EU Reportedly Planning to Charge Apple for Violating Digital Markets Act

[AppliedMicro]

Telecommunications is regulated because of the scare nature of the resources and the expense of acquiring said resources.

So are mobile operating systems. Narrow in selection als natural monopolies and very expensive to create.

While it's perhaps a bit sad that Apple has chosen to stake its claim to its intellectual property and the right to monetise it (via the CTF) in what may be seen as a publicly ugly manner, I still feel it's Apple's right to, and I would urge developers to accept things as they are and stick with the current status quo. If for nothing else but the greater good.

...and I would urge to accept things as they've been regulated by law and move on to focus on security and providing a better, more competitive product than the competition. If for nothing else but the greater good.

They aren't going to get a 30% commission from Spotify or Netflix - so might just as well allow them to provide in-app subscriptions and stop playing their ridiculous games.

Benefiting developers is one thing, but developers forget what things were like in the early 2000s. Nobody downloaded apps, which was how web apps even became a thing in the first place. Everyone was scared of malware and the prospect of downloading viruses and getting scammed

You must have been living in a wholly different world back then.
Of course did people download apps from the internet.

To give them credit, Apple greatly expanded the concept of what applications on mobile smartphones could do with launching the iPhone.

 

[I7guy]

So are mobile operating systems. Narrow in selection als natural monopolies and very expensive to create.

Nice job of taking totally different scenarios. In one case the gov controls the airwaves. There is no natural barrier for developing an operating system. Apple isn’t responsible for the failures of its competitors.

 

[AppliedMicro]

Nice job of taking totally different scenarios. In one case the gov controls the airwaves.

Not a good job of drawing a comparison. Dropping one word, naming one criterion doesn’t make for a reasonable comparison. Telecommunications infrastructure isn‘t airwaves only.

Government doesn‘t control the cell towers, backhaul and core network (including cables, switches, power equipment). Network operators do control the infrastructure.

And they, too, had been forced to open up their networks, to grant access and interoperability to competing operators. Even in the U.S.:

„In order to enable competition, the 1996 Act required incumbent telecommunications companies to interconnect their networks with new competing companies, and to provide wholesale access to materials and components as those smaller companies build their networks“

There is no natural barrier for developing an operating system

There isn’t. But natural monopolies don‘t require natural barriers.

 

[I7guy]

Not a good job of drawing a comparison. Dropping one word, naming one criterion doesn’t make for a reasonable comparison. Telecommunications infrastructure isn‘t airwaves only.

Government doesn‘t control the cell towers, backhaul and core network (including cables, switches, power equipment). Network operators do control the infrastructure.

And they, too, had been forced to open up their networks, to grant access and interoperability to competing operators. Even in the U.S.:

„In order to enable competition, the 1996 Act required incumbent telecommunications companies to interconnect their networks with new competing companies, and to provide wholesale access to materials and components as those smaller companies build their networks“

Sure you can be some voip startup piggybacking on someone else’s back haul. But if you want to have your own cell phone company you are out of luck.

There isn’t. But natural monopolies don‘t require natural barriers.

Natural monopolies don’t have to require natural competition.

 

[ProbablyDylan]

Do you think companies like Nintendo and Sony would be happy if a ruling was passed forcing them to open up their console platforms to third party app stores like Epic or steam? Do you think they would welcome the idea of sales revenue cratering as consumers utilise the option to purchase games from sources that they are not able to receive a cut from?

Here's the issue with this question - I don't care for Nintendo or Sony in the slightest. F*** 'em. If a country were to legislate that they would need to open up their platforms, great, I get access to my Steam Library on Switch and PlayStation. Absolute win for the consumer, wouldn't you say? No longer need to buy Stardew Valley 12 times.

Benefiting developers is one thing, but developers forget what things were like in the early 2000s. Nobody downloaded apps, which was how web apps even became a thing in the first place. Everyone was scared of malware and the prospect of downloading viruses and getting scammed. Apple recreated a market that had ceased to exist (or perhaps never existed to begin with) via the App Store. And Apple did so with their promises of convenience and safety and security and ease of refunds and Apple has by and large delivered on them.

Apple didn't invent the concept of software distribution, people have been apt-get-ing since the late 90s. Steam has been around since '03. To pretend that Apple invented trustworthy software distribution is to ignore their contemporaries.

And in this regard, while it's arguable that it was a win-win situation where Apple owes developers just as much for adding value to the iPhone, I feel that developers owe Apple even more because without Apple (and the iOS App Store), they would probably still be developing JAR applications for Nokia phones, or maybe not be in this industry altogether.

