Apple's EU Core Technology Fee Could Bankrupt Freemium App Developers

[heretiq]

If I’ve paid to own that store then yeah.

I paid for my Mac and I can put what I want on it.

You bought a phone not a store. The phone includes a set of built-in features and the ability to add additional features (through a store that you neither own nor maintain). We live in a free enterprise society so the builders of the store and the apps that are available through it have sole discretion whether and how much to charge or whether to provide some or all services for free. You are not entitled to anything other than the phone you willingly bought knowing the restrictions that Apple imposes on apps available through the store that they built and bear the sole financial burden of maintaining and keeping secure. But you can freely choose another phone that gives you ownership of a store with your purchase if you can find one.

Apple chose a different approach to apps on the iPhone than the approach on the Mac for many good reasons that I’m not going to bother to rehash other than to say that some of them are similar to the reasons that Microsoft and Sony impose different rules for software for game consoles vs PCs. In any case, buying a Mac or a PC does not make you an owner of a software store and neither does buying a phone from any phone manufacturer. You wouldn’t claim that you own the service department of your auto manufacturer just because you bought their car .. why do you think you can claim to own the Apple App Store just because you bought an iPhone? 🤔

 

[mrochester]

Who in the EU will object to it? Is Apple a company based in Germany, France, or maybe Spain? As long as there is political agreement within the EU, any law can be passed.

From the EU's perspective, Apple is raking in revenue as a foreign company.

I think there'd be a lot of pushback because it would set a precedent that the EU can outlaw the ability of a private company to charge for its services. Not even essential services have to be given away for free; consumers still have to pay for gas, electricity etc.

 

[JPack]

Sounds like what Communists would do.

Apple doesn't have to play in the EU. But they do.

 

[mrochester]

No one is taking a company into public ownership. They are just defining the rules you have to play by, if you want to sell stuff to consumers in the EU.

Forcing a company to sell for £0 is all but public ownership. I don't know of any other company that is forced to sell its products/services for £0. Even essential services have a cost to the consumer. The EU might say the fee is too high and ask Apple to set it to €0.25 but I’m not sure they’d ever be able to tell Apple to do it for nothing.

 

[BadApe]

Apple doesn't have to play in the EU. But they do.

All this shemozzle says more about the state of EU than anything else and as a citizen of an EU country i'm worried. Fortunately i'm moving to Baja soon where i purchased some nice real estate.

 

[JPack]

I think there'd be a lot of pushback because it would set a precedent that the EU can outlaw the ability of a private company to charge for its services. Not even essential services have to be given away for free; consumers still have to pay for gas, electricity etc.

EU has designated Apple a foreign "gatekeeper" company, not just any private company.

It's no different than how the U.S. treats ByteDance.

 

[jclardy]

If you’re app is free, why the hell would you list it in a side loaded store knowing the fees.

This is a non issue.

That is the entire point - you are siding with the EU here by calling it anti-competitive.

 

[Ries]

Forcing a company to sell for £0 is all but public ownership. I don't know of any other company that is forced to sell its products/services for £0. Even essential services have a cost to the consumer. The EU might say the fee is too high and ask Apple to set it to €0.25 but I’m not sure they’d ever be able to tell Apple to do it for nothing.

I'll give you one, the EU banned roaming charges within the EU. This is not the US, anti competitive behaviour and screwing consumers will get you regulated.

 

[mrochester]

EU has designated Apple a foreign "gatekeeper" company, not just any private company.

It's no different than how the U.S. treats ByteDance.

I’m not sure how that’s relevant. If the EU creates a law that says platform companies cannot charge for their products/services it puts a huge amount of the economy at risk. Amazon would have to give AWS away for free, Netflix couldn’t charge for its content, Spotify couldn't sell subscriptions.

 

[mrochester]

I'll give you one, the EU banned roaming charges within the EU. This is not the US, anti competitive behaviour and screwing consumers will get you regulated.

You still pay for mobile service. The cost is incorporated in that. The cost didn’t go away it just got absorbed elsewhere. The CTF is the equivalent of you paying for mobile service. Without the CTF developers using none of Apple’s other services (App Store billing etc) would be paying Apple nothing. In that instance Apple would be providing the developer with a product/service and getting no money for that. The EU cannot ask Apple to do that for free, unless the EU is prepared to subsidise it.

 

[ofarlig]

The DMA is not really concerned with users the way you are referring to here. What the DMA requires Apple to do is allow for other app stores on iOS. This means end-users can shop for apps in multiple different app stores. I don't believe there's any provision in the DMA that Apple allow individual end-users to be able to install apps from wherever they like.

The whole idea with the DMA is to force gatekeepers to give the end user access to software from other places as well so Apple cannot dictate the price or what is allowed, it mentions both applications and market places but as far as I know you are right and they don’t state that both need to be able to be installed directly by the end user.

Apple has made a solution without direct access to the software which probably would be okay, but once they start to try to bury it with fees that goes against why they wanted the DMA in the first place. Which leads me to believe that the EU will not let it be that way.

