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

[Timo_Existencia]

I find it completely ironic that people here justify Apple's behavior because they "develop a platform".
I pay them for the phone hardware and software and I have a right to do with my hardware what I want.

The DMA certainly doesn't say that.

 

[AppliedMicro]

What we're arguing is that if Apple's behaviour is bad or unethical or anti-competitive, it should have been made illegal irregardless of Apple size as a company and the popularity of iOS.

The badness or unethicalness of a certain behaviour is also function of an agent's (a company's) market power.

Your friendly, family-run neighbourhood restaurant prohibiting drinks purchased externally when dining in isn't as bad or unethical as ... well, you can fill in that blank yourself.

The metropolitan neighbourhood convenience store refusing to sell you a bottle of distilled spirits vs. the lonely gas station in the middle of the desert refusing to sell a bottle of water or gasoline...

Same behaviour - different degrees of badness and unethicalness.

I mean... in general, in competitive markets, stores should be free to choose whom they're selling to, or decline a sale, shouldn't they?

 

[1129846]

Why should YOUR wish suppress the wants of others? YOU HAVE ANOTHER PLATFORM THAT DOES EXACTLY WHAT YOU WANT!!! Go use it!

Dont like the EU the move over it. There are plenty of countries in this world that are not forcing this. Russia and China are good choices.

It is the exact same level as the argument you just made.

Everything else you said did nothing to distract from the fact that if you choose not to use something other than the App store DOES NOT AFFECT YOU. Yet you demanding only Apple effects everyone else.

 

[vipergts2207]

Even if Apple supported third-party install, they would still be bound by the DMA. It doesn't matter what they did or didn't do before the DMA.

Google's Android supported both individual side-loading and alternative application stores. And yet, it also became a gatekeeper under the DMA.

But if iOS was smaller in the EU and Apple was a smaller company, they would't be bound by the DMA no matter what kind of support they had for side-loading or third-party application stores.

Ok sure, Apple still would have been a gatekeeper. However, this would have had little to no impact on them because Apple would have already been in compliance with the DMA's requirements. As it stands they were not, which is almost certainly one reason for that being a provision of DMA in the first place. If nobody was doing what Apple was, there would have been no impetus for its inclusion in the DMA.

What we're arguing is that if Apple's behaviour is bad or unethical or anti-competitive, it should have been made illegal irregardless of Apple size as a company and the popularity of iOS.

Apparently, iPad OS wasn't designated as a gatekeeper even though it behaves exactly the same as iOS. Why? It didn't have enough monthly users in the EU.

An action or rule can be unethical or anti-competitive and simultaneously be incapable of impact on the broader market. The unfair behavior that the provisions of the DMA seeks to guard against really only matters when it comes to big player, essentially by definition. The EU generally doesn't need to safeguard their markets from a business with a measly $1 million market cap. Regulating markets for some degree of fairness isn't simply about some divine philosophy of benevolence that must be enforced no matter what. It's about making sure consumers and other businesses are able to operate unencumbered to some degree. Different governments and regulators may differ on exactly what degree that should be.

 

[hans1972]

Um yeah, exactly, because the EU isn’t trying to prevent Apple’s or anyone else’s market dominance. They’re putting up safeguards so that their market dominance can’t be abused in an unfair manner. Glad we could agree on this.

You can be designated as a gatekeeper even if you don't have market dominance.

If you have enough users and enough revenue/market cap you're a gatekeeper.

Company A:
200 million monthly users
€40 billion in EU revenue
€2000 billion in market cap
Operate in 27 EU countries (all of them)

Company B:
45 million monthly users
€0 in EU revenue
€75 billion in market cap
Operate in 3 EU countries


Both would be designated by the EU as a gatekeeper

 

[hans1972]

Ok sure, Apple still would have been a gatekeeper. However, this would have had little to no impact on them because Apple would have already been in compliance with the DMA's requirements. As it stands they were not, which is almost certainly one reason for that being a provision of DMA in the first place. If nobody was doing what Apple was, there would have been no impetus for its inclusion in the DMA.


An action or rule can be unethical or anti-competitive and simultaneously be incapable of impact on the broader market. The unfair behavior that the provisions of the DMA seeks to guard against really only matters when it comes to big player, essentially by definition. The EU generally doesn't need to safeguard their markets from a business with a measly $1 million market cap.

But then you're saying that EU is OK with unethical behaviour as long as it doesn't impact the broader market too much. Which isn't a principled way to look at it. EU certainly don't take that position when it comes to bribes.

But you are agreeing on that what Apple has been doing is legal in the EU if the company is small enough?

 

[Timo_Existencia]

The unfair behavior that the provisions of the DMA seeks to guard against really only matters when it comes to big player, essentially by definition.

The "unfair behavior" was defined in the DMA. Both "gatekeeper" and "unfair behavior" were born together. Prior to the DMA, nothing labeled Apple's action as "unfair behavior."

