EU Proposes New Laws to Rein in Big Tech

Posted on July 30, 2020 by Paul Thurrott in Amazon, Apple, Google with 69 Comments

EU Competition Commissioner Margrethe Vestager (Source: The New York Times)

Lawmakers in the EU have had it with Apple and other Big Tech firms unfairly favoring their own offerings over those of rivals. So they’re going to introduce several new laws that make this business practice explicitly illegal.

The news comes amidst several antitrust investigations into Amazon, Apple, Facebook, and Google in both the United States and EU. More important, it comes in the wake of several guilty verdicts against Google especially, which EU lawmakers say have done nothing to slow down these juggernauts or rein in their illegal business practices.

The problem is many-fold. These companies generate many billions of dollars every quarter and can afford to pay fines in Europe, no matter how expensive, without materially undermining their businesses. And the legal system moves slowly in Europe, too, meaning that by the time a belligerent Big Tech firm has been found guilty of some illegality, it has long since moved on to other strategies.

So the EU is looking to cut down on the time by simply making certain behaviors illegal and cutting down on years of investigations and court cases. The idea is to simply prevent these firms from operating as they do now, helping consumers and competitors alike.

Apple is a classic example. Its App Store charges an egregious 30 percent on all in-app charges, including for some reason subscription services which pay Apple every month or year in perpetuity for doing literally nothing (the free reduces to 15 percent in subsequent years). But in requiring these fees Apple also cuts off each developer’s access to its own customers. It prevents those developers from even telling their customers that they can make these payments elsewhere without incurring Apple’s fees. And Apple does not allow developers to use non-Apple payment systems or load their apps on iPhones or iPads outside of its store.

So Apple plays a gatekeeper role on its own platforms. But it can also see which services are doing well on those platforms and then offers its own alternatives, none of which “pay” a 30 percent fee on each in-app transaction, and each of which is subsidized by iPhone and other hardware sales. So Apple Music, for example, can artificially compete with Spotify and other music services because its costs are much, much lower. Apple gives its own services an advantage that competitors can never match.

Apple argues that it doesn’t dominate the smartphone market, so it shouldn’t be held to monopolistic standards. But Apple actually controls 40 to 50 percent of the market in the United States and in many EU countries, and its app store earns more money than does the supposedly dominant Android, despite its relatively small worldwide marketshare. So Apple is very much a dominant player, despite its protests, and it ensures that the playing field is not level on its own platforms.

And now the EU wants to make sure that that behavior is illegal. It seeks to create business practice boundaries for search engines, social networks, and app stores. It wants to slipstream investigations to cut down on the amount time wasted while the abuses continue. And it wishes to enact all this by 2021.

Many hope, of course, that the very threat of this action will trigger real change. And we’ve already seen it happen. To continue with Apple example, Apple this year will for the first time allow its users to configure non-Apple applications as the default web browser and email application on iOS. And the firm has quietly made several changes to address the many complaints about its insane app store policies. It’s reasonable to expect further concessions in order to evade antitrust problems both in the US and the EU.

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Comments (74)

74 responses to “EU Proposes New Laws to Rein in Big Tech”

  1. lvthunder

    So Apple will just switch and charge developers say $0.05 per download (including updates). Spotify has how many downloads on iOS? I don't know about Spotify, but Facebook updates their app every two weeks or so. Microsoft updates Office every month at a minimum.


    So what is it they are trying to make illegal?

    • mattbg

      In reply to lvthunder:

      Agree with your point. There is cost in distributing 100MB+ app updates to hundreds of millions or billions of devices every two weeks, and many of those apps are free or associated with a service acquired outside of the Apple walled garden.


      On the other hand, there are synergies and Apple benefits from the active app ecosystem.


      You'd think a solution would require someone to pay for distribution rather than taking a % of the profits, but that potentially means that free apps need to pay their way as well, no?

      • Usman

        In reply to mattbg:

        Those costs don't warrant a 30% cut from an app sale, in app purchases and subscriptions. In the early days iOS was a new platform and they were 'Apple Customers'. Apple is the largest tech company by valuation, they're able to maintain the app stores infrastructure costs without a sweat.


        These days iOS is an operating system and platform, I find it weird people are blindly defending a key influential operating system requiring a 15-30% cut to use application and services on said operating system. I'll say the same with Android and the Microsoft Store, these are stores that reach billion(s) of people, their impact on humanity as a whole which is 7 billion people is huge and this precedent is unheard of before.


        As a software engineer, it's a weird thing to see that you can have web applications which lets you sign up customers with no cut going to the operating system maker, like netflix, spotify, kindle etc.


        However if you're building a native app you're required to forfeit 15-30% of sales and subscription revenue, but for what exactly? I'm certain that the cost of each individual download doesn't cost the app store those operating costs and a 15% cut for being a payment processor for subscriptions and in app purchases is absurd.

  2. bluvg

    Interesting how some are casting this as anti-free market. On balance, it seems far more pro-free market.

  3. ommoran

    I'm also outside the US (Canada) but I think the broader point is often missed here. Many see competition ending at the point of sale for a mobile device - be it Apple, or Android. Once that transaction has occured, especially but not exclusively with Apple, you are locked in their oft-touted "walled garden". Once you are on iOS you must purchase your apps through the Apple app store.


    Now change the product. Once you buy a Lenovo laptop, you can only buy your software through Lenovo - who takes a percentage, even if they didn't write it.


