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EU Opens Non-Compliance Investigations into Apple, Meta, and Google
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The linked answer you were given shows:
"Apple and Google are not direct competitors in relation to smart mobile OS and app stores
One of the most disputed aspects of the case concerned market definitions and Google's dominance in the worldwide market (excluding China) for (i) licensable mobile OS and (ii) Android app stores.
Google's key argument was that the EC wrongly focused its assessment on OEMs but failed to properly consider the competitive pressure from Apple app stores and OS in relation to users and developers.
- The General Court confirmed that Android and iOS are not in the same market since Apple does not offer to license its iOS to other OEMs. In relation to users and developers, the competition is only indirect and Apple does not exert sufficient indirect competitive pressure on Google to constrain its conduct. The General Court agreed with the EC's analysis that due to switching costs and users' loyalty to their OS, users would not switch to Apple in case of a small but significant non-transitory decrease in quality of the OS (the SSNDQ test). As users would not switch, the same is true for developers, who would not abandon Android's large user base."
Doesnt this play against the current allegations?
Apple and Google arent monopolies because this previous 2022 ruling says neither Apple nor Google compete in the same marketplace and dont constrain each other's conduct. A monopolist would severely limit what competitors are trying to do.
You cant have it both ways. They either compete or the dont. They are either monopolies or they arent.
It's not something that varies from moment to moment when it suits an EU court.
Real world data for years has shown 11-15% of new Apple devices are purchased by Android switchers.
That's a significant number given how "difficult" the 2022 ruling says it is and how "reluctant" loyal Android users would be to switch over.
The statement might also explain why all those complaining about iOS not being open dont accept they can move to Android. No matter how easy it is or how many equally powerful devices exist that would suit their declared needs.
Their behaviour is to put up with something that doesnt do what they want but just make noise about it and hope Apple are forced to make changes. Squeaky wheels effectively.
The ruling went on to say:
"the assessment of digital markets in general, acknowledging that parameters such as innovation, user behaviour or network effects may be more important than price."
Regardless of any changes the EU may force on iOS (or Android), user behaviour may keep things largely as they are currently. When these alt app stores fail to attract users or make money it wont be pricing. Users have had 15 years of trusting the app store and payment systems. There's little motivation for them to change that behaviour. Even cheaper prices may not work.
I was reluctant to get rid of my Spotify Premium subscription. I'd used it for years. I was comfortable and while I wish they had delivered on their promise of higher quality streams, I put up with it and hope it would happen. Once I was actually motivated to jump, it all went smoothly and I'm now even happier with Apple Music for the same price.
I just need to stop Spotify emailing me to upgrade again...
Apple and google not competing in the same market actually would support the notion that Apple is a monopoly and is exerting monopoly power to limit user choice for iOS developers and users.
The goal of the DMA isn't necessarily to make it easier for users to switch between platforms, that is the focus of the US DOJ complaint. The DMA is more focussed on ensuring that there is fair competition and access to features and users within each platform.Real world data for years has shown 11-15% of new Apple devices are purchased by Android switchers.
That's a significant number given how "difficult" the 2022 ruling says it is and how "reluctant" loyal Android users would be to switch over.
The statement might also explain why all those complaining about iOS not being open dont accept they can move to Android. No matter how easy it is or how many equally powerful devices exist that would suit their declared needs.
Their behaviour is to put up with something that doesnt do what they want but just make noise about it and hope Apple are forced to make changes. Squeaky wheels effectively.
The ruling went on to say:
"the assessment of digital markets in general, acknowledging that parameters such as innovation, user behaviour or network effects may be more important than price."
Regardless of any changes the EU may force on iOS (or Android), user behaviour may keep things largely as they are currently. When these alt app stores fail to attract users or make money it wont be pricing. Users have had 15 years of trusting the app store and payment systems. There's little motivation for them to change that behaviour. Even cheaper prices may not work.
I was reluctant to get rid of my Spotify Premium subscription. I'd used it for years. I was comfortable and while I wish they had delivered on their promise of higher quality streams, I put up with it and hope it would happen. Once I was actually motivated to jump, it all went smoothly and I'm now even happier with Apple Music for the same price.