Remember Installer.app? Or Cydia? Seems to me like developers were going to make native software with or without Apple's blessings. Apple put themselves in the position of gatekeeper back then, and their taking advantage of that position led us to this. Remember their old marketing campaigns? There's an App for That. Software availability used to be a major marketing point for them. I wonder who made all those apps that they were proud to have available?

And what the EU want to do now is to disregard all this history, hardware away everything Apple has done to build up their platform, and make it freely accessible to developers. The EU also seems to want to see a return to the days of Windows circa 1998, where users could install whatever software they want, for better and — very often for the vast majority of people in the world — for worse.

It's funny to say the EU is disregarding history when you are committing that very act. History has shown users prefer using storefronts, see the massive success of Steam as proof of that. This is to say that, in a competitive marketplace, a store offering convenience and security would in fact win out regardless of any one company's interference.

The tech world hasn't stood still since the 90s, even the 00s and 10s. Only Apple has stood more or less still since 2008, their only innovation being new ways to extract revenue from consumers.

 

[AppliedMicro]

Sure you can be some voip startup piggybacking on someone else’s back haul.

Not VOIP piggybacking nonsense. I and the U.S. Telecommunications Act of 1996 are talking about mandatory wholesale access for mobile virtual network operators (MVNOs).

Natural monopolies don’t have to require natural competition.

...and that means?

There's a natural duopoly in smartphone operating systems due to the high investments needed and network effects from existing app ecosystems - that is the point. And that is the justification why they're getting regulated.

 

[I7guy]

Not VOIP piggybacking nonsense. I and the U.S. Telecommunications Act of 1996 are talking about mandatory wholesale access for mobile virtual network operators (MVNOs).

That act does not give away infrastructure for free like the dma. This is a poor comparison.

...and that means?

There's a natural duopoly in smartphone operating systems due to the high investments needed and network effects from existing app ecosystems - that is the point.

There are no legal barriers as with the telecom airwaves for example. Those are bought outright. There are literally hundreds of cell phone manufacturers who can develop their own operating system. Hence why these regulations are bad.

And that is the justification why they're getting regulated.

Piss poor justification.

 

[AppliedMicro]

That act does not give away infrastructure for free like the dma

Apple can charge for access (at least as long as it doesn’t give unfair advantage to their products and services).

The developer subscription that gives third parties access to all the IP and tools they need to develop and distribute apps isn’t free. Neither have I seen any indication that the EU has a fundamental issue about charging a core technology fee on a nondiscriminatory basis.

There are no legal barriers as with the telecom airwaves for example. Those are bought outright. There are literally hundreds of cell phone manufacturers who can develop their own operating system

Antitrust legislation and regulation is not confined to situations with legal barriers. It regulates de facto failure of markets, regardless of legal barriers or whose (as you often like to point out - not Apple‘s) fault it is.

 

[mrochester]

Apple can charge for access (at least as long as it doesn’t give unfair advantage to their products and services).

The developer subscription that gives third parties access to all the IP and tools they need to develop and distribute apps isn’t free. Neither have I seen any indication that the EU has a fundamental issue about charging a core technology fee on a nondiscriminatory basis.

Antitrust legislation and regulation is not confined to situations with legal barriers. It regulates de facto failure of markets, regardless of legal barriers or whose (as you often like to point out - not Apple‘s) fault it is.

The regulation should therefore address the failure of the market instead of micro-managing what the existing players can/can’t do. Creating more competition will almost always be better than micro-managing.

 

[surferfb]

The developer subscription that gives third parties access to all the IP and tools they need to develop and distribute apps isn’t free.

It’s been pointed out repeatedly to you that the developer subscription does NOT give a license to Apple’s IP. Just because you want it to doesn’t mean that it does.

 

[bcortens]

It’s been pointed out repeatedly to you that the developer subscription does NOT give a license to Apple’s IP. Just because you want it to doesn’t mean that it does.

Your claim is just as invalid. The CTF doesn’t exist outside of the EU and there are countless apps that pay Apple only the 99/year fee. Apple has never properly enumerated what fees cover what costs.

 

[I7guy]

Apple can charge for access (at least as long as it doesn’t give unfair advantage to their products and services).

How’s that? Anybody can open an app store. People are raging over the CTF.

The developer subscription that gives third parties access to all the IP and tools they need to develop and distribute apps isn’t free.

It never was. We’re not discussing that.

Neither have I seen any indication that the EU has a fundamental issue about charging a core technology fee on a nondiscriminatory basis.

We’ll see.

Antitrust legislation and regulation is not confined to situations with legal barriers. It regulates de facto failure of markets, regardless of legal barriers or whose (as you often like to point out - not Apple‘s) fault it is.

