Dutch Regulator Still Unsatisfied With Apple's Rules Surrounding Dating Apps

[AppliedMicro]

27% has nothing at all to do with being a payment processor. It has to do with Apple's procedures on how to actually generate revenue to support running the App Store. How the payments are done are irrelevant. Revenue is needed to run the App Store,

27% on revenue isn‘t. Unless you’re having 100%+ margins, I guess.

That being the case both stores are well worth the commissions they are asking in marketing cost alone, and they darn well know it.

Absolutely. And I‘m not even convinced that allowing sideloading“ will change that much.

That said, if there’s a lack of choice and (reasonable) alternatives, and these gatekeeping platform operators abuse their market power, we should regulate them.

Sideloading or side-payment processing will at least give us some potential for competition - and keep these gatekeepers and their conditions in check. That, of course, requires enforcing non-discriminatory pricing and conditions.

 

[BaldiMac]

27% on revenue isn‘t. Unless you’re having 100%+ margins, I guess.

Math doesn't work that way.

 

[deevey]

That’s google shooting them self’s in the foot. And can be argued as a way to deceive developers. They have a bigger case here than apple who honestly always enforced it

I'd agree, they did the same thing with workspace as well, cheap to start and then tripled/quardrupled the prices

Sure thing, but this is something the courts don’t respect or take in to consideration. Not enforcing a policy= not a policy

This would be thrown out of court on the basis they did not enforce it voluntarily. And knowingly let everyone circumvent it.

An argument that would very much depend on the court and the country.

I'm sure the lawyers from both sides will have differing points of view on this matter and research relevant legal precedence to back up their arguments.

 

[AppliedMicro]

Math doesn't work that way.

Caught me out

Markups.

 

[BaldiMac]

Caught me out

Markups.

Based on the back of the envelope math in my post earlier in the thread, Apple's gross margin on the App Store is probably in the 10-20% range. Pretty reasonable to me.

 

[AppliedMicro]

Based on the back of the envelope math in my post earlier in the thread, Apple's gross margin on the App Store is probably in the 10-20% range.

Doubt it, when their services gross margin is 70%.
Even factoring in other operating costs, I'd roughly estimate(d) their margin to be about 60 - 70%.

 

[BaldiMac]

Doubt it, when their services gross margin is 70%.
Even factoring in other operating costs, I'd roughly estimate(d) their margin to be about 60 - 70%.

Well, since they pay developers 70-85%, that's quite impossible.

 

[AppliedMicro]

Apple's gross margin on the App Store is probably in the 10-20% range

10% is impossible as a gross margin, when their minimum commission is above 10%.

We're talking two different things here:

You are talking margin as a percentage of App Store retail prices/sales.
I am talking about margin as "commissions earned vs. costs".

Simplified:
Apple are charging customers 1000 USD in apps/subscriptions sold (gross, incl. VAT/sales tax)
At a 15% sales tax/VAT rate, 130 USD go immediately to the taxman.
So net sales are 870 USD.
Apple charge a blended commission of 23% (mix of 15% and 30% rate) on that, that 200 USD.
? You'd say at this point: "Apple's gross margin on the App Store is 20%." (200 / 1000)

But here's the thing: Apple doesn't actually "buy" and "stock" the apps they're selling. Another important difference to brick and mortar stores that have been mentioned. They're merely passing through money to developers. With zero risk to that "margin". Zero. (And 10% or 20%, let alone 30% is a lot for zero risk to margins).

Back to the back of the envelope:
They charge a commission of 200 USD.
But they are doing at costs of sales of only 60 or 80 USD.
? So I'm saying: "They have a gross margin of 60-70%."
(Now that I'm thinking about it, it could be higher, because how much are cost of sales, when you're only a commissionaire charging commissions?)

? The way I'm looking at is actually the one adopted in Apple's financial reporting:
"For third-party applications sold through the App Store and certain digital content sold through the Company’s other digital content stores, the Company does not obtain control of the product before transferring it to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in Services net sales only the commission it retains."

 

[Sophisticatednut]

An argument that would very much depend on the court and the country.

Actually it would depend on the court system of the country. And EU shares the same legal system.

I'm sure the lawyers from both sides will have differing points of view on this matter and research relevant legal precedence to back up their arguments.

Oh you would be surprised it will be the judges (chief investigator) point of view being important as well as independent expert witnesses. Lawyer in civil law systems have a completely different role than the US/UK common law system.

legal precedence isn’t a thing in civil law systems. Only the EU Supreme Court have legal precedence. Lower court can’t make new laws.

I guess a surprise for you is that In common law, past legal precedents or judicial rulings are used to decide cases at hand. Under civil law( used in every EU member), codified statutes and ordinances rule the land.

