Epic Games and Spotify Say Apple's Latest DMA Changes Are 'Illegal' and 'Deliberately Confusing'

[AppliedMicro]

The Americans can go on paying...and that's their right.

It‘s their patriotic duty.
And their ultimate form of "freedom": companies doing what they want - even if it's against users.

Why do you think developers deserve to use Apple’s intellectual property (iOS) without paying?

They don‘t. They pay a developer subscription just like any other free (or paid) audio player app.
That doesn’t give Apple the moral right to charge them 30% or 15% of revenue ad infinitum.
And sooner or later, when the DMA is properly enforced (and Apple has been fined enough and lost in court), their terms and conditions doesn’t give Apple the right in the EU anymore.

Apple shouldn’t have the right to leech off Spotify - and the DMA will (hopefully) make that clear very soon.

I think you’d agree if Apple used Spotify’s music recommendation algorithm for Apple Music, Spotify would be within their rights to ask for compensation

Probably.
But Spotify aren‘t doing that.

Their app is playing music - just like any other music player app or personal computer released in the last 25 years can. No highly valued algorithm there.

👉🏻 It‘s about time Thierry Breton dust of his „Fair share“ schemes for European internet service providers and enable them to tax charge „Big tech“ on their revenue.

1. Let‘s block internet access to Apple’s App Store/Music and TV service and their CDN partners
2. Draft access agreements that allow for revenue share that App Store operators pay to internet/cellular carriers in the EU. 20% or so of every EUR of „digital“ revenue certainly seems appropriate, given the billions European ISPs have invested and are expending for their infrastructure.

👉🏻 Why should high traffic-generators like Apple leech of European ISPs‘ networks for free? The certainly deserve their share, don’t they?

However, iOS is not your property, it is Apple's, and you (and developers) license it. So if the developer wants to use Apple's property to make apps, then Apple has a right to ask for money for the use of its property.

And Spotify‘s licensed music rights or podcasts aren‘t Apple‘s property.
They have a right to charge for making apps . But not ror a percentage money from Spotify’s streaming subscription.

Ok, but a developer choosing to develop for only one or a few operating systems is a choice and doesn't necessarily make the market a "natural" anything (monopoly, duopoly, oligopoly). Natural monopolies are typically tied to a specific region such as an electric company or an ISP being the sole provider to a town and are (supposed to be) more strictly monitored and regulated by that local government.

Natural are often but not necessarily tied to regions or place of operation/service. Natural refers to „developing naturally“ due to the first and/or biggest maket participants enjoying and overwhelming advantage. Which iOS and Android do, with developers obly developing for the temost popular mobile OS.

 

[chmania]

Some of the Android alternate app stores out there,
F-Droid, Aptoide, GetJar, SlideME, Aurora, 1Mobile, Samsung Galaxy Store, APKMirror, Huawei AppGallery, Xiaomi GetApps, 9Apps, Mobango, QooApps, Uptown, APKPure, AppBrain, Mobile9, Opera Mobile Store, TapTap

And, some of the iOS alternative app stores out there, AppValley, AppCake, TweakBox

There maybe more such alternative app stores on Android and iOS. The German Federal Government sponsored an open source project, microG, which helped Huawei to install Google's Apps and other Play store apps.

Extract from microG website.

 

[surferfb]

It’s not.

India has 17x the population of Germany (the largest EU country). If India overtook Germany in absolute sales of iPhones for the first time last year, that means India‘s iPhones sales per capita of respective population is only a fraction of Germany‘s.

If you’re telling us that the European Union, one of the richest regions in the world, only so slightly „overperforms“ in iPhone sales or Apple revenue, e.g. 7% as opposed to the „expected“ 5.5% (share of the world’s population), you‘ll soon run out of countries that will make sense.

There have to be countries that compensate for the very low relative sales in India - and Africa (you won‘t be telling us they‘re a great iPhone market, will you?) - for aggregate numbers to make any sense.

