EU Reportedly Planning to Charge Apple for Violating Digital Markets Act

[atomic.flip]

It sounds terrible, but what would happen if Apple left the EU market? A solid billion is a lot to be fined for non-compliance. I respect the spirit of EU regulations to open up closed systems, to promote standards, and to protect user privacy. I wonder if the EU is too ambitious; their regulations are sometimes challenging to comply with. I’m referring to GDPR… this I’m unsure of. I hear many battles with the EU and anti-competitive practices, but at some point, switching to leave a market will become a viable option.

They would lose about 100 Billion year over year by just chopping those numbers off a spreadsheet. There would be an unquantifiable impact to global sales as a result of negative PR as well.

 

[MilaM]

"We know from today’s workshop that (a) Apple has already gotten specific pushback from the EC on aspects of its DMA compliance plan; and (b) Apple continues to think the CTF is perfectly cromulent under the terms of the DMA. That to me says the CTF is going to fly."

No wonder Gruber thinks like that. To him everything that comes out of Apple HQ is gospel. I would do the same if my career was built around having friendly relations with Apple execs.

 

[raghu8912]

Good. Apple needs to comply with European law if it sells products in Europe. Just like how European countries have to comply with US law to operate in the US. It's kind of bizar how many people in this thread seem to imply that US companies somehow don't have to respect local laws. Why wouldn't they? That's how business works in every country. Any company always has to comply with the local laws of the country in which they're operating. Why would it be any different for Apple?

People also seem to be forgetting that there's also an antitrust case against Apple in the US, for many of the same reasons as in the EU.

The idea of Apple pulling out of the EU is, simply, absurd. The costs of complying are minuscule compared to the profits they'd lose if they pulled out of the EU.

Also, anyone in this thread who's enjoying playing on an emulator on their iOS device should be thanking the EU for these laws, since the Digital Markets Act is the only reason Apple now allows emulators in the App Store.

if Steve Jobs was alive he would have pulled out of EU and said enough of this BS.

 

[Jimmdean]

Laws and regulations are fine, but the penalty being based on worldwide revenue is wrong on its face. EU tried to do some good here but took it just a little too far. If they have the means to do so Apple should just not pay the fine. They should also stop selling in any way that sends revenue to EU or its members. I'm sure if people in the EU want iPhones they'll figure out how to buy them.

Don't get me wrong I know a lot of people think Apple is wrong in this matter. That's fine - you don't have to buy Apple products. The EU could even choose to ban Apple products. But telling them how to run their business is wrong.

 

[hesoba]

The EU only accounts for around 7% of Apple's revenue. So, while I personally don't think they'll pull out, it wouldn't be as big of a deal to the bottom line as a lot of people here think it would. Especially if EU is fining them 10-20% of Apple's global revenue.

App Store Revenue. Revenue in all sales and products is 24 %

 

[jumpcutking]

They don't subsidize it with the sales of the most popular apps but off of unethical microtransactions in games.
They don't make every developer pay a fair percentage of revenue (ex: streaming apps pay nothing) and they allow physical goods purchased to pay nothing even when those apps have just as much burden on the system as do digital goods apps.

Furthermore, Apple doesn't charge the same app the same fees based on the new or old agreement, instead just by accepting the old agreement an App that today pays nothing has to pay something.

So lets look at two categories,
Category DMA: Apps that choose to accept the new terms and release apps both inside and outside the App Store.
Category Apl: Apps that are only on the old terms and are exclusive to the App Store.

Streaming App
DMA: 0.5 per download to apple
APL: 0.00 to Apple

IAP or Up front purchases:
DMA: 20% + 0.5 per download to apple
APL: 30%

You can go to Apple's calculator and just look at how quickly the new fee structure outpaces the old one.

The only way you can pay less is if you have a very high per user revenue. If you have low per user revenue then the old system costs less. And that is steering and clearly against the rules.

Ex:

0.50 per user per year on 10,000,000 users:
DMA: $451,000 per month (more than the 416,000/month that the app even makes!!)
APL: $115,000 per month

If your app is mostly free with a few paid users the new terms are a non-starter.