 

[hans1972]

Right, the EU doesn’t care if small companies with comparatively little market power, self-preference, and frankly neither do I. Why would I or the EU care if some company’s practices aren’t negatively impacting the broader markets? You seem to be under the impression that because we don’t like trillion dollar corporations self-preferencing (among other things), that we don’t like mom and pop Jenny’s Bakery self-preferencing. If Jenny’s Bakery takes over a sizable portion of the EU market, effecting tens of millions of consumers and many other businesses, let us know and maybe the EU can look into it. Otherwise, who cares.

That's exactly what we're arguing.

It's not about the business practise by itself, but when it's being done by a large company with a large impact on the market.

So, the same practise Apple has done for years, is legal in the EU as long as you're not a huge multi-billion euro company with tens of millions of monthly users.

Do you agree with Apple not offering third-party install on iPads to be legal and not something the EU should be concerned with?

 

[vipergts2207]

Only ONCE they reached the point of being a "Gatekeeper." A point that didn't exist until they created the legislation defining a Gatekeeper. So, up until that point, Apple was operating just like every other business, using self-preferencing. I read the DMA to mean that going forward, it would be unfair of Apple to deny 3rd Party App Stores. Not that retroactively it was unfair of them to have done so. Where would that have been defined prior to the DMA?

The "unfair behavior" was defined in the DMA. Both "gatekeeper" and "unfair behavior" were born together. Prior to the DMA, nothing labeled Apple's action as "unfair behavior."

What truly strange logic. It was unfair before the DMA was enacted. The only difference is that with the DMA having been enacted, there is now a legal way for the EU to go about eliminating that unfairness. If I murdered someone yesterday and there were no laws against it, but today they passed a law against it because of what I did, that doesn't magically mean that murdering someone wasn't wrong yesterday. There was just no legal ramification for me doing so, but now they have a way to do so. Apple acting unfairly and the EU passing a law, that in part targets that unfair practice, doesn't mean Apple wasn't acting unfairly before. There was just no legal mechanism to do anything about it.

 

[BeatsByTim]

Personally, I'm okay with freemium app developers being bankrupted. Just let me pay for apps and cut the bs.

 

[vipergts2207]

You can be designated as a gatekeeper even if you don't have market dominance.

If you have enough users and enough revenue/market cap you're a gatekeeper.

Company A:
200 million monthly users
€40 billion in EU revenue
€2000 billion in market cap
Operate in 27 EU countries (all of them)

Company B:
45 million monthly users
€0 in EU revenue
€75 billion in market cap
Operate in 3 EU countries


Both would be designated by the EU as a gatekeeper

Any company B's been designated a gatekeeper or just company A's? I'm sure the EU left themselves some flexibility on the matter. Alphabet, Amazon, Apple, Bytedance, Meta, and Microsoft have been designated gatekeepers. Which one of those am I supposed to be weeping for?

 

[hans1972]

What truly strange logic. It was unfair before the DMA was enacted. The only difference is that with the DMA having been enacted, there is now a legal way for the EU to go about eliminating that unfairness. If I murdered someone yesterday and there were no laws against it, but today they passed a law against it because of what I did, that doesn't magically mean that murdering someone wasn't wrong yesterday. There was just no legal ramification for me doing so, but now they have a way to do so. Apple acting unfairly and the EU passing a law, that in part targets that unfair practice, doesn't mean Apple wasn't acting unfairly before. There was just no legal mechanism to do anything about it.

What if the law passed said it was only illegal if you had murdered people in 3 EU countries for 3 consecutive years?

We're arguing murdering should be illegal no matter what, the same way we argue if offering no third-party install is wrong it should apply to any platform irregardless of size.

 

[vipergts2207]

But then you're saying that EU is OK with unethical behaviour as long as it doesn't impact the broader market too much. Which isn't a principled way to look at it. EU certainly don't take that position when it comes to bribes.

Not necessarily ok with the behavior, but certainly not worth the resources to target and regulate.

But you are agreeing on that what Apple has been doing is legal in the EU if the company is small enough?

That would seem to be the case.

 

[vipergts2207]

That's exactly what we're arguing.

It's not about the business practise by itself, but when it's being done by a large company with a large impact on the market.

So, the same practise Apple has done for years, is legal in the EU as long as you're not a huge multi-billion euro company with tens of millions of monthly users.

Yes. It's relatively unconcerning to me and apparently the EU if a company acts in a way that favors themselves if it's not causing major market impacts.

Do you agree with Apple not offering third-party install on iPads to be legal and not something the EU should be concerned with?

I don't know, what's Apple's tablet OS market share and what is the value of the overall tablet market? How do those two figures compare to the smartphone equivalents?

 

[vipergts2207]

What if the law passed said it was only illegal if you had murdered people in 3 EU countries for 3 consecutive years?

We're arguing murdering should be illegal no matter what, the same way we argue if offering no third-party install is wrong it should apply to any platform irregardless of size.