I just need to stop Spotify emailing me to upgrade again...
Yes, because a monopolist limits their competition only inside the same market they’re in.The linked answer you were given shows:
"Apple and Google are not direct competitors in relation to smart mobile OS and app stores
One of the most disputed aspects of the case concerned market definitions and Google's dominance in the worldwide market (excluding China) for (i) licensable mobile OS and (ii) Android app stores.
Google's key argument was that the EC wrongly focused its assessment on OEMs but failed to properly consider the competitive pressure from Apple app stores and OS in relation to users and developers.
- The General Court confirmed that Android and iOS are not in the same market since Apple does not offer to license its iOS to other OEMs. In relation to users and developers, the competition is only indirect and Apple does not exert sufficient indirect competitive pressure on Google to constrain its conduct. The General Court agreed with the EC's analysis that due to switching costs and users' loyalty to their OS, users would not switch to Apple in case of a small but significant non-transitory decrease in quality of the OS (the SSNDQ test). As users would not switch, the same is true for developers, who would not abandon Android's large user base."
Doesnt this play against the current allegations?
Apple and Google arent monopolies because this previous 2022 ruling says neither Apple nor Google compete in the same marketplace and dont constrain each other's conduct. A monopolist would severely limit what competitors are trying to do.
You cant have it both ways. They either compete or the dont. They are either monopolies or they arent.
It's not something that varies from moment to moment when it suits an EU court.
Real world data for years has shown 11-15% of new Apple devices are purchased by Android switchers.
That's a significant number given how "difficult" the 2022 ruling says it is and how "reluctant" loyal Android users would be to switch over.
The statement might also explain why all those complaining about iOS not being open dont accept they can move to Android. No matter how easy it is or how many equally powerful devices exist that would suit their declared needs.
Their behaviour is to put up with something that doesnt do what they want but just make noise about it and hope Apple are forced to make changes. Squeaky wheels effectively.
The ruling went on to say:
"the assessment of digital markets in general, acknowledging that parameters such as innovation, user behaviour or network effects may be more important than price."
Regardless of any changes the EU may force on iOS (or Android), user behaviour may keep things largely as they are currently. When these alt app stores fail to attract users or make money it wont be pricing. Users have had 15 years of trusting the app store and payment systems. There's little motivation for them to change that behaviour. Even cheaper prices may not work.
I was reluctant to get rid of my Spotify Premium subscription. I'd used it for years. I was comfortable and while I wish they had delivered on their promise of higher quality streams, I put up with it and hope it would happen. Once I was actually motivated to jump, it all went smoothly and I'm now even happier with Apple Music for the same price.
I just need to stop Spotify emailing me to upgrade again...
And did you miss the “The General Court confirmed that Android and iOS are not in the same market since Apple does not offer to license its iOS to other OEMs.
And “ The General Court agreed with the EC's analysis that due to switching costs and users' loyalty to their OS, users would not switch to Apple in case of a small but significant non-transitory decrease in quality of the OS (the SSNDQ test). As users would not switch, the same is true for developers, who would not abandon Android's large user base."
The European Commission’s Revised Market Definition Notice: A New Approach to Digital Markets | Insights | Skadden, Arps, Slate, Meagher & Flom LLP
The European Commission’s recently revised Market Definition Notice confirms the authority’s forward-looking approach to dynamic and innovative markets and identifies factors relevant for the agency’s assessment of multisided platforms and digital ecosystems.
The revisions to the Notice are the first since its adoption 27 years ago. They reflect new market realities. While they confirm the importance of factors other than price — such as innovation, quality, reliable supply and sustainability — in defining the boundaries of competition, they leave many factors open for assessment on a case-specific basis.
The meaning of a dominant market used in the case was written in 1997.
Traditionally(it’s been revised this year), the main question EU regulators consider is whether a hypothetical monopolist of the product could profitably sustain prices at a small but significant amount above competitive levels (the so-called hypothetical monopolist, or SSNIP (small but significant non-transitory increase in price), test). Following a small price increase, customers may switch some of their purchases to other products, which would then belong to the same product market (demand-side substitutability). Similarly, if prices rise, companies that do not currently supply a product might be able to supply it without incurring substantial sunk costs (supply-side substitutability).
