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

[Ctrlos]

If I was Apple I would be playing these games too. No way I’d let a developer post info on how to get cheaper stuff within the ecosystem I had created and provided. That doesn’t make any business sense to Apple.

That’s like being forced to put pricing information of other cheaper competitors vehicles at a car dealership.

People are too defensive of greedy capitalist conglomerates.

Apple are non different to Dell, a hardware manufacturer whose products are used by developers for the sale of software.

 

[Beautyspin]

You are too emotional and invested.
Courts are great at separating fact from emotion. They judge by letter of the law not the spirit of it.

If you want to redirect this emotion to the EU who drafted such a poor law and gave Apple the wiggleroom they needed.

The world’s best lawyers are in Apple’s HQ and they know what they are doing.

The EU is a multilingual region. So, the letter of law is not possible as there can be a change in the meaning due to losses in translation. Therefore, the courts look at the spirit of the law too.

 

[Ctrlos]

They already made the carrot, the donkey’s just getting greedy.

Did they though?

I don’t get why so many people on here don’t want to see the benefits of competition.

If we looked at some bygone case studies we would see that whenever Apple has been forced to innovate to stay relevant we have all benefitted:

- Hackers crack iPhone OS 1. We all get the App Store.

- Android gets released. Apple improve iOS and lower prices of the iPhone.

- WebOS brings proper multitasking. Apple add it to iOS.

- Windows Phone 7 makes iOS and Android look archaic. We get flat design with iOS7 and Android 5

- Apple forced to adopt an industry standard. We can now use one charger for all our gadgets.

- Apple opens up iOS to alternate app markets. Emulators finally get released and Apple drop their stupid restrictions on game streaming apps.

- OpenAI teams with Microsoft. We get Apple Intelligence.

Now from the very same people that bemoan Apple for not innovating with hardware or software every year comes an opportunity for some healthy competition and they bat it away?!?

 

[atoqir]

Apple eventually will relent when: revenue won < massive fines + massive lawyer fees

They can use their new iPad calculator app to generate the graphic to see where the turning point is

 

[tobyx]

Now from the very same people that bemoan Apple for not innovating with hardware or software every year comes an opportunity for some healthy competition and they bat it away?!?

Nono, I agree with that completely. Competition makes products better.

So compete. Instead of making ludicrous overreaching laws, invest in EU companies to build a competing ecosystem incl. hardware and software and see how much people like it. That would be the way to go.

 

[Beautyspin]

Exactly! And you probably intended to say it directly anyway, but they’ll continue to rake in the cash through their already established channels, i.e. the App Store, because the existence of the CTF is a deterrent to many if not most developers.

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.

Having said that, as a user, I wish the DMA didn’t exist. It solves nothing for actual citizens of the EU. I consciously picked iOS as my platform of choice, because I like Apple defaults and the way they manage to give me a good user experiences that extends to third party apps. The correct answer would’ve been to develop a mobile application platform in the EU with funds and everything. Let’s see how a fair and open market accepts it. Probably not at all.

Users don’t care.

The DMA is not for consumers, at least not directly. It is for competition, which will help the consumers indirectly resulting in price reduction or feature improvement. However, the main goal of the DMA is to foster competition. They believe that it will unlock the potential and increase the trade in the EU by several folds.

"Evidence suggests that unlocking the full potential of the platform economy could increase EU27 GDP by between EUR 43.7 and EUR 174.5 billion from 2019 to 2029. Increased R&D resulting from a more diverse pool of innovation could create between 136,387 and 294,236 new jobs."

https://www.cullen-international.com/dam/jcr:fb846258-a48a-4fee-bf17-244026577510/KK0620190ENN.pdf

 

[Beautyspin]

Just like Apple couldn’t come up with a decent keyboard mechanism 10 years ago. They may have money but that doesn’t mean they have the best people. They even tried to revise it theee times before realizing the mechanism used prior was better all along.

Also, as evidenced by their foray into the AI. All vapor(soft)ware until now.

 

[tobyx]

The DMA is not for consumers, at least not directly. It is for competition, which will help the consumers indirectly resulting in price reduction or feature improvement. However, the main goal of the DMA is to foster competition. They believe that it will unlock the potential and increase the trade in the EU by several folds.

I get that. But it’s a very limited view from the lawmakers.

When they end up regulating 5 US and 1 Chinese company, they should instead be at least considering why none of those “big tech” companies originated in the EU. Increase competition by actually competing. Make a competing product. This is a petty law.

