The bill for Apple’s antitrust stand off in the Netherlands over dating apps’ payment methods has ticked up by another €5 million — and now stands at €15M, the Authority for Consumers and Markets (ACM) confirmed today.
The penalty relates to an order by the competition authority requiring Apple to allow local dating apps to use third party payment providers for sales of digital content, rather than mandating these app use Apple’s own payment infrastructure which incurs a commission fee to Apple.
The iPhone maker has been fighting the Dutch order since last year and continues to appeal against it. But last month — as a first deadline for compliance with the threat of a penalty loomed — it agreed to let apps plug into alternative payment tech, saying it would be introducing two “optional new entitlements” exclusively for dating apps on the Netherlands App Store so they could provide additional payment processing options for users as required by the order.
Apple’s claim of compliance last month was, however, quickly met by a fine by the ACM for non-compliance — as the regulator apparently took issue with Apple foot dragging on fulfilling all the requirements of the order.
The exact details remain murky as parts of a court order related to Apple’s challenge to the ACM’s order have not been unsealed so the competition regulator has said it is limited in what it can discuss.
Apple, meanwhile, has concentrated its own public-facing comms on this saga at attacking the order — claiming the changes “could compromise the user experience, and create new threats to user privacy and data security”, as it put it in a statement last month.
Information it has provided to local developers wanting to take up the ability to use non-Apple payment tech in their dating apps has also seemed intended to be as off-putting as possible, with Apple warning them that their users may be excluded from certain App Store features, and suggesting they will have to take on additional responsibilities to deal with issues that may arise around such sales, such as support with refunds, purchase history and subscription management.
In an extra kicker last week, Apple also revealed that it intended to charge a commission fee of 27% on any dating app sales that use non-Apple payment tech — which is a barely any reduction on the 30% fee Apple typically levies on in-app purchases.
So a tiny discount on the standard fee combined with extra customer service responsibilities plus some extra technical overheads doesn’t exactly sound like a revenue windfall for apps that qualify — suggesting Apple is trying to make it as difficult and expensive as possible for local devs to use third-party payment systems.
This in turn implies that Apple’s approach is to opt for faux compliance — pushing against the spirit if not the literal letter of the ACM’s order by making it very unattractive for developers to take up the “entitlements”. (Albeit, the ACM’s latest penalty suggests Apple is not even hitting the core of what the regulator mandates in the order.)
Asked for details of these ongoing compliance issues, the competition authority told TechCrunch Apple has failed to provide it with full and complete information — which presumably means it feels unable to properly assess whether it’s complied or not.
“ACM has not yet received any information from Apple itself regarding the changes that Apple says it has already implemented so that it complies with the order subject to periodic penalty payments. Under said order, Apple is required to do so. Since Apple has failed to provide us with such information in a timely manner nor with complete information, Apple continues to fail to comply with the requirements laid down in the order. As such, Apple must pay a third penalty payment, which means the total amount that Apple must pay currently stands at 15 million euros,” said a spokesperson.
“On the basis of the information on Apple’s website, we are unable to assess whether or not Apple complies with the substantive requirements laid down in the order subject to periodic penalty payments,” they added. “ACM is disappointed in Apple’s behavior and actions. We hope that Apple will eventually comply with ACM’s requirements. Moreover, these requirements have been upheld by the courts.”
Apple was contacted for comment — but at the time of writing it had not replied.
While a sub-set of apps in a single, relatively small European market may not sound like much of a big deal to a money-minting tech giant, the company’s App Store commission fee model is now facing developer complaints and regulatory pressure from around the world.
That also means Apple likely sees a far greater risk to its business if it to quickly make sweeping and meaningful changes that cut into its core App Store revenue model based vs dragging its feet per market, creating complexity and doubt for local developers and generally spinning out this process into something slow and painful.
The ACM has said the penalty for Apple’s non-compliance will keep going up each week — until it reaches a maximum of €50M.
But ofc that’s still pocket change for a company with a market cap of $2.817TR… So, basically, Apple can afford to make this hard and unfun.
That said, several markets in Europe already have — or are in the process of — retooling their competition laws to tackle the singular challenge posed by tech giants, such as the EU’s Digital Markets Act proposal for ex ante rules for so-called Internet “gatekeepers”; or Germany’s (already legislated) faster powers of intervention against platforms with “paramount significance across markets” which are now being applied against Google.
The German Federal Cartel Office also has an open proceeding probing Apple’s App Store — which could also step up a gear if it confirms the company meets the local threshold for special competition measures.
The UK is also working on a pro-competition reform that will, parliamentary time willing, see it introduce bespoke rules for tech giants which are deemed to have “significant market status”.
So regional lawmakers are fast dialling up their powers to target platforms that simply ignore rules they don’t like.