The European Commission is issuing antitrust charges against Apple over concerns about the company’s App Store practices. The Commission has found that Apple has broken EU competition rules with its App Store policies, following an initial complaint from Spotify back in 2019. Specifically, the Commission believes Apple has a “dominant position in the market for the distribution of music streaming apps through its App Store.”
The EU has focused on two rules that Apple imposes on developers: the mandatory use of Apple’s in-app purchase system (for which Apple charges a 30 percent cut), and a rule forbidding app developers to inform users of other purchasing options outside of apps. The Commission has found that the 30 percent commission fee, or “Apple tax” as it’s often referred to, has resulted in higher prices for consumers. “Most streaming providers passed this fee on to end users by raising prices,” according to the European Commission.
As predicted, and entirely reasonable. This is only the first step in the process, and Apple will have the opportunity to respond. If found guilty, Apple could face a fine of more than 22 billion euro, 10% of its annual revenue, or be forced to change its business model.
It should be charged 10% each month until Apple changes its illegal and anticompetitive model in Europe.
Thom Holwerda,
I think it’s reasonable too, although ironically it might actually still be worthwhile to pay it to keep competitors out of the market. They can still be very profitable even with the fines. Consider such a fine would be less than the taxes they’ve been avoiding anyways.
A big problem with antitrust though is that it’s too damn blunt. The application of antitrust, though justified, is awfully inconsistent and as a result it has a lot of trouble keeping impartiality. You know a lot of people are going to complain that apple was a scapegoat (even though I don’t think they were). And to that end I wish they’d put laws on the books to directly outlaw the anti-competitive business practices that take away consumer access to competing stores. This would stop a lot of the market abuse early on without having to bring antitrust cases against individual companies.
Alfman,
But there is a thin line here, and it is impossible to codify all cases into the law. Someone named Godel has interesting theorems on formal logic which will apply.
Some examples:
What about a gaming console? Shall Xbox open itself to Steam? Shall PlayStation be forced to include Game Pass?
There will always be exceptions to a law.
(Note that I do not like what Apple does, and do not buy their products for myself).
sukru,
I think the competition would be good for consumers, but actually implementing It depends on whether the government exists to promote consumer interests or not.
Alfman,
I gave consoles as an example, since as a consumer I find them being locked actually a good compromise.
But let’s go back to laws. They are never going to be complete or consistent. That is just not possible.
1) So, we have either “straight line classifiers”.
Like “ban all hardware with closed stores”, with collateral damage. Or ban none of them, and keep phones locked out.
(The same thing happened here in California. State tried to ban “gig” workers, which caused many independent translators, illustrators, journalists, stylists to lose their jobs. So we voted to strike that out, which still keeps Uber as-is.).
Obviously these blunt rules are not sufficient.
2) Or, we have “over-fitting”:
Like a classifier, we can enumerate all known valid and invalid cases. This of course will become like Swiss Cheese in a short time, and hence all those “loopholes”.
(California also tried to add individual exemptions to gig rule for each job category, but it was not fast enough to catch up).
3) Or what EU does, and leave a large gray area
Since laws cannot enumerate all cases, most often they are purposefully written in a vague language. As you mentioned, that causes selective applications of laws, since no company or person can know whether they are infringing upfront. Even worse, prosecutors taking on cases will also be arbitrary.
(US has a partial solution to that: case law. Once a case is settled it becomes a template for future ones).
So, basically here are no “solutions”. And we have a constant need to update our laws and regulations as we run into new cases.
Anyway, we strayed too much from the topic at hand (Apple).
sukru,
I think we ought to be consistent. This is only controversial because we’ve allowed corporations to normalize their control over us, but before the technology existed to control consumers remotely. It was always taken for granted that owners would be in control of their own hardware. It just went without saying. Neither the public nor legislators agreed to grant manufacturers a right to control owners, that merely happened because the technology evolved to the point when they could keep control for themselves even after sale. But it’s not a foregone conclusion that we should allow corporations to hold this power over us.
We do have solutions though, the question boils down to whether the government should protect consumer rights or if corporations are allowed to take them away. Alas, today’s governments lean heavily towards protecting corporate interests, which isn’t really surprising because by and large it’s the corporations that fund lobbyists and political campaigns.
