European Commission finds Apple violated the DMA, threatens huge $38 billion fine

These are the direct sources for the story by the way:
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3433
https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_24_3442

Seems like a grossly over complicated way of doing things. A much more simple law, along the lines of "Device makers shall not use crytographical means to prevent the actual device owner from using said device with third party hardware, software, or repair services" would prevent consumer abuse & promote more open markets without requiring lots of bickering on what should or should not be counted, and prevent these sort of lockdown shenanigans in more than just phones, but with other stuff like cars, farm equipment, or trains.

Plutoisaplanet said:

Wow Europe seems like a horrible place to do business as a big company when they threaten you with fees in the tens of billions of dollars. The biggest thing for me is why are they charging 10% of global revenue? Why not a % of Apple's app store revenue specific to Europe?

It's one thing to try making sure Apple plays fair, but it's important that the EU has fair business laws. Otherwise Apple and other companies will be very tempted to stop doing business in the continent.

I just checked and their annual report shows while $383B was Apple's global revenue, all European revenue was $94B (see page 21). Meanwhile all service revenue was $85B for the year (see page 22): https://investor.apple.com/sec-filings/sec-filings-details/default.aspx?FilingId=17028298

This isn't perfect and still includes other services like Apple Card, Apple Care, Advertising, and more, but a good approximation of the relevant revenue here is 94*85/383 or $21B. Therefore a $2.1B fine would be much more appropriate. As it is right now, a $38B fine would wipe out half of their European revenue. Plus their operating margin is 30% so Apple would be losing money by continuing to do business in Europe.

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Do you think The USA is fair to foreign companies?
Do USA oil companies pay the same fines for polluting as say Shell paid- The US tax payer has paid trillions to clean up after USA companies over the years from poor mine dumping , soil contamination , river pollution , bad forestry, poor farming techniques and other practices etc etc
Or was it for VW for cheating tests, when the major USA manufacturers were doing it most likely
Or that Samsung got a fair trial at a court house just down the road from Apple , in an area benefitting from Apple.

Lets see what fines Boeing gets

I wouldn't cry for Apple ( well I wouldn't , but you shouldn't as well ) . bet these things are not out of blue, and lots of heads-up before. These Corps play a viscous game, they are brutal and soulless. Ethics are irrelevant, fines are considered the cost of doing business and often the cheapest solution to stealing , cheating , polluting , not providing. See USA ISPs lots of USA money with very little to show for it , and hardly even a wet bus ticket , with exclusive rights to exploit all human wetware in their profit extracting area with no remorse or compassion.
Directors hardly do prison time. Kill over 100 thousand people for obscene profits , pay a few laughable Billion . aka The Sackler great killing machine
USA is corrupt, Senators get crazy amounts of money to screw the people

Global corps like Uber. Apple are happy to flout every law they can , every consumer guarantee. To not pay a cent of tax anywhere, or look after employees once dumped

To have an argument, you have to show it only applying to non-EU companies , or unfairly burdensome

Now China, don't think you will be treated fairly

Oh, for ***** sake. Once again, Europe gots to get paid.
Why don't those lazy bastards get a job? Maybe open some frozen yogurt stands.

Targeted laws are the real crime.

An article last fall (NY Times or maybe the WSJ) had the headline "Expect a new fine or lawsuit soon" and mentioned this. Paraphrasing, but it's the gist of the story.
And here we are.

Who else does this to our companies? Just the EC.
They are NOT on our payroll, and they sure as hell are not one of our dependents.
Those ******** are worse than patent trolls because they make laws designed to slam a predetermined target. And then open some new bank accounts.

WhiteLeaff said:

I don't like Apple, I don't use anything from the brand, But Europe is becoming a strange and overprotective alienated socialist cradle

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Come on brother please, give the 30-year-old Rush Limbaugh babble a rest.

This is a disgusting dependence on other nations to support a lifestyle they cant
possibly secure any other way. They don't have it in them and they know it.

WhiteLeaff said:

I don't like Apple, I don't use anything from the brand, But Europe is becoming a strange and overprotective alienated socialist cradle, I don't see them chasing the Nvidia monopoly.

These moves will only harm the consumer.

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Its more rights and protections for the populace, you should probably stop worshipping multi-billion to multi-trillion dollar corporations as if they don't work to maximize a profit margin and lure the consumers into their product to help neglect the environments they live in.
Many of these companies work as a black-box, and investigating and enforcing regulations on anything of the sort is a hellish-nightmare, this is the only practical way.

If they don't like it they can pull out of the country. Europe is a unity of several hundred different cultures, languages, ideaologies into a uniform movement that protects eachother, no matter what, its extremely respectable and something to work towards as an outsider.

