Dutch Antitrust Watchdog Nears Draft Decision in App Store Probe

[MacRumors]

The Netherlands Authority for Consumers and Markets, or ACM for short, is reportedly nearing a draft decision in its investigation into Apple over rules that require developers to use its in-app payment system, which charges commissions of between 15% and 30%.

According to Reuters, the ACM revealed that the draft decision was nearing completion in letters sent this month to some of the developers involved in the case. However, the letter didn't divulge how the ACM would rule, nor when its decision will be finalized.

According to the letter, the regulator is also scrutinizing Apple rules that bar developers from telling users about cheaper payment alternatives outside of the app.

"It's not just that Apple is inflicting economic harm," said David Heinemeier Hansson, co-founder of software firm Basecamp and one of those who received the letter. "Apple is essentially giving us a gag order."

The development comes almost two years since ACM began investigating the App Store to determine whether Apple abuses its position by, for example, giving preferential treatment to its own apps.

ACM launched the investigation after completing a market study that explored the influence of app stores. For numerous apps, the watchdog found that no realistic alternatives to the ‌App Store‌ and Play Store exist, potentially giving Apple and Google the opportunity to set unfair conditions.

Apple is facing several antitrust investigations into its App Store practices, including a legal dispute with Epic Games over in-app transaction fees and an ongoing probe by the European Commission, prompted by a complaint by Spotify that accused Apple of acting as "both a player and referee to deliberately disadvantage other app developers."

If the ACM issues a decision soon, Reuters speculates that it could become the first antitrust authority to rule on Apple's app-store payment policies which would set a precedent that could influence other ongoing investigations.

A separate ongoing ACM probe is investigating contactless platforms on smartphones and the access that payment apps have to NFC capabilities.

According to the ACM, the software that's on some smartphones "only allows the developer's own payment app to connect to NFC communication," preventing third-party payment apps from also being able to use NFC capabilities.

On iPhones, Apple Pay is the only payment method able to use NFC. Apple does not permit other financial apps to use NFC, which has resulted in disputes with some banks and financial institutions.

Article Link: Dutch Antitrust Watchdog Nears Draft Decision in App Store Probe

 

[contacos]

According to the letter, the regulator is also scrutinizing Apple rules that bar developers from telling users about cheaper payment alternatives outside of the app.

This one seems quite reasonable. Not allowing other payment options is one thing, not being able to promote "out of App Store" possibilities another.

 

[jlc1978]

Macrumors: According to the letter, the regulator is also scrutinizing Apple rules that bar developers from telling users about cheaper payment alternatives outside of the app.

This one seems quite reasonable. Not allowing other payment options is one thing, not being able to promote "out of App Store" possibilities another.

While it would seem reasonable, if that results in a significant drop in in-app purchases Apple will no doubt raise other fees to compensate. For example, only allowing free hosting for apps with no purchases, in app or otherwise, and charging to host those that have purchases per download. They could credit that against in-app purchases; but it still would mean developers would have to pay upfront without knowing if they will recoup the costs in purchases. At some point, if less than x% buy something they will lose money.

The current system significantly reduces the costs and risks of bringing an app to market since the only significant costs are development; if distribution becomes an additional upfront cost that will impact a developer's cash flow and ability to turn a profit. In addition to the costs of a new app, a developer may find it unprofitable to leave an app up and update it, since every download would potentially cost money with no return.

Are Apple's fees unreasonable is a valid discussion; but potentially enabling developers to avoid paying any fee for an in-app purchase opens up another can of worms. Big developers could no doubt survive but smaller ones may feel a financial squeeze.

 

[Stratus Fear]

This one seems quite reasonable. Not allowing other payment options is one thing, not being able to promote "out of App Store" possibilities another.