Key Updates to the EC’s Guidance on Market Definition
Nonprice Dimensions of Competition
The revised Notice underscores the importance of competitive parameters other than product characteristics, prices and intended use and refers to parameters such as the degree of innovation and quality. Differences in the resource efficiency, durability, the value and variety of uses, the possibility to integrate the product with other products, the image conveyed or the security and privacy protection afforded may also be relevant.The revised Notice also refers to the relevance of behavioral biases in customer choices, such as a tendency to choose the default option provided (see the reference to customer inertia identified by the EC in its recent Booking.com/eTraveli merger decision).
It's astonishing how many people seem to want to be "ruled" by a central government like the EU. They actually believe these apparatchiks are superior humans, gifted managers, 'smarter' than free markets, and of course have the best of intentions behind their actions. Nothing could be further from the truth. These central command bureaucracies are the problem, not the solution.
At a certain point Apple, Microsoft, etc, should tell these Vogons to go pound sand, and refuse to sell their products & services in the EU.
At a certain point Apple, Microsoft, etc, should tell these Vogons to go pound sand, and refuse to sell their products & services in the EU.
We don't want to be ruled. We elect representatives who we believe will advance our interests. That is normally how elected governments work. They are elected and make laws to regulate markets so that they are controlled in a way that reflects the interests of their citizens.
The free market has no innate intelligence, it is only as smart as the collective actions of all its members and it also suffers in many ways when there are monopolists who can use their money, influence, and reach, to distort market choice. The idea that the App market is currently a free market is actually in dispute right now. Actions of people acting in the free market are also not truly free as they are influenced by marketing which is often misleading and most people don't have the time to truly evaluate all choices completely enough to actually make a truly informed choice.
Note: I think we should have a market based economy, but I dispute the notion that the free market has magical intelligence that mean it never needs regulation.
That’s very ironic of you to say that people wants to be ruled by a “centralized authority like EU” while simultaneously likely not being aware how decentralized EU actually is compared to your own government, or that it functions with likely 1/1000th of the budget in comparison.
Barely 1% of The GDP goes to funding the EU government.
US states could only dream of being as independent as EU countries are considering it’s not a federation
I prefer to see governments exercise control over the savagery of unfair markets that have been distorted by vested interests.
And that's a big problem. Vaguely worded legal documents that can be interpreted in multiple ways depending on your point of view.
(yeah another car analogy)
Regulator: Drive the car safely and don't hit anyone.
Driver: Drives for a week and doesn't hit anyone.
Regulator: You're being fined as we feel you were driving too fast to be safe.
Driver: So what's the actual speed limit you want me to drive at?
Regulator: Safe
🤷♂️🤷♂️🤷♂️🤷♂️🤷♂️🤷♂️
Or:
"Eu DMA Article 6:
12. The gatekeeper shall apply fair, reasonable, and non-discriminatory general conditions of access for business users to its software application stores, online search engines and online social networking services listed in the designation decision pursuant to Article 3(9)."
Apple puts in place fees that punish applications that move to the new terms which lets them distribute apps on own Apple's store and alt stores. Apple acts surprised when they are in trouble!
In Ireland there are the offences of careless driving, and reckless driving.
Neither are rigidly defined, and there's a grey area between what constitutes careless, and what constitutes reckless, but in the main it works well, and everyone understands what it means. The reason it's not rigidly defined is because it removes the need to have a huge list of acts that constitute an offence, which will not cover everything. It also allows for context - certain acts are fine in one situation, but wrong in others.
Similar with the DMA - it's not rigidly defined, but anyone with a reasonable level of common sense can see what it means.
your example exactly hits the nail on the head of how vague the wording is from the EU.
no matter what Apple (or Google) do, they will still find a way to issue a fine.
And noting in the EU DMA says Apple cant charge fees.
What Apple thinks is fair and what those using it think is fair is just like your driving analogy
But the wording itself has been adhered to...