Its fair to support this type of behavior because it benefits a populace of millions upon millions rather than a few hundred or a few thousand incomprehensibly wealthy people.

Apple already curates its products for a populace of individuals who are already well-off, this is backwards thinking at best.

As a US citizen I can say with extreme confidence that Europe's economy and infrastructure is extremely desireable. While the 'grass is greener on the other side' complex is very real, coming into a country yields far more potential in many situations than trying to find employment where you are born.
[Especially because European workers have far more rights, which is really, really good!]

An additional address to the Nvidia monopoly is that they are providing computational power. They called the AI bluff and every company with a telementry problem is coming to see how they can harness the exabytes of information they've obtained from their userbase and products to resell it to the consumer. Nvidia will not be held accountable for that, they're the ones selling the shovel.

Probably not hard to see that if some EU companies or any others that cannot compete against big tech, the next best thing is to enact laws and fine them to to bring them down to their level. The EU needs money and that's all there is to it. Emerging tech waits for no one and one day the EU will find out it's a very lonely place out there.

WhiteLeaff said:

I don't like Apple, I don't use anything from the brand, But Europe is becoming a strange and overprotective alienated socialist cradle, I don't see them chasing the Nvidia monopoly.

These moves will only harm the consumer.

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In which way have Nvidia monopolized the market....please explain.

Unfortunately, big corporations often think they are above the law. If the apple can't comply, then they should stop selling those devices there. Somehow they comply with everything China is asking them to do...
It is a monopoly, and companies become very good in making sure they will stay monopoly. Only by enabling competition we can get a proper progress. Right now making the os an open platform is a way to ensure even Apple would need to compete. We all would gain on that.

The Talking Tech said:

In which way have Nvidia monopolized the market....please explain.

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Cuda.

WhiteLeaff said:

I don't like Apple, I don't use anything from the brand, But Europe is becoming a strange and overprotective alienated socialist cradle, I don't see them chasing the Nvidia monopoly.

These moves will only harm the consumer.

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Absolutely true. This quote reveals how inane this action is:

"... The EC claims that the App Store's rules and fees restrict app developers from directing consumers to alternative purchasing channels....."

The EC is claiming Apple's own stores are legally required to direct consumers to their own competitors.

Quite funny to see how many people think holding Apple accountable is a bad thing to do.

The EU wrote down the law (literally) and gave Apple the time to implement the changes. Apple is trying its best to circumvent what the law is trying to achieve whilst trying to get by on technicalities. The EU has decided this (rightly so imo) that Apple didn't stick to the laws and should get fined for it.

Obviously the logic behind the laws are that consumers don't get stuck with excessively high prices (Apples 30 percent) and arbitary limitations (simplest example is that Apple doesn't allow porn, obviously a huge market).

* Apple still wants a say in what third party stores can offer
* Apple wants 27 percent of any third party store sale or in App purchase (why? They're literally not involved). Any payment provider will charge 2-4% bringing the total to the same prices again
* Apple still doesn't allow mentioning anywhere in the App that paying through means other than their own payment system is cheaper.

Literally nothing would change other than third party app stores appearing. But from what Apple proposed it sounds like they can't have anything in it that Apple doesn't want them to, for nearly the same prices... So what's the point.

Axeia said:

Quite funny to see how many people think holding Apple accountable is a bad thing to do.

The EU wrote down the law (literally) and gave Apple the time to implement the changes.

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Oops! The "law" is incredibly vague, and certainly doesn't state that companies must allow in their own stores advertising for competitors.

Apple has had this policy in place since the store was created. If the EU cared about consumers rather than money, they'd have acted long ago. The EU never once issued a clarification or a stop-and-desist order. They allowed Apple to continue with this policy for decades --- then they attempt a $40 billion money grab.

Axeia said:

Obviously the logic behind the laws are that consumers don't get stuck with excessively high prices (Apples 30 percent)

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Companies set their own price on Apple's store -- or anywhere else they sell. And multiple companies have testified they save *more* than 30% by using Apple's platform than attempting to build and maintain their own.

I am generally against government and regulations, but these giant companies just laugh at normal fines. So how other than a % of total revenue fine do get them to care if they break the law?

Endymio said:

And multiple companies have testified they save *more* than 30% by using Apple's platform than attempting to build and maintain their own.

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Nobody says this.

Because it is simply not true.

ScottSoapbox said:

So how other than a % of total revenue fine do get them to care if they break the law?

