Report: EU to Charge Apple With Antitrust Violations

Posted on April 27, 2021 by Paul Thurrott in Apple, iOS, iPadOS, Mobile with 33 Comments

The European Commission could charge Apple with sweeping antitrust violations as soon as this week, according to a new report in the Financial Times that cites several people with direct knowledge of the announcement.

The charges are related to the arbitrary rules that Apple enforces for developers who target its platforms, including iOS (iPhone), iPadOS (iPad), macOS (the Mac), and others. And I assume that most readers are already familiar with the laundry list of anticompetitive business practices that Apple uses to hobble third-party developers, copy their best ideas, and then promote their own copycat apps and services that do not abide by the same rules.

Apple, of course, has referred to this kind of talk as “misleading rhetoric.” But with antitrust regulators from around the globe taking its gatekeeper role seriously, there will be changes. Indeed, we’ve already seen some major proactive changes from Apple: Most app developers will no longer be charged a 30 percent vig on digital purchases thanks to complaints from Spotify and others and the resulting antitrust investigations.

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Comments (33)

33 responses to “Report: EU to Charge Apple With Antitrust Violations”

  1. Avatar

    vladimir

    I guess the EU is getting a bit quicker than before. Good. I hope they don't give them a slap on the wrist.

  2. Avatar

    txag

    How much would Apple lose by just stopping EU sales?

  3. Avatar

    ebraiter

    Ah the lawyers at Apple will be busy. Do they have a tower building just for the lawyers there?

  4. Avatar

    dftf

    Always interesting when people argue that Apple "aren't a monopoly, because Android".


    Sure, Android has greater market-share in the "smartphone and tablet" market globally; somewhere around 70%. But should a monopoly-position purely be based around this (i.e. install-base or active-use), and not the money? Clearly money-wise Apple do dominate as their App Store accounts for somewhere around 65-70% of all app-spend for such devices.


    I mean, if you go by "install-base" then a giant like Walmart or Tesco could similarly argue "actually, we don't hold a monopoly position because, if say you were to individually count the number of independent shops across either country, there are way more in-number than of our own. Or how-about we go by total land-cover: again, all indie shops combined collectively cover more land than our own".


    Going by anything other-than the money seems daft to me: any major-player could find a way to argue out of being a monopoly!

  5. Avatar

    scovious

    Thanks to the lawsuits of Epic Games, the mobile market might finally become a fair place for developers to distribute their products. This will set a precedent for other countries to follow, hopefully a wave of change is afoot. Apple's lock in strategy seems to finally be working against them. Google won't be far behind if Apple is charged, maybe Google will regret not supporting competing platforms when Android was rising in popularity.

    • Avatar

      bettyblue

      In reply to scovious:

      Microsoft and Sony will be right behind them.

    • Avatar

      MikeCerm

      In reply to scovious:

      Whatever eventually happens to Google will be a slap on the wrist compared to how different things might have been if WebOS, Windows Phone, and/or BlackBerry had managed to survive. I mean, do you think the Microsoft of today would have propped up OS/2 if it could have somehow spared them from antitrust action? 20 years later, their share of the desktop PC market is still going strong, and even though they missed out on mobile, they're still in a much better place than they would have been if the industry had never coalesced around Windows in '90s.

  6. Avatar

    wright_is

    In reply to lvthunder:

    That is more Marxist than true socialism, or rather it is an extreme of socialism, and it is the community, not the government that controls.

    Socialism in Europe is social democracy, something totally different.

  7. Avatar

    Stokkolm

    In reply to lvthunder:

    He's supporting regulators investigating anticompetitive practices. How is that denying due process? Also, it's not like a crime where the evidence is hearsay or circumstantial. You can look up their policies.

  8. Avatar

    wright_is

    In reply to lvthunder:

    That has nothing to do with socialism.

  9. Avatar

    vladimir

    In reply to lvthunder:


    that would be great. An anticompetitive abuser being stopped by regulators from exploiting other businesses and customers. Where do i sign?

  10. Avatar

    toukale

    I see the commission is back for another lost. If some developers are under the impression they will be able to avoid that 15/30% fee then they are mistaken. Apple will just apply it to their api call, either way they will pay. Plus is the government going to tell private businesses how much to charge for access to their products now. Because I am not sure why all this dance around the topic when that's basically what this is about at the end of the day. I look forward to another popup prompt.

    • Avatar

      Andi

      In reply to toukale:

      First of all the iphone is my product, not Apple's. Just how I don't play Apple a commission when I purchase macos software, the same way I should be able to avoid paying 30%/15% of my mobile transaction.