 

[Unregistered 4U]

Preventing harmful business practice is has nothing to do with „attacking“ companies because you don’t like them. Neither the EU nor the Dutch despise Apple or Google - they just want them to refrain from employing certain business practices (like… forcing their payment systems on other companies that don’t have a real other than to be in the app store).

But, without any value determination, how can’t anything be objectively defined as “harmful”? Using values would have indicated, from the start, that these company’s business practices are not allowed in the EU and today’s situation would not be a concern as it wouldn’t exist. The rest of the world would have an App Store and the EU wouldn’t. Apple’s tiny marketshare would just be tinier.

 

[Unregistered 4U]

And what makes you believe it’s not an objective standard?

English definition of objective:
(of a person or their judgment) not influenced by personal feelings or opinions in considering and representing facts.

If no values(facts) are offered or used in the evaluation, then, by the ENGLISH definition, it’s not objective. But, just as “dominant” doesn’t mean dominant, it’s likely true that “objective” doesn’t mean objective.

Anti competitive laws, abusing dominant position and being in a dominant position is objective standards.

English definition of dominant:
most important, powerful, or influential.

Of which Apple are none. However, as long as one removes any “values” to compare and determine “dominant” or “most” then ANYONE can be dominant.

You need to meet EU standards. Not 27 different “backs”. Businesses can always go to EUCJ if they think the lower courts are wrong.

I’m guessing that going to the EUC isn’t cheap. Which would you figure a company would do, do a thing then hope they can challenge one or more of the 27 standards and win OR avoid growth/expansion in an attempt to not be “dominant”. Looking at the size of EU companies… there’s a clear indication of what they choose.

 

[Unregistered 4U]

Based on the back of the envelope math in my post earlier in the thread, Apple's gross margin on the App Store is probably in the 10-20% range. Pretty reasonable to me.

Based on my back of the napkin math (which is clearly more rigorous than back of the envelope math), Apple has a negative margin, in the 5-15% range. /s

 

[BaldiMac]

Based on my back of the napkin math (which is clearly more rigorous than back of the envelope math), Apple has a negative margin, in the 5-15% range. /s

I hear the sarcasm, but to be fair, I did show my work earlier in the thread.

 

[BaldiMac]

10% is impossible as a gross margin, when their minimum commission is above 10%.

We're talking two different things here:

You are talking margin as a percentage of App Store retail prices/sales.
I am talking about margin as "commissions earned vs. costs".

Simplified:
Apple are charging customers 1000 USD in apps/subscriptions sold (gross, incl. VAT/sales tax)
At a 15% sales tax/VAT rate, 130 USD go immediately to the taxman.
So net sales are 870 USD.
Apple charge a blended commission of 23% (mix of 15% and 30% rate) on that, that 200 USD.
? You'd say at this point: "Apple's gross margin on the App Store is 20%." (200 / 1000)

But here's the thing: Apple doesn't actually "buy" and "stock" the apps they're selling. Another important difference to brick and mortar stores that have been mentioned. They're merely passing through money to developers. With zero risk to that "margin". Zero. (And 10% or 20%, let alone 30% is a lot for zero risk to margins).

Back to the back of the envelope:
They charge a commission of 200 USD.
But they are doing at costs of sales of only 60 or 80 USD.
? So I'm saying: "They have a gross margin of 60-70%."
(Now that I'm thinking about it, it could be higher, because how much are cost of sales, when you're only a commissionaire charging commissions?)

? The way I'm looking at is actually the one adopted in Apple's financial reporting:
"For third-party applications sold through the App Store and certain digital content sold through the Company’s other digital content stores, the Company does not obtain control of the product before transferring it to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in Services net sales only the commission it retains."

Sure, but it depends on what you want to compare it to. Apple is comparing it to services, so they do it your way. For the purposes of our discussion, the comparison to brick and mortar stores is more reasonable with the way I calculated it.

 

[AppliedMicro]

For the purposes of our discussion, the comparison to brick and mortar stores is more reasonable with the way I calculated it.

Besides the very different cost structure:

? Are there any brick & mortar stores that have no inventory risk and/or gross margin risk whatsoever? Which ones?

 

[BaldiMac]

Besides the very different cost structure:

? Are there any brick & mortar stores that have no inventory risk and/or gross margin risk whatsoever? Which ones?

You brought them up as a point of comparison, not me. Obviously, they are different than digital goods. My numbers are still better for that comparison even if they're not perfect.

 

[Sophisticatednut]

English definition of objective:
(of a person or their judgment) not influenced by personal feelings or opinions in considering and representing facts.

