benefits opening up the App Store will bring for them (because these benefits tend to be more for the developer than for them).

This is why I have often likened the App Store to a union that gives users power to push back against unfair developer practices. And why I continue to believe that the App Store model ultimately results in the greatest amount of good for the greatest number of users.

Conversely, the EU government is focusing on harm done to businesses, and I have been categorically clear right from day one that what is deemed good for the developer may not necessarily be good for the end user, which is why I see the App Store as the last line of defence against developers.

It’s not a perfect system, but it’s all we have got.

 

[Sophisticatednut]

I've asked this question multiple times without a specific answer. How does the ACM ruling benefit consumers? It certainly gives the developers a choice to collect additional consumer information, but I consider that a consumer harm.

Higher prices that developers make consumers pay for music streaming, inability to inform consumers of cheaper prices outside the app, making consumers pay unnecessarily higher prices. Less payment options if consumers didn’t want to use apples IAP.

And it’s also about market harm, Apple stifles competition with anti steering clauses and the mandatory use of apple IAP, preventing other companies to compete against apples.

It’s literally available on ACM website. And EU have just released their objection and preliminary finding, but the all investigations finding isn’t public.

Yes

Well luckily evidence is on the opposite so far.

No, imo. But horses for courses.

Great no problem then and they will be left alone

Seems to me it does.

Well seems to be a baseless opinion. Being big just doesn’t allow you to do everything you want.

Where is it "proved" there is harm to consumers, except through some opinion it is.

Harm to consumers aren’t that important, read the definition I provided

The government can't legally prove, in this instance, Apple is an illegal monopoly. But there is nothing (except SCOTUS) that is stopping congress from drafting any law.

Well I guess apple is just a legal monopoly then.

Apple’s vertical integration helps them deliver better products to consumers.

That might be true, but that’s different from developers providing better products. This is the issue.

 

[Abazigal]

Higher prices that developers make consumers pay for music streaming, inability to inform consumers of cheaper prices outside the app, making consumers pay unnecessarily higher prices. Less payment options if consumers didn’t want to use apples IAP.

Ironically, the desire for third party payment options had been proven to be more about attempting to sidestep Apple’s 15/30% cut, and less a genuine desire to offer consumers more options / choice.

 

[Sophisticatednut]

Yeah, 15%.

If my app were to hit $1m/year, yes it would still be worth it.

What does Apple have to do with me hosting backend services? Nothing, but they do have something to do with hosting and letting people download the app. They're also pretty heavily involved in developing and maintaining the App Store, Xcode, iOS, iPadOS etc. They have to pay their staff to develop these things. They pay their legal team to ensure the developer contracts and tax contracts are correct for every country my app is available in. So yeah, still worth it.

Okay, I'm Spotify. I have $10bn in revenue. The app is free for people to download (Apple pays for all that). If someone wants to subscribe they can do so in the app, and I'll pay Apple the 30% commission (covering payment processing, hosting, developing and maintaining Xcode and the App Store etc.). If you want Premium, then you can go outside of the app and subscribe and we'll pay the payment processing fees, the maintenance of our website, employing staff to help customers etc. If everyone subscribed to Spotify outside of the app (as in, no one was ever able to subscribe in the app, ever, right from our launch), then Apple has paid all the outlay for developing the infrastructure and I've paid nothing to Apple for all that, and I'll never pay Apple a penny for anything they do in future to help me develop and improve my app. Does that seem fair?

If Apple charged developers based on how much it actually cost to download an app, no one would ever download free apps because they'd no longer be free. All apps would have to charge a price, however small. Would it be different for each app based on its file size? Would a 1MB app be charged less than a 200MB app? If so, would Apple have to charge based on the actual bandwidth used or could they introduce tiers? Say, anything less than 10MB is $0.25, 10MB-20MB is $0.30...? Wouldn't that mean some apps were being charged more than they should (an 11MB app vs. a 19MB app), and that Apple would be making a profit by using these tiers? Okay, so exact bandwidth use only then. Now, how much does Apple actually get charged for their bandwidth? I don't know, but it likely fluctuates, which means app prices would change all the time. Is it worth it to the customer to switch to this model?

If you want this, then you should also be expecting Apple to charge prices for their hardware based on the exact market rate for the currency you're buying in, right? Or isn't Apple allowed to make variable amounts of profit on a product? So I could buy an M1 MacBook Air today for £1,000, but tomorrow it's £992. Apple lost £8 because they left their profit margin at 40% instead of 41%. Silly Apple for not employing people to recalculate prices on an hourly basis worldwide!