      Apple mandates that if you have 3rd party sign in option, Fb, Google, etc. then you should add the Apple option. The EU could mandate the same; you must allow 3rd party payment options in addition to Apple, just like Epic wants.

      • Avatar

        bettyblue

        In reply to Andi:

        Do you see a place on your app purchase bill that shows commission? The developer pays it.


        So yes instead of them getting the full 99 cents for that app they are getting 79 cents for Apple to check it for bad stuff, host it for download and handle the payment processing. If the developer is small then they will get 84 cents of that 99 cents.

      • Avatar

        Greg Green

        In reply to Andi:

        The physical device is yours, the software is theirs, they just let you use it.

      • Avatar

        bkkcanuck

        In reply to Andi:

        The iPhone is what you own, you however DO NOT own iOS that makes it run (software is leased not sold). You can wipe the device of iOS and do whatever you want with it. You don't pay Apple, the developers do... you pay the gross price of the software you install. The developer sets the gross price and then receives the net value after the transaction is done (i.e. it is an agency model not a wholesale model). If you violate the terms of the software lease that you lease (even the lifetime lease) can be terminated. I am not overly familiar with EU laws, so I cannot comment on the viability of it... but the EU has on several cases tried to extend the laws way beyond what they were enacted to cover and have been told so by the courts as they wound their way through. If Apple chooses to do so this will be another long battle. I however do think that the wisest course of action is to add 'gatekeeper' to the device and sandbox the software (i.e. secure sandbox). I actually think that is why they spun iPadOS out from iOS is because the long term had that migrating more to be in common with the macOS division so spinning it out so that it would align with macOS (which has gatekeeper). This model is not new, the Sony Playstation console and XBox have been using it for decades and it existed decades before that. If they want to change it, it should be done through legislation - no room for confusion (but it should not be targeted at one company but at legislating virtual stores etc.).

      • Avatar

        toukale

        In reply to Andi:

        Didn't you read my post, I am not opposed to that, I am simply saying if anyone thinks they will be able to get that milk for free then they are mistaken. Apple will simply put a price on their api access. Developers will then have to pay a price (set by Apple) to access those api's. that's what I am saying. Apple will simply move the charge around. The main thing I am waiting on is what they will focus on since Apple market share in Europe is not as high as its market shares in the US.

        • Avatar

          Andi

          In reply to toukale:

          Apple can attempt to do what it wishes, maybe pass the cost along the API chain, should the complaints continue however, the fine will be increased.


          The EU doesn't have a sign that says "you must have this amount of marketshare/revenue share until we officially brand you a monopoly". They will focus on making a more level playing field between Apple, its services and 3rd party options.

          • Avatar

            toukale

            In reply to Andi:

            We will see, folks made those same comments (even worst) during the tax charges against Apple and we know now how that turned out. I have no dog in this fight I am just pointing out folks will not get a free ride, because this is what this is about at the end of the day.

    • Avatar

      MoopMeep

      In reply to toukale:

      In my state we have to register our cars every two years. The state sends you a sticker to put on your license plate, its about the size of a postage stamp. I am not sure what happened this time... (probably related covid and the car sitting in the driveway directly in the way of the sun) but I recently noticed the paint on the sticker all flaked off, so the sticker base is there but the color and expiration year are all gone. So if the police see it they might think my car isn't registered. To get a new sticker from the state is 25 dollars.... seems excessive but the state can basically charge whatever they want and you can't really complain.

  11. Avatar

    nbplopes

    The crux of the matter is the in-app purchase policy. If the commission focuses on that they will have a very very good case. The in-app purchase policies paired with the 30% shared revenue its indeed charging for goods, technology and services that does even sell, much less distribute or produce. The sale in-app not only are done within the confines of the third party property, its app, but is also sold by the third part in effect, its simply being forced to hand over the payment and billing to the App Store for them to collect 30%, just like that (more actually, because they hold on payments).


    There would be not problem if it was the third party choice, but when forced with a threat of being banned hence not being able to reach their customer on the devices of their customers choice … pair this with 50% market share in the US … it has the grounds to be considered abuse. Even more so when Apple itself competes with their digital service directly, the case of Spotify.


    The App Store should do what it says in the Tin, what the customers that buy iPhones perceive it do. Host, Distribute and sell Apps, in the end that is what their system, their infrastructure actually does. The rest is all done, invented even by the third party.


