EU Not Reassessing Apple and Google Antitrust Investigations, But New Administration Could Shift Priorities

[AppliedMicro]

If I were an entrepreneur in the EU, why would I bother trying to nurture a third smartphone or desktop computing platform or even their own social media platform knowing that I would just end up being subject to the DMA as a “reward” for being too successful?

The tech companies subject to the DMA, first and foremost Apple, Alphabet and Meta are among the most valuable companies in the entire world, raking in billions of Euros in revenue and earnings every year, while having dozens of millions - a substantial part of the EU population - as customers and obtained considerable degrees of monopoly power.

„Once I‘ve earned billions of Euros and become one of the most valuable companies on Earth, I run the risk of becoming subject to the Digital Markets Act in Europe!“ 😱😬🥵🫣😢

Do I really believe this would discourage „entrepreneurship“ and innovatio in Europe? No, I quite frankly consider that suggestion absurd, given how these have already earned and been rewarded in the billions. 💰💰💰💰

Quite the contrary! If anything, it’s precisely the monopoly power held by gatekeepers - combined with their branching out (from their core platform services) into related markets - that is going to discourage European (or other foreign) “entrepreneurs” from competing and innovating.


“We can’t sell subscriptions in smartphone apps - unless we fork over 30% of that revenue to our biggest competitors (for close to nothing of a service we need)”

👉 Does that premise encourage competition and innovation in the market for streaming services? Hell bloody no!

I mean… yeah, unless you really

 

[AppliedMicro]

the decision was ludicrous on its face - a non-resident company owes taxes to a country on sales made outside of that country? Crazy.

You know what‘s just as crazy? Companies pretending go be resident „nowhere“ - and paying effectively no taxes on their sales.

Everyone loves to bring this up and proceeds to ignore that every online platform charges the same fees whether it's Sony Microsoft Nintendo steam, etc.

It isn‘t. You‘re wrong.
Especially when you’re looking outside of gaming transactions - that people seem to be willing to pay a premium for.
Also, the console business basically relies on subsidised hardware - PCs and iPhones do not.

So the EU is opposed to high tax rates?
I know there's more to it. The irony was just too much.

Fair point.
That said, when a government charges everyone similar taxes, it’s a level playing field.
When one company can extort its competitors, it’s not.

 

[AppliedMicro]

Yes, I was referring to Apple's 30/15% tiers, which is more generous than most stores.

Brick & mortar stores take business risk - and have higher costs than online platforms.

 

[I7guy]

The tech companies subject to the DMA, first and foremost Apple, Alphabet and Meta are among the most valuable companies in the entire world, raking in billions of Euros in revenue and earnings every year, while having dozens of millions - a substantial part of the EU population - as customers and obtained considerable degrees of monopoly power.

What monopoly power? Show me a finding of illegal monopoly power.

„Once I‘ve earned billions of Euros and become one of the most valuable companies on Earth, I run the risk of becoming subject to the Digital Markets Act in Europe!“ 😱😬🥵🫣😢

Do I really believe this would discourage „entrepreneurship“ and innovatio in Europe? No, I quite frankly consider that suggestion absurd, given how these have already earned and been rewarded in the billions. 💰💰💰💰

Quite the contrary! If anything, it’s precisely the monopoly power held by gatekeepers - combined with their branching out (from their core platform services) into related markets - that is going to discourage European (or other foreign) “entrepreneurs” from competing and innovating.


“We can’t sell subscriptions in smartphone apps - unless we fork over 30% of that revenue to our biggest competitors (for close to nothing of a service we need)”

👉 Does that premise encourage competition and innovation in the market for streaming services? Hell bloody no!

I mean… yeah, unless you really

30% is fair. Don’t like that fee; thankfully there is competition.

 

[I7guy]

You know what‘s just as crazy? Companies pretending go be resident „nowhere“ - and paying effectively no taxes on their sales.

You mean companies using legal tax avoidance strategies?

It isn‘t. You‘re wrong.
Especially when you’re looking outside of gaming transactions - that people seem to be willing to pay a premium for.
Also, the console business basically relies on subsidised hardware - PCs and iPhones do not.

Fair point.
That said, when a government charges everyone similar taxes, it’s a level playing field.
When one company can extort its competitors, it’s not.