I think the problem is, Current AppStore: the fairness stems in free apps being free but once you make money from digital distribution (such as downloads or in game purchases) a percentage is charged. The platform .50 fee is because they can’t know if someone is using a payment system or charging users without human review. So I think they crunched some numbers and felt people like it was a compromise. Nothing that you are only charged after the first million if your app install metrics. Or something similar to that affect - under the new rules. Small business and new companies don’t have to pay until they expand. With a well guided update system, and a user charged fee, they could subside this cost easily (in theory). Of course, we’re talking about the fairness. Is it fair?

Windows OS: install any application use any SDK. We collect nothing. Venders like NVidia may use developer tools that Windows releases. Any app can be installed without any charge… (minus signing certificate verifications for executables). Windows is not Open Source. Use our store pay revenues (excluding physical goods).

Android: Pay the developer fee (one time), use Google Play and get charged 10% of all revenue (except physical goods). You can download and install APK’s (executables) (signed or not) for free. Android OS is open sourced.

Apple Mac/iOS: Pay the developer fee yearly, get access to tools and api’s. Use our SDK’s. Mac can install signed (and technically unsigned) apps for free without charging fees. Use the Mac Store and get charged a fee (except physical goods). iOS use the App Store or use Testdrive, or enterprise certificate provisioning. Pay royalties on all revenue of 10-30%. Apple source code is gated to them and security researchers (binaries).

I think EU and Developers have a problem. Apple’s licensing doesn’t seem to be in congruent with the market standards. When they look at the grand scheme of their users they believe Apple has an unfair advantage and is taking advantage based on similar assessments and assertions I performed above.

 

[bcortens]

Laws and regulations are fine, but the penalty being based on worldwide revenue is wrong on its face. If they have the means to do so Apple should just not pay the fine. They should also stop selling in any way that sends revenue to EU or its members. I'm sure if people in the EU want iPhones they'll figure out how to buy them.

Don't get me wrong I know a lot of people think Apple is wrong in this matter. That's fine - you don't have to buy Apple products. The EU could even choose to ban Apple products. But telling them how to run their business is wrong.

When companies get so big that they can treat fines as the cost of doing business then worldwide revenue is the only measure they understand.

 

[djphat2000]

The problem is that in the rest of the world (and in the EU if you stick with the old App Store terms) you only have to pay the annual developer membership to gain access to all of those features, they give all of that away already.

So Apple charging Apps, essentially, a 0.50 fee to also offer their apps outside of the App Store is what is at issue, they already give away the tech because Apple knows that it is important to keep third party apps around.

They give it away as those apps are selling on the AppStore.
By leaving the app store, they are going to lose money on "giving" away membership for only $99 a year.

It was/is mutually beneficial to both parties to charge only $99 for membership, while making money on sales 30% or less cut. Apple most likely doesn't want to charge more than the $99 yearly fee as it makes it very accessible to developers and startups to make something for the AppStore. .50 past the first million makes it possible for people to still give away their apps if they wish. But, if it is successful, they pay Apple back for that success. It's their IP at the end of the day.

"from link above -
The idea that the entire CTF is disallowed under the DMA is an argument that the DMA disallows a company from monetizing access to its own platform and IP. EC fans may be surprised to hear this but the EC is a capitalist body. I really don’t think they want to send a message to the world that the EU will strip companies of their own platforms. As Jebelli writes in an aside in his thread:

It’s pretty incredible if you take a step back, in what other industry do entire regulatory frameworks pop up to address a dispute between different businesses over the question of “Why can’t I have gratuitous access to this infrastructure, at zero cost to myself?”

The crybaby Spotifys in the EU have already gotten a lot from the EC protection racket, including a large number of huge concessions in Apple’s DMA compliance plan. Not paying anything to Apple under any condition is all they’ll settle for though."

 

[raghu8912]

It often comes from posters who don't do math.

View attachment 2388889

Apple wouldn't loose all of the revenue.
Most of the regulation is on Phone iOS store.
and people will smuggle phones into EU easily.
i think Apple should try not selling iPhone in EU.
if Apple doesn't push back then EU will force apple to share their processor technology with competitors.
make iOS/MacOS open source
all tablets and laptops should be water resistant.

