Why John Gruber is unsurprised by Apple's Dutch dating app rules

From "Going Dutch" posted Monday on Daring Fireball:

On Friday, Apple updated its “Distributing Dating Apps in the Netherlands” developer documentation, which now includes a description of how Apple intends to get paid for purchases in apps that choose to use alternate in-app payment processing or links to websites:

Consistent with the ACM’s order, dating apps that are granted an entitlement to link out or use a third-party in-app payment provider will pay Apple a commission on transactions. Apple will charge a 27% commission on the price paid by the user, net of value-added taxes... etc. See Apple’s Dutch app rules: Just the obnoxious parts.

I don’t know why anyone is surprised by this, but some are. Apple has been clear from the App Store’s debut that their cut from App Store sales wasn’t merely for payment processing. The 70/30 split is the same as the split from the iTunes Music Store, and no one ever claimed that was for “payment processing” alone. Apple sees the App Store as a store, and the entire iOS third-party ecosystem as an extension of that store, and expects a retailer’s cut of sales.

Testifying during the Epic trial last May, Tim Cook made that clear. From iMore’s coverage of his testimony:

Asked about the prospect of letting developers use their own in-app payment systems (as opposed to Apple’s in-app payment system) Cook stated:

“It would wind up where customers would then have to fill in their credit cards for all of these different apps, so it would be a huge convenience issue, but also the fraud issues would go up...”

Then Cook dropped a bombshell:

“Also, we would have to come up with an alternate way of collecting our commission. We would then have to figure out how to track what’s going on and invoice it and then chase the developers. It seems like a process that doesn’t need to exist”.

See also this brief from Apple’s attorneys filed on 30 November 2021 (page 10, some legal citations omitted for clarity):

Finally, Epic suggests that “Apple will not receive a commission” on “transactions that happen outside the app, ... on which Apple has never charged a commission.” That is not correct. Apple has not previously charged a commission on purchases of digital content via buttons and links because such purchases have not been permitted. If the injunction were to go into effect, Apple could charge a commission on purchases made through such mechanisms...

Apple’s lawyers said Apple could charge a commission on such purchases, but lawyers are going to lawyer. Cook, in his testimony, made clear that Apple would. And so they are. I often compare Apple punditry to Kremlinology — to predict or analyze an opaque, secretive organization, you’ve got to read between the lines of the few things they do say, and you’ve got to know how to interpret silence. The “interpreting silence” aspect is the hard part; what Apple does say they almost always mean. Just listen to them. When they said they would devise a way to collect their 15 to 30 percent commissions on App Store transactions for digital goods, they meant it.

FOB Dave Emery's take: Gruber does his usually excellent job capturing the issues.

See also: A conversation about the Dutch dating app rules

8 Comments

  1. Horace Dediu said:
    Anyone surprised by this has not been paying attention and probably does not understand distribution agreements or distribution business models.

    12
    February 8, 2022
    • Robert Paul Leitao said:
      Horace: I couldn’t agree more with your view. Although it’s been years, I worked as an executive in the entertainment industry and everything from artist recording contracts, music and film licensing agreements, obligatory royalty licenses and especially distribution agreements were direct and left little if anything for misunderstanding. The contracts are ordinarily voluminous. I’ve witnessed attorneys quibble over the placement of commas and the phrasing of particular sentences. The reason for the back-and-forth is to avoid any ambiguity, misinterpretations or misunderstandings. I find nothing surprising, shocking or even out of the ordinary in Apple’s response to the Dutch regulatory agency and the dating app developers. Even today in a much different setting, renting out so much a parking lot in our complex for a one-day film shoot to a production company for no other purpose than a place for crew members to park requires a three or four page contract, indemnification clauses and certificates of insurance with minimum limits into the millions and specifically naming our organization as additional insureds. If the contract is for filming on our premises (even a one-day or eight-hour shoot that might create five minutes of content for a movie or TV episode) requires review of the entire script (not just what’s being filmed on the property) and those contracts can run several pages and may require full legal review. They also contain the other requisites previously noted. I’m not seeing an issue at this time. In my view, the reason why Apple is so direct is to avoid any confusion or misunderstandings.

      3
      February 8, 2022
      • David Emery said:
        Well, since the company I worked for was involved in a relatively lengthy lawsuit over a poorly written contract, I think ‘lawyers quibbling’ isn’t all that bad. (The company ended up suing -and settling- with the law firm that wrote that deficient contract.)

        1
        February 8, 2022
    • Bart Yee said:
      Agree Horace and thank you for continuing to point this out. I’m betting lots of companies in different industries are keeping their heads down, hats over their heads and slinking around trying to avoid having THEIR distribution agreements from wholesale to retail to retail markups (car dealers and current supply issues) become exposed and known, lest they too become targets for regulation.

      0
      February 9, 2022
  2. Robert Paul Leitao said:
    @PED I just checked Apple’s news feed on my broker’s site for the past several days. There’s over 100 news items involving mention of Apple in one way or another and none of the news items are about Apple’s policy on payment flow for Dutch dating apps or App Store policies in general. There is one mention of the legislation pending in the Senate. Yet this is the 6th blog post on this issue or App Store policies in general on Apple 3.0 over the past two or three days. Is there a reason you are making coverage of this particular issue a priority? Is there something you believe your readership is missing in terms of understanding the issue?

    4
    February 8, 2022
    • Good question. I’ve give that some thought now. Maybe at heart I feel like I’m being misunderstood. I’m frustrated, and maybe that’s why I keep gnawing at this bone. I’ll stop now. Although I would like to talk it out on Saturday with anyone who’s still interested.

      0
      February 8, 2022
  3. Fred Stein said:
    “punditry”? “Kremlinology”? So intellectual! No it’s simple.

    Apple allows T’s of $$ of value for third parties from mobile operators monthly fees, to all the web-Apps (not Apps tailored for iOS with 250,000 iOS specific Apps) to all the free iOS-tailored Apps (85% of all Apps).

    Apple charges 15% to 30% for the Apps where the value of the experience is inherent to:
    1) Consumer safety
    2) The iOS experience which leverages $100’s of B’s of Apple’s R&D
    3) Apple’s curation that protects App developers from copy cat Apps, and comfort to consumers

    And Apple gives away access to 86.2% of the world’s consumers with disposable income.

    5
    February 8, 2022

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