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So what’s a “fair and reasonable” rate to charge developers in the EU? Because it increasingly feels like the EU really just wants companies like Apple to away with any cut whatsoever and not collect a single cent; they just don’t want to say it out loud.
The EU’s Share of Apple’s Global Revenue
The DMA allows the EC to penalize “gatekeepers” with fines that are vastly disproportionate to the amount of revenue they generate in EU member states.
May not seem like so controversial an opinion at the end of the year.
it doesnt matter how many languages you translate "fair and reasonable" into, they still are vague and open to interpretation.So what’s a “fair and reasonable” rate to charge developers in the EU? Because it increasingly feels like the EU really just wants companies like Apple to away with any cut whatsoever and not collect a single cent; they just don’t want to say it out loud.
The EU’s Share of Apple’s Global Revenue
The DMA allows the EC to penalize “gatekeepers” with fines that are vastly disproportionate to the amount of revenue they generate in EU member states.daringfireball.net
May not seem like so controversial an opinion at the end of the year.
And that is probably the EU aim.
Make it open so you can continue to bleed companies with fines.
I worked for a government department.
They wrote workplace agreements that contained "may" and "might" when discussing annual performance bonuses.
We warned staff signing (which we were all forced to eventually) that these words were open.
Some said "oh no, we trust them, they said if we do our job we will get out bonus".
A year later, most were surprised to get a rating of 5 or 6 and little or no bonus because they only "met expectations".
Legal matters should not contain ill-defined words that can be twisted.
If that's too hard, there should be clear examples of what the words mean to clarify, if not absolutely, but with a much better idea of common scenarios. "an OS provider can charge up to 27% commission on a sale outside their store" is clear guidance of what is acceptable to those writing the law without picking a specific number less than 27%. It can be 0 or 27% or anywhere in between but 28% or higher is not adhering to the intent. Vendors can safely work with those words.
The law doesn’t have multiple points of view, they have the intent of the legislation and the legal context of eu primary and secondary law.
The Court of Justice takes a different approach to legal texts than common law judiciary and is prepared to use interpretive techniques to give a purposive application of a Treaty provision or secondary legislation. In doing so, the Court will look at the overall context within which the legislation is set and use what is known as teleological reasoning.
This may appear to be similar, at least ostensibly, with common law methods of purposive interpretation of statutes (the so-called 'mischief rule') but is different in one important respect. The use of purposive interpretation by the Court of Justice
Going by a textual or literal description would break EU primary law as it would mean some EU laws have more legal weight in some languages compared to other languages.
Or you might look what is defined or classified as unsafe, dangerous and reckless behavior. EU tells you the only information you should need and that is what the goal and results are desired. How you happen to meet such expectations in your unique way that is super wasteful or super efficient is for you to find.
Such as I can drive 30km/h in school district as is the speed limits. But if I swing around, drive backwards, drive on the wrong side of the road, driving blindfolded etc etc I will squarely fall in reckless endangerment that most likely will cause my driver’s license to be revoked.
A monopoly can exist in a market that has alternatives/other companies.
A U.S. district court ruled Microsoft was a monopoly in computer operating systems in 1999 despite the fact that alternatives existed including Mac OS, OS/2, Linux, BeOS, DR-OS, etc.
A U.S. jury declared Google's Play Store and payment system a monopoly last year despite alternatives existing.
Well it’s not defined, because it’s determined with a multitude of tests that defines what fairness and reasonable means.So what’s a “fair and reasonable” rate to charge developers in the EU? Because it increasingly feels like the EU really just wants companies like Apple to away with any cut whatsoever and not collect a single cent; they just don’t want to say it out loud.
The EU’s Share of Apple’s Global Revenue
The DMA allows the EC to penalize “gatekeepers” with fines that are vastly disproportionate to the amount of revenue they generate in EU member states.
May not seem like so controversial an opinion at the end of the year.
To measure what’s considered “reasonable” in the context of EU policies and decisions, the European Commission may use the following methods:
- Proportionality Test: Evaluates whether actions or regulations are proportionate to the objectives they aim to achieve
- Comparative Analysis: Compares practices and regulations across member states to establish a common standard of reasonableness.
- Impact Assessment: Analyzes the potential economic, social, and environmental impacts of proposed legislation or actions to ensure they are reasonable and justified.