 

[AppliedMicro]

Are the people served better by a smaller number of companies with immense resources to drive innovation (e.g.: Microsoft, Apple, Alphabet/Google, Meta, Intel/AMD) and a limited number of heavily supported platforms (e.g.: iOS and Android, Mac/Windows/Linux)?

Or would they by government interference in the market creating a Balkanized patchwork of more numerous brands/companies/standards?

I think sometimes the market and user interest favors consolidation

Fully agree!

Just like no one is interested in having two dozens of cellular carriers or internet service providers operating their own physical infrastructure in a given market.

The market and user interest favour a consolidation down to a handful of competing firms. A natural oligopoly. It’s just as true for operating systems (or mobile application stores) as it is for cellular providers. Or airlines or train operating companies on given routes.

Especially in markets that provide essential infrastructure - what these operating systems have become.

 

[AppliedMicro]

What monopoly power? Show me a finding of illegal monopoly power.

“The (U.S.) Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market," and monopoly power as "the power to control prices or exclude competition”.

That’s an appropriate description for the mobile OS and application stores businesses of Apple and Google.

 

[I7guy]

“The (U.S.) Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market," and monopoly power as "the power to control prices or exclude competition”.

That’s an appropriate description for the mobile OS and application stores businesses of Apple and Google.

Until there is a finding there is no issue. Actually it’s not an apt description as there is competition. It’s like saying Costco has no power to decide whose products to sell.

 

[surferfb]

You know what‘s just as crazy? Companies pretending go be resident „nowhere“ - and paying effectively no taxes on their sales.

You well know that Apple was not "paying no taxes on their sales." Apple was paying sales tax to the appropriate jurisdictions, but they were (legally) delaying paying taxes on their profit made on those sales to the rightful recipient of said taxes, the United States. In fact, Apple paid taxes on that money to the US in 2018, which the US is having to return to Apple now that the EU effectively stole the money from US taxpayers. Ireland agreed that they didn't have any right to tax Apple on that money, and any sane person would think the same thing. Why on Earth does Apple owe taxes to Ireland on their profit made in France and Germany?

I know this is a stretch, but imagine if the incoming President declared that the DMA was "illegal state aid" and required any developer taking advantage of alternate app stores to pay taxes on their profit from the alternate app stores to the US. You'd be crying bloody murder.

 

[jlc1978]

Brick & mortar stores take business risk - and have higher costs than online platforms.

Not sure of your point; but if you are comparing them, well, some stores often have much higher margins than 15 or 30%.

Cost does not detremine pricing, demand and value does. If costs did, I couldn't charge what I charge for my services.

If the App Store was not an attractive market, developers would go elsewhere; their being on it tells me they find it profitable. I have no doubt they'd like access for less, just as consumers would want developers to charge less; but Apple shouldn't be forced to charge less, anymore than a brick and mortor store should be told to allow access to all products and what the can charge for access.

 

[surferfb]

“The (U.S.) Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market," and monopoly power as "the power to control prices or exclude competition”.

That’s an appropriate description for the mobile OS and application stores businesses of Apple and Google.

No, it's not. There are dozens of mobile app stores on Android, for example, including ones run by large corporations like Samsung, Huawei, and Amazon that are perfectly capable of competing with Google and Apple. Just because you personally don't want to shop at those stores doesn't make it a monopoly.

 

[AppliedMicro]

Why on Earth does Apple owe taxes to Ireland on their profit made in France and Germany?

When you sell something for profit through a French, German or Irish entity, that entity has to pay corporate tax on profits.
Unless it can reduce its profit by owing royalties for intellectual property to another company.
Which is what Apple did: assign their intellectual property to an Irish entity and have them charge for it.

delaying paying taxes on their profit made on those sales to the rightful recipient of said taxes, the United States

Since the intellectual property wasn’t assigned to a U.S. company, the U.S. wasn’t the rightful recipient.

 

[Abazigal]

Quite the contrary! If anything, it’s precisely the monopoly power held by gatekeepers - combined with their branching out (from their core platform services) into related markets - that is going to discourage European (or other foreign) “entrepreneurs” from competing and innovating.