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Easy. You do what rational governments have done for more than 100 years: notify the company in question with a cease-and-desist letter:

"...A cease and desist is a written notice demanding that the recipient immediately stop an illegal or allegedly illegal activity. It may take the form of an order or injunction issued by a court or government agency ... A cease and desist order or injunction has legal power..."

Apple has run their app store the same way since it was founded decades ago. Not once did the EU notify Apple they considered the behavior illegal. Nor is there any law on the books that specifically bars the behavior in question.

ScottSoapbox said:

Nobody says this. Because it is simply not true.

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Of course it is. Apple's store provides a platform for sales, content distribution, and payment -- as well as fraud prevention, indemnification and insurance, and tax compliance and reporting for more than 150 different countries, many of which have dozens of sub-jurisdictions: more than 1,000 different sets of legal codes to abide by. Oh, and a DRM system as well.

There's no way a small app creator could provide all that for even 50% of their total revenue, and it's a good deal even for a medium-sized publisher. It's really only a drawback for the very large publishers.

What is with the comment section here. EU fine Microsoft for forcing IE on everyone, no complaints other than "why don't they do this to Apple"...

Apple gets bigger and bigger, to the point it's time to start fining them, but for some reason, everyone is defending them?!

Has nobody here asked the question "why aren't the other gatekeepers getting fined as well"...

Endymio said:

Oops! The "law" is incredibly vague, and certainly doesn't state that companies must allow in their own stores advertising for competitors.

Apple has had this policy in place since the store was created. If the EU cared about consumers rather than money, they'd have acted long ago. The EU never once issued a clarification or a stop-and-desist order. They allowed Apple to continue with this policy for decades --- then they attempt a $40 billion money grab.


Companies set their own price on Apple's store -- or anywhere else they sell. And multiple companies have testified they save *more* than 30% by using Apple's platform than attempting to build and maintain their own.

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Sorry on my phone so I'll just reply to the whole block rather than trying to edit it into pieces.
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As for the EU not caring.
This might be largely due to someone having to bring this to attention. Epic got the ball rolling on this as they have the finances to make a decent case out of it. Epic is a US (not EU) company btw.
How is this a money grab? Apple could pull the plug on the EU if they really didn't want to comply to this. (Heck, they're in a position where the EU might have to come back on this if they did. I'd be interested too see how it would pan out if they did)
Instead they're doing what's essentially the same as siblings doing the "I'm not touching you" whilst getting as close as possible.
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As for companies set their own prices in the app store. Yes and no.
Say you offer a video streaming platform and charge your customers $10 a month. Now you make an iOS app. Your options are:
1) You start charging everyone $13
2) You stick to your $10 and eat the $3 cost, not really an option unless you have a profit margin of at least that.*
3) Offer your app without an in app payment method and without linking to one. Likely leading to getting review bombed because people wonder why your app is useless.

Apple doesn't (or didn't at least) allow you to point to payment options outside your app.

*Even if it doesn't put you at a loss it massively eats into your profits and your the one having to pay for the costs of videostreaming. Apple does nearly nothing for you if your app is basically a browser in a native UI wrapper.

If that isn't abusing their position I don't know what is. Apple is trying to make themselves out to be the good guys, offering the App store out of the kindness of their heart.
Fact is that's the reason why the iPhone is popular - due to the Apps. The App store was the entire selling point in the early days.

Boy, the Apple zealots sure are coming out of the woodwork for this article! Where were you when Samsung got massive American fines? Where were you when American companies like Microsoft and Google got huge fines? Darling companies like Apple can do no wrong and you cry foul, but other companies that you don't like... well they get what's coming to them!

Burty117 said:

What is with the comment section here. EU fine Microsoft for forcing IE on everyone, no complaints other than "why don't they do this to Apple"...

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Oops! You didn't read the comments carefully if you didn't notice a large number of people -- including myself -- pointing out the large number of problems with the EUs action against Microsoft.

Axeia said:

How is this a money grab?

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Did you miss the part about the $40 billion fine?

Axeia said:

Apple could pull the plug on the EU if they really didn't want to comply to this

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Oops again. Did you miss the part that this is a fine for events in the PAST?

Axeia said:

Say you offer a video streaming platform and charge your customers $10 a month. Now you make an iOS app. Your options are:
1) You start charging everyone $13
2) You stick to your $10 and eat the $3 cost, not really an option unless you have a profit margin of at least that.*
3) Offer your app without an in app payment method and without linking to one. Likely leading to getting review bombed because people wonder why your app is useless.