    Once you buy a Ford, you must purchase all your parts and services from the Ford dealer. No independent garages available, even for out-of-warranty cars; and Ford takes a percentage of the dealer's invoice and any after market parts.


    Once you buy a home, you must return to the original builder for all repairs - even if you aren't the original owner.


    Competition doesn't end at the purchase of the hardware. The EU is trying to point out that competition should continue past that point, and they're right.

  4. pierrelatour

    Weird what pass off as illegal theses days...

  5. toukale

    In reply to RM:

    The app is a basic app for family usage. My family is large we are located on 3 continents and 5 countries. The app gives us a central place to organize/communicate and stay up to date on our yearly family reunion dates and activities we want. A good number of my family refuses to use Facebook for example, so I put something together for our basic use. We've even used it to plan family holidays. It's not something for public use.

  6. esp476

    Steam does the same thing as Apple. But steam is the dominant “App Store” when it comes to games. Steam takes 30% of the sales if I’m not mistaken. Maybe I’m not in the right forums to see this argument.

    • wright_is

      In reply to esp476:

      Except that Steam isn't exclusive. If I buy the game at a shop, on Amazon or directly from the game publisher, from the Microsoft Store etc. Steam doesn't get 30%. The App Store is the exclusive method for acquiring software on iOS - internal corporate sub-stores aside.

  7. Pbike908

    I do think there is ample evidence that the U.S. tech conglomerates have enjoyed a lax regulatory framework for YEARS that other fortune 100 companies are green with envy. Just think about all the regulations auto manufacturers, food manufacturers, broadcasters, financial instituions/banks, telco companies, energy companies, airlines, trucking, etc. have to navigate.


    That said, I do wonder how much of the EU's position of tech companies is predicated on the fact that other than perhaps Spotify, non of the major players are European companies.

    • wright_is

      In reply to Pbike908:

      Yes, Ford wouldn't be where it is today if its cars crashed into trees every few hours... Yet software is "complex" and therefore doesn't have to provide any warranty that it is secure, stable or even does the job it is supposed to do!

      I can't see a bank getting away with losing your life savings and saying, "oops, it was a bug sorry, but you did back up your money, right. No? Oh well, you'll have to start all over again." Ah, well, Lehmann Brothers does spring to mind... And there is the quasi tech banking service Wirecard that managed to "create" 2 milliard dollars of money out of thin air.

  8. red.radar

    It will still take time for this to become law. They have to craft the language carefully to mitigate loopholes and reduce collateral damage. That will take years to accomplish. In the mean time big tech will respond by deploying their lobbyists to influence the process poking holes in the law to give loop holes for them to exploit. Your not going to win... The fundamental issue is that Government is slow and bureaucratic. Business world is resourceful and quick to respond and Big techs lawyers are better than ones writing the laws.


    You are approaching the point in which you have to break the companies up so they are spending more time competing against each other for business viability rather than fighting the governments that regulate them.


    I am feeling extra cynical this morning.

  9. prebengh

    Why would Apple make their own app to replace a very popular third party app in the appstore and give it away for free if they make 30% on the third party app?

    • nbplopes

      In reply to Prebengh:


      “So Apple plays a gatekeeper role on its own platforms. But it can also see which services are doing well on those platforms and then offers its own alternatives, none of which “pay” a 30 percent fee on each in-app transaction, and each of which is subsidized by iPhone and other hardware sales. So Apple Music, for example, can artificially compete with Spotify and other music services because its costs are much, much lower. Apple gives its own services an advantage that competitors can never match.”


      As far as I see it Apple does not do this. This is a different matter from the 30% revenue share they demand for the prevalece of alllowing you to sell your services inside your app.


      Yes there are cases were Apple implements features found in other apps. As dev, I find it impossible not to happen. It’s not even a matter of competition.


      Thurrott is forcing an Amazon practice on to Apple. It’s forced. Actually is looks far more like a MS modus operando than Apple.

    • Paul Thurrott

      Because it makes 100 percent on its own app.
  10. Andi

    Mr. Thurrott get with the times. Apple has according to Statcounter 58% of the US smartphone market. It also has in excess of 70% of the entire market's revenue - I even read somewhere the number being close to 80%. This is the very definition of a dominant position. They have used this dominant position to harm competition and give its nascent services an unfair advantage. In the EU this would lead to a 10% of yearly revenues fine and corrective measures.

    • Paul Thurrott

      We don't use StatCounter here. But these higher numbers only serve to prove my point. Weird way to agree with someone.
    • lvthunder

      In reply to Andi:

      Except it's legal to be dominate. It's not legal to leverage your power when you are a monopoly. There is a difference.

      • nbplopes

        In reply to lvthunder:


        I have no problem with an company success up to and including being Monopoly.


        I do have a problems with a company forcing a 30% revenue share only to be able to tap in features such as payment that are fundamentally commodities as far as the digital business goes.


        There is no Miracle that a commodity sells. Demanding 30% shared revenue over it, is extortion and impairs the future of the digital business in ways totally unpredictably negative.

    • brduffy

      In reply to Andi: I don't understand why you are asking Paul to "get with the times" here. He clearly made the argument that Apple "is very much a dominant player".


  11. jimchamplin

    Yay.


    More decisions about how technology will work from politicians. Because politicians are always the best people to decide everything. If my user experience is harmed by politics on a different continent, then I'll be rightfully angry.