Like you said, the companies being targeted are all US companies. What's the EU equivalent of Windows, iOS, macOS, or any of the social media platforms like Instagram or WhatsApp?

Allowing sideloading on iOS might allow certain apps that were previously unavailable (like saying gambling or r18 content), but I don't see how this would help foster a third smartphone platform to serve as meaningful competition, when the problems they would face are not addressed by the DMA (like developers' reluctance to support a third platform).

It feels more structural and environmental. Complaining that Google and Apple are monopolies is but a convenient distraction from the realisation that the very nature of the EU itself discourages such attempts at innovation to begin with.

 

[AppliedMicro]

Cost does not detremine pricing, demand and value does

The commission pricing charged by Apple isn’t subject to competition.

If the App Store was not an attractive market, developers would go elsewhere

There were no other alternatives to selling your iPhone app as elsewhere.
Neither can you have a competitive app without being present on either the Mac App Store or the Play Store - both of which together dominate the market.

There are dozens of mobile app stores on Android, for example, including ones run by large corporations like Samsung, Huawei, and Amazon that are perfectly capable of competing with Google and Apple. Just because you personally don't want to shop at those stores doesn't make it a monopoly.

The other stores aren’t of great relevance, considering their small market share.
It’s not a perfect but a de facto duopoly.

 

[drrich2]

China dominates hardware manufacturing (or so it seems from my U.S.-based consumer perspective).

The U.S. seems to dominate computer and smartphone software platforms (e.g.: Windows, MacOS, iOS), and international social media platforms (China bars some and has its own).

I was trying to figure out why more European Union nations don't come to mind at the platform level, but there sort of is one.

1.) Unix came about in the U.S., but wasn't freely available open source.
2.) Condensing some Wikipedia explained history down, a number of developments ensured and Finnish software engineer Linus Torvalds produced a Unix-compatible kernel, ultimately named Linux, which grew and while niche on the desktop space is widespread and important in a number of products (e.g.: servers), and is what Android (which I consider an iOS knock-off in look & feel) is based on.
3.) It's open source, which is very relevant to this discussion.

So, while there was considerably U.S. industrial 'fertilization' helping lead up to it, we have a European Union source for a tremendously important computer (and smartphone/tablet) platform.

But it's open source. It's not a product that was devised in the context of for profit, from what I understand, so not sure its presence validates the E.U. corporate legal environment approach.

In other words, based on discussion in this thread, I was curious as to whether the U.S. (which is larger than Western Europe) business/legal/cultural approach is more fertile ground to tech. advances than that in the E.U. I found the Linux example, but it seems very 'apples to oranges.'

What other European contributions do you guys think we should recognize today? Who is the Microsoft, Apple or Google of the E.U.?

 

[AppliedMicro]

What's the EU equivalent of Windows, iOS, macOS, or any of the social media platforms like Instagram or WhatsApp?

Irrelevant.

It’s not so much about competing with these platforms.
It’s about limiting the power of these platforms from being used in anticompetitive ways in related markets.

As an illustrative example, it’s making sure that a European music streaming service can compete fairly with one operated by the developers of Windows, Android or iOS.

When gatekeeper A. can charge music streaming service S. anything they want for transactions on S.’s app, prevent S. from marketing to consumers through said app, or exclude their app from their gatekeeping platform altogether - while A operates its own competing streaming service A.M. - competition on the market for streaming services may be anticompetitively distorted.

This is the case when there’s a lack of viable alternatives for S. to distribute its application and deliver its services that “forces” them to offer them through and on the gatekeeper’s platform service (operating system/application store).

Not as in legally forced to - but as in “having no other viable business choice”. This is most certainly the case when a duopolist intermediary (company A.) commands 40% or 50% of consumer spending on relevant products or services - even when its share of the hardware device market may be considerably smaller.

I don't see how this would help foster a third smartphone platform

No one is asking for a third platform - at least not “the market”.
Consumers in the market have converged on the two relevant platforms today
And basically no one is asking for a third one without extant ecosystem of third-party apps.

Since Apple doesn’t license or allow derivatives of iOS, any OS developer either adopts a variant of Android, with compatibility to Android apps - which just further cements Android‘s dominance - or his third platform will be dead on arrival. For lack of apps.