 

[Sophisticatednut]

Not in the EU. The EU has multiple languages and hence any law can have different meanings when interpreted in different languages.

"Methods of interpretation of EU law When interpreting EU law, the CJEU pays particular attention to the aim and purpose of EU law (teleological interpretation), rather than focusing exclusively on the wording of the provisions (linguistic interpretation).14 This is explained by numerous factors, in particular the open-ended and policy-oriented rules of the EU Treaties, as well as by EU legal multilingualism.15 Under the latter principle, all EU law is equally authentic in all language versions. Hence, the Court cannot rely on the wording of a single version, as a national court can, in order to give an interpretation of the legal provision under consideration. Therefore, in order to decode the meaning of a legal rule, the Court analyses it especially in the light of its purpose (teleological interpretation) as well as its context (systemic interpretation)."

https://www.europarl.europa.eu/RegData/etudes/BRIE/2017/599364/EPRS_BRI(2017)599364_EN.pdf

It always baffles my mind how Americans always misses this part of how law actually works in EU, especially when we have multiple languages to work with.

Needs to mention this in just about every other thread

 

[cfountain72]

The CTF was never going to hold. It massively puts off smaller devs going it alone.

Apple would be better off making a carrot than a stick.

"Apple won’t charge the small developer the CTF even if they hit 1 million annual installs in the three-year window and continue to exceed it. However, if a developer reaches a global revenue between €10 million and €50 million during this time, Apple says it will start charging them after “one million first annual installs up to a cap of €1 million per year.”" https://www.theverge.com/2024/5/2/24147225/apple-ios-iphone-ipad-core-technology-fee-eu

 

[Beautyspin]

I get that. But it’s a very limited view from the lawmakers.

When they end up regulating 5 US and 1 Chinese company, they should instead be at least considering why none of those “big tech” companies originated in the EU. Increase competition by actually competing. Make a competing product. This is a petty law.

That is what the EU is telling Apple. Not just the EU by the way, even the US, Japan, India, Australia, Brazil, the UK, and several other countries are telling Apple the same thing.

 

[Dephibio]

Said but true: US innovates, EU regulates.

 

[Beautyspin]

Apple would be smart to pause all 3rd party app sales to the EU until the threat to their business is eliminated. The concept that they have the right to impose a fine of 10% of their global sales. Here is why Apple may be forced to pull out of the EU over this extreme uncertainty eventually. If not, they will remove many of the features like most new apps and services, maybe just providing updated.

To determine the effect of an EU fine of 10% of global sales on Apple's profits, we need to follow these steps:

1. **Calculate the fine as 10% of global sales.**
2. **Calculate the total profit with a 36% profit margin.**
3. **Determine the new profit after accounting for the fine.**

Let’s break this down with a hypothetical example, assuming Apple’s global sales are \( X \).

1. **Fine Calculation:**
- Fine = 10% of global sales = \( 0.10 \times X \).

2. **Profit Calculation:**
- Profit margin = 36%, so total profit before the fine = \( 0.36 \times X \).

3. **New Profit Calculation:**
- New profit = Total profit before the fine - Fine
- New profit = \( (0.36 \times X) - (0.10 \times X) \)
- New profit = \( 0.36X - 0.10X \)
- New profit = \( 0.26X \).

Thus, the profit after accounting for the fine would be 26% of global sales. The fine would reduce Apple's profit by \( 0.10X \), which corresponds to a reduction in profit from 36% to 26% of global sales. This represents a significant decrease in the profit margin by 10 percentage points or approximately 27.78% of the original profit margin

That means the Fine is more than they make in the EU.

You have not considered several things in your calculations due to false assumptions.
1. No Appstore, not HW sales. So, count those sales also. About 80 billion per year.
2. Fines can be negotiated. Apple had complied with the Spotify ruling, and then is contending it in the courts. That is the right way to do it. If it had just simply not complied, it would have been accruing fines on a daily basis due to non-compliance.
3. If they continue to be non-compliant, the fines will certainly exceed their global turnover over a period of time.
4. Apple cannot get out of every country that fines it as almost all the major markets are either bringing similar laws or at an advanced stage of bringing similar laws, including the US. Where will they sell?

 

[Beautyspin]

Potentially some kinda of API access model. A fee for every X pulls. If developers want to pull on certain features within the core OS, link into Apple services, like the App Store for sales and updates, iCloud for backups or Apple Pay, etc they pay. If they’re going totally solo then in theory, they’re not using Apple Services, so have no reason to owe Apple. 🍏

They might have to do the same for those selling in the Apple's Appstore. There cannot be any discrimination that preferences their store, remember.