Forcing a company to sell for £0 is all but public ownership. I don't know of any other company that is forced to sell it's products/services for £0.

Nobody is forcing them to sell anything for 0, they are forcing Apple to allow people to choose where to get their software and not be forced to buy it from Apple. Apple could have opened it up for end user side-loading like Android has it instead of their monitored approach and they wouldn’t have to provide any service at all.

The EU has loads of requirements on companies that sell their product in the EU, car manufacturers cannot demand you use their authorised service centres to keep your warranty, phone providers cannot charge you for roaming, anything sold needs to adhere to the EUs view of what is a safe product and so on. They are now moving more into the digital realm and making sure the companies cannot dictate any terms they want.

 

[Ries]

You still pay for mobile service. The cost is incorporated in that. The cost didn’t go away it just got absorbed elsewhere.

You still pay for the phone and developer account, the cost for the App Store is incorporated in that.

 

[Ries]

I’m not sure how that’s relevant. If the EU creates a law that says platform companies cannot charge for their products/services it puts a huge amount of the economy at risk. Amazon would have to give AWS away for free, Netflix couldn’t charge for its content, Spotify couldn't sell subscriptions.

That is not what is happing.....

 

[d686546s]

The “application store” would be free, and that would t be up to Apple. But using Apple‘s tools to build the app, does not have to be free. An artist can make their art free, but adobe does not have to provide their software for free, just be the artist chooses to do so.

Except the application store isn't free, as Apple charges its €0.5 fee for every user who installs an independent app store from the very first user, so providers of those will have to budget for that in addition to what it costs to run the store itself.

Apple of course doesn't have to make their tools free, but the question will likely be if it has implemented a pricing structure that disproportionally discriminates against other providers.

It certainly makes free apps outside of the App Store and its old terms financially impossible, at least if they're popular, so I doubt we will see anyone taking the risk to run a store for free open source software, or publish a game emulator you think could be downloaded more than a million times.

I reckon the argument would be that if Apple wants to charge money for its tools, it should do so consistently across both its own and independent app stores.

 

[JPack]

I'll give you one, the EU banned roaming charges within the EU. Anti competitive behaviour and screwing consumers will get you regulated.

Another one is 2-year legal guarantee (warranty). That's an additional year of warranty for $0.

 

[mrochester]

You still pay for the phone and developer account, the cost for the App Store is incorporated in that.

No it’s not. The cost of the App Store is the cost of a developer account plus commission. In the new world the cost of the App Store will be a developer account plus CTF.

 

[JPack]

I’m not sure how that’s relevant. If the EU creates a law that says platform companies cannot charge for their products/services it puts a huge amount of the economy at risk. Amazon would have to give AWS away for free, Netflix couldn’t charge for its content, Spotify couldn't sell subscriptions.

Slippery slope argument. Apple is required to provide access to software application stores in a way that is not "unfair" or lead to an "imbalance of rights an obligations imposed on business users."

Fairness, per the EU regulation, is determined by comparison to other app stores and prices charged by the gatekeeper to itself.

Right now, the EU regulation does not apply to web services or entertainment content. Neither Netflix nor Spotify are classified as gatekeepers.

 

[mrochester]

That is not what is happing.....

Of course it is. If you write a law that says a private company cannot charge a fee for a service it provides then every company that charges fees for its products is at risk.

 

[ofarlig]

Of course it is. If you write a law that says a private company cannot charge a fee for a service it provides then every company that charges fees for its products is at risk.

Which service are you even talking about?

 

[mrochester]

Slippery slope argument. Apple is required to provide access to software application stores in a way that is not "unfair" or lead to an "imbalance of rights an obligations imposed on business users."

Fairness, per the EU regulation, is determined by comparison to other app stores and prices charged by the gatekeeper to itself.

I think all apps will go through the same notarisation process. All apps will have the same terms other than a few exceptions such as non-profits.

 

[mrochester]

Which service are you even talking about?

App notarisation. The use of Apple’s APIs and other IP.

 

[JPack]

Of course it is. If you write a law that says a private company cannot charge a fee for a service it provides then every company that charges fees for its products is at risk.

You keep saying private company. The six companies that the EU regulation applies to are specially designated companies called "gatekeepers."

Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft are not every company.

 

[JPack]

I think all apps will go through the same notarisation process. All apps will have the same terms other than a few exceptions such as non-profits.

That's part of the DMA and expected. The EU regulation allows the gatekeeper to implement "necessary and proportionate measures" for third-party software apps in relation to security.

 

[Ries]

Of course it is. If you write a law that says a private company cannot charge a fee for a service it provides then every company that charges fees for its products is at risk.

No it's not...

 

[Zest28]

No way they go through with this, right?

Ofcourse they will go ahead. If free apps move outside of the Apple Store, it’s more difficult for Apple to know how much in-app purchases are made, so Apple will have to charge extra due to developers abusing this.