OK….Here’s how Apple can fix this while maintaining the integrity of the app store for users:
Make the app store backend support 3rd party connections to CDNs from 3rd parties. If someone wants to use their own CDN and payment processor then they can get app approval, have the proper security evaluation for the CDN and payment processors by Apple, and then apple can set up the interlink. In this situation, Apple doesn’t need to charge anything.
They can then offer two services that are independent of each other:
1) Payment processing – this can charge the industry standard amounts other payment processors charge and offer enhanced user experiences which will encourage developers to use it, even the separate CDN apps.
2) CDN hosting – This can be useful for smaller developers because it makes publishing dead simple and avoids the overhead of setting up a CDN separate from Apple. You get the ease of publishing from apple’s development tools, and other features.
This could be a service they offer for whatever profit level they like. If it covers the cost of running their infrastructure they can charge as competitive an amount as they like for the additional ease and that publishing comes with it.
If they do this, I think they will resolve all the issue larger developers have while also supporting smaller developers and maintaining the security and integrity of their platform for the users.
behindmyscreen,
I’m not clear on what you mean by “CDN”, do you mean competing stores? If not then there would still be gripes about apple depriving owners of the right to access competing app stores.
…BTW I know what a content distribution network is, but it’s more of an implementation detail. Clearly a competitor would have to solve distribution themselves whether they use a CDN or not.
I literally mean providing their own means to distribute the binaries in the apple app store. I think a phone can argue they should be the only store available to the users for security, but if the issues people have is related to costs Apple charges, then removing the need to use Apple infrastructure and not prioritizing client developers in the store that will suffice.
behindmyscreen,
But that’s a non-solution to the problem of consumers being denied the right to choose competing app stores (and repair stores while we’re at it).
Game systems are an interesting thing.
In the olden days, a console was a dedicated system solely meant to play the games, usually branded by the company making the game, and developers / publishers would get a cut.
It could be argued that the iOS and Android devices are general use devices and should have store competition. But then we no longer have Video game consoles, we have Multimedia devices. We are no longer in the day and age where a Playstation is all that different from a PC. The proof in this is the Atari VCS, which embraced the “you can just install Linux or Windows on it (someone even got MacOS to run)” which shows that the modern Playstation and Xboxes shouldn’t be ignored in this issue.
The Nintendo Switch is probably the one exception, as they have not added any multimedia things to it. People keep asking for netflix, youtube, etc, but pretty sure it is limited to a basic browser, if that (been a while since I looked).
Here’s how I look at it. Apple, as far as I know, does not stop anyone from opening up Google.com and look for Spotify or any other application they are interested in. In putting your application in Apple’s App Store, they are doing your advertising for them. Advertising that takes servers and people to run. Should it be 30%? That’s the big question. Keep in mind that brick and mortar stores charge far more than 30%, it’s like 50% of what you paid at a physical store back in the day. Prices have come down. Nobody is stopping people from going to a search engine and searching for their apps.
No, I don’t use Apple Music or most of what Apple is trying to get people to buy. I’m very happy with the music that I’ve bought and when I hear new music that I like, I buy it instead of renting it. I almost always prefer buying vs renting.
Note: People don’t think about the fact that using either Apple Music or Spotify, that the day they stop paying they can no longer listen to music. When I buy a song, I never lose access to that song. EVER! I also buy physical vinyl albums along with buying music in iTunes. I don’t see people being unable to buy or rent music from anyone other than Apple. Just go to another music store and buy it. Either a physical one or an online store where you can buy digital music.
I’m not sure you fully grasp the complete situation here. Sure, you can find out about apps from anywhere else, but then what? Unless you do a lot of faffing, you can’t install it on your iPhone without going to the App Store anyway and paying for it there. And then, should you wish to purchase anything within that app, you can’t pay for it in any way other than through Apples payment system. This isn’t about default search engines or anything like that – it’s about Apple’s tight monopoly on any payments that happen in any way for or through any app in their store.
As for music streaming, I don’t thing there are that many people under the illusion that they own any music they stream on Spotify, just like they don’t believe they own any movie they watch on Netflix. Streaming services like Spotify are seen as an alternative to radio – it’s essentially your own personalised radio station. If you don’t have access to it, of course you can’t listen to it. And I wouldn’t be so sure about never losing access to any music you purchase. Physical media, fine, but digital media you need to still have access to the downloads just in case something disastrous happens to your storage. Contravene Apple’s terms and conditions and they can simply ban you, thus preventing you from downloading that music without buying it again under a different account. Remember, technically you’re only buying a licence to play the music, which Apple can revoke at any time.