 

[atomic.flip]

if Steve Jobs was alive he would have pulled out of EU and said enough of this BS.

LOL but…. He isn’t alive is he? RIP SJ

 

[jumpcutking]

They would lose about 100 Billion year over year by just chopping those numbers off a spreadsheet. There would be an unquantifiable impact to global sales as a result of negative PR as well.

Maybe, what’s the taxes Apple Pay’s on that? vat, income etc? Because that would be the EU effective number if apple left.

 

[surferfb]

App Store Revenue. Revenue in all sales and products is 24 %

"Europe" is 24%. Includes countries like the UK, Switzerland, and the Middle East which aren't in the EU.

 

[raghu8912]

The word "government" literally includes the word "govern" within it

are they going to "govern" what car i drive, how long i drive, what i should eat, what i should drink ?
are they going to govern by giving me a weekly menu ?

 

[cfountain72]

Not sure why Apple even tried as it was obvious the fee was in clear violation of the DMA.

Either way, the EU will get their money, either through daily penalties or compliance. Apple ain't about to stop selling to nearly 500 million consumers.

Can you point out where in the DMA this was clear?

 

[MilaM]

Maybe, what’s the taxes Apple Pay’s on that? vat, income etc? Because that would be the EU effective number if apple left.

VAT is never part a the revenue reported by companies. It's a tax paid by the customers.

 

[bcortens]

I think the problem is, Current AppStore: the fairness stems in free apps being free but once you make money from digital distribution (such as downloads or in game purchases) a percentage is charged. The platform .50 fee is because they can’t know if someone is using a payment system or charging users without human review. So I think they crunched some numbers and felt people like it was a compromise. Nothing that you are only charged after the first million if your app install metrics. Or something similar to that affect - under the new rules. Small business and new companies don’t have to pay until they expand. With a well guided update system, and a user charged fee, they could subside this cost easily (in theory). Of course, we’re talking about the fairness. Is it fair?

Except all reader apps, and all physical goods apps are charged nothing if you stick with the existing system. They pay only the annual fee.

I've long bemoaned Apple's system as far as I can tell the current system incentivizes only the worst monetization practices in Apps which seem to help Apple pad out its bottom line with unethical micro-transactions in games.

They shouldn't charge for IP licensing because they already don't. The claim that the CTF is for the IP smells like a lie (even if it isn't) because they already don't charge all apps that earn revenue from Apple's IP.

Windows OS: install any application use any SDK. We collect nothing. Venders like NVidia may use developer tools that Windows releases. Any app can be installed without any charge… (minus signing certificate verifications for executables). Windows is not Open Source. Use our store pay revenues (excluding physical goods).

Android: Pay the developer fee (one time), use Google Play and get charged 10% of all revenue (except physical goods). You can download and install APK’s (executables) (signed or not) for free. Android OS is open sourced.

Apple Mac/iOS: Pay the developer fee yearly, get access to tools and api’s. Use our SDK’s. Mac can install signed (and technically unsigned) apps for free without charging fees. Use the Mac Store and get charged a fee (except physical goods). iOS use the App Store or use Testdrive, or enterprise certificate provisioning. Pay royalties on all revenue of 10-30%. Apple source code is gated to them and security researchers (binaries).

Except that Pay royalties on all revenue isn't true, physical goods and services apps as well as streaming reader style apps use just as much of Apple's IP as any other app but pay nothing.

I think EU and Developers have a problem. Apple’s licensing doesn’t seem to be in congruent with the market standards. When they look at the grand scheme of their users they believe Apple has an unfair advantage and is taking advantage based on similar assessments and assertions I performed above.

If Apple wants to charge a licensing scheme that is fair it has to apply to everyone and it never has.

 

[raghu8912]

Apple should just pay them out of pity. Europe has absolutely zero technical or business leadership in the world due their overly regulated markets. It’s rare to see successful startups there.

they just want money, EU has created a new business model to generate revenue by imposing fines on American tech companies.

 

[turbineseaplane]

are they going to "govern" what car i drive, how long i drive, what i should eat, what i should drink ?
are they going to govern by giving me a weekly menu ?