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Oops once more. You forgot the most important part of option 1, which allows you to avoid the costs of distribution and maintaining your CDN network, collecting and verifying payments, handling chargebacks and fraudulent payments, insurance and indemnification for claims of unwarranted payments, as well as the literally gargantuan task of complying with the sales tax collection and reporting requirements for more than 11,000 different jurisdictions globally -- each and every one of which can issue you a crushing fine if you fail to follow them exactly.

Kashim said:

Boy, the Apple zealots sure are coming out of the woodwork for this article!

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I count far more anti-Apple zealots ... and unfortunately for them, they fail to have a single fact supporting their side.

Endymio said:

Did you miss the part about the $40 billion fine?

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No, but this fine isn't coming out of nowhere.
Apple was told to do something, they didn't.

In addition the language is used "could" "might" etc. If Apple is to change their ways and actually implements the requested changes I'm sure it won't come to do that. Or they can stop doing business entirely (like I said before, I'd be interested to see how that pans out. Big tech vs Goverment(s) - who will win. Because that would lead to an absolute shitstorm with people backing both sides)

Endymio said:

Oops again. Did you miss the part that this is a fine for events in the PAST?

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It isn't? They didn't retroactively go "Well this is our new laws, you didn't stick to it for the last x amount of time so now we'll fine you".
They implemented Apple, notified Apple, gave Apple the time to make the requirement changes.

Apple in the opinion of the EU commission didn't make the required changes (they made changes, but these are insufficient in the eyes of the EU).

Endymio said:

Oops once more. You forgot the most important part of option 1, which allows you to avoid the costs of distribution and maintaining your CDN network, collecting and verifying payments, handling chargebacks and fraudulent payments, insurance and indemnification for claims of unwarranted payments, as well as the literally gargantuan task of complying with the sales tax collection and reporting requirements for more than 11,000 different jurisdictions globally -- each and every one of which can issue you a crushing fine if you fail to follow them exactly.

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Ah you mean that what other payment provide mostly do for 2-4%? I believe Stripe is the largest one and it charges 2.9% + a flat 30 cent fee.
There's companies that offer these services - it doesn't need to be Apple.

The CDN you're right about but the costs of that compared to the profits Apple is making are not even a rounding error. Sure they're free to charge a little bit extra - heck there's plenty of free Apps that get to make use of it as well. The money has to come from somewhere. But the costs of that would be millions, not billions.
(Alternatively, without an App store filled with free apps not many would be buying iPhones in the first place)
Also note that they're stuck with these costs because... well, they never allowed anyone else to do it.

Endymio said:

I count far more anti-Apple zealots ... and unfortunately for them, they fail to have a single fact supporting their side.

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It'd be the same for any other company for me. I don't particularly care for Apple (nor for Google). If anything with its pro-privacy moves Apples products have been looking more appealing. But with nonsense of basically not allowing any apps through means other than what they have approved I would not buy their product.

I'm currently working on a remote app for qBittorrent. Technically it could support iOS in the future - however I'm not sure if this is allowed. They don't seem to allow torrent clients so a remote app for one is probably out of the question as well. I don't want the maker of my devices telling me what I can and can't do.


--

All in all I don't think Apples rules make sense for a fair market. Developers should be free to offer alternative payment requirements. If they had just made it so that their own payment method *must* be present and a developer is allowed to offer alternative payment options within or outside the app the EU would be happy. Developers would be happy and the majority of Apple users would prolly change nothing because they're set in their ways and like the convenience. They should have more faith in their own system.

It's the same with the App store. It's extremely unlikely there would be a mass exodus with everyone leaving the App Store (users or developers). Users are lazy so most will just stick with it and developers don't want to miss out on the biggest (default) App store.
It's not like Android is swimming in alternative app stores that are comparable to the Play Store in size.

Axeia said:

No, but this fine isn't coming out of nowhere. Apple was told to do something, they didn't.

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Why repeat misinformation? The DMA -- which just came into full force this March -- requires "gatekeepers" to allow developers a method to "steer" consumers to alternative purchase options. Apple allows this, but the EU claims the process is "too onerous" for consumers.

The EU's second claim against Apple is even more vague:

"... the Commission believes that the fees charged by Apple for facilitating new customer acquisition via the ‌App Store‌ "go beyond what is strictly necessary for such remuneration." For example, Apple charges developers a fee for every purchase of digital goods or services a user makes within seven days after a link-out from the app, and the Commission sees this as excessive....."

Nowhere in the DMA does it bar these fees, nor state what is or isn't "excessive". That's a judgement call -- and a call the EU made in order to justify their money grab.

Furthermore, the EU has never "told Apple" specifically what it needed to do. The EU opened an investigation last month, then announced this $40B fine yesterday.