    • wright_is

      In reply to jimchamplin:

      Welcome to the club. I'm really angry about the US deciding what I can and can't use, here in Europe.

      I can't use any US based cloud service, because the US failed, over half a decade, to actually set up their side of the Privacy Shield agreement, didn't change their laws to stop the US TLAs from snooping on data without a warrant etc. and didn't appoint a permanent ombudsman, as they had agreed to do.

      Then there is the Huawei debacle.

      Big tech is riding roughshod over the competition and there is a need to curtail some of their excesses and they have proven themselves to be unwilling and incapable of doing it themselves.

      • jimchamplin

        In reply to wright_is:

        US government is a cesspool of conmen and grifters. I’m not singling out any administration here, as the problem goes deeper than the White House. It’s been hollowed out to serve profit-driven interests - such as in this case Big Tech - rather than to provide the services and programs needed for a healthy nation.


        It’s capitalism at all costs. Why create public programs when you could get your rich buddies to cook up a new scam like more insurance, or shoddy public construction? The same thing here: Protect the privacy of citizens? Why? There’s terr’ists and activists to spy on.

  12. SvenJ

    Someone remind me. What is VAT, and what does the EU do to deserve that cut?

    • Paul Thurrott

      lol I literally spit coffee on my display
    • Vladimir Carli

      In reply to SvenJ:


      vat does not go to the eu but to member states. I wonder what do us states do to deserve taxes? At least in the eu people get healthcare, education and pension. How are tax payer money used in the us?

      • lvthunder

        In reply to Vladimir:

        Roads, schools, cops, firemen, building code enforcement, libraries, etc is what sales taxes in the US is used for. There is no member fee due to the US government to be part of the USA. The government taxes the people directly through income taxes.

      • karlinhigh

        In reply to Vladimir: taxpayer money used in the us?


        This link has the instructions to the US Form 1040 income tax return.


        irs.gov/pub/irs-pdf/i1040gi.pdf


        On page 103, it has nice pie charts showing revenue and spending for the US Government. The 2 largest spends are healthcare/pension for retirees and social-safety-net programs for low-income populations, including healthcare. Those 2 items equal 63% of federal spending, which fails to buy anything more than the current USA healthcare system.


        And please read this piece before saying the answer is more government regulation.


        slatestarcodex.com/2019/04/30/buspirone-shortage-in-healthcaristan-ssr/

    • wright_is

      In reply to SvenJ:

      It is what the US would call sales tax.

      The idea wil be to have the tax rated at the point of purchase (i.e. where the customer is), not in a tax haven.

      What the EU is worried about is more corporate tax. The big tech companies have staff in each country who make sales, for example, but the sales all go through Ireland, Belgium or Luxembourg, where the companies get favourable tax rates. That means, that although the sales person in Germany, for example, sells to German businesses, that sales person makes a net loss for the German branch of the business, it is just a cost centre, the actual sale is made in Ireland (E.g. Apple, Dell etc.) and any corporate profits are made in Ireland.

      Then, they go one step further, the Irish subsidiary then has to pay licensing fees to the "HQ", but that isn't the US HQ, they have actually offshored their licensing HQ to the Cayman Islands or some similar tax haven, so the licensing fees in Ireland cover most of the profit made in Ireland and is funneled offshore.

      As an example, Facebook made tens of millions in advertising revenue in the UK, but Facebook made an operating loss in the UK, so got a corporate tax refund. In fact, they sold more advertising to the UK government than the UK government could reclaim in tax from Facebook in 2016 - 2018. All because the UK staff never sold anything from Facebook UK, every sale was done through Facebook Ireland, even though the person was in the UK and employed by Facebook UK.

      That is all perfectly legal, when morally corrupt. The EU wants to start changing things, so that any profit made in a sale occurs in the country where the customer is. That would mean, in the future, that Facebook UK would be liable for corporate tax on all income from the UK, Facebook Germany for all income in Germany etc. and not Facebook Ireland reaping in all the income from the whole region and paying a fraction of the tax they should be paying in Ireland. The hope is to get companies (all companies, this isn't just about US Big Tech) to actually, fairly contribute back to the countries where they actually do business.

      @cyloncat, the EU doesn't collect it and each part in the chain, up to the final sale to the end user can usually reclaim that tax on all their purchases, so it doesn't mean the price keeps going up and up, because of the tax.

      The UK is an oddity, in this regard, because smaller businesses don't have to be registered for VAT and therefore can't claim it back.

      @ponsaelius I agree, but the tax is not used just to pay for EU budget directly. The tax goes into a country's pot of collected taxes and is redistributed for various things, including EU membership fees.


      • nine54

        In reply to wright_is:


        Why should the answer be more government heavy-handedness instead of more favorable corporate tax laws in other countries? If the UK, Germany, etc., want a bigger piece of the action, then they should consider tax laws that are competitive with Ireland's.


        While behavior that's legal certainly can be unethical, it might be a stretch to say that such tax optimization is morally corrupt. This assumes that 1) all taxes and the things that they pay for are morally sound, and 2) that the EU motivation for changing the tax laws is morally sound. Companies could argue that these countries have "dollar" signs in their eyes and are trying to fleece profitable tech companies to pay for programs that they cannot afford. Is that morally sound?