Normally I'm on Apple's side on a lot of their platform decisions, but I agree, this probably isn't unreasonable. In my opinion, if Apple really wants developers to use IAP, even for services Apple largely is not providing in a third-party app, e.g. media content delivery related transactions, like ebooks and music/video subscriptions, I don't see why they can't compromise on their 30% for certain categories such as those and make the fee similar to what credit card processors charge (something like 1%-3%). They'd still have the massive 30% cut from traditional IAP like DLCs for game apps and other stuff where content delivery is solely from the App Store. Seems like that could be a compromise that makes most people happy.

 

[jlc1978]

Normally I'm on Apple's side on a lot of their platform decisions, but I agree, this probably isn't unreasonable. In my opinion, if Apple really wants developers to use IAP, even for services Apple largely is not providing in a third-party app, e.g. media content delivery related transactions, like ebooks and music/video subscriptions, I don't see why they can't compromise on their 30% for certain categories such as those and make the fee similar to what credit card processors charge (something like 1%-3%).

In many cases those products already incur no fees since you can subscribe outside of the Apple store; while I use Apple devices to stream content and read eBooks none of them are purchased through Apple so they get no cut.
.

They'd still have the massive 30% cut from traditional IAP like DLCs for game apps and other stuff where content delivery is solely from the App Store. Seems like that could be a compromise that makes most people happy.

The thing that is overlooked when discussing Apple's cut is developers now make a significantly larger percentage of a sale than previously, while reducing their upfront costs and risks for bringing an app to market. As a result, a lot of small developers are able to create apps and make a go of it; in the old model they'd give up 70%, upfront all the production costs of manuals, disks, etc. and hope retailers will sell their app. Now, they can focus on development and let Apple handle the distribution, while taking home 70% instead of 30.

 

[HQuest]

Develops a brand new hardware product;
Engineers a brand new software for its own hardware;
Creates and entire ecosystem around its own hardware and software;
Offers developers world class documentation, premium support, worldwide advertisement, content distribution, all in global scale, for $99/year - “pennies a day”;
Gets called “monopoly” because everybody wants to make more money out of the amazing investment of $99/year;

Nobody is forcing you to use their proprietary, monopolistic platform. Unhappy with paying them taxes? Pull your app away. Develop for Android. Use Microsoft Windows Mobile. Go develop your own platform and put it out there where you can write your own rules - including giving others everything you always wanted for free, for free.

This is a combination of greed at its finest, and politics at its best.

 

[deevey]

This one seems quite reasonable. Not allowing other payment options is one thing, not being able to promote "out of App Store" possibilities another.

Alright, say if you have a shop that sells Apple products.

By that rationale, Apple should be able to advertise in YOUR shop that customers can buy those products cheaper from them directly and you must let them do that ?

 

[Wildkraut]

Nice, nice that's a good route!
Interlocking business types is anti-competitive, period.

Other countries will realize that too, and Apple will face it.

 

[subi257]

Alright, say if you have a shop that sells Apple products.

By that rationale, Apple should be able to advertise in YOUR shop that customers can buy those products cheaper from them directly and you must let them do that ?

Exactly, You as a store owner would tell Apple get the F out! That applies to any and all sales, I have a supermarket and on the shelves above every item, I will have a sign telling you where to get it for a lower cost.

It costs Apple....or Google, or whatever app store money to host the apps. Server space, utilities to run servers, engineers to maintain them, etc. Why should I give that away for free as a for profit business. I could be wrong, but if it was not for Apple and the app store in he first place, more than half of these developers would not exist.

 

[lkrupp]

If Apple cannot generate revenue from the App Store then what is the business motivation for having it? Is the App Store to be regulated into a free service for developers that Apple is required to provide and lose money on? Apple gets nothing for its efforts? It certainly looks that way. You know it wasn’t that long ago that developers had to fend for themselves and do all of the marketing and rely on word of mouth to get traction for their softwares. How many small time developers went belly up because they didn’t have the resources to promote their products?

 

[contacos]

Alright, say if you have a shop that sells Apple products.

By that rationale, Apple should be able to advertise in YOUR shop that customers can buy those products cheaper from them directly and you must let them do that ?