If no values(facts) are offered or used in the evaluation, then, by the ENGLISH definition, it’s not objective. But, just as “dominant” doesn’t mean dominant, it’s likely true that “objective” doesn’t mean objective.

It’s almost you miss everything written ANd explained. The legal text, contains legal definitions and objective things you use to evaluate. The facts are specified that you must meet to be classified as having a dominant position.

English definition of dominant:
most important, powerful, or influential.

This is codified in statutes and ordinances.
Example
http://www.dutchcivillaw.com/legislation/competitionact.htm
And here you have the ACM summary decision as the full legal text hasn’t been released untill apple’s complaint is done.

https://www.acm.nl/sites/default/files/documents/summary-of-decision-on-abuse-of-dominant-position-by-apple.pdf

Of which Apple are none. However, as long as one removes any “values” to compare and determine “dominant” or “most” then ANYONE can be dominant.

English dictionary isn’t relevant for a legal definition in the Netherlands.

I’m guessing that going to the EUC isn’t cheap. Which would you figure a company would do, do a thing then hope they can challenge one or more of the 27 standards and win OR avoid growth/expansion in an attempt to not be “dominant”. Looking at the size of EU companies… there’s a clear indication of what they choose.

It cost you as far as I can find 0€ To go to a EU Supreme Court and is filed through your local government. Local government courts generally have a fee of 50€ or up to 1.000~€ depending what kind of complaints it is for a business. If you win you get all your legal fees payed by the loosing side by default.

I think Apples court fees with ACM was about a few thousand euros

33. Furthermore, ACM must be ordered to pay Apple's legal costs. The court in preliminary relief proceedings determines the costs of the proceedings on the basis of the Administrative Costs Decree as follows:
†
an amount of € 7,480 for legal assistance provided professionally by a third party
(2 points for submitting the petitions, 0.5 points for appearing at the pre-trial hearing, 0.5 points for the reply and 2 points for appearing at the hearings, with a value per point of €748 and weighting factor 2) ;
†
an amount of € 220 for interpreting costs (5 hours at € 44 per hour).
The request for reimbursement of the costs of CRA's report is rejected by the preliminary relief judge because that report has not contributed to the assessment of a point of dispute on which Apple has been successful.

And here you have the Dutch legal text including the preliminary ruling in its full.

Rechtspraak.nl - Zoeken in uitspraken

Zoeken in uitspraken

uitspraken.rechtspraak.nl

 

[tobybrut]

Not sure why you feel the need to resort to referring them as „brothel“ apps.
Are you one of those christian Americans that feel they need to incite moral outrage by namecalling?

The dating app providers business models are neither illegal nor operationor advertising of brothels. Besides that, brothels legal in Netherlands.

No, I personally could totally live with Apple charging everyone the same, rather than discriminating particular services or apps/developers.

Just get rid of the discrimination. Let’s go charge Amazon (shopping), Booking.com, Uber, Expedia Starbucks 30% on all of their (net) in-app revenue as well.


The ACM argued that they don’t have another realistic business choice (cause they‘d be severely disadvantaged without a native app and/or means of monetisation). And I pretty much to agree.


Regulatory authorities are rarely run by politicians (at least in Europe). Besides that, there‘s no reason not to believe that politicians could, as a matter of good judgement and conscience, conclude and believe that a duopoly as Google/Apple need to be regulated.

Again, there’s lots of developers that make money - and they don’t pay.

How is "brothel" namecalling? Is it not accurate? I'm making fun of the term, "dating app". Sorry, those are not dating apps. Dating apps are things like Tinder or Hinge. These are not dating apps. I don't care how you try to define dating, this ain't it chief. As for my religion, I'm an agnostic. I don't care if someone visits a brothel. It's up to them. But Apple has a long-standing policy that apps that are too sexual are banned. How these brothel apps got in the store in the first place, I have no idea.

I agree. No disciminination. Back to 30% for companies making less than $1 million. Yes, I'm joking. I don't actually care what the number is. I hate freeloaders.

 

[AppliedMicro]

Apple has a long-standing policy that apps that are too sexual are banned.

I'm not sure what you are talking about with regard to the situation in the Netherlands.

How these brothel apps got in the store in the first place, I have no idea.

What "brothel apps" are you even talking about?

Dating apps are things like Tinder or Hinge

And exactly such apps are what the Dutch ACM order is about!

Sophisticatednut has just (again) posted the link to the court order Apple has initiated against the ACM. And if you read that, there's one dating app provider that's been involved in the process. It's US-based Match Group - the very operator of Tinder and Hinge.

So, according to your own definition, it very much seems about dating apps - and not "brothel apps".