        Tax preparation is a multi-billion dollar industry premised on two goals: 1) legal compliance, and 2) income retention. If you want to eliminate "loopholes," then simplify the tax code. But as long as the tax code requires an army of accountants just to determine liability, then attempts to limit liability seem warranted. Do you want to determine how your money is spent or do you want someone doing it for you? You might take the money you save or the refund you get and turn around and donate it to charity, or use it to help out a loved one, or to take your family on a much-needed weekend getaway. Are those morally corrupt? Or, if you want, you can give it to the government--there's nothing stopping you from paying more taxes than you owe.


        And let's not forget that these political decisions have secondary and tertiary downstream impacts. Anything that impacts a company's profitability and market competitiveness can impact the number of people employed and the stock price, which in turn, can affect individual investments, pension funds, retirement funds, etc.

    • ponsaelius

      In reply to SvenJ:

      The EU doesn't collect VAT (Value Added Tax). It is collected by the member states who decide the rate and on what goods or services it should apply. VAT i charged variously between 5% and 27% across the EU. The EU governs the principle that a tax on consumption should exist. The EU also provides common systems across member states to stop avoidance and fraud.


      Where there is a link is that the tax collected is used by the member state as payment to the EU budget. The budget and national contributions are decided by the member states. There are various directives and laws that makes sure that VAT works within the single market.


      The EU "cut" doesn't exist in the sense of taking money for every transaction. It's "cut" comes from what it's members decide should be it's share when creating the budget.

    • cyloncat

      In reply to SvenJ:

      VAT is a "value-added tax" which must be included in the price, rather than added at time of sale. And it hits all sellers in a chain, so it can become quite expensive by the time it hits customers. VAT in some countries is 20%.

  13. proftheory

    The EU is seeking to make competition illegal. Are there such restrictions against EU countries? How many global companies are in Europe? (check your beer and food products) Do we prevent them from taking over US markets?

    • ponsaelius

      In reply to proftheory:

      Exactly the reverse. It thinks there is too little competition reducing consumer choice. US competition rules are differently framed. If a European supplier breaks US law then the US should act.

    • jimchamplin

      In reply to proftheory:

      European megaconglomerates already own our beer and liquor industry. Inbev is German and Diageo is British.

    • Vladimir Carli

      In reply to proftheory:

      Exactly the same laws apply to EU and US companies. And us businesses are required to follow eu laws if they do business in the eu. Exactly as eu companies are required to follow us laws if they do business in the us. It’s as simple as that.

      I wonder if any of the people here own large corporations. It’s amazing that so many people feel big tech is treated unjustly by the EU. The EU is actually trying to protect the people and is probably the only hope to stop these giants. They are just too big to not create dysfunctional scenarios

    • wright_is

      In reply to proftheory:

      Who is trying to make competition illegal? They are trying to level the playing field, to make it more competitive.

  14. toukale

    Since 85% of the apps in the appstore are free, if I am Apple I would say ok, let's change the metrics and charge folks $.15 per download/hosting fee. I am sure the developers of those 85% of apps that are free would have something to say to those guys that are now complaining. I have a basic app I developed a few years ago as a side projects for our yearly family reunion which costs me zero up to this point. You bet I would be very upset with those guys if Apple were to change their policy in a way that would cost me money now to host the app.

    • Andi

      In reply to toukale:

      Free apps pay apple 100$ per year. That's more than enough for all hosting purposes.

      • lvthunder

        In reply to Andi:

        Do you really think it costs $100 to send out hundreds of MB updates to the Office apps every month to the millions of people who have the office apps on their phone? How about Facebook and Instagram when they update their app every two weeks? Plus I'm pretty sure that $100 goes more towards developing XCode then it does the store. Microsoft charges $45 a month for Visual Studio Pro.

        • nbplopes

          In reply to lvthunder:


          If you think that $45 is down to the cost of the infrastructure for you to be able to download and update visual studio you have no digital service business acumen. If you measured to cost at 30%, that would mean it would cost MS, $13 per month per user just for downloading heheh, ridiculous. You stream 8GB in Just one 4K movie from Netflix man and you move to the next in the next second. Millions of users doing it simultaneously, how much would that cost using your math? Look, you pay $45 because of others things not because of the cost of “distribution”/downloads of Visual Studio. That cost is almost negligible.


          Honestely, don’t believe Apple when they wing the cost of processing, hosting and downloads to sustain the 30% share over your revenue. It would cost you pennies in comparison ff could serve directely from your hired cloud service provider, say AWS, Azure or whatever.. It just happens that you can’t, and you still need to serve those 30% of your customers that have chosen iOS has their device.

          • lvthunder

            In reply to nbplopes:

            You are conflating two different things. I said the $99 a year you pay to be an Apple Developer pays for Apple to develop XCode whereas Microsoft sells Visual Studio Pro for $45 a month. You are talking about an unrelated topic.

            • nbplopes

              In reply to lvthunder:


              My the understanding of what you have said was within the context of the article topic. But it seams that you are arguing over Xcode being way cheaper than VSP, my mistake.


              But if you allow me ... if to deploy Xcode apps concerning pure digital services to the App Store you need to either give it for free or share 30% of your revenue than it does indeed correlate.


              Look, typically conglomerates stack different parts to pay more for each part, not less. By making it impossible to perceive the value of any of the parts so you can only speculate on the over all value.