They must be either very populous (the EU isn‘t, compared to India).
Or have much higher sales than their share of the population (more than 7% vs. 5.5!).

We've established that:

• Apple's CFO said, on a SEC-regulated investor call about financial results that, and I quote "Just to keep it in context, the changes apply to the EU market, which represents roughly 7% of our global App Store revenue." (emphasis mine).
• You and I agree that it is reasonable that the EU's percentage of global App Store revenue is equivalent to the EU's percentage of global iPhone revenue.
• The two largest iPhone revenue drivers in Apple's "Europe" Segment are outside of the EU (The UK and India). Other non-EU countries with significant number of iPhone users are included in the Europe Market Segment (i.e. the Middle East).

In arguing your point, you keep arguing "it's impossible" that the EU only makes up 7% of Apple's iPhone revenue, citing "relative sales" and "per capita sales" and "shares of the population" like that has any bearing on percentage of revenue. Spoiler alert: It doesn't matter if only one person in India is buying $8 billion worth of iPhones or 8 million people are each buying a $1000 iPhone or 80 million people are buying a (non-existent) $100 iPhone - its the $8 billion of revenue that goes into the calculation.

But let's do some math!

Apple made roughly $200 billion worth of revenue from iPhone in 2023. Apple doesn't break out iPhone sales by region, but I've seen an estimate of ~$40 billion thrown out repeatedly. However, let's just assume that it's the same 22% of global revenue that the "Europe" market segment makes up. 22% of $200 billion is $44 billion.

• Apple is estimated to have made $10 billion (5%) of iPhone revenue in the UK and $8 billion (4%) in India. So right there the rest of the European market segment is down to $26 billion, or 13% of global iPhone revenue.
• But wait! The Middle East is estimated to account for around $5.6 billion (~3%) of iPhone revenue. Unclear if that includes Turkey and Israel, but we'll assume that it does. So now the European Market segment is down to $20.4 billion, or a little over 10% of global iPhone revenue.
• Now let's factor in Africa and non-EU countries not previously accounted for - harder to estimate here, as there aren't clear figures I can find. So I'll give them ALL to the EU.

So even with me spotting the EU $4 billion at the top of calculation, then giving the EU all non-UK European revenue, and all African revenue, and assuming Turkey and Israel are in the Middle East and not counted separately, we've got the EU with 10% of global iPhone revenue. If I use the $40 billion estimate I've seen cited, then the EU comes in right at 8% of global iPhone revenue and that is giving the EU all non-UK European revenue and all African revenue.

Remember we both agree that the percentage of global App Store revenue is likely equivalent to the EU's percentage of global iPhone revenue. Maestri said the EU market "represents roughly 7% of our global App Store revenue." My math comes to the EU representing somewhere between 8-10% of global iPhone revenue, after spotting the EU revenue from countries that aren't in the EU.

So barring someone correcting math errors on my end, I'm done engaging on this. Apple wouldn't pull out of the EU even if the EU represented 1% of their global iPhone revenue, so it's an entirely pointless exercise anyway.

 

[I7guy]

And, the EU would stop that ransom in time in the EU. The Americans can go on paying...and that's their right. 😏

Pretty sure that’s the plan from apple. But that’s why the dma is playing robin hood with someone else’s money.

 

[chmania]

But that’s why the dma is playing robin hood with someone else’s money.

Depending who Robin Hood was...to whom...😏

 

[Nuno Lopes]

@suferfb,

I think the CTF could be reasonable. Notarization for security purposes could be reasonable So could what Apple defines as Web Publishing, which is basically the ability of one distribute its App through a website. Much like it happens on macOS.

Apple rules to qualify a company for such a choice, is totally unreasonable and against the DMA regulations the way I see it. Only very large companies, very successful businesses that passed by the App Store (requirement) are able to be qualified as per Apple policies. So we are basically to square 0. Any legal business is required to be qualifiable. No OEM vetting must be necessary for a business to choose to distribute its App by their own means, much like in macOS. That is why the macOS platform and devices aren't under scrutiny of this kind.

