Apple fined again over Dutch dating app payments order.
The bill for Apple’s antitrust battle in the Netherlands over dating apps’ payment methods has risen by another €5 million, bringing the total to €15 million, according to the Authority for Consumers and Markets (ACM).
The fine stems from a competition authority ruling forcing Apple to allow local dating apps to utilize third-party payment providers for digital content sales rather than using Apple’s own payment infrastructure, which incurs a commission fee.
Since last year, the iPhone maker has been battling the Dutch order and continues to do so. However, as the first deadline for compliance loomed, it agreed to let apps use alternative payment technology, announcing that it would be introducing two “optional new entitlements” exclusively for dating apps on the Netherlands App Store, allowing them to provide additional payment processing options for users as required by the order.
Apple’s declaration of compliance last month was immediately followed by a punishment from the ACM for non-compliance, as the regulator reportedly took issue with Apple’s tardiness in meeting all of the order’s conditions.
Because elements of a court order connected to Apple’s challenge to the ACM’s order have yet to be unsealed, the competition regulator has stated that it is constrained in what it can say.
Meanwhile, Apple has focused its public communications on this drama, arguing that the modifications “may degrade the user experience, and create new threats to user privacy and data security,” as it phrased it in a statement last month.
Apple has warned local developers who want to use non-Apple payment technology in their dating apps that their users may be excluded from certain App Store features, and that they will have to take on additional responsibilities to deal with issues that may arise around such sales, such as refunds, purchase history and subscription management.
Last week, Apple also stated that it planned to impose a 27 percent commission fee on any dating app sales that utilize non-Apple payment technology, which is a small reduction from the 30 percent fee Apple usually charges on in-app purchases.
So a small discount on the standard fee combined with additional customer service responsibilities and some additional technical overheads doesn’t exactly sound like a revenue windfall for apps that qualify — suggesting Apple is attempting to make using third-party payment systems as difficult and expensive as possible for local developers.
This implies that Apple’s strategy is to opt for “fake compliance,” going against the spirit if not the letter of the ACM’s judgment by making the “entitlements” extremely unappealing to developers. (However, the ACM’s newest punishment implies that Apple isn’t even violating the order’s main requirements.)
When asked for more information about these ongoing compliance difficulties, the competition authorities informed the media that Apple has failed to give it comprehensive and accurate information, implying that it is unable to determine whether it has complied or not.
“ACM has yet to receive any information from Apple detailing the improvements that Apple claims it has already implemented in order to comply with the order subject to periodic penalty payments.” Apple is compelled to comply with the order.
Apple continues to fail to comply with the order’s provisions because it has failed to provide us with such information in a timely way or with complete information. As a result, Apple is required to pay a third penalty payment, bringing the total sum owed to 15 million euros, according to a spokeswoman.
“We are unable to judge whether Apple complies with the substantive conditions put out in the order subject to periodic penalty payments based on information on Apple’s website,” they added. “ACM is dissatisfied with Apple’s activities and behaviour. We are hopeful that Apple will comply with ACM’s criteria in the future. Furthermore, the courts have supported these criteria.”
Apple was asked for comment but had yet to respond as of this writing.
While a subset of apps in a single, relatively small European market may not seem like much to a cash-cow digital behemoth, the company’s App Store commission fee model is now facing developer complaints and regulatory pressure from all over the world.
That also means Apple is likely to see far greater risk to its business if it makes broad and significant changes that cut into its core App Store revenue model, rather than dragging its feet in each market, creating confusion and doubt for local developers, and generally spinning out this process into something slow and painful.
According to the ACM, the penalty for Apple’s non-compliance will increase every week until it reaches a maximum of €50 million.
Of course, for a corporation with a market cap of $2.817TR, that’s still pennies on the dollar… So, in essence, Apple can afford to make this difficult and unpleasant.
Nonetheless, several European markets have already retooled their competition laws to address the unique 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.
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The German Federal Cartel Office is also investigating Apple’s App Store, and if it verifies that the corporation satisfies the local threshold for special competition measures, the investigation might be stepped up a notch.
The UK is also working on pro-competition legislation that will see it adopt bespoke restrictions for tech behemoths with “substantial market standing,” if parliamentary time allows.
As a result, regional legislators are rapidly increasing their authority to target platforms that simply ignore rules they don’t like.