EU Accuses Apple's App Store Steering Rules of Violating DMA and Opens Investigation into Developer Fees

[jlc1978]

And for most apps and (digital) in-app sales sold, it is - or would be - 30%.

Would you clarify that? According to Apple, 90% of the developers are small developers, and thus only pay 15%.

The 30% commission keeps getting referenced but that's only for the largest developers, and from my POV it is not an unreasonable cut from developers making millions off of Apple's App Store.

Looking at the stats in Apple's press release, I suspect most small developers will stick with the App Store since 15% is likely to be highly competitive with any alternative store and most alternative stores will not have the reach of Apple's. It simply make sense to stick with the most lucrative market.

Ultimately, Apple will find a way to keep the revenue stream from the large developers flowing in a way that satisfies the EU; and a few may chose to leave the App Store. I doubt they will however, because that means losing direct access to Apple's user base; many of whom will stick with the App Store as their default store.

I just do not see the EU ultimately requiring Apple to allow access to the App Store or all aspects of its tech for free. Looking beyond Apple, that would be a bad precedent and ultimately impact companies far removed from Apple.

 

[jlc1978]

Agreed. And while the idea of self regulating market is nice it DOES need at least certain amount of regulation when entities get too big. telcos and media companies and banks were already split in the past (and now they let them mega back 🤦‍♂️).

The interesting thing about the advent of telco regulation in the US was to end competition and create a unified, interoperable system which ensured a profit for the monopoly provider.

What some miss in this argument is regulations often ultimately benefit the regulated as well as they find ways to use them to limit competition or create higher barriers to entry.

Many here are arguing that UE is overegulating and while it's debatable I'd say EU is still quite far from being excessive...

What is teh right amount of regulation is certainly debatable. In the end, some middle ground will be established that opens iS up more while letting Apple be enumerated for access to its tech; I suspect when all is said and done Apple will find ways to use the DMA to its benefit as well. I suspect we'll also see some fragmentation of capabilities as Apple decides what to release or hold back in the EU while teh whole DMA issue is sorted.

 

[cfountain72]

The number of competitors is irrelevant as long as there is an environment for competition. Those who can compete, will compete and this includes Apple too.

An 'environment for competition'. No, that's not vague at all. How do you define that? What does that look like in practice, if not what we already have? As best as I can tell, there are numerous device manufacturers, improving on price/performance every year. Operating systems have mostly matured, but they continue to develop improved environments for customers and developers to work and play in. And, unless there are EU regulations against it, there is nothing stopping some entrepreneurally-minded individual or company from stepping in to offer an equal or better product at an equal or better price. That is an environment for competition.

 

[deeddawg]

I doubt that will ever happen. More likely is a fragmentation of the market with the EU not getting some features that Apple decides cannot be made compliant or they do not wish to allow 3rd parties to access. We see some hints of that already.

That's certainly a potential state of affairs. Whether it'd be the end-state is unknown.

Nothing even remotely close to that is being proposed

I wasn't talking about today, but potential end-state should future regulations make the environment untenable. Point was not to get full of oneself because of the size of the market - what counts is not size of market, but profitability within that market.

 

[cfountain72]

You mean like they do on macOS? Yes!

Until you're CEO, that's not decision for you to make.

 

[MilaM]

Until you're CEO, that's not decision for you to make.

Yes Sir 🫡 😂.

But seriously. This is the court of public opinion. Here everyone is the CEO 😁.

 

[cfountain72]

A percentage of iPhone profits?

A reminder: big corporations are not your friend.

I don't expect them to be my friend. I expect them to provide a good product at a good price, or I go down the road.

They are 'big' because customers have voted with their wallets and decided to pay them for their products and expertise. Not because they were forced to by 'lock-in'. Not because the are a 'friend' (although being friendly can take you a lot farther than the alternative).

Curious: Apple is obviously big by any objective definition. But tell me: when does a company become 'big'?

 

[jlc1978]

And, unless there are EU regulations against it, there is nothing stopping some entrepreneurally-minded individual or company from stepping in to offer an equal or better product at an equal or better price. That is an environment for competition.

The problem is network effects are a huge barrier to entry. Even if you made a better phone, many apps people use would not be avaiable and thus not chose to switch. With low adoption rates, there is no reason for app developers to spend money on developing for your device, and the death spiral continues.

The pone OS battle is pretty much over, which is why it as switched to apps and access. In the end, I suspect not much will change for most developers or consumers.

 

[turbineseaplane]

A great summary from Jeff
I agree wholeheartedly

 

[GrayFlannel]

This is all a result of a failure to self-regulate. See Microsoft’s case, they just budge, and didn’t have a huge issue with the demands of the DMA anyway.