Unless, maybe, a company the size of Huawei is forced into it for „political“ reasons.

 

[surferfb]

When you sell something for profit through a French, German or Irish entity, that entity has to pay corporate tax on profits.
Unless it can reduce its profit by owing royalties for intellectual property to another company.
Which is what Apple did: assign their intellectual property to an Irish entity and have them charge for it.

Again, Apple licensed their IP to an Irish entity to delay paying the AMERICAN taxes it owed to its home country - which it subsequently paid in 2018. Vestager in her zeal to "get" one of the big tech companies, has stolen from Americans, with an assist from a court that, according to this expert, "totally contradict[ed] precedent, which the very same court handed down over the last two years" and "now the case law is a mess".

The other stores aren’t of great relevance, considering their small market share.
It’s not a perfect but a de facto duopoly.

Again, just because you don't want to shop there doesn't mean the competition doesn't exist. And you keep flipping between duopoly and monopoly like they're interchangeable. They're not.

When gatekeeper A. can charge music streaming service S. anything they want for transactions on S.’s app, prevent S. from marketing to consumers through said app, or exclude their app from their gatekeeping platform altogether - while A operates its own competing streaming service A.M. - competition on the market for streaming services may be anticompetitively distorted.

This is the case when there’s a lack of viable alternatives for S. to distribute its application and deliver its services that “forces” them to offer them through and on the gatekeeper’s platform service (operating system/application store).

If only there was some way for streaming music service S. to distribute its application on gatekeeper A's devices without paying gatekeeper A. anything. They might have been able to become the world's largest streaming music service without "state aid" from the EU.

 

[AppliedMicro]

Again, Apple licensed their IP to an Irish entity to delay paying the AMERICAN taxes it owed to its home country - which it subsequently paid in 2018

The fact that the U.S. used to apply worldwide taxation rather than a territorial one is „your“ (their) problem.

Likewise, when you, as (supposedly) an American citizen move to a European Country to live and work there, the fact that the U.S. will (contrary to almost any other civilised, first-world country on this planet) continue to tax you on your worldwide income (even though you don’t live there) is your bloody problem. Or the United States‘ problem.

Not Europe‘s.

And no, Europe doesn‘t and shouldn‘t give a damn about your being double-taxed (unless, of course, otherwise agreed upon through applicable DTA between the two countries).

Your income tax belongs to Europe - and you sort out your problems with the U.S. yourself. Give up citizenship, if you don‘t like it.

Likewise, if you assign intellectual property to a European company, the corporate tax that company has to pay belongs to Europe (as long as it‘s deemed tax resident in Europe, e.g. Ireland).

 

[I7guy]

Irrelevant.

It’s not so much about competing with these platforms.
It’s about limiting the power of these platforms from being used in anticompetitive ways in related markets.

The most abused word on this site. The dma is used for justification of anticompetitive and when you say prove it…the dma is
Trotted out.

As an illustrative example, it’s making sure that a European music streaming service can compete fairly with one operated by the developers of Windows, Android or iOS.

When gatekeeper A. can charge music streaming service S. anything they want for transactions on S.’s app, prevent S. from marketing to consumers through said app, or exclude their app from their gatekeeping platform altogether - while A operates its own competing streaming service A.M. - competition on the market for streaming services may be anticompetitively distorted.

Nice hypothetical as music gatekeeper b does not pay their artists and in fact can distribute their wares in multiple ways.

This is the case when there’s a lack of viable alternatives for S. to distribute its application and deliver its services that “forces” them to offer them through and on the gatekeeper’s platform service (operating system/application store).

That is not the big techs problem.

Not as in legally forced to - but as in “having no other viable business choice”. This is most certainly the case when a duopolist intermediary (company A.) commands 40% or 50% of consumer spending on relevant products or services - even when its share of the hardware device market may be considerably smaller.

That’s made up rational.

No one is asking for a third platform - at least not “the market”.
Consumers in the market have converged on the two relevant platforms today
And basically no one is asking for a third one without extant ecosystem of third-party apps.

The EU wants a third platform because it hobbled the one with a minority market share.