- Stakeholder Consultation: Involves consulting with affected parties, including businesses, NGOs, and citizens, to gather a wide range of views on what is reasonable.
- Case Law of the European Court of Justice (ECJ): Relies on precedents and rulings of the ECJ to define standards of reasonableness in specific contexts
- Cost-Benefit Analysis (CBA): Evaluates the benefits and costs associated with implementing certain principles to ensure a balance between different interests
- Social Multi-Criteria Evaluation (SMCE): Considers multiple criteria reflecting a range of social values, perspectives, and interests to assess policy options
- Public Consultations: Engages with stakeholders and the public to gather diverse opinions and ensure democratic participation in policy assessment
- Ethical Frameworks: Incorporates ethical considerations into policy analysis to ensure that a plurality of social values and interests are taken into account
- European Pillar of Social Rights: Acts as a compass for socio-economic convergence, aiming to implement policies that promote fairness across the EU
That’s only if you want to limit legal definition to static definitions instead of using analytical methods to determine its meaning. Just how the meaning of a “chair” is very vague and would make a very complicated text if you tried to write an exhaustive list on it.
Or you make a test that can likely identify what a chair is in any context.
That’s the worst way to do it as it means politicians are legislating what the best method is.
Saying 27% is arbitrary, and so would any number between 0-29% be and legally indefensible.
It’s better to have a testable result that is flexible enough to allow different circumstances and context to determine the outcome
Seems like the DMA could just be summarised into 1 page then.
1) thou shall allow sideloading and third party app stories similar to what android is doing.
2) thou shall allow Spotify to include IAPs inside their apps and keep 100% of the proceeds
3) thou are not allowed to collect a single cent from developers under any means or circumstances
4) Tim Cook must salute any member of the EU governing body whenever they are within 3 m of each other or Apple will be fined 5% of their global revenue.
That kind of thing. Make it straight and to the point.
1) thou shall allow sideloading and third party app stories similar to what android is doing.
2) thou shall allow Spotify to include IAPs inside their apps and keep 100% of the proceeds
3) thou are not allowed to collect a single cent from developers under any means or circumstances
4) Tim Cook must salute any member of the EU governing body whenever they are within 3 m of each other or Apple will be fined 5% of their global revenue.
That kind of thing. Make it straight and to the point.
Let’s just look at how well the CTF tries to be FRAND.
Fair:
Positives: It nearly applies to all devs equally while all of Apple’s previous terms single out one group of devs over another for monetization.
Negatives:
- It doesn't apply to apps that remain exclusively in Apple’s App Store
- It charges devs more than once for the same IP, if a developer produces something using Apple’s IP they are not charged every time they sell the product containing the IP to someone else but every time the person they sold that product to downloads the app containing the IP. So not fair at all.
Reasonable:
Complete Fail: As many devs have pointed out the fee doesn’t scale well (on a recent episode of Under the Radar David Smith Mentioned it would bankrupt him to switch). If Apple’s intent is to drive more developers to higher priced subscriptions as their monetization model that is again, not reasonable and also is not good for the users of the platform. According to people here and elsewhere Apple is supposed to care about it’s users so why is it trying to drive devs off the platform and raise the prices on Apps for its users?
Non-Discriminatory
Fail: Apple discriminates against Apps that choose the new terms under the DMA which is completely against the point of the law. If Apple sets up its fee in such a way that developers can’t actually take advantage of the benefits they are guaranteed under the DMA then that is not a non-discriminatory fee.
I can propose a better system more likely to pass muster in the EU right now:
Step 1: Eliminate the exception to Apps that are willing to remain exclusive to Apple’s store under the old terms.
Step 2: Developer can choose a) 0.5 euros per first install per year, first million installs free (current version of the CTF) or b) 5% of per user revenue on Apple’s platforms* per year.
This fixes the problem in lots of ways:
Free apps will always be free.