    • Paul Thurrott

      You would never do any such thing. The app store hosting is a cost of doing business and the existence of all those apps is a key reason people choose iPhone. Here's the math. Apple's iPhone and services business (the key component of which is the App Store) generated a collective $40 billion in the most recent quarter, and that came during a pandemic. Hosting free apps is no issue.
      • lvthunder

        In reply to paul-thurrott:

        Is that revenue or profit? Also the hardware profit shouldn't count for money to spend on the App Store. Each thing should be able to stand on its own. That's Google's problem. If the online ad business dries up Google is toast.

        • nbplopes

          In reply to lvthunder:


          I agree with you it shouldn’t count. But iOS devices market share is indeed winged to establish the 30% shared revenue policy on digital goods and services (hybrid are left out).


          The App Store business is structurally dependent on iOS devices business. As much as Google software business and digital services is structurely dependent on the Ad business.


          By the way, an internal letter explaining why The Kindle app was stopped from selling Books in app is explained. Jobs wanted iBooks to be the only book store in town. This were aThe all thing started.


          That is fine when you are small. But when one in two Americans has an iPhone it is a competition problem because it’s leveraging a business on top of another one.


          This hasn’t changed. How difficult is for people to understand that when more than one in two Americans has as an iOS device, the idea that any digital business can go somewhere else to serve customers on the go is a fallacy? How difficult is to understand than dodging the 30% shared revenue carried a very high cost that only a few can sustain hence Apple policy is anti competitive In this context?


          Its so simple. It does not matter how much the App Store generates. It generates whatever because one in two Americans has an iOS device and 30% of revenue of all-digital businesses. Paired this with the fact that business are going all digital in many areas. So it’s not the the App Store generates, is more that the businesses need to go trough it!!!


          There is no Miracle here apart from iOS having a 58% mobile market share in the US.


          This is a digital business gate keeper for all businesses and 50% of the American smartphone population. In other words 50% of the market is governed by the Policies of one company. The idea that digital businesses can opt to tackle just the other it’s a fallacy because these businesses do not choose which devices their customer use, so they need to be in both slices of the market pie and can assume that 50% are on iOS devices. It’s an imperative.


          Stop with straw man arguments to yourselves


          PS : The idea that the digital surface is fragmented from a business perspective is long gone. Customers use devices on all platforms, none can be neglected by itself. That is the price of Apple and Google success. So they should welcome it instead of trying to dodge this and pay billions in fines.

    • nbplopes

      In reply to toukale:


      The free Apps are established by Apple's POLICY. All Apps need to offer a free venue even if limited by Policy.


      On the other hand Free Apps benefit mainly Apple business as it benefits its users, you know more device sales ... who doesn't like free candy and a glass of wine for free in the shop (payed of course by you, offering your app for free). Devs offering those apps should than check their business models and not put others paying for it!!!!


      Apple likes free apps of course as it benefits iOS sales, so use some of those sales to back free apps. That includes yours. Simple.


      PS: Apple offers their apps for free, OS for free, so why not a free app venue as part of its iOS device marketing? The others, rate it as a commodity because that is what it is, that would be disruptive indeed!!!!!

  15. bart

    A day after the judiciary hearing in the US, the EU does the right thing. No arguing, no court cases (though no doubt there will be a few), just make it law. If this happens, it is game, set, match. Best of all? For Android users, iOS may become an interesting platform. I am already keeping a close watch on Apple opening up myself.

    • wright_is

      In reply to lvthunder:

      Corporation Tax is the biggest. At the moment, it is funneled to the cheapest (from a tax viewpoint) country and the tax paid there.

      One of the big changes they want to make is that income generated in one country cannot be siphoned off to another country.

      At the moment, for example, Apple, Facebook, Microsoft, Dell, Cisco and many other companies and companies not in the tech sector have their EU HQ in Ireland. They have subsidiaries in the individual countries, but any sales that, say, Facebook makes in the UK, by UK sales staff are never booked in the UK business, they are booked directly with the Irish company. Therefore the UK is missing out on tax revenue for 10s or 100s of millions of income. That gives these companies an unfair advantage compared to local companies that have to pay tax at local rates. (E.g. Ireland gave Apple a sweet deal to pay single digit corporation tax, whilst its competitors were paying several times that in Ireland, and national companies in other parts of Europe even higher rates).

      Then there could be things, like opening up the App Store situation on the iPhone to allow competition in the app store market or to stop "price gouging" (Apple's 30% Vig, for example), by either allowing other payment processors or other stores on the iPhone or capping the amount that Apple can charge.

      • lvthunder

        In reply to wright_is:

        So security be damned. We need more App Stores on the iPhone. I think every person who buys an iPhone knows they must buy their apps through Apple just like every developer knows that to get their app on the device they have to go through Apple.

        • wright_is

          In reply to lvthunder:

          Either more app stores, which won't necessarily make iOS less safe, but it does give the chance for fly-by-nights to open a store up, stuff it full and not care about security and scarper with the loot, before the whole thing collapses. The laws would need to ensure that can't happen.

          Or they need to find a way to stop Apple "ripping off" developers and users that doesn't harm the eco system, but brings a fairer playing field.