Apple know this, because it was designed to keep the discussion with regulators in a loop.

 

[surferfb]

@suferfb,

I think the CTF could be reasonable. Notarization for security purposes could be reasonable So could what Apple defines as Web Publishing, which is basically the ability of one distribute its App through a website. Much like it happens on macOS.

Apple rules to qualify a company for such a choice, is totally unreasonable and against the DMA regulations the way I see it. Only very large companies, very successful businesses that passed by the App Store (requirement) are able to be qualified as per Apple policies. So we are basically to square 0. Any legal business is required to be qualifiable. No OEM vetting must be necessary for a business to choose to distribute its App by their own means, much like in macOS. That is why the macOS platform and devices aren't under scrutiny of this kind.

Apple know this, because it was designed to keep the discussion with regulators in a loop.

Apple is kinda stuck between a rock and hard place with web sites. Because while I don’t agree Apple should be forced to allow sideloading, I do agree that if side loading is allowed, it’s unfair for small and new companies to not allow them to take advantage (although my guess is the vast, vast majority of users will stay on the App Store, so most apps will want to be there).

But Apple definitely has a legitimate point that if you let anyone host side-loaded apps on websites it’s opening up massive security and privacy concerns for Apple’s users. A large part of the reason Macs don’t have a ton of malware is it’s a small market (~100 million users). Not much return on your investment - but the iPhone has over a billion users. A lot more worth criminals’ time.

And when something happens the headline isn’t going to be “Sketchy side loaded app steals iPhone user data” but something like “Virus Steals iPhone Customer Data”. And while I’ll on here be here saying “told you so” - most people will just think iPhone security is bad or apps can’t be trusted - which isn’t good for customers, Apple, or developers.

In theory I think something like Gatekeeper on MacOS would be a decent solution, but I am also not sure the EU would approve of hiding the functionality to download side loaded apps in settings and behind a “scare sheet”. And I FIRMLY believe it should be hard to find/turn on. While I have no concerns with the users who post here being able to discern a sketchy sideloaded app from a legitimate one - the majority of users aren’t sophisticated enough to do so.

 

[AppliedMicro]

Apple's CFO said, on a SEC-regulated investor call about financial results that, and I quote "Just to keep it in context, the changes apply to the EU market, which represents roughly 7% of our global App Store revenue."

Yes - and then he said something slightly (but substantially) different on the next conference call.

Maestri said the EU market "represents roughly 7% of our global App Store revenue."

...until he said something different on the next conference call.

I'm going to quote it again (originally from here), for a third time:

Question:
Luca the Services growth momentum seems very strong. Are you seeing any impact from changes made to comply with the DMA rules?

Luca Maestri:
Well, as you know we have introduced some changes to the way we run the App Store in Europe already in March[…] It is obviously early stage, but in general, our results for the Services business and for the App Store have been pretty good until now.

Again to just provide you a frame of reference, the percentage of revenue that we generate from the European Union on the App Store is about 7% of the total.

👉 "of the total". Which total?

You and I agree that it is reasonable that the EU's percentage of global App Store revenue is equivalent to the EU's percentage of global iPhone revenue.

Yes.

In arguing your point, you keep arguing "it's impossible" that the EU only makes up 7% of Apple's iPhone revenue, citing "relative sales" and "per capita sales" and "shares of the population" like that has any bearing on percentage of revenue.

Of course it does, if you have to put together the full picture.

However, let's just assume that it's the same 22% of global revenue that the "Europe" market segment makes up

Europe made up for 94294/383285 = 24.6% of global revenue.
That's $49 billion of $200 billion.

👉 49 billion instead of 44 billion - you've been erring on the side of your narrative.

iPhone revenue in the UK and $8 billion (4%) in India

No.

It doesn't matter if only one person in India is buying $8 billion worth of iPhones or 8 million people are each buying a $1000 iPhone or 80 million people are buying a (non-existent) $100 iPhone - its the $8 billion of revenue that goes into the calculation.