Oh, and what happens when Apple introduce their new rOS for their AR/VR headset? They'd have to tot up everything they've ever spent on developing the new OS, staffing costs, hardware design, prototypes, flights abroad to get the hardware built... Then, when they release the headset and developers start writing apps, does Apple try to recoup the $10bn they've spent on R&D by charging developers or should they just give that away as a freebie because they're not in this game to make any money? /s I mean, that's the cost of actually having those apps in the App Store (ah, the new bit in the App Store so they'll have to add in those costs, too). Right, so I create an rOS app that I'd like to sell for $10 and I'll get $9 back because the costs are $1 to distribute the app (covering bandwidth, staffing, Xcode updates etc.), but Apple tell me that they need to recoup that $10bn because they're not a charity, I'm gonna be charged $5m in the first year, or I can spread it over five years as long as I keep my app online, but hey, I get my $9 for each copy sold and there are no other charges to pay.

It's an extreme but it's there to point out that charging actual delivery costs isn't actually that easy.

The thing is apple doesn’t need to charge developers an exact number. Bandwidth is extraordinary cheap.

There are extraordinary easy baselines they can implement. Plus any RnD is already recouped years ago for the AppStore.

1: free apps can be listed for no cost.
2: add supported apps can have a 0.001$ per download
3: apps costing 0-5$ with IAP can have a 0.01$ per download
4: apps costing 6$> are free.

Or an even simpler implementation would be.
1: free apps with no adds are listed at no cost.
2: every app sold or using adds/ IAP pays 0.001$

Of course apps paying the 15-30% fee(or whatever the will be) gets benefits that apps not using it won’t get and obviously compete to provide this.

 

[Sophisticatednut]

Ironically, the desire for third party payment options had been proven to be more about attempting to sidestep Apple’s 15/30% cut, and less a genuine desire to offer consumers more options / choice.

Well it has always been this. Developers aren’t a charity just like apple. It’s the government saying the consumer should have the choice.

Apple didn’t lower their commission from 30% to 15% to help developers or offer consumers anything. It was all to lower regulatory pressure as it barely affected their revenue.

 

[Abazigal]

Well it has always been this. Developers aren’t a charity just like apple. It’s the government saying the consumer should have the choice.

Apple didn’t lower their commission from 30% to 15% to help developers or offer consumers anything. It was all to lower regulatory pressure as it barely affected their revenue.

Then maybe it’s about time these developers dropped their pretence and stop acting like this is about anything other than the money.

 

[Sophisticatednut]

Then maybe it’s about time these developers dropped their pretence and stop acting like this is about anything other than the money.

Have they ever said anything else? Why would you want to use other payment solutions or link to your website? If not to circumvent the need to pay apples 30% fee? Why would Netflix or Spotify remove the ability to sign up in the app if no other reason but to circumvent apples tax.

 

[Abazigal]

Have they ever said anything else? Why would you want to use other payment solutions or link to your website? If not to circumvent the need to pay apples 30% fee? Why would Netflix or Spotify remove the ability to sign up in the app if no other reason but to circumvent apples tax.

I just don’t see how anyone can argue that it is somehow a developer’s god-given right to be allowed to transact business on the iOS platform via apps, while at the same time not being required to pay Apple anything beyond that annual $99 developer fee. Much less attempt to enforce it via legislation.

What’s even more dismaying is that both consumers and indie developers are being used as pawns by large corporations to improve their balance sheet. Match is no small fry here (being the owner of Tinder and OkCupid). They are hardly some downtrodden underdog struggling to get by.

My guess is that we will eventually see the argument shift away from wanting third party payments (because Apple has shown that they are adamant in continuing to charge for such transactions) to wanting sideloading and alternative app stores. Whatever it takes to be able to continue accessing iOS users while sidestepping that 15/30% fee.

It’s simply ridiculous.

 

[Sophisticatednut]

I just don’t see how anyone can argue that it is somehow a developer’s god-given right to be allowed to transact business on the iOS platform via apps, while at the same time not being required to pay Apple anything beyond that annual $99 developer fee. Much less attempt to enforce it via legislation.

Nobody is arguing they get things for free. It’s apple who chose to allow apps to be hosted for free. It’s all the interpretation that transactions through apps are the right of the developers and not Apple’s

What’s even more dismaying is that both consumers and indie developers are being used as pawns by large corporations to improve their balance sheet. Match is no small fry here (being the owner of Tinder and OkCupid). They are hardly some downtrodden underdog struggling to get by.

For argument’s sake. How will consumers and indie developers be harmed if they can use apples IAP payment system or choose a 3d party payment system that gives apple little to no revenue(depends on the outcome of the antitrust probe)?

What would be negative for consumers or small developers I’d the fee was 0-3% for any revenue bellow 1million a year?