That’s redundant because Apple will never be the cheaper option. Also there isn’t even an option to go buy elsewhere with the AppStore being the only source. You can buy a game for your Nintendo at Walmart but you can also decide to buy it more expensive on the Nintendo Online Store. Apple doesn’t even give you the option

Exactly, You as a store owner would tell Apple get the F out! That applies to any and all sales, I have a supermarket and on the shelves above every item, I will have a sign telling you where to get it for a lower cost.

It costs Apple....or Google, or whatever app store money to host the apps. Server space, utilities to run servers, engineers to maintain them, etc. Why should I give that away for free as a for profit business. I could be wrong, but if it was not for Apple and the app store in he first place, more than half of these developers would not exist.

I thought that’s what the 99 dollars per year is already for?

If Apple cannot generate revenue from the App Store then what is the business motivation for having it? Is the App Store to be regulated into a free service for developers that Apple is required to provide and lose money on? Apple gets nothing for its efforts? It certainly looks that way. You know it wasn’t that long ago that developers had to fend for themselves and do all of the marketing and rely on word of mouth to get traction for their softwares. How many small time developers went belly up because they didn’t have the resources to promote their products?

Yes and no. Apple needs developers to develop apps just as much as the devs need Apple. Without apps, iOS would have become another Windows Mobile and the iPhone less interesting. Imagine if FB stopped offering FB, Instagram and WhatsApp on iOs

 

[subi257]

Develops a brand new hardware product;
Engineers a brand new software for its own hardware;
Creates and entire ecosystem around its own hardware and software;
Offers developers world class documentation, premium support, worldwide advertisement, content distribution, all in global scale, for $99/year - “pennies a day”;
Gets called “monopoly” because everybody wants to make more money out of the amazing investment of $99/year;

Nobody is forcing you to use their proprietary, monopolistic platform. Unhappy with paying them taxes? Pull your app away. Develop for Android. Use Microsoft Windows Mobile. Go develop your own platform and put it out there where you can write your own rules - including giving others everything you always wanted for free, for free.

This is a combination of greed at its finest, and politics at its best.

Apple has been a closed ecosystem from day one. As a developer if you didn't see that up front you are either blind or nieve....OR...just plain greedy. That closed app store has made a lot of money for a lot of developers. I can't even begin to count how many .99 apps I bought...knowing that it's most like junk, or ehh, but an .99 who cares. If globally, 10,000 people did the same and the developers get .666 on the dollar that means they just made $6,666.00

 

[Wildkraut]

Apple has been a closed ecosystem from day one. As a developer if you didn't see that up front you are either blind or nieve....OR...just plain greedy. That closed app store has made a lot of money for a lot of developers. I can't even begin to count how many .99 apps I bought...knowing that it's most like junk, or ehh, but an .99 who cares. If globally, 10,000 people did the same and the developers get .666 on the dollar that means they just made $6,666.00

Sounds like you love to pay 0.99 for junk!
Mind if i sell you a bit of garbage out of our trash can?

 

[Suckfest 9001]

Good, I support this investigation, and have done since Apple first pulled this stunt with Spotify. taking 30% of profits for content that isn’t even hosted on their servers.

 

[Fabian Leopold]

Alright, say if you have a shop that sells Apple products.

By that rationale, Apple should be able to advertise in YOUR shop that customers can buy those products cheaper from them directly and you must let them do that ?

As far as I know, me as a store owner have to buy the products before I can sell them. Maybe that's just me.

So, Apple should have to buy the apps first before they can sell them to customers? I think most developers would be on board.

 

[Rob_2811]

Break them up

 

[Rob_2811]

If Apple cannot generate revenue from the App Store then what is the business motivation for having it? Is the App Store to be regulated into a free service for developers that Apple is required to provide and lose money on? Apple gets nothing for its efforts? It certainly looks that way. You know it wasn’t that long ago that developers had to fend for themselves and do all of the marketing and rely on word of mouth to get traction for their softwares. How many small time developers went belly up because they didn’t have the resources to promote their products?