          Is it fair that Apple Music earns 9.99€ from its subscription, whilst Spotify only gets 7€ for their's, after paying the Apple vig? (Okay, that is ignoring the percentages that go into sales tax/VAT etc. for simplicities sake.) It doesn't cost Apple anywhere near 3€ per customer to distribute Spotify and it certainly doesn't cost them 10 times that amount to distribute an app that costs 99€! That is simply pushing bits, it doesn't cost more to move around bits from a more expensive app. Yes, some of that subsidises free apps. But given the scale of the App Store, I'd be surprised if it cost more than a few cents per app to provide the download.

  16. cavalier_eternal

    I think there is certainly debate for if Apple should be held accountable even if they are to the dominate player as well last what are reasonable charges for their "services" but the debate should be informed.


    "App Store charges an egregious 30 percent on all in-app charges, including for some reason subscription services which pay Apple every month or year in perpetuity for doing literally nothing (the free reduces to 15 percent in subsequent years)."


    "And Apple does not allow developers to use non-Apple payment systems"


    Apple only charges for in-app purchases that use their payment processing. Anyone selling physical goods and services can have their own in-app payment processing that can be set up in the App. Examples are Uber, Lyft, public transit apps, grocery delivery services .... So saying they charge for all in-app purchases or that developers can't use non-Apple payments is patently false.


    And to whomever is going to respond with something saying I agree with what Apple is doing, I don't but disagreeing doesn't mean you get to make things up.








  17. nbplopes

    I really like Apple devices and software offerings. So this share has little to do with it. Has more to do with Policy! Something that Tim Cook, is very keen no to extract value from.


    So way to go EU! This needs to be done unfortunately.


    Don't believe me? Here is a story of my own.


    Recently I needed to replace my iPhone X battery. Apple offers a service for that, and the price is not unreasonable 69 euros. Relaxed.


    Went to an Apple Authorised Repair Shop as there are no Apple Stores in Portugal here is the conversation as I recall:


    Me: "Hi, my iPhone battery is in its last drop, want to replace it. Can you do it?"

    Shop: Sure it does not take long. It costs 69 euros.

    Me: Ok. How long will it take?

    Shop: About an hour.

    Me: *Grin* great.

    Shop: You iPhone looks like brand new.

    Me: Yes. I rarely take it out of the cover (use Apple covers).

    Shop: Let me do a simple test ...

    Me: Ok

    Shop: We are unable to connect your phone. The port is not working.

    Me: Did not notice, sorry. I use wireless chargers. But Ok, can you repair that too?

    Shop: No. We are not authorised to make these kinds of repairs. We can "give" you a replacement unit.

    Me: Humm. Ok. How much will it cost?

    Shop: Well its out of warranty ... let me see ... about 600 euros.

    Me: *Gulp*. Ok, can you simply replace the battery than?

    Shop: We cannot do that without the port working. We need to run tests and for that we need a working port to connect to the Shop. Sorry.

    Me: Why? So I'm stuck?

    Shop: We do this way for your security and protection. Even if we fixed it we would have no way to assure that it would be dangerous.

    Me: Thank you, it's a lot of money. I'll think about it - What I actually wanted to say, is what a pile of ... This sounds exactly what someone would say in a equiry ...


    Went on Holidays in the next day. While in Lagos, Portugal, went to one of a phone repair shop, non authorised.


    Me: Hi. My iPhone X port stopped working. Can you repair?

    Shop: Sure. Let me see ... ok we can do that.

    Me: How much and how long will it take?

    Shop: 45mins. It will cost you 45 euros.

    Me: *Grin*. Can you swap the battery too?

    Shop: Unfortunately we don't have a battery that fits your phone at the moment.

    Me: Ok. Just repair the phone.


    An hour later, had my iPhone X port working with no glitches.


    So I thought, maybe if I go back to the certified shop they can repair it now?


    So I did.


    Me: Hi. I would like to replace the battery of this my iPhone.

    Shop. Sure. It will cost you 69 euros.

    Me: Ok.

    Shop: We will test it out and replace the battery .... come back in a hour.

    Me: Ok.


    An hour later, had the battery replaced fully working. The shop report provided my Apple Software, no problems what so ever with the machine.


    Moral of the story: A non authorised shop fixed something that Apple refused to fix and with refusal was asking me 600 euros to replace my unit with a reconditioned one. I would leave of course the old unit on the table.


    This technique I guess is called double dipping. You see, if Apple ability to fix my phone was to believe than I would be playing 600 euros for the swap, probably. Dip 1. I would leave the old phone, they would fix it as the other did, and run the same tests and sell it reconditioned for 630 euros, Dip 2. Over all, If I blindly believed Apple, a repair that would earn them 45 euros, the price of the other shop, would end up earning them 1200 euros (sell me a replacement unit and than sell the mine again recondicioned).


    If Apple considers the business of repairing their own devices not interesting ... well I would say out of luck. But even than, they could just not go out prosecuting independent repair shops. For these independent shops, the business is interesting enough, But Apple goes after these shops as well as suppliers to lead the user to these kinds of policies, giving Customers as little options has possible to rise their prices as much as they can (less options ... the greater the price).


    The value up is mostly driven by Apples Policy no quality in this case.


    Same has the App Store. Apple leverages on its devices and OS business to build the App Store business. Apple argues that App Store is a component of the OS, but in fact this is just Policy. I'm ok with this Policy as far as the user is concerned. The problem seams to be the side effect. Asking for 30% of devs revenue to sell through the store, means that the Policy in effect is dipping on a value that no longer delivers.