My guess is that we will eventually see the argument shift away from wanting third party payments (because Apple has shown that they are adamant in continuing to charge for such transactions) to wanting sideloading and alternative app stores. Whatever it takes to be able to continue accessing iOS users while sidestepping that 15/30% fee.

It’s simply ridiculous.

Well they have always argued for side loading, EU seem to want to enforce 3d party payments instead. And US is debating to force side loading.

Should apple have a right to any revenue? Should they not have to compete fairly to prevent stagnation of their services?
The AppStore is stagnant, safari is stagnant and isolated by apple.

Apple single-handedly are responsible for chrome’s market dominate position

 

[I7guy]

Have they ever said anything else? Why would you want to use other payment solutions or link to your website? If not to circumvent the need to pay apples 30% fee? Why would Netflix or Spotify remove the ability to sign up in the app if no other reason but to circumvent apples tax.

If one doesn’t like the “apple tax” don’t use Apple’s infrastructure. Easy peasy.

 

[I7guy]

[…].

Should apple have a right to any revenue?

Yes, as long as it’s consistent and let the market forces dictate the winner.

Should they not have to compete fairly to prevent stagnation of their services?

They shouldn’t have to be regulated to force their own platform open, let the market decide.

The AppStore is stagnant, safari is stagnant and isolated by apple.

[…]

And the sky is blue. Seems like a shareholder problem.

 

[BaldiMac]

Higher prices that developers make consumers pay for music streaming, inability to inform consumers of cheaper prices outside the app, making consumers pay unnecessarily higher prices. Less payment options if consumers didn’t want to use apples IAP.

The ACM's ruling doesn't affect music streaming prices. And you have not provided any evidence that Dutch dating app providers offer cheaper prices off the App Store.

 

[Abazigal]

For argument’s sake. How will consumers and indie developers be harmed if they can use apples IAP payment system or choose a 3d party payment system that gives apple little to no revenue(depends on the outcome of the antitrust probe)?

What would be negative for consumers or small developers I’d the fee was 0-3% for any revenue bellow 1million a year?

It is my opinion that the iOS App Store has been an overall good for smaller developers, many of whom do not have household name recognition with consumers the same way Netflix or Facebook do. In order to ensure the viability and the vitality of the iOS App Store, I do not feel that it is in consumers’ best interest for the App Store to be positioned as a loss leader hemorrhaging cash (viability) or doing things like constantly pushing customers out of the store for various reasons (vitality).

The problem isn't so much that indie developers use third party payments, because they account for only a small percentage of App Store earnings (and my guess is that the savings is so small that most would just stick with iTunes and save themselves the hassle of managing payments). Rather, the real risk comes when the larger companies like Epic do, because they are the ones contributing more to the App Store, and it is this source of revenue which goes back into improving the App Store which benefits both small and big developers alike.

The former may lead to Apple spending less resources on improving the App Store in a bid to better manage costs, making it a worse experience for both consumers and developers (like you said, companies are not charities). It also adds context why Apple is so hesitant to allow game streaming apps on their platform, because they are like de-facto app stores in their own right and have the risk of pushing consumers away from the App Store, which in turn reduces the number of potential customers patronising the App Store, affecting developers.

Should apple have a right to any revenue? Should they not have to compete fairly to prevent stagnation of their services?
The AppStore is stagnant, safari is stagnant and isolated by apple.

You already know my answer to that.

I will argue that Apple already competes at the hardware level (in that the consumer has the choice of buying an iPhone or an android phone, and in previous years, had the option of going with a windows phone and even a blackberry). Every user that embraces the Apple ecosystem, Apple courted and won over, fair and square.

And yes, I don't see why Apple should not be allowed to profit from running the App Store, any more than companies like Sony and Nintendo profit by charging game developers 30% for selling games on their own app stores (and who most certainly do not allow third party app stores on their platform). Even when I purchase a game via their App Store either through PayPal or my credit card, Nintendo still gets a cut of it at the end of the day.

Second, I fail to see how any competition can possible be fair when third party payment companies don't have to contend with the costs of operating an App Store. You are essentially expecting Apple to absorb the app store operating costs and effectively subsidise it with hardware profits. Is the idea of an App Store legal only when it is run at break even rates? Again, try telling that to Nintendo, where game sales make up the bulk of its profits. As such, I support Apple continuing to charge developers a fraction of app sales even if they switch to other payment options.

Third, even if the App Store is "stagnant" (which I disagree), I fail to see how any of the proposed changes above will remedy any of this. Looking at the sheer volume of transactions that flow through the App Store each year, of course there are going to be copycat and scam apps here and there. Allowing third party payments is not going to address this issue, nor will enabling third party app stores or side loading. You also lose the ability to track and manage your subscriptions at the app store level.

