$50 million Euros later, Dutch watchdog accepts Apple's App Store fix

But Apple's objection to the Netherlands Authority for Consumers and Markets' full order is yet to be litigated.

From "Apple changes unfair conditions, allows alternative payments methods in dating apps" posted Saturday by the ACM:

Apple has changed its unfair conditions, and will now allow different methods of payment in Dutch dating apps. With this concession, Apple will meet the requirements that the Netherlands Authority for Consumers and Markets (ACM) set under European and Dutch competition rules. Until recently, customers of dating apps had only been able to pay using the payment method that Apple imposed. In ACM’s opinion, Apple abused its dominant position with those practices. From now on, dating-app providers are able to let their customers pay in different ways. ACM forced these changes by imposing an order subject to periodic penalty payments. In the end, the sum of all penalty payments totaled 50 million euros.

In August 2021, ACM imposed an order subject to periodic penalty payments on Apple. Apple filed an objection against this order. At the same time, Apple asked the court to suspend the order as well as publication of ACM’s decision. The part of the order that is relevant here was upheld by the court in December 2021, which meant that ACM was allows to publish that part of the decision. The other part of the order was suspended by the court until after the objection process, and ACM cannot publish this part. It then took a while before Apple finally complied with the cleared part of the order. In January 2022, the periodic penalty payments started to kick in, and went up to the maximum of 50 million euros. That is why Apple must pay a total penalty of 50 million euros. Apple now complies with the rules. That is why ACM no longer needs to impose a new order subject to periodic penalty payments. Over the past few months, ACM had collected information from dating-app providers and independent experts before its assessment that Apple complied with the order.

The procedure regarding the objection against ACM’s full order is still ongoing.

Robert Paul Leitao's take:

This appears to be a pyrrhic victory. What’s the savings for the developers? I believe it’s 3%. From what I’ve read, Apple will still be paid in the range of 27% and the developer will have to cover the merchant transaction fees. Apple can’t fix stupid and customers that get sucked into changing their payment scheme for the benefit of the developers are the real losers due to the risk of greater privacy deprivation.

As I’ve said many times, there are better ways for Apple to build recurring revenue streams for services than the App Store model. Watch what happens.

6 Comments

  1. Jerry Doyle said:
    “…. As I’ve said many times, there are better ways for Apple to build recurring revenue streams for services than the App Store model. Watch what happens.”

    RPL is correct! The good man nailed this outcome long ago and his prognostication on Apple’s App Store model changing will come to fruition.

    3
    June 12, 2022
  2. Fred Stein said:
    Apple won, full stop.

    The ACM lost because their case had no merit. There was no abuse. 30% is not abuse.

    Speaking of abuse, dating Apps are happy hunting grounds for predators.

    4
    June 12, 2022
    • David Emery said:
      Even ignoring predators, dating apps are ones where I’d expect their user community has really strong privacy concerns. But that’s mostly not an Apple problem (except with the Do Not Track disclosures…)

      0
      June 12, 2022
  3. David Drinkwater said:
    “ As I’ve said many times, there are better ways for Apple to build recurring revenue streams for services than the App Store model. Watch what happens.”

    I must have missed this, Robert. Would you please expand on this? Thanks.

    0
    June 12, 2022
    • Robert Paul Leitao said:
      David: From the latest research I’ve seen, games represent about 60% of App Store revenue and nearly 60% of App Store revenue is sourced from two countries – the US and China. Due in part to China’s regulatory crackdown on games, the pace of App Store revenue growth has slowed over the most recent quarters. Additionally, the App Store revenue model has drawn out-sized interest from regulators in the US and the EU, legislative scrutiny in the US and lawsuits from a small group of vocal developers which prompted the Dutch regulatory action. Meanwhile, other components in Apple’s Services revenue mix are growing more quickly. Licensing, subscription services such as Apple One, and AppleCare services are likely to scale faster than growth in App Store revenue. I’m enamored with Apple’s subscription-based services and the accompanying revenue model. I consider the revenue model for Apple Arcade, for example, to be superior to that of the App Store for stable long-term revenue growth and customer engagement. I expect more Apple-branded services to be brought to market for the benefit of customers and long-term customer engagement and this is much less apt to draw scrutiny from over-zealous regulators and politicians.

      1
      June 12, 2022
    • Robert Paul Leitao said:
      I’m covering updates on the legislative and regulatory scrutiny of the App Store model as well as the latest news on Apple’s emerging services revenue model in the Apple 3.0 Slack group. Access to the group is available to all Apple 3.0 subscribers as a no-cost, value added. Subscribers who have yet to join the conversations in the Apple 3.0 Slack group simply need to ask PED for an invitation. Apple is a dynamic enterprise and is a vital and positive force for growth in the global economy. Necessarily, covering it all takes work and near-constant conversation.

      0
      June 12, 2022

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