It can sometimes and it shouldn’t in others no and definitely is not universal in nature,

 

[I7guy]

Your claim is just as invalid. The CTF doesn’t exist outside of the EU and there are countless apps that pay Apple only the 99/year fee. Apple has never properly enumerated what fees cover what costs.

Apple doesn’t have to enumerate anything. If you don’t like the service don’t buy the product.

 

[bcortens]

Apple doesn’t have to enumerate anything. If you don’t like the service don’t buy the product.

Apple does have to enumerate what it is charging for if it wants to charge for something, you cannot just bill developers for services without enumerating what you are billing them for. Especially when you don't bill those same developers for the same services if they were only to agree to keep their app exclusive to the main App Store.

The claim is that devs aren't paying for Apple's IP which I dispute for several reasons:

1. Apple already sold the IP to the end user when they purchased the product (iPhone, Mac etc...)
   1. Apple shouldn't be able to charge devs to access IP that is already in consumers hands
      1. I know that in the US the balance of power is tipped towards corporations and many of you seem happy to sign away property rights (people are happy not owning the things they buy) in exchange for nebulous and often contradictory "licensing terms" but that doesn't mean the rest of the world is happy to do so.
   2. Apple should be able to charge for tools access (Xcode)
2. Apple doesn't charge for access to the exact same SDKs in countless other situations
   1. Ex, I can build a Mac app using the same tools, and SDKs and pay Apple nothing beyond the $99/year fee.
   2. I can build a iOS app using the same tools and SDKs and pay Apple nothing if I sell a physical goods and services, a reader app (a category which has expanded so much it seems to include email at this point) a free Ad monetized app etc...

 

[surferfb]

1. Apple already sold the IP to the end user when they purchased the product (iPhone, Mac etc...)
   1. Apple shouldn't be able to charge devs to access IP that is already in consumers hands
      1. I know that in the US the balance of power is tipped towards corporations and many of you seem happy to sign away property rights (people are happy not owning the things they buy) in exchange for nebulous and often contradictory "licensing terms" but that doesn't mean the rest of the world is happy to do so

Apple did NOT sell you the IP. You buy the HARDWARE when you buy an iPhone but you accept a license to use the software. The DMA did nothing to change this, it's the same license in the US as the EU.

Apple doesn't charge for access to the exact same SDKs in countless other situations

1. Ex, I can build a Mac app using the same tools, and SDKs and pay Apple nothing beyond the $99/year fee.
2. I can build a iOS app using the same tools and SDKs and pay Apple nothing if I sell a physical goods and services, a reader app (a category which has expanded so much it seems to include email at this point) a free Ad monetized app etc...

Companies can choose to charge different customers different amounts. Apple could decide blue app icons cost more than black app icons. They could decide apps from big developers have to pay more than small developers. As long as they are not discriminating for a protected reason (race, gender, nationality) they're free to charge how they charge.

Apple has clearly laid out their rules when they charge a licensing cost for their IP and when they don't. Just because you don't like it doesn't mean they can't. Their rules are clear. If the app is free, no charge. If the app is free with a subscription/purchases for digital content, developers are charged for the IP license, if the app is paid, charged for the IP license. If you are saying they aren't allowed to do that, then you are, in fact forcing them to give away their IP for free.

 

[bcortens]

Apple did NOT sell you the IP. You buy the HARDWARE when you buy an iPhone but you accept a license to use the software. The DMA did nothing to change this, it's the same license in the US as the EU.

Licenses aren't law and where they conflict with the law they aren't enforceable. If the EU says that the user owns a copy of the software then they own a copy of the software and the company can write whatever they want in a license it is still unenforceable.

Again, you seem to be continuing to defend a system in which corporations have the right to reach into the software after you have bought it and enforce their will. A system in which there is no such thing as owned software copies. I think this is something we should fight against and work to undermine!

Companies can choose to charge different customers different amounts. Apple could decide blue app icons cost more than black app icons. They could decide apps from big developers have to pay more than small developers. As long as they are not discriminating for a protected reason (race, gender, nationality) they're free to charge how they charge.

Not anymore in the EU they can't, they have to offer fair terms and while you might want them to be able to act as capriciously as they would like that doesn't mean that they can. They cannot discriminate as much as they used to in the EU, they have to have clear, consistent rules that do not benefit their own store. The current rules do benefit their own store and preference their own apps. They cannot do that.

Apple has clearly laid out their rules when they charge a licensing cost for their IP and when they don't. Just because you don't like it doesn't mean they can't. Their rules are clear. If the app is free, no charge. If the app is free with a subscription/purchases for digital content, developers are charged for the IP license, if the app is paid, charged for the IP license. If you are saying they aren't allowed to do that, then you are, in fact forcing them to give away their IP for free.

