NYT: Apple’s Fight in the Netherlands Matters

From The New York Times:

Who wins when governments go head-to-head with technology giants — and whom should we root for?

We’re getting a small test of that question in the Netherlands. Last year, the Dutch equivalent of the U.S. Federal Trade Commission became one of the first regulators in the world to require Apple to give people multiple payment options for using dating apps on their phones. It was a tiny crack in the absolute control Apple has asserted over iPhone apps since 2008.

This has now become a standoff between the world’s most valuable company and Dutch bureaucrats. Apple has proposed a workaround, but the regulator calls Apple’s attitude “regrettable” and has issued weekly fines totaling 25 million euros (about $28 million). Apple says that iPhone owners’ security and convenience would be compromised if it allowed this, but also says that the company is complying with its legal obligations.

It might not look like much, but the Netherlands could be one of the first dominoes in loosening Apple’s grip on the app economy.

In response, Apple last month proposed a set of conditions that some app developers said was a hostile defiance of the Dutch regulator. Apple essentially said that dating apps in the country could use any payment system they wanted, but that Apple would collect a fee of 27 cents on each dollar of purchases that people made in the app, and require the dating companies to hand over information and audit it.

Try to imagine if Walmart said that shoppers could pay any way they wanted, but that it might cost more if you used a non-Walmart credit card and you had to give Walmart your card’s monthly statement.

Exactly. This is exactly the flaw in Apple’s strategy.

Conversation 16 comments

  • lvthunder

    Premium Member
    22 February, 2022 - 4:19 pm

    <p>Wow, that’s a bad analogy at the end. Walmart only offers Walmart Pay instead of Apple Pay and Google Pay like most other retailers do.</p>

    • anoldamigauser

      Premium Member
      22 February, 2022 - 9:16 pm

      <p>Walmart has accepted any credit card I have used, and as far as I know, they have not asked me for the additional 2 or 3 cents on the dollar of the transaction that they would have made had I used a Walmart card; not from myself or the card issuer. In this case, Apple is saying they are entitled to 27 cents on the dollar, and that the companies in question, are required to submit the documentation, basically the equivalent of their credit card statements in this analogy, so that Apple can audit that.</p><p><br></p><p>To call Apple’s interpretation of the ruling "regrettable" is being rather charitable. It is a hostile act aimed at the companies that filed the complaint, the regulators, and the sovereign government they represent. Personally, I hope Apple reconsiders its decision, but I doubt they will…because hubris.</p>

      • lvthunder

        Premium Member
        23 February, 2022 - 10:56 am

        <p>I was talking tap to pay solutions. Most of their registers now won’t even accept cash. At least here in Las Vegas.</p>

      • lvthunder

        Premium Member
        23 February, 2022 - 11:02 am

        <p>You know Walmart gets close to 50% of everything you buy right. That’s how retail works. If you sell something on Amazon you set the list price. You get 50% of that price when the product sells. Amazon then sets the price to whatever they want.</p>

        • anoldamigauser

          Premium Member
          24 February, 2022 - 9:55 am

          <p>I am well aware how retail works, my wife was a buyer. In this case, we are talking about payment processing.</p><p>The reason that Walmart is moving to cashless payments is that the registers and terminals don’t get paychecks and benefits.</p>

  • Brett Barbier

    22 February, 2022 - 11:02 pm

    <p>Apple has multiple ways to collect money from app developers – right now, there’s a flat $99/year developer fee, whatever money the app is sold for (unless it’s free of course), and recurring subscriptions – plus money from advertising in the App Store, if the developers chooses to advertise there. </p><p><br></p><p>The big point of contention here is the requirement to use Apple’s payment processing system. Apple is saying, OK… you still owe us most of the same fee you’ve always owed us, but you’ll be able to use another payment processor. </p><p><br></p><p>Apple says their cut of app sales is to cover a whole host of things, not just the payment processing. </p><p><br></p><p>So, I imagine Apple could, if a government steps in to regulate that percentage cut Apple says needs to be paid, could just start mucking around with that annual $99/year fee. Instead of a flat fee, they could make the total dependent on app sales figures (and/or download numbers). </p>

  • Brett Barbier

    22 February, 2022 - 11:40 pm

    <p>If I was in charge of Apple, I’d strongly consider the following – spoiler alert, they’d all reduce income to Apple, and Ali would be fired:</p><p><br></p><p>Fees cut to 10% for all developers’ annual app sales, up to $1 million.</p><p><br></p><p>Once $1 million threshold is reached for a developer each year, the fee goes to 20% (only on the sales beyond $1 million, not the first $1 million).</p><p><br></p><p>Create secure, auditable APIs for trusted/approved payment processors for in-app purchases, and reduce fees from 10% to 5%, and 20% to 15% respectively, if a developer uses a secondary payment processor. Require that apps offer the primary Apple payment processing option, along with the secondary payment option.</p><p><br></p><p>Allow apps to link to the developer’s site, where users could sign up for subscriptions completely without any Apple payment fees.</p><p><br></p><p><br></p>