Whatever issues the App Store may have will not be solved using the proposed legislation. Like you admitted above, it's really just about improving the bottom line of larger companies. Not about benefiting consumers, and most certainly not about empowering smaller developers.

 

[Sophisticatednut]

Yes, as long as it’s consistent and let the market forces dictate the winner.

Well that’s a hard disagreement. It should be legally defined and limited. America is full of horrible examples harming consumers And the market when businesses are free to as they wish according to the free market. Regulators came to exist for a reason.

They shouldn’t have to be regulated to force their own platform open, let the market decide.

Sometimes when businesses don’t fix it themselves, people tend to vote to force change.

And the sky is blue. Seems like a shareholder problem.

Seems more like a market problem and an apple problem. Shareholders probably don’t care for safari.

Still apple is responsible for chrome taking over.

 

[I7guy]

Well that’s a hard disagreement. It should be legally defined and limited. America is full of horrible examples harming consumers And the market when businesses are free to as they wish according to the free market. Regulators came to exist for a reason.

Then all fees and commissions should be regulated. Car fees, grocery store fees, everything. Two examples that imo are more important than an App Store fee.

Sometimes when businesses don’t fix it themselves, people tend to vote to force change.

Sure as long as it’s across the board.

Seems more like a market problem and an apple problem. Shareholders probably don’t care for safari.

Shareholders should care if the platform isn’t up to snuff.

Still apple is responsible for chrome taking over.

If that’s the benchmark then let chrome go for it. I personally don’t use chrome on iOS.

 

[Sophisticatednut]

The ACM's ruling doesn't affect music streaming prices. And you have not provided any evidence that Dutch dating app providers offer cheaper prices off the App Store.

It was in relation to the EU commission’s statement of objection in their early funding on music.

Why would I need to provide evidence for cheaper prices off the AppStore for dating apps?
This is common knowledge, many apps provide more expensive prices inside the app compared to their website.

 

[Sophisticatednut]

Then all fees and commissions should be regulated. Car fees, grocery store fees, everything. Two examples that imo are more important than an App Store fee.

Well agree, considering fees aren’t asked to be regulated . Car fees are regulated tho, in the sense that any licensed mechanic shop can repair or provide any service without limitations from the manufacturer. An consumer isn’t penalized if they go anywhere else not associated with them and keep the warranty etc etc.

Sure as long as it’s across the board.

Well it is. Any business that fits a criteria is affected.

Shareholders should care if the platform isn’t up to snuff.

Perhaps they care more for things bringing in revenue. Safari seems to be apples side project.

If that’s the benchmark then let chrome go for it. I personally don’t use chrome on iOS.

Chrome doesn’t exist on iOS.
Apple mandate only WebKit is allowed to be used. So chrome on iOS is a reskinned safari.

 

[robco74]

Of course Tinder is going to jack up their prices, the Match Group is in league with Epic, Basecamp, and the others to try and get the App Store declared illegal.

 

[BaldiMac]

It was in relation to the EU commission’s statement of objection in their early funding on music.

Why would I need to provide evidence for cheaper prices off the AppStore for dating apps?
This is common knowledge, many apps provide more expensive prices inside the app compared to their website.
View attachment 1965351

Your own evidence shows that the difference in pricing is not directly related to Apple's commission. Likewise, there is no requirement that dating apps pass on their savings to consumers.

 

[I7guy]

Well agree, considering fees aren’t asked to be regulated . Car fees are regulated tho, in the sense that any licensed mechanic shop can repair or provide any service without limitations from the manufacturer. An consumer isn’t penalized if they go anywhere else not associated with them and keep the warranty etc etc.

That’s not regulating fees. That’s forcing car repair.

Well it is. Any business that fits a criteria is affected.

Exactly what businesses fits that criteria….. Apple. So this legistlation is very narrow targeting apple.

Perhaps they care more for things bringing in revenue. Safari seems to be apples side project.

Maybe, maybe not.

Chrome doesn’t exist on iOS.
Apple mandate only WebKit is allowed to be used. So chrome on iOS is a reskinned safari.

Honestly, looks and acts like chrome to me.

 

[deevey]

For argument’s sake. How will consumers and indie developers be harmed if they can use apples IAP payment system or choose a 3d party payment system that gives apple little to no revenue(depends on the outcome of the antitrust probe)?

You could argue that a massive company with large accounting infrastructure will be able to undercut any competition based on their own processing fee's being cheaper than the small fry, just like supermarket chains do currently.

Whereas the current IAP structure allows smaller developers to get their foot on the rung and build their business before falling into the same category as the big developers. It evens out the playing field.