...unless it's considerably less than $8 billion:

"Apple's annual sales in India have reached a record high of nearly $8 billion, reports Bloomberg. This marks a significant 33% increase from the previous year's $6 billion, underscoring India's growing importance to the iPhone maker. The surge in sales, for the year ending March 2024, was largely driven by iPhones, which accounted for more than half of the revenue, according to a person familiar with the matter."

https://timesofindia.indiatimes.com...nt-for-the-company/articleshow/111755593.cms#

$8 billion in total annual sales in India - including iPhones that made "more than half" of the revenue.
How much "more than half"? We don't know. But it sounds more like $5 billion than $8 billion.

iPhone sales make up for just over half (52.3%) of Apple's worldwide total net sales. Giving you - and India - the benefit of doubt, I assume the ratio is somewhat higher in younger, developing economies, with a higher preference for smartphone ownership than (premium) PC ownership. Let's be generous and say it's two thirds (two thirds of sales are iPhone, one third everything else, including Macs). That makes for about $5.3 billion of "nearly $8 billion".

👉 You've been erring on the side of your narrative.

8 billion/44 billion = 18% your figure (for the Indian share of "Europe" iPhone sales).
5.3 billion/49 billion = 10.8%


Also, I just happened to notice this "gem" you (again) failed to mention from the CNBC link you posted yesterday:

"India contributed close to 4% of all iPhone sales in the second quarter, according to the research firm"

And according to that link, India also overtook Germany and France only last year. So... let's guess numbers and let's say 3.8% is close to 4% for India. Germany, presumably, didn't lag far behind, if it was just recently overtaken - let's say 3.6%. France, due to its lower population I assume to be 20% less = 3%.

That makes 6.6 percent of Apple's global revenue for just the two countries of Germany and France (accounting for 150 million of the EU population). Even if it's only 6%, it doesn't matter.

That still leaves 300 million EU consumers unaccounted for. Including Italy, Spain, Poland and the smaller nordic countries with very high iOS market share.

 

[AppliedMicro]

(accidental double post)

 

[surferfb]

Yes - and then he said something slightly (but substantially) different on the next conference call.


...until he said something different on the next conference call.

I'm going to quote it again (originally from here), for a third time:

Question:
Luca the Services growth momentum seems very strong. Are you seeing any impact from changes made to comply with the DMA rules?

Luca Maestri:
Well, as you know we have introduced some changes to the way we run the App Store in Europe already in March[…] It is obviously early stage, but in general, our results for the Services business and for the App Store have been pretty good until now.

Again to just provide you a frame of reference, the percentage of revenue that we generate from the European Union on the App Store is about 7% of the total.

👉 "of the total". Which total?

Yes.

Of course it does, if you have to put together the full picture.

Europe made up for 94294/383285 = 24.6% of global revenue.
That's $49 billion of $200 billion.

👉 49 billion instead of 44 billion - you've been erring on the side of your narrative.

No.

...unless it's considerably less than $8 billion:

"Apple's annual sales in India have reached a record high of nearly $8 billion, reports Bloomberg. This marks a significant 33% increase from the previous year's $6 billion, underscoring India's growing importance to the iPhone maker. The surge in sales, for the year ending March 2024, was largely driven by iPhones, which accounted for more than half of the revenue, according to a person familiar with the matter."

https://timesofindia.indiatimes.com...nt-for-the-company/articleshow/111755593.cms#

$8 billion in total annual sales in India - including iPhones that made "more than half" of the revenue.
How much "more than half"? We don't know. But it sounds more like $5 billion than $8 billion.

iPhone sales make up for just over half (52.3%) of Apple's worldwide total net sales. Giving you - and India - the benefit of doubt, I assume the ratio is somewhat higher in younger, developing economies, with a higher preference for smartphone ownership than (premium) PC ownership. Let's be generous and say it's two thirds (two thirds of sales are iPhone, one third everything else, including Macs). That makes for about $5.3 billion of "nearly $8 billion".

👉 You've been erring on the side of your narrative.