Microsoft has their own antitrust issues with Teams, but as you said MS says they will come into compliance.

 

[I7guy]

A great summary from Jeff
I agree wholeheartedly


View attachment 2391973

View attachment 2391974

JAPTTBMIW*

Just another person telling apple their business model is wrong.

 

[Beautyspin]

An 'environment for competition'. No, that's not vague at all. How do you define that? What does that look like in practice, if not what we already have? As best as I can tell, there are numerous device manufacturers, improving on price/performance every year. Operating systems have mostly matured, but they continue to develop improved environments for customers and developers to work and play in. And, unless there are EU regulations against it, there is nothing stopping some entrepreneurally-minded individual or company from stepping in to offer an equal or better product at an equal or better price. That is an environment for competition.

Read Article 5 onwards. They are crystal clear. They clearly tell what Apple cannot do. If Apple does not understand them, then they are really reaching and I am sorry to say I (and you too) should be worried about giving my (our) personal information including financial information to such an entity.

Regulation - 2022/1925 - EN - EUR-Lex

eur-lex.europa.eu

 

[turbineseaplane]

@Beautyspin

For folks that defend everything Apple has done and is doing, there is no information or details that will ever change their mind.

It's not about facts (sadly)

 

[surferfb]

Read Article 5 onwards. They are crystal clear. They clearly tell what Apple cannot do. If Apple does not understand them, then they are really reaching and I am sorry to say I (and you too) should be worried about giving my (our) personal information including financial information to such an entity.

Regulation - 2022/1925 - EN - EUR-Lex

eur-lex.europa.eu

I love how all of you think YOUR INTERPRETATION of the DMA is clearly the exactly correct one. The EU says "you can't follow the letter of the law, you have to follow the spirit of the law." But then at the same time you say there can't possibly be any other interpretation, the law is crystal clear on what Apple can and cannot do. It's not crystal clear. A lot of it will be worked out through negotiations with the EU, and I bet other parts will be worked out in the courts. But to say the law is crystal clear is laughable!

 

[Damian83]

Well okay, Apple base storage isn't good. But that's not the point.

...base ram isnt good, base icloud isnt good, base warranty isnt good (in EU). Apple is like Porsche selling iron rims and fabric seats as base options

 

[cfountain72]

@Beautyspin

For folks that defend everything Apple has done and is doing, there is no information or details that will ever change their mind.

It's not about facts (sadly)

Actually, that's not true at all. For instance, in my opinion, Apple's restriction preventing developers from showing other ways to download items at a lower price elsewhere is heavy handed. But it is their house. They can arrange the furniture how they see fit. I can choose to stay there or not, as I see fit.

 

[I7guy]

@Beautyspin

For folks that defend everything Apple has done and is doing, there is no information or details that will ever change their mind.

It's not about facts (sadly)

This is exactly the type of baseless post that is as bad as those who you claim defend everything apple. Those who criticize everything apple.

Sadly for those, it’s also not about the facts.

 

[cfountain72]

Read Article 5 onwards. They are crystal clear. They clearly tell what Apple cannot do. If Apple does not understand them, then they are really reaching and I am sorry to say I (and you too) should be worried about giving my (our) personal information including financial information to such an entity.

Regulation - 2022/1925 - EN - EUR-Lex

eur-lex.europa.eu

That didn't really answer my question. I wasn't asking about Apple's obligations, I was asking what an 'environment of competition' looks like, and why the current situation doesn't qualify. If not, how will we know when we get there?

Interesting. No fewer than 19 different instances of the term 'free of charge' in the document.

How clear is it? Should Paragraph 9 just include data like (for instance) location logs, browser history, etc.? Or would it also include Photos, Music, Books, Movies, transactions, etc.? Say a new mobile OS appears on the scene. Would the 'Gatekeeper' be obligated to develop new apps allowing all of these items to be transported to this new OS, 'for the effective exercise of such data portability'?

 

[ProbablyDylan]

Huh. Article 6 specifies requirements for data portability - would certainly make switching between platforms easier if we could export a .zip with all our data and "install" it on the other platform.

Article 8 section 3 also specifies that the Gatekeeper can work with the EU on their proposed changes, checking to see if the changes would bring them into compliance before spending the resources on implementing them. In that case, it's not as vague as some users are making it out to be if the EU will lend a second pair of eyes to help navigate compliance. I'm guessing Apple didn't go this route, though.