    No? Just ear me out!


    Recently there a story came out about Class Pass. Class Pass digital service offers a way to to book gyms and classes in local businesses for a fee. For that matter Apple did not require its 30% revenue share. Given the Pandemia they decided to start offering virtual classes. They received a letter from Apple that they were now required to share 30% of its revenue with them. None were required previously because classes were given in person. Shull


    The way I read this, is that Apple wants a 30% revenue cut of any and all digital businesses that go through the App Store. Phil Shiller said that they cannot open an exception because it would be unfair to others. But here is the thing, this is entirely driven by Policy. In the end, apart from app distribution and digital payment services Apple offers nothing else to devs in return of the 30% shared revenue. For these services actually the market charges a flat rate that it is at most $2 per app if not cents (its depends on the tech, if we are talking web apps its probably cents).


    Apple states that the 30% shared revenue reflects the value it delivers to devs. Let's just sink on this for a moment.


    The world has been going digital for decades. At an accelerated pace lately. In the end all business will be digital. This is a natural force. Nothing to do with Apple alone, albeit its part of it. The idea that a dev can simply go somewhere else it's a fallacy, because it based on a straw man argument. You see, the Apple market share averages close to 30% world wide, it some places up to 50% or more and other cases 10% maybe. A digital business needs to be wherever its customers are independent of the devices they use. The business have not control which devices the customer use, as it should be. So a digital business can assume that 30% of its user base will be on the iPhone, so they need to be there the best they can, no other option. This has nothing to do with Apple, it's the way digital business are. If they leave Apple out because of this POLICY, means that they leave 30% of their customers behind unless they change devices. In the US I would assume 50%. Why, because this POLICY leverages on another business, the devices Apple sells. This is the thing typical of Conglomerates, they see of course their businesses as components of each other, unified force until someone says, look, you need to do "this" or split and than they do" this".


    The fact is that the App Store is a commodity, a raw material for digital business. If there is only one, that is Apple's concern. It's the company imposing that constraint to the her benefit and its customers. Thinks have changed massively since 2009. Today App Stores like services are a commodity for digital business, over which businesses like ClassPass build their value on. A serious business has no other option but be in all major platforms (Android, iOS, Windows, macOS, Web) servicing customers the best they can, with quality. I mean, a commodity as "raw material", like electricity. Cut that electricity in the US 50% of ones customers are in cold, and so is the business. Imagine a energy company coming up to your door "Mr Thurrot, we have built an electricity infrastructure to you house were there was none, give 30% of your salary or go and leave somewhere else if you can, than you go somewhere else same thing, in 30% of the globe".


    It's not a Commodity? Being able to access digital services and apps, including proper payment and distribution facilities it's not a Commodity? Of course it is. How else can we have a future in the digital services?


    I wonder if the US Gov or any other Gov would think ... consider this. Say one can start paying taxes though an Gov App in the iPhone. This is a digital service right? So over the taxes collect the Gov should than pay Apple 30% right? Why wouldn't that be fair? Apple for sure delivers the same amazing value it offers to all digital services. Govs business is Gov's business, Apple business is Apple business right? But Apple does not do that course because well that would accelerate the split pace, so it opens exceptions. I does by progressively changing its policy to fit the Govs needs or someone else has the net tightens. the giant lobsters are ok to pass, but not for the little devs, the mussels. Than Cook comes to congress and Say the rules are the same for everyone one, which is of course diluting the question. I mean, I need to start believing that I can be a Gov and than be honoured with the exemption. You need to believe, that is the American way bla bla bla.


    Cook in congress said that the digital services market is like a cock fight, or something similar. But that its diverting the issue. There is no fight on this ... its a commodity. Again, there is no option (of course I can go around this rules, of sorts, say emails customers with payment information ... can I, but this does not seam like a clean way to do business moving forward.


    Govs need to pay attention to this across the board. Apple, MS, Amazon ... so on and so forth. These companies don't just offer Retail Stores for digital business. In fact, these store have become Digital Services Gate Keepers ... GLOBALLY! Built on top of many, including Telcos, Government subsided digital networks, so n and so forth. Comparison's with regular retail is misleading! No companies should OWN their customers this way! To potential to harm and to funnel value, impair competition and innovation in the future is absolutely astronomic, these companies model reality, once you are there, you don't know you are there because you know nothing else exists besides the reality molded by POLICY.


    Cheers.


    • Andi

      In reply to nbplopes:

      Fantastic story Mr. nbplopes; you arrived at the same conclusion I always held. Apple believes it is entitled to a cut of every single transaction that happens on the iphone and its policies reflect that. They are the ultimate middle man. I always called the smartphone, be it iphone or otherwise, a dumb pipe. No way should Apple be entitled to 30% of my Spotify subscription. Apple should take a cut from Fortnite skins or flat fee apps not content distributors.


      On the "authorized" repair shop. First of all it insinuates that a repair shop must be authorized by Apple to perform repairs, false. Check Louis Rossmann's videos. All authorized shops must give all the data on every repair including name and address of user to Apple. Apple knows exactly what repairs you made and where.


      The authorized repair program has one mission and one mission only. To protect Apple's incredible cash cow named Apple Care. In the US it's basically an automatic purchase by Apple users. There are repairs that Apple won't make or are very expensive, and you found out the hard way. Why is that? So it can upsell a new unit or to get you to purchase Apple Care. A competent independent repair shop is anathema to this scenario. This is why Apple is fighting with its teeth against the right to repair movement in the US.