    • wright_is

      Premium Member
      23 February, 2022 - 12:16 am

      <p>That is completely backwards, compared to how all other systems work. The more you sell, the cheaper things get, because you have quantities of scale.</p><p><br></p><p>If I buy a single item, it usually costs more than 10, if I buy a thousand, I’ll get a bigger discount, buy millions and there will be another reduction in price, because the manufacturer can guarantee more production capacity, so doesn’t have to take chances on large production volumes, they are also shipping in bulk, which reduces transport costs.</p><p><br></p><p>That said, I agree, sinking the fee to 10% would be a good compromise. </p><p><br></p><p>What really annoys me, with iOS versions of Amazon, Kindle and Audible, is that I can’t buy any books (e- or audio) on them. The transaction is between me and Amazon, I already have an Amazon account, the product is sold by Amazon and it comes from Amazon’s servers over a CDN that Amazon pays for. Why should Apple become 30% of the price of the book?</p><p><br></p><p>Apple has a lot of positives, with the Store and offering a payment system for smaller developers. But, for a large, well known developer, with which I already have a relationship outside of the Apple ecosystem, I don’t need that added protection that Apple provides, so I don’t see the benefit of paying Apple 30% for an audio book that they aren’t selling!</p><p><br></p><p>If I am buying something in an app from a supplier I don’t know or trust with my data, I am happy to use the Apple App Store payment system. So, why not just give me the choice? If I already have a good relationship with the app maker, I’ll take their payment method, if it is someone I don’t know, I’ll take the Apple Payment method and pay a bit more for the extra protection it offers.</p><p><br></p><p>Maybe Apple needs to come up with a more sound way of calculating the costs of an app. I have PocketCasts, I paid a couple of dollars for that, I have the Audible app, I spend a couple of hundred dollars a year on audio books, does it really cost Apple so much more to provide the Audible app that PocketCasts, that they need $100 from Amazon for it?</p><p><br></p><p>Both use the same way of content delivery – you download the app and updates from Apple, everything else comes directly from Amazon or an RSS feed and doesn’t go anywhere near Apple’s infrastructure. How can Apple justify that PocketCasts only needs to pay Apple $2 for my download, whereas Amazon would have to pay Apple $100 <strong>per year </strong>for my use of the app, yet both apps have the same total amount of interaction with Apple’s infrastructure and both cause the same amount of costs!</p>

      • Brett Barbier

        23 February, 2022 - 9:41 am

        <p>Think of it more like a graduated tax – the first $X earned is taxed at a lower rate than the next $Y earned, etc. I agree about the Amazon example, too. </p>

      • lvthunder

        Premium Member
        23 February, 2022 - 10:55 am

        <p>Apple charges the fees for purchases to make up for all the free apps and the free updates. Take the Facebook App for instance. It’s free. They update it every two weeks. Facebook only pays Apple $99 a year. The paid apps and in app purchases have to make up the difference.</p>

        • Brett Barbier

          23 February, 2022 - 1:46 pm

          <p>Based on what I’ve seen, they can "make up the difference" while still implementing some/all of the proposed changes. Also, they could have different tiers of developer accounts, each costing a different amount. Bigger companies could be charged more, even if their apps are free.</p><p><br></p><p>Basically, if Apple doesn’t implement some fundamental changes in the near future, governments will be forcing them to make fundamental changes. My guess is Apple would rather have more control, rather than less control, over those changes. </p><p><br></p><p>So that led me down the path of thinking what changes could Apple make that would be seen as big steps, not tiny/inconsequential steps. And making changes along the lines of what I proposed would, I think, take a lot of the heat off from government agencies/legislatures, yet still bring in a lot of money for Apple’s bottom line. </p>

    • lvthunder

      Premium Member
      23 February, 2022 - 10:58 am

      <p>You clearly don’t know how to run a profitable business.</p>

  • Brett Barbier

    22 February, 2022 - 11:42 pm

    <p>Can’t seem to edit my post… "<span style="color: rgb(232, 230, 227); –noir-inline-color: #d8d4cf;" data-noir-inline-color="">and Ali would be fired" should be "and I would be fired". </span></p>

  • navarac

    23 February, 2022 - 6:32 am

    <p>Apple especially, but US tech companies in general, need to remember that they are companies, and are not elected governments. I get fed up with hearing about Apple (and others) running rough-shod over everything, and are so bloated with their own sense of importance and entitlement.</p>

    • lwetzel

      Premium Member
      23 February, 2022 - 11:22 am

      <p>I think we have agreement here.</p><p><br></p>

      • navarac

        23 February, 2022 - 2:25 pm

        <p>Nice – thank you.</p>

Windows Intelligence In Your Inbox

Sign up for our new free newsletter to get three time-saving tips each Friday

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Thurrott © 2024 Thurrott LLC