    Has for the licensing for dev kits and so on, just set the price Apple. This is the standard modus operandi and its quite transparent. Give business the option of either pay the price set and process own sales in app like anywhere else. If the licensing cost is too much for the third party to pay maybe they accept sharing their revenue as a form of payment, heck maybe even 50% who knows. Each business would do their calculation and choose the best option for them. I see small business, say businesses with less that half a million to a million in sales to choose the second option. After that, once they outgrow the thousands in sales, a fixed or variable price based on estimated number of downloads, much like a web site host, will for sure be preferable. I can’t phantom a justification to pay 300K for Million in app purchased given the above … unless one is forced into choosing not having an app for my customers altogether while having to compete with the other Apple digital services, that of course get the all shebang for free, no policies there.


    Only one with no skin in the business game or an Apple share holder does not see much problem with the current Policy. Not even Amazon does this on their marketplace. Oh, forgot another class, businesses that do, or have the capacity to do and are just waiting to see how the all thing is closed, to make a similar move, maybe even more aggressively.


    Those are mostly quite about this. Yes, you Microsoft :)


    EDIT: Considering Azure … probably being a bit unfair to Microsoft.

    • Avatar

      bettyblue

      In reply to nbplopes:

      I do not use Spotify but I do use Netflix. Apple gets nothing from my Netflix monthly payment but I use Netflix exclusively on Apple devices.


      Why can’t Spotify use this same model?


      On my Xbox I buy ad on’s, content etc for games and in most cases non Microsoft games. I do it through the game/Xbox which bills my credit card on file with Microsoft. Is Microsoft getting a cut from my in app purchases? If so how is this different? Unless I am wrong I have no other way to purchase this content outside of the Xbox world like I can with Netflix.

      • Avatar

        nbplopes

        In reply to bettyblue:


        The question is not so much if there is a “backdoor” to Apple and Google in app purchase, a device that is required to be implanted in third party software, but wether the conditioning constitutes an abuse of its device market share. After all, the App is owned by the third party and any any sale done in is conducted by it, the App Store works in this context as a cash register of a good that does not sell, distribute or produce. Why shouldn’t than have the option to accept payment and process billing?


        In closing 49 years, never seen a Store behaving this way. Its not like Tesco, BestBuy, Amazon … even gaming consoles. For instance in gaming consoles you can by add-ons that you need to download from the store. It makes sense because its using the store the store to distribute add-ons. In case of Spotify and most digital services, the goods services never cross the App Store boundaries.


        In case of an hypothetical Tesco case imagine someone coming to your shop choose something that you have created or distribute and when its time to pay … sorry you need to go to Tesco, pay, bring the receipt, and only than you can take it. This is the same process, yet it happens at light speed so is not inconvenient to the customer as it would in a bricks and mortar situation, but it does have a profound business impact … now and in the future … ultimately fully controlling the money flowing to digital services, control or condition the flow money, is half way to control and condition the market. I find this kind of conditioning unacceptable, anti competitive. When you have 50% of market share, case in case US, Australia and UK (and others) the power is incredible and they use it.


        One needs to have skin in the game to appreciate this situation. A regular consumer wouldn’t care less. For them is just a supplier / store issue. People follow the best price and the most convenient process.


        Cheers.

        • Avatar

          bkkcanuck

          In reply to nbplopes:

          When you buy from a store that sells 3rd party items - they require you to pay them before anything is delivered to you... they don't allow you to pay someone not connected with them hoping that they might get the money sometime in the future.

          What is being asked from Apple is that they allow the payment to be made directly (for example Amex) and the app distributed to by the App store.... and maybe Apple might receive the proceeds of the commission sometime in the future. This is not how business works, you are expected to pay the retailer and the retailer will deduct commission and pay the product supplier the net amount (or if it is wholesale physical products it is sold wholesale at $60 and the seller charges $100). Apple already accepts third party payment networks for payment - in fact my Visa card is hooked up to it.

          • Avatar

            nbplopes

            In reply to bkkcanuck:


            Take a Book Store. When you buy in a Book Store you don't need to go to another store to pay. The App Store does not sell books, the third party App does, yet through a device that is required to implanted in the Book Store ... they call in-app purchases. Never heard of something similar in Bricks and Mortar stored. According to Eddie Cue the 30% markup was inspired by Bricks & Mortar. Don't know which one they got in-app purchase device from, do you?


            Its interesting that people when they read the label App Store start from the word Store and totally forget about the App. In what way charing say a subscription for remote classes equates to selling Apps?


            What is being asked is Apple is to remove the requirement of such device and make it optional and allow digital services conclude the sale in their Apps, in their property, after all if the user is converted in App, payment is just protocol, probably the most important one. That is called eating someone else lunch after all the effort to make it . For multiple fair reasons.

  12. Avatar

    shawnthebeachy

    In reply to SvenJ:

    I'm not arguing about effectiveness. I'm just saying that PA doesn't even require them at all anymore.

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