This is a separate point from the one being made by the person I was responding to (their argument was essentially that the murder wasn't wrong because it wasn't illegal yet), but I'll respond to this anyway. In a fantasy world where there are limitless resources, you may be right. Thing is, that's not the world we live in. Regulators have to pick and choose their battles because they can't fight them all. In a completely fair world of limitless resources every U.S. tax payer would be audited every year to make sure they paid what they owed. Obviously that's not practical in reality (the 2022 audit rate was 0.38%), nor is regulating every business operating in the EU for compliance with the provisons of the DMA.

 

[dypeterc]

This is what happens when someone (i.e. Epic Games CEO Tim Sweeney and Spotify CEO Daniel Ek) without developer‘s interests argues for “developers” interests. This is 100% F around and you’ll find out...

 

[dypeterc]

Dont like the EU the move over it. There are plenty of countries in this world that are not forcing this. Russia and China are good choices.

It is the exact same level as the argument you just made.

Everything else you said did nothing to distract from the fact that if you choose not to use something other than the App store DOES NOT AFFECT YOU. Yet you demanding only Apple effects everyone else.

You think Russia and China are less regulated?

 

[iOS Geek]

You think Russia and China are less regulated?

Ha, no kidding. Those were probably the absolute WORST examples to try and prove a point on...

 

[Abazigal]

I pay them for the phone hardware and software and I have a right to do with my hardware what I want.

That's the thing though. You are free to do whatever you want with the hardware. Feel free to toss your iPhone off a bridge or smash the screen with a hammer if that's what you desire.

The OS however, is subject to the terms and conditions you agreed to when you first set up your device. That's where the limitations to how much you can modify it apply.

 

[cupcakes2000]

Also worth noting: if you make a completely free app, just stay in the original App Store. No charge, no problem.

Except if you want to make an app that deals with something that Apple ‘doesn’t agree with’, or if you want to be free as in libre and have every aspect of your app be open.

And in the Epic example, they aren't delivering any where near the same services as Apple for that 5%.

People need to look at what the 15/30% is. It's not a tax, it's not a distribution fee... it's Revenue Sharing for all the things Apple *gives* to developers. Want to play with machine learning? Apple did it for you. Want to build an Augmented Reality app? Apple did it for you. Want to integrate with every smart consumer product without coding it for each vendor? Apple did it for you. Want to integrate with every health product? Apple did it for you. Want to support downloading 2 billion apps at $0 cost? Apple did it for you. Want to process $1/day to $1,000,000/day in revenue overnight globally without worry about tax laws? Apple did it for you.

Apple removed all up front barriers about releasing a global app and all you have to do is build it. They took care of the rest and they want a cut of the revenue. It worked great when apps were for sale, but the free apps they get $0 out of unless they monetize in-app purchases.

The alternative is much worse. Epic is the evil one here that wants to stamp out indy game devs and make the barrier to entry being you must be big enough to do all this stuff yourself.

All this ‘Apple did that for you so pay’. What rot. Why does Apple need to give anyone anything? I mean, great if you want that and they offer excellent tools, but why should it be a necessity without any other option?

EU certainly don't take that position when it comes to bribes.

Care to elaborate on the bribes which you’re talking about?

 

[cupcakes2000]

That's the thing though. You are free to do whatever you want with the hardware. Feel free to toss your iPhone off a bridge or smash the screen with a hammer if that's what you desire.

The OS however, is subject to the terms and conditions you agreed to when you first set up your device. That's where the limitations to how much you can modify it apply.

To be fair, that’s about rooting and jailbreaking and messing with the bootloader. You can hardly call installing an app outside of the AppStore ‘modifying’ anything.

 

[cupcakes2000]

Some really emotional responses in this thread. Plenty of capital letters and exclamation marks. It’s quite an amusing read.

 

[AppliedMicro]

This is what happens when someone (i.e. Epic Games CEO Tim Sweeney and Spotify CEO Daniel Ek) without developer‘s interests argues for “developers” interests. This is 100% F around and you’ll find out...

Spotify and Epic Games are developers - one of the biggest ones (in terms of overall revenue) indeed.
And choice of distribution channel will also benefit other, smaller developers.

If the Core Technology Fee is bankrupting any developers, that's due to apply screwing them - not Sweeney or Ek.

 

[AppliedMicro]

The OS however, is subject to the terms and conditions you agreed to when you first set up your device. That's where the limitations to how much you can modify it apply.

You don't agree.
Shrink-wrapped EULA aren't valid or enforceable.

You buy a device to use as you see fit - or modify, if you like to.
The manufacturer can't legally prohibit you from doing that after the sale.

You can't agree to something you weren't shown when buying the device.
And if you didn't buy the device from Apple, you don't even have a contractual relationship with them.

(That said, there remain of course legal restrictions on copying and distribution of software by law)

 

[MilaM]

The OS however, is subject to the terms and conditions you agreed to when you first set up your device. That's where the limitations to how much you can modify it apply.

Maybe there are still countries where companies can ask for your first born child in the terms and conditions. But this is not how things work in the EU, especially if you are a consumer and not another business. Laws and court decisions will in many case take precedent before T&Cs.