 

[jlc1978]

...base ram isnt good, base icloud isnt good, base warranty isnt good (in EU). Apple is like Porsche selling iron rims and fabric seats as base options

Thy sell those because it meets peoples' needs at an affordable (for a Porsche) price point. Not everyone needs or wants leather, high end rims, etc. Those that want or need that have the option to do so, just like Apple offers options to upgrade as well.

 

[Ctrlos]

I don't expect them to be my friend. I expect them to provide a good product at a good price, or I go down the road.

They are 'big' because customers have voted with their wallets and decided to pay them for their products and expertise. Not because they were forced to by 'lock-in'. Not because the are a 'friend' (although being friendly can take you a lot farther than the alternative).

Curious: Apple is obviously big by any objective definition. But tell me: when does a company become 'big'?

When profits surpass people?

 

[Beautyspin]

That didn't really answer my question. I wasn't asking about Apple's obligations, I was asking what an 'environment of competition' looks like, and why the current situation doesn't qualify. If not, how will we know when we get there?

Interesting. No fewer than 19 different instances of the term 'free of charge' in the document.

View attachment 2392030

How clear is it? Should Paragraph 9 just include data like (for instance) location logs, browser history, etc.? Or would it also include Photos, Music, Books, Movies, transactions, etc.? Say a new mobile OS appears on the scene. Would the 'Gatekeeper' be obligated to develop new apps allowing all of these items to be transported to this new OS, 'for the effective exercise of such data portability'?

I think point 7 is all about competition.
Point 9 and 10 say, don't keep the data with you (like Apple does with the customer data that it collects and uses it for its own advertising platform while denying the same to 3rd parties using ATT and in the name of privacy), share it with 3rd parties when the customer allows it.
Seems pretty clear to me.

 

[Beautyspin]

I love how all of you think YOUR INTERPRETATION of the DMA is clearly the exactly correct one. The EU says "you can't follow the letter of the law, you have to follow the spirit of the law." But then at the same time you say there can't possibly be any other interpretation, the law is crystal clear on what Apple can and cannot do. It's not crystal clear. A lot of it will be worked out through negotiations with the EU, and I bet other parts will be worked out in the courts. But to say the law is crystal clear is laughable!

Please go ahead and give me your interpretation that agrees with the letter of law but is different from what we have been saying.
Somebody mentioned that the DMA mentioned the phrase "Free of charge" 19 times. But Apple goes ahead and charges CTF. Please show me which part of the regulation shows that it is okay for Apple to charge CTF.

 

[AppliedMicro]

Would you clarify that? According to Apple, 90% of the developers are small developers, and thus only pay 15%.

The “independent” study has been carefully crafted to support Apple’s position. Apple don’t dare telling how much (of either revenue, downloads or purchase transactions) these “small” developers account for.

The Verge summed it up nicely when reporting on the announcement of the small business program.
Just one sentence about those small developers you need to take in:

“According to analytics company Sensor Tower, an estimated 98 percent of developers would be eligible for the 15 percent cut, but those developers generated just 5 percent of the App Store’s total revenue last year.”

https://www.theverge.com/2020/11/18...s-program-commission-cut-15-percent-reduction

The 30% commission keeps getting referenced but that's only for the largest developers

Larger developers account for most of all app downloads or revenue.

 

[surferfb]

Please go ahead and give me your interpretation that agrees with the letter of law but is different from what we have been saying.
Somebody mentioned that the DMA mentioned the phrase "Free of charge" 19 times. But Apple goes ahead and charges CTF. Please show me which part of the regulation shows that it is okay for Apple to charge CTF.

I'd throw this back at you and ask you to show me where it says that Apple isn't allowed to charge developers the CTF? There's not one word that says they can't. The free of charge bits don't say anything about Apple having to provide its Intellectual Property "free of charge". There's not one word that says "you can't charge developers for the tools and services you provide to have them develop on iOS."

I've seen some argue in here that the DMA says you can't treat developers differently that use Apple's App Store any different than you treat developers who use alternate App Stores. That may be the case - and if so, my guess is Apple has an uphill climb to make the CTF stick unless they start applying to Apps in the Apple App Store too. But obviously Apple's lawyers think they can charge the CTF and it's legal. If the EU disagrees then Apple will have to change it or fight over it in court.

I'm not saying who is right and wrong - I am just saying the law is not clear on what is and isn't allowed. I'll note that while the EU said that Apple was out of compliance on steering, they were only "opening an investigation" on the CTF. I am sure that investigation is going to say it is out of compliance. But if it was 100% as clear cut as you are saying, they would have said they were out of compliance on the CTF - the CTF and steering provisions were announced at the same time.