8 billion/44 billion = 18% your figure (for the Indian share of "Europe" iPhone sales).
5.3 billion/49 billion = 10.8%


Also, I just happened to notice this "gem" you (again) failed to mention from the CNBC link you posted yesterday:

"India contributed close to 4% of all iPhone sales in the second quarter, according to the research firm"

And according to that link, India also overtook Germany and France only last year. So... let's guess numbers and let's say 3.8% is close to 4% for India. Germany, presumably, didn't lag far behind, if it was just recently overtaken - let's say 3.6%. France, due to its lower population I assume to be 20% less = 3%.

That makes 6.6 percent of Apple's global revenue for just the two countries of Germany and France (accounting for 150 million of the EU population). Even if it's only 6%, it doesn't matter.

That still leaves 300 million EU consumers unaccounted for. Including Italy, Spain, Poland and the smaller nordic countries with very high iOS market share.

You’re right on India, so I’ll give you $4 billion back. Still way closer to 7% than the 22% figure I was correcting. And for the record, I trust Apple’s CFO over a random MacRumors poster who thinks Verstager can do no wrong any day of the week - so I’m still convinced 7% is close to accurate. But I don’t have the numbers to prove that, so I’ll cede the point. Congratulations - you’re closer to 10-11% - your proposed fining of Apple’s global revenue is slightly less obscene and disproportionate to your market’s size.

 

[Abazigal]

When I switched to iOS in 2019, I found that there weren't free alternatives to the official reddit app. Apollo had a free tier, but it was severely limited in functionality. I ended up having to pay for Apollo.

All this to ask - do Apple users pay more on software because they want to? Or because there are generally fewer free alternatives?

I paid upfront for Apollo, and even dropped a couple of tips periodically, because I liked the app and wanted to support the developer. And when the app was terminated, I stopped visiting Reddit altogether because to me, Apollo defined the Reddit experience.

As to why there are more free alternatives on android, I dunno. Developers are really that generous, or are they are simply realistic about their odds of successfully monetising their apps on said platform?

 

[blazerunner]

I love how Apple fans just make up stuff that doesn't even resemble reality to try to make some kind of weird argument. It certainly is entertaining.

It's weird and cringey to see so many adults cheerleading for a brand... a BRAND, LOL.

 

[chmania]

Apple policies vs EU policies?
EU policies serves the people, Apple "policies" serves the company only to make a profit. People come first.

DMA will come and continue. Apple would have to pay in the end. There's no way out of that. Apple will "fight" wasting shareholders' money. The shareholders don't have anything to say, are just hangers-on, waiting for something to fall on their laps, who had forfeited their rights, when they bought those shares.

 

[surferfb]

It's weird and cringey to see so many adults cheerleading for a brand... a BRAND, LOL.

Personally, I think it’s weird and cringey to see so many adults cheerleading their government’s insistence on ensuring the continent’s technological irrelevance by stealing intellectual property and handing it over to freeloading EU developers, but I guess differences in opinions is what makes the world interesting!

 

[chmania]

Personally, I think it’s weird and cringey to see so many adults cheerleading their government’s insistence on ensuring the continent’s technological irrelevance by stealing intellectual property and handing it over to freeloading EU developers, but I guess differences in opinions is what makes the world interesting!

Batting again?

 

[surferfb]

Batting again?

I'll happily stop when you convince me the EU is "serving the people" and "putting people first" instead of serving EU developers' desire to freeload, in the process making Apple's products worse for its citizens by exposing them to more scams and malware while dooming the EU to tech irrelevance in the future. So far, you haven't come close to convincing me.

But as I said, differences are opinion are what make the world interesting! One of us will be wrong, and as I've said repeatedly on here, I really do hope I am the one who is wrong. And I mean that. I don't think I am wrong, but would be overjoyed to be. I still won't think the ends justify the means (theft by the government is still theft), but at least the outcome would be beneficial for end users.