Apps that have lots of installs but very low revenue can choose the 5% fee
Apps that have high per user revenue but modest downloads can choose the 0.5 euros per install
Note: These two numbers (0.5 euros and 5% would likely have to be adjusted up or down based on analysis of what will not discourage people from creating apps for the platform)
Note 2: While I personally believe a small amount of monetization of the iOS SDK wouldn’t be inappropriate it might also be the case that the EU believes that iOS should be like macOS where there is no secondary monetization via app devs. Apple is already monetizing iOS and its APIs by virtue of the iPhones it sells (Of which it would sell far fewer without any Apps on the platform). As such the EU might determine that Apple is already being fairly compensated for its IP and any further attempts to monetize the IP amount to rent seeking.
Given that Apple spent something like 3 times as much on stock buybacks as on R&D in 2023 if this is the EUs position I would be sympathetic to it.
Edit Note 3: Clarifying the * I put above when fixing the CTF, “on Apple’s platforms”. It should be 5% of revenue of earned via Apple’s platforms. So if a user pays Spotify $100/year and that users streams 50% of their songs on Apple’s platform then it would be 5% of $50 rather than 5% of $100.
I don’t know, Gruber seems to have revealed himself to be something of an anarchocapitalist lately, what with the way he responded to the EUs regulation of Meta’s targeted ads.The EU’s Share of Apple’s Global Revenue
The DMA allows the EC to penalize “gatekeepers” with fines that are vastly disproportionate to the amount of revenue they generate in EU member states.
May not seem like so controversial an opinion at the end of the year.
I also think people here are trying to make complying with the DMA harder than it needs to be.
s/
Oh it’s so mysterious what they could want. So hard to figure out. The regulations are so unclear. We put in place these new rules that are designed to make sure devs choose our store and don’t take advantage of the freedom the DMA is supposed to give them. I can’t imagine why we’re being investigated.
/s
i think they most want point 4... governments need to prove they are more powerful than corporations (theyve seen too many SciFi movies like RoboCop)
They kind of did write that, just with more lawyery language.
I’m not sure if this is in there but I think the anti-steering is mostly aimed at Apple’s anti-linking policies rather than requiring Spotify allowed to offer IAPs and keep 100% of profits.
However the FRAND requirements might require Apple to either do as you mention (let everyone keep 100% of the proceeds) or start charging Apps that use IAP for physical goods to start giving them a percentage. I would be moderately surprised if the commission for IAP on digital goods survives being subjected to a FRAND analysis.
So if Apple was claiming it needed a fee to run the App Store and that is what they were going to charge for, and they made public the costs to run the App Store then I think they could charge a fee that allows them to run the store and make some small profit. I suspect the EU would find a 70% profit margin is not FRAND.
The CTF has problems (which I’ve already covered) elsewhere.
Yeah, you and others just seem to think the EU isn’t serious about this and that they aren’t trying to make things better for both devs and citizens in the EU.
Given Apple’s clear attempt at malicious compliance I really don’t have much sympathy and continue to find it odd how people try and pretend that the DMA isn’t clear.
The other thing is now Apple are forced to allow sideloading anything, then basically they are becoming a direct competitor to Google.
And if only a small percentage of Apple users choose the alt store/sideload, then Google becomes a monopoly on that competition...
Another round of allegations and fines coming.
The EU dont need member states to contribute to running the EU.
They can fund it from fining foreign companies
I can accept this with one caveat - how would Apple know how much a developer brought in in terms of app revenue if the sales took place outside of the App Store?
With the CTF, I get what Apple is doing here. They are likely still able to monitor app installs, hence a flat fee is easy to calculate and administer. Let’s say David Smith reported $1 million in annual app revenue and opts to pay 5% of that. Is Apple supposed to just take him at his word? Do they have the power to audit developers the same way the government approaches taxation? What’s the penalty if somebody like epic or Spotify is found to be guilty of under declaring their earnings? Total removal from the iOS platform entirely? Does Apple have the authority under the DMA to even enforce that?
With iTunes, it’s a solved issue because the money goes through Apple first. With other payment methods, it’s a black box.
seems more like a way to pay Apple almost nothing for their efforts... so a 100 Euro app can pay 1/200th of what it cost buyer? Sure Apple will be stoked at self reported 0.5% commission... in what world does that make sense? that's beyond tokenistic.