They have not clearly laid out the rules, they do not enumerate which fees cover which IP, they have a generic and vague set of assertions that do not come anywhere close to a clear message. They have not described a reason why the same app should have to pay CTF if distributed in the App Store as well as an alt store but no CTF if distributed exclusively through Apple's store. There is no coherence to this plan.

They already sold a copy of the IP to the customer who bought the phone. If the cost to develop the APIs used by Apple's own apps and the OS itself were not covered by the phone then they would be selling iPhones at a loss (which we all know isn't true).

Edit: I'll say it again, Apple is not Unreal Engine. Unreal engine does not come bundled on the phone with Unreal then trying to charge a second time for the IP that is already in consumers hands. Apple is trying to double charge for the same development costs. They charge the consumer who bought that device (because Apple had to pay the dev costs to develop iOS and the SDKs used by their own apps already) as well as they are trying to charge the developers.

Apple has already been paid for the IP that already exists on the Phone. They are not being forced to give away the iPhone (which comes bundled with iOS).

 

[ProbablyDylan]

It’s been pointed out repeatedly to you that the developer subscription does NOT give a license to Apple’s IP. Just because you want it to doesn’t mean that it does.

So why charge it? Just cause they can? Isn't this a classic example of rent-seeking?

 

[BaldiMac]

So why charge it? Just cause they can?

Why charge for access to their property? Seems obvious. The developer fee is only part of the terms for access to Apple's IP. Other terms include the commission or CTF.

If I say you can access my property for $99 + $500 a month but you can't have pets. You can't just give me the $99 and ignore the rest of the terms.

Isn't this a classic example of rent-seeking?

No. When you create something of value and charge for it, that's called profit-seeking. Rent-seeking is when you grow wealth without creating something of value. Such as by lobbying the government for a grant or tax break.

 

[I7guy]

So why charge it? Just cause they can? Isn't this a classic example of rent-seeking?

There is nothing wrong with rent seeking. Most companies rent seek.

 

[surferfb]

Licenses aren't law and where they conflict with the law they aren't enforceable. If the EU says that the user owns a copy of the software then they own a copy of the software and the company can write whatever they want in a license it is still unenforceable.

Please point to me where the EU says users buy a copy of iOS when they buy an iPhone instead of a license to use iOS on the phone. Again, just because you wish that is how it works doesn't mean that is actually how it works. If I've somehow missed the EU nationalizing Apple's intellectual property I'll gladly concede the point.

They have not described a reason why the same app should have to pay CTF if distributed in the App Store as well as an alt store but no CTF if distributed exclusively through Apple's store. There is no coherence to this plan.

Huh? It's pretty obvious why - the commissions have been lowered to account for the CTF.

• If App is exclusive to the App Store, the commission is:
  • 15/30% and no CTF (because it's included in the 15/30%)
• If accepting new terms and conditions and sold on App Store the commission is either:
  • 13/20% (if using Apple as payment processor) + CTF
  • 10/17% (if using outside payment processor) + CTF

They already sold a copy of the IP to the customer who bought the phone.

Apple did not sell you a copy of the IP. Full stop. I know you don't like that, but they didn't. If I am wrong, again, please point to legislation or case law that says the EULA is unenforceable and that Apple is selling a copy of its Intellectual Property to end users. If you can't, there's no point in continuing debating if you're just going to put your hands in your ears and scream "NO! The sky is green because I say so!"

 

[BaldiMac]

There is nothing wrong with rent seeking. Most companies rent seek.

Most people consider rent seeking wrong. Most commonly, it's when companies lobby the government for free money.

 

[bcortens]

Please point to me where the EU says users buy a copy of iOS when they buy an iPhone instead of a license to use iOS on the phone. Again, just because you wish that is how it works doesn't mean that is actually how it works. If I've somehow missed the EU nationalizing Apple's intellectual property I'll gladly concede the point.

The EU considers sale of software to be ownership of a copy:

EU Court: When You Buy Software You Own It

Public Knowledge promotes freedom of expression, an open internet, and access to affordable communications tools and creative works. We work to shape policy.

publicknowledge.org

CJEU Rules First Sale Doctrine Applies to Digital Copies of Software in Europe

In an eagerly-awaited judgment, the Court of Justice of the European Union (CJEU) has held that the first sale doctrine applies to digital copies of software sold in the European Union or European Economic Area. In Luxembourg on 3 July 2012, the CJEU held that the resale and use of used...

www.mwe.com

CURIA - Documents

curia.europa.eu

Even decompilation is legal if I want to run software I write myself

Directive - 2009/24 - EN - EUR-Lex

eur-lex.europa.eu

What this is not:
This is not nationalization of Apple's IP, no matter how many times you repeat it.
Nationalization would be someone saying that I can take iOS and resell/redistribute as many copies as I want.
Nationalization would be saying Apple must give iOS updates away for free (Apple can charge for iOS updates if it needs to recoup costs to develop the APIs and iOS itself). Apple sells a whole product, iPhone, which is a software and hardware product. The first sale doctrine applies in the EU.