      • lvthunder

        In reply to Andi:

        Except for your Spotify subscription to work Spotify must update the app on your phone. Some app makers send out updates every other week. You can argue the actual percentage, but someone has to pay for the distribution of app updates, the app store reviewers, etc.

        • nbplopes

          In reply to lvthunder:


          That someone is the developer. Has it happens with any business. Spotify is willing to pay for distribution as they do with they Web App version, as they do with their macOS version, Windows version ...


          Just because one is not not willing to give up 30% of its business to Apple for a download and catalogue service, something that costs 1% If not less, Ir does not mean one does not want to pay for it. I know of little digital businesses, say 500k turnover a year, that for static hosting of files, downloads and payment/billing spends 2k per year .. 15.000 users, the app itself with a footprint of 1.5MB per download. If you think you need Apple for that service you are mistaken. Most of the infrastructure expense is not there, is in server side running infrastructure. On top of that, man and all Marketing and sales to actual have. Compared that with relinquishing 30% of your revenue for static hosting a bin and download service and catalogue. Yes, Apple does curation, their own policy verification and certification, but that is their doing on behalf of the their Customers and themselves, not on behalf of the your service, have their customers pay for it if they haven’t already when they bought the device to them.


          The fact is digital services need to access the entire market as you don’t know what devices your customers use, that includes those 30% of your customers in the iPhone for reasons nothing to do with the App Store value, but because of the nature of digital services itself. The nature of the digital economy, Has I’ve explained, you don’t have any control over which device your customers choose, that is a good thing for Apple. That benefited Apple before and benefited Google ... and it will benefit the innovation of other in the future.


          What sells Spotify is Spotify. The same for the any other digital service ... Apple is not selling or promoting it for you. You see, digital service are way different from Analog for that matter. It can not be compared, the economics are totally different, Any comparison is nothing but a smoke screen ... how else a data center say in Arizona serve millions of user, say the entire US if not globally. In analog terms, that would be impossible, you would need way more complex and expensive analog network and convince a lot of middle man (local shops) wanting to sell your whatever. The digital space is not comparable in cost in any way shape or form. The materials you work over have a totally different nature and “breath“ on an entire different atmosphere ... for one it does not even require H2O or O2 if you know what I mean.

  18. JH_Radio

    And here's a bigger question. If they actually do this, will the big tech companies just do one thing for everybody in the entire world? Or will they do separate things for the EU. I'd think it'd be easier to do one thing for the entire world, but what do I know.

    • wright_is

      In reply to JH_Radio:

      This isn't just about Big Tech, it will affect all companies doing business in Europe, just Big Tech are the biggest companies these days and the visible poster child for such "bad" practices. But nearly every multi-national company does more-or-less the same thing with tax reduction, for example.

      They rarely pay tax where they do business, they find the cheapest country (corporate tax wise) to base their EU HQ and funnel all sales through that, regardless of where they actually do business. The EU wants to, among other things, ensure that income is taxed at the point of sale (this is different to sales tax), so that if a sale is made in Germany, corporation tax on that income is collected in Germany, not Ireland, for example.

      It is hard to do it for the EU, let alone the whole world. There are few international laws and not everybody is a member of the UN or other international bodies. There is always some tax haven somewhere that will be happy to accept big businesses for a much smaller portion of their income.

    • mattbg

      In reply to JH_Radio:

      It probably depends on what it is and what the impact to their bottom line will be. Apple, for example, is US-heavy and has different app stores for different regions. If the EU is asking for a costly remedy and they are able to apply it in the EU app stores only, I can see them doing that.


      It was a long time ago, but concerns an EU regulation against a worldwide software product... but, remember Windows XP "Reduced Media Edition" that did not include Windows Media Player because the EU didn't want Microsoft competing unfairly against competing MP3 players? They only released it to EU OEMs and were forced to rename it to Windows XP N because of the obtuse naming strategy.

      • wright_is

        In reply to mattbg:

        Apple isn't very US heavy, at least not tax wise, that all goes to tax paradises, where possible.

        But part of what the EU wants is that the income is taxed where it is made, not after it has been funneled to the cheapest tax paradise within the EU.

  19. overseer

    I'm not a big fan of a lot of the practices of the big tech companies, but I feel like the EU just views American Tech companies as an ATM. Kind of tired of seeing them treat US firms as a revenue stream.

    • Vladimir Carli

      In reply to overseer:


      there is a simple solution to your tiredness. US firms could just stop selling their products in the EU. I would be happy about it but unfortunately US firms are not as tired as you are

    • wright_is

      In reply to overseer:

      The problem is that US big tech are the biggest offenders and they often more blatantly ignore the laws and rules, which is why they often get pulled up short. They are also the most glamourous poster children, because they are well known names, especially in the American news cycle.

      When Philips, Sharp and Samsung get fined for a CRT cartel in the EU, that doesn't make the same headlines in the US as when Facebook, Apple, Google or Amazon get the same treatment.

      The proposed law changes will affect all businesses equally, but it makes more headlines when talking about big tech, because they are names everybody knows and can relate to.

      The other thing is, US big tech often comes in to a region and just does what it wants and then acts all hurt and surprised, when the local laws they have ignored for years are applied to them, just like any other company doing business in the region.

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