Dutch antitrust regulators have told Apple to open up payment systems in their app store or pay fines of up to €50 million.
There’s been a number of developments in the antitrust front. Earlier, we reported on a judge allowing an FTC antitrust lawsuit to proceed. Meanwhile, German authorities say that Google will be placed in a category of companies that is subject to special market abuse controls. This after authorities found that Alphabet controls a significant portion of the market.
Of course, Facebook and Google aren’t the only ones on the receiving end of antitrust scrutiny. Dutch regulators have taken action against Apple over it’s in-app pay system. In December, those authorities basically told Apple to either open up their payment systems to third parties or face a €5 million fine every week for up to €50 million. From Jurist:
The Authority for Consumers and Markets (ACM), the competition regulator of the Netherlands, Friday ruled that Apple’s commission policies on in-app payments violates the country’s competition law and ordered the company to adjust the payment policies of its App Store.
In 2019, the ACM initiated an investigation on whether Apple’s practices amounted to an abuse of dominant market position and eventually narrowed down its scope to dating apps. According to the ACM, app developers pay $99 each year to use the App Store. Around 85% of app developers pay only this fee. However, if an app developer seeks to offer paid services within its app, Apple levies additional conditions in order to take a cut from purchases made within the app. A little over 15% of app developers are subject to such conditions.
The ACM noted that since most users own Android-based smartphones or iPhones, dating apps need to be available on both the Google Play Store and the Apple App Store in order to maximise their reach. On iPhones, dating apps are exclusively available through the App Store, making app developers highly dependent on Apple’s policies. Developers have no choice but to accept Apple’s “unreasonable” conditions, which are disproportional to the additional payment and in breach of the Dutch Competition Act because they are not necessary to operate the App Store.
Martijn Snoep, Chairman of the Board of ACM, said, “some app providers are dependent on Apple’s App Store, and Apple takes advantage of that dependency. Apple has special responsibilities because of its dominant position. That is why Apple needs to take seriously the interests of app providers too, and set reasonable conditions.”
Consequently, the ACM ordered Apple to “adjust the unreasonable conditions in its App Store that apply to dating-app providers.” In addition, it said that if Apple fails to change the unreasonable conditions within two months, it will have to pay a weekly penalty of 5 million euros, with a maximum penalty of 50 million euros. This decision will allow dating-app developers to freely select a payment mechanism for purchases made within their apps.
Apple has responded to this by allowing third party payments, thus complying with the order and avoiding the financial penalties. From BNN:
Apple Inc. will comply with a Dutch ruling to allow third-party payment options for dating apps, the first time the company is allowing outside payments within App Store apps.
Apple said late Friday it’s releasing a pair of what it calls entitlements that will allow developers to implement their own third-party payment services to pay for dating apps in the Netherlands.
That will circumvent Apple’s 15% to 30% revenue share, which has been highly scrutinized by governments and developers in multiple countries.
The iPhone maker said dating app developers can continue to use Apple’s system and outlined the benefits of doing so.
“Because Apple will not be directly aware of purchases made using alternative methods, Apple will not be able to assist users with refunds, purchase history, subscription management, and other issues encountered when purchasing digital goods and services through these alternative purchasing methods,” the company said in a message to developers posted on its website.
Apple has also said that it has disagreed with this decision and intends on appealing it. From the Verge:
Apple has also appealed the Netherlands Authority for Consumers and Markets’ (ACM) decision. “Because we do not believe these orders are in our users’ best interests, we have appealed the ACM’s decision to a higher court,” Apple explains. “We’re concerned these changes could compromise the user experience, and create new threats to user privacy and data security. In the meantime, we are obligated to make the mandated changes which we’re launching today and we will provide further information shortly.”
Now, if some of these details seems to ring a bell, then you aren’t alone. In fact, the details are quite similar to what happened in the US back in 2020. As you might recall, Apple banned Fortnite from its app store. A lawsuit was filed and Apple ultimately banned Epic from the app store as well. The case dragged on into 2021 and an interesting decision was reached. A judge ruled that Apple isn’t a monopoly, but must open its store to alternative payment methods.
So, it’s interesting that history would seemingly repeat itself in the Netherlands with dating apps. We are seeing these efforts to open up the app store to alternative payment methods and those efforts are seeing success to varying degrees so far. Obviously, the Dutch case isn’t over with Apple wanting to appeal the decision, so it’ll be interesting to see if this decision holds up or if the Fortnite case was a one-off incident.
Drew Wilson on Twitter: @icecube85 and Facebook.