 

[surferfb]

Slightly off topic, but it sounds like everyone's second-favorite EU Commissioner has been naughty:

Will the EU Fine the EU Commissioner?

Thierry Breton goes rogue, has Brussels seeing rouge

spyglass.org

 

[chmania]

I'll happily stop when you convince me the EU is "serving the people" and "putting people first"...

Simple, I live here. And, we are the EU, all of us. 😊

 

[Nuno Lopes]

Personally, I think it’s weird and cringey to see so many adults cheerleading their government’s insistence on ensuring the continent’s technological irrelevance by stealing intellectual property and handing it over to freeloading EU developers, but I guess differences in opinions is what makes the world interesting!

Yes. That would be weird. But what you wrote is a fantasy. In fact is quite the opposite of what such a fantasy suggests.

Mind you. I don’t think most people around here equating the DMA as an act of robbery are cheerleading for a Brand either.

 

[surferfb]

Simple, I live here. And, we are the EU, all of us. 😊

I used to live in the EU, and if I still lived there, I'd say they weren't serving the people. You may think they're serving the people, but they're actually doing them a disservice. Just because the EU passes a law doesn't mean its in the people's best interest.

For a completely non-tech example, is the EU serving the people when it says that manufacturers of bottled drinking water cannot say that drinking water prevents dehydration?

EU bans claim that water can prevent dehydration

Brussels bureaucrats were ridiculed yesterday after banning drink manufacturers from claiming that water can prevent dehydration.

www.telegraph.co.uk

 

[ric22]

I used to live in the EU, and if I still lived there, I'd say they weren't serving the people. You may think they're serving the people, but they're actually doing them a disservice. Just because the EU passes a law doesn't mean its in the people's best interest.

For a completely non-tech example, is the EU serving the people when it says that manufacturers of bottled drinking water cannot say that drinking water prevents dehydration?

EU bans claim that water can prevent dehydration

Brussels bureaucrats were ridiculed yesterday after banning drink manufacturers from claiming that water can prevent dehydration.

www.telegraph.co.uk

I was wondering what news sources you read to have such 'interesting' opinions. Google 'Telegraph' and 'lies' to find out a bit about that paper.

 

[ProbablyDylan]

Personally, I think it’s weird and cringey to see so many adults cheerleading their government’s insistence on ensuring the continent’s technological irrelevance by stealing intellectual property and handing it over to freeloading EU developers, but I guess differences in opinions is what makes the world interesting!

isn't it a government's duty to protect their local industry? The EU attempting to level the playing field for their local developers seems to be in line with that goal.

 

[surferfb]

I was wondering what news sources you read to have such 'interesting' opinions. Google 'Telegraph' and 'lies' to find out a bit about that paper.

You can read the ruling yourself, or does the (*checks notes*) EU lie too?

Water and reduced risk of development of dehydration

Following an application from Prof. Dr. Moritz Hagenmeyer and Prof. Dr. Andreas Hahn, submitted pursuant to Article 14 of Regulation (EC) No 1924/2006 via the Competent Authority of Germany, the Panel on Dietetic Products, Nutrition and Allergies was asked to deliver an opinion on the scientific...

www.efsa.europa.eu

 

[surferfb]

isn't it a government's duty to protect their local industry? The EU attempting to level the playing field for their local developers seems to be in line with that goal.

Actually a good argument! I'll give you that point.

 

[ric22]

You can read the ruling yourself, or does the (*checks notes*) EU lie too?

Water and reduced risk of development of dehydration

Following an application from Prof. Dr. Moritz Hagenmeyer and Prof. Dr. Andreas Hahn, submitted pursuant to Article 14 of Regulation (EC) No 1924/2006 via the Competent Authority of Germany, the Panel on Dietetic Products, Nutrition and Allergies was asked to deliver an opinion on the scientific...

www.efsa.europa.eu

I wasn't referring to that ruling, but the catalogue of 'interesting' EU related opinions you have shared in this thread.

I actually bothered to read the EU's reasoning, which while a little peculiar, does involve some logic, whether you agree with it or not.