Nobody has said it has to be free, you are constructing a counter to an argument nobody has ever made.

The App store runs at enormous profit, developers have to pay for a developers licence aswell in addition to the fees, the idea that it would ever be loss making is silly.

 

[DeepIn2U]

This one seems quite reasonable. Not allowing other payment options is one thing, not being able to promote "out of App Store" possibilities another.

I think this only applies to marketing other payment options IN their apps within App Store or their app listed in the App Store (aka screenshots/videos/details).

I'm sure developers/teams can list other pricing outside of the App Store. Nothing is forcing developers to create for iOS their choosing to and agreeing to do so - and still Apple is NOT the biggest platform - but developers/teams see it as the best monetary income solution for their hard work as amongst best revenue stream.

Valid? possibly ... that's fine. make it so.
The real point here to contend with is will iOS users feel comfortable or protected with transactions spending elsewhere? (in terms of reporting issues, credits or refunds being processed or considered, etc).

 

[justperry]

The Netherlands Authority for Consu....

FYI
That should be "The Dutch Authority for ....."

You don't say
The Germany Authority ..it's The German Authority for
or
The Spain Authority for ..t's The Spanish Authority for
or
The Mexico Authority ..it's The Mexican Authority for

 

[Rob_2811]

FYI
That should be "The Dutch Authority for ....."

You don't say
The Germany Authority ..it's The German Authority for
or
The Spain Authority for ..t's The Spanish Authority for
or
The Mexico Authority ..it's The Mexican Authority for

It's called the Netherlands Authority for conusmers and Markets

Authority for Consumers & Markets | ACM

www.acm.nl

 

[jlc1978]

That’s redundant because Apple will never be the cheaper option. Also there isn’t even an option to go buy elsewhere with the AppStore being the only source.

Which is a choice consumers must make when deciding what phone to buy.

You can buy a game for your Nintendo at Walmart but you can also decide to buy it more expensive on the Nintendo Online Store. Apple doesn’t even give you the option

True, but Nintendo's not forced to warehouse the product and ship it to you while Walmart gets the money for it; nor can developers of a Nintendo game put in announcements that they can buy in game upgrades cheaper elsewhere.

I thought that’s what the 99 dollars per year is already for?

If Apple is forced to change its model they likely will up that fee, hurting smaller developers.

As far as I know, me as a store owner have to buy the products before I can sell them. Maybe that's just me.

Some stores sell on consignment, which essentially is Apple's model.

So, Apple should have to buy the apps first before they can sell them to customers? I think most developers would be on board.

I doubt it, as then Apple would likely only pick products they felt had a large market, avoid ones that compete with their products, require a hefty discount off of list, and institute some sort of credit for unsold goods. They could also charge slotting fees so if you want them to give your product good placement you pay for it; no payment and you show up on page 3 of search results. Big developers could handle it but small ones would be hurt.

 

[justperry]

It's called the Netherlands Authority for conusmers and Markets

Authority for Consumers & Markets | ACM

www.acm.nl

Wow, that's stupid, some Moro.. picking the name.

It's ACM, the text on the site says nothing, just some guy/girl not knowing it should be Dutch... instead of The Netherlands...

This is the Dutch site, there's no Nederland (Netherlands) before ACM as you can see.

 

[Cosmosent]

In the end, I see ONLY ONE WAY out for AAPL !

They will need to reduce their cut to the bare minimum, to ward off this, other, & continued attempts at Opening Up the App Store beyond what Apple wants.

That bare minimum, IMO, is somewhere in the 5%-10% range, across the board.

Consider, for example, what would happen if Apple says it agrees to go to 7.5% across the board.

And, IMO, it's inevitable !

 

[LillDrutten]

I think it is time to break up apple in different parts.

 

[Mike_Trivisonno]

Bureaucrats and regulators will ruin the App Store.