 

[Beautyspin]

"Apple won’t charge the small developer the CTF even if they hit 1 million annual installs in the three-year window and continue to exceed it. However, if a developer reaches a global revenue between €10 million and €50 million during this time, Apple says it will start charging them after “one million first annual installs up to a cap of €1 million per year.”" https://www.theverge.com/2024/5/2/24147225/apple-ios-iphone-ipad-core-technology-fee-eu

This will hold once Apple charges CTF for apps being distributed in the Apple's Appstore as well or remove it for both. No self-preferencing.

 

[I7guy]

As I keep saying. The EU wants to force th App Store to be a public utility.

 

[crees!]

This will never end. Pull out baby, pull out.

 

[Xavier]

Did they though?

I don’t get why so many people on here don’t want to see the benefits of competition.

If we looked at some bygone case studies we would see that whenever Apple has been forced to innovate to stay relevant we have all benefitted:

- Hackers crack iPhone OS 1. We all get the App Store.

- Android gets released. Apple improve iOS and lower prices of the iPhone.

- WebOS brings proper multitasking. Apple add it to iOS.

- Windows Phone 7 makes iOS and Android look archaic. We get flat design with iOS7 and Android 5

- Apple forced to adopt an industry standard. We can now use one charger for all our gadgets.

- Apple opens up iOS to alternate app markets. Emulators finally get released and Apple drop their stupid restrictions on game streaming apps.

- OpenAI teams with Microsoft. We get Apple Intelligence.

Now from the very same people that bemoan Apple for not innovating with hardware or software every year comes an opportunity for some healthy competition and they bat it away?!?

This is an interesting take and definitely holds true to competition and tech.

It will be interesting to see how the EU, Japan, and any other countries implementing alt app stores, will effect the greater iOS United States install base in the future. The dominos are falling?

 

[jlc1978]

...until you realise that Amazon can't and doesn't prevent your product from working if sold outside of Amazon.
And that there are way more marketplaces and direct sales channels available than for mobile apps.

Which is why I think the ultimate endgame would be simply to allow sideloading like on the Mac. Apple could change the fee structure on the App Store to a per download fee or Apple could do what Epic does and tier the costs of access to its technology. Simply forcing Apple to host an app and allow the developer to sell it via 3rd party with no renumeration is not, IMHO, what the EU intended with the DMA. The only question is how will Apple continue to make money from the App Store and comply with the DMA.

If a developer wants Apple to sign the app, you pay Apple's fees. if not, the user gets. warning and can chose to whether to load the app and what permissions to give it.

If a developer wants to be on the App Store, then they pay its fees. If not, sell on an alternative store.

If a developer wants access to Apple's developer tools and early betas, pay to join.

 

[CEmajr]

Can’t innovate? Just regulate!

 

[Ctrlos]

Nono, I agree with that completely. Competition makes products better.

So compete. Instead of making ludicrous overreaching laws, invest in EU companies to build a competing ecosystem incl. hardware and software and see how much people like it. That would be the way to go.

It’s not impossible. Huawei continue to make the best phones on the market and are kicking Apple’s backside in China without any Google apps or services.

 

[Ctrlos]

"Apple won’t charge the small developer the CTF even if they hit 1 million annual installs in the three-year window and continue to exceed it. However, if a developer reaches a global revenue between €10 million and €50 million during this time, Apple says it will start charging them after “one million first annual installs up to a cap of €1 million per year.”" https://www.theverge.com/2024/5/2/24147225/apple-ios-iphone-ipad-core-technology-fee-eu

Why make it so complex though? Why not just scrap it altogether? Doesn’t the dev already pay a subscription for access to SDKs and will already have bought a Mac. Isn’t this enough if they’re not using avenues of distribution?

 

[GrayFlannel]

Probably planned by Apple all along.

Ahh, the Bruce Lee hero worship. Lee was so magical he could jump over a tree from a standing position.

They will have known the CTF wouldn't fly, but it will take several years of legal wrangling to sort out, during which time they will rake in the cash. The longer they prolong the inevitable, the more money they will make.

So Apple has knowingly extorted money from developers and customers to become a trillion dollar company. Interesting plausible theory actually.

 

[Ctrlos]

Can’t innovate? Just regulate!

Ironically it is Apple doing the regulating because they don’t want to innovate!

 

[GrayFlannel]

The lawyers will be winners out of this.

Which ones? The one on staff at Apple or on staff in the EU?