Huh? It's pretty obvious why - the commissions have been lowered to account for the CTF.

• If App is exclusive to the App Store, the commission is:
  • 15/30% and no CTF (because it's included in the 15/30%)
• If accepting new terms and conditions and sold on App Store the commission is either:
  • 13/20% (if using Apple as payment processor) + CTF
  • 10/17% (if using outside payment processor) + CTF

You keep ignoring the fact that I pointed out that the same app has a different payment requirements under the two systems. If an App is already paying Apple 0% commission (only paying them the 99/year fee) then the CTF obviously shouldn't be required as that App is already paying Apple nothing. Yet if Spotify wanted to distribute in both the App Store and outside of it they would have to pay the CTF.

What you wrote only applies to apps that are using IAP, if an App already pays nothing but wants to add alternative distribution what you wrote is meaningless.

Furthermore:
The EU has already ruled that Apple's 10/17% if using an outside payment processor goes against the DMA
From the preliminary decision:
"Whilst Apple can receive a fee for facilitating via the AppStore the initial acquisition of a new customer by developers, the fees charged by Apple 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."

Apple did not sell you a copy of the IP. Full stop. I know you don't like that, but they didn't. If I am wrong, again, please point to legislation or case law that says the EULA is unenforceable and that Apple is selling a copy of its Intellectual Property to end users. If you can't, there's no point in continuing debating if you're just going to put your hands in your ears and scream "NO! The sky is green because I say so!"

Apple sold me a copy of iOS, which contains the IP, therefore they sold me the IP that third party take advantage.
As I liked above: https://www.forscope.eu/blog/legal-... means is that,exhausted after the first sale.

 

[BaldiMac]

Please point to me where the EU says users buy a copy of iOS when they buy an iPhone instead of a license to use iOS on the phone. Again, just because you wish that is how it works doesn't mean that is actually how it works. If I've somehow missed the EU nationalizing Apple's intellectual property I'll gladly concede the point.

The whole "licenses don't apply in the EU" is based on misinterpretation of the first sale doctrine (which also applies in the US.) The first sale doctrine basically just says that the developer can't license away your right to resell the copy that you purchased.

 

[bcortens]

The whole "licenses don't apply in the EU" is based on misinterpretation of the first sale doctrine (which also applies in the US.) The first sale doctrine basically just says that the developer can't license away your right to resell the copy that you purchased.

The doctrine of first sale means that Apple is not issuing me a license to use the software as they see fit that they can revoke arbitrarily but that I own a copy of the software that I can use as I see fit so long as I am not infringing upon Apple's copyright to do so. I am trying to say that because Apple has already sold me a copy of the software and that software already contains the IP, and thus the IP that devs are trying to access has already been paid for (by me the consumer). The DMA is trying to force Apple to let devs access the software on users phones without having to go through Apple. Apple is fighting back by trying to stay in the middle between devs and the users.

I am not trying to say that all licenses don't apply, what I am trying to say is that where the license is in conflict with the doctrine of first sale then at least that portion of the license is not enforceable.

 

[BaldiMac]

The doctrine of first sale means that Apple is not issuing me a license to use the software as they see fit that they can revoke arbitrarily but that I own a copy of the software that I can use as I see fit so long as I am not infringing upon Apple's copyright to do so. I am trying to say that because Apple has already sold me a copy of the software that software already contains the IP and thus the IP that devs are trying to access has already been paid for (by me the consumer). The DMA is trying to force Apple to let devs access the software on users phones without having to go through Apple. Apple is fighting back by trying to stay in the middle between devs and the users.

I am not trying to say that all licenses don't apply, what I am trying to say is that where the license is in conflict with the doctrine of first sale then at least that portion of the license is not enforceable.

Except the first sale doctrine only deals with resale of the original copy. Apple's SLA doesn't restrict resale.

It has nothing to do with what we are talking about. It does not give you rights to modify the software, nor does it give developers rights to distribute modifications to the software. It certainly doesn't mean that Apple should be forced to modify it's software to support third-parties.

Again, all it means is that you can resell the original copy that you purchased and pass on the original licensing terms. Hence, the name.