We do have car safety regulations, limitations on commercial driver time on road w/o rest and food safety regulations, yes.

This is called "civilized society", and you are benefiting enormously from it whether you realize it or not.

 

[atomic.flip]

Apple wouldn't loose all of the revenue.
Most of the regulation is on Phone iOS store.
and people will smuggle phones into EU easily.
i think Apple should try not selling iPhone in EU.
if Apple doesn't push back then EU will force apple to share their processor technology with competitors.
make iOS/MacOS open source
all tablets and laptops should be water resistant.

Not about device sales. It’s about commerce in general. Including e-commerce. Even in the US we now pay sales tax on many online transactions. And so the government has a say in what we can and cannot buy even online / digital goods.

The US is imposing a ban of TikTok! And lots of Americans on here are talking about the EU being overly regulated. LOL

 

[jumpcutking]

It often comes from posters who don't do math.

View attachment 2388889

These are confirmed numbers?

They also already charge for iPad OS and iOS when they sell the device and trying to double monetize the platform by also charging developers to access it is kind of double dipping.

I could see that, but they offer the OS free - maybe because they monetize the OS and APIs developed for gaming and developers through AppStore Revenue.

 

[bcortens]

They give it away as those apps are selling on the AppStore.
By leaving the app store, they are going to lose money on "giving" away membership for only $99 a year.

What money are they losing? If Spotify is in or outside of the App Store either way they pay Apple only the $99 per year. So which money would they lose by not charging the CTF?

It was/is mutually beneficial to both parties to charge only $99 for membership, while making money on sales 30% or less cut. Apple most likely doesn't want to charge more than the $99 yearly fee as it makes it very accessible to developers and startups to make something for the AppStore. .50 past the first million makes it possible for people to still give away their apps if they wish. But, if it is successful, they pay Apple back for that success. It's their IP at the end of the day.

Their IP that they don't charge for in sooooooo many situations. They only want to charge Apps that aren't willing to obey them and stay in their store. It's steering.

"from link above -
The idea that the entire CTF is disallowed under the DMA is an argument that the DMA disallows a company from monetizing access to its own platform and IP. EC fans may be surprised to hear this but the EC is a capitalist body. I really don’t think they want to send a message to the world that the EU will strip companies of their own platforms. As Jebelli writes in an aside in his thread:


The crybaby Spotifys in the EU have already gotten a lot from the EC protection racket, including a large number of huge concessions in Apple’s DMA compliance plan. Not paying anything to Apple under any condition is all they’ll settle for though."

I actually don't have a problem with monetizing their IP, what I have a problem with is them claiming that is what they are doing when they have so many exceptions (reader apps, free apps under the old terms, apps selling physical goods and services etc...) that it is clearly not them trying to monetize their IP.

If there was a flatter structure where ALL apps had to give Apple say 5% of revenue regardless of how it is earned or even something like the CTF with a flat per download fee (capped at some % of revenue) I could see that passing muster in the EU. But that fee would have to apply worldwide to Apps inside and outside the store for it to be fair.

Only charging Apps that accept the new terms is where Apple gets in trouble. Only charging Apps in the EU where the same app outside of the EU would pay apple nothing is also going to get Apple in trouble. Claiming it's an IP license when they let so many monetize the use of their IP for free is going to get Apple in trouble.

 

[atomic.flip]

are they going to "govern" what car i drive, how long i drive, what i should eat, what i should drink ?
are they going to govern by giving me a weekly menu ?

LOL the FDA, DEA, SEC, CPSC and every DMV in the United States already do those things!

 

[jumpcutking]

"Europe" is 24%. Includes countries like the UK, Switzerland, and the Middle East which aren't in the EU.

So EU regulated revenue would be less than that? Maybe 10% less

 

[spazzcat]

I think Apple was waiting for this so they could appeal it in a higher court and maybe get parts of DMA removed.

 

[jumpcutking]

VAT is never part a the revenue reported by companies. It's a tax paid by the customers.

Yes, but if Apple stopped selling in that country that tax would no longer be collectible on those products as they are no longer sold.