Since Apple doesn’t license or allow derivatives of iOS, any OS developer either adopts a variant of Android, with compatibility to Android apps - which just further cements Android‘s dominance - or his third platform will be dead on arrival. For lack of apps.

Unless, maybe, a company the size of Huawei is forced into it for „political“ reasons.

Maybe.

 

[surferfb]

The fact that the U.S. used to apply worldwide taxation rather than a territorial one is „your“ (their) problem.

When you, as an American citizen (supposedly) move to a European Country to live and work there, the fact that the U.S. will continue to tax you on your worldwide income(even though you don’t live there) is your bloody problem.


Not Europe‘s.

I am well aware how this works, my brother is a citizen of both the US and his adopted EU country.

That has nothing to do with the fact that Ireland didn’t deserve the money the EU stole. That profit should have been booked in the US, as it was Apple’s profit, not their subsidiaries’. The fact that Apple was delaying paying US taxes on it should have been none of the EU’s business, but Vestager had her vendetta, the EU’s highest court decided that giving unearned billions to an EU country was more important than following their own precedent, so here we are.

 

[drrich2]

The other stores aren’t of great relevance, considering their small market share.

This was in regards to Android ap. stores other than Google Play.

So, why do they have so little market share they lack such relevance?

It seems like competition would lead to them offering ap. developers lower % fees to host on their site, word would get around, and their market share would grow...or at least force Google to cut whatever they charge way down.

If the competition model works as the E.U. mindset seems to think it would, seems like on the Android ap. store side of things somebody else would have big market share and relevance. If that's not the case, why not?

 

[AppliedMicro]

That profit should have been booked in the US, as it was Apple’s profit, not their subsidiaries

Debatable from a “moral” perspective (if you will), Apple chose to book it through and for their Irish subsidiary.

The fact that Apple was delaying paying US taxes on it should have been none of the EU’s business

Exactly.
I agree: whether Apple saves taxes in a third jurisdiction (the U.S.) shouldn’t matter when it comes to determining tax residence and liability in Ireland.

And it wasn’t, really.
They just determined that the profits were attributable to the Irish entity - and thus taxable in Ireland.

And you can’t (shouldn’t) have it both ways:
- saying the profit belongs (is attributable) to the U.S.
- while booking it through a European subsidiary and (further on a low or no-ta. jurisdiction)

 

[AppliedMicro]

So, why do they have so little market share they lack such relevance?

It seems like competition would lead to them offering ap. developers lower % fees to host on their site, word would get around, and their market share would grow...or at least force Google to cut whatever they charge way down.

Convenience.
Consumer preference.
Trust in the OS developer’s own store.
And let’s not forget that Google and Apple have given away their services for (basically) free to most developers.

That’s how they created and maintain their dominant position.

Again, it doesn’t really matter.
Their dominant positions are a fact.

And you keep flipping between duopoly and monopoly like they're interchangeable. They're not.

It’s a quasi duopoly on the overall smartphone application market - and respective monopolies on the markets for iOS and Android apps.

 

[fzJNotIBOxgnbqejSeVCvJScL]

Good. Daily reminder the EU is a protectionist cartel designed to harm non-EU firms by political means disguised by any other name. Funny how the European continent fought wars against fascistic police states only to install a bigger one covering almost every one of their countries that haven't escaped.

Good thing the US finally has a government that cares about OUR firms being shut out of THEIR markets, and cares enough to tighten the screw on these crooked EU commissars (every single one of whom deserve to be in jail for the harm they do to their own citizens)

 

[avz]

Funny how the European continent fought wars against fascistic police states only to install a bigger one covering almost every one of their countries that haven't escaped.

Neville Chamberlain understood that just like Ukraine, Nazi Germany don't have the resources necessary to fight against the Soviet Union, therefore he helped Hitler to create a first iteration of NATO by uniting EU under Nazi Germany.

There is a reason why NATO logo contains a watered down swastika.

People like Charles de Gaulle represented a minuscule underground resistance against the Nazis in Europe.

The great achievement of the Soviet diplomacy at the time was to make sure that US/UK did not join that first iteration of "NATO". It seems that Roosevelt understood himself the importance of being on the right side of history and therefore was poisoned in 1945.

This explains why US is in such a difficult/unsolvable situation right now with regards to Ukraine.