Why Apple Is Paying $5,000,000 a Week in Fines

The ACM has now imposed a fine on Apple of 5 million Euros per week (around $5.6 million USD) until it comes into compliance with the new regulations.
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Although Epic Games may not have prevailed in its lawsuit against Apple, it does appear to have resulted in regulatory scrutiny over Apple’s restrictions on allowing third-party payment methods.

Last summer, an investigation by the Japan Fair Trade Commission forced Apple to open things up ever-so-slightly, allowing apps like Netflix and Spotify to direct users to their websites to sign up and subscribe to their services — something that was previously prohibited by what the courts call Apple’s “anti-steering” rules.

Not long after, South Korea became the first country to pass legislation forcing Apple to open up to third-party payment processors, and more recently, the Netherlands did something similar.

On December 24, the Netherlands Authority for Consumers and Markets (ACM) published an order compelling Apple to “adjust the conditions for access to the Dutch App Store for dating-app providers.”

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Specifically, Apple was to allow them to use their own payments systems, rather than forcing them to process payments through the App Store. The ACM deemed the additional conditions that Apple imposes on apps that offer paid services to be unfair and competitive.

ACM is of the opinion that these conditions are not proportional to the additional payment service. Furthermore, the conditions are not necessary for running the App Store. That is why ACM considers these conditions to be unreasonable and in violation of competition rules.Netherlands Authority for Consumers and Markets

While this certainly goes far beyond just dating apps, the Dutch regulator chose to focus on that category specifically after receiving complaints from Match Group. According to Reuters, ACM did not immediately levy a fine against Apple, instead insisting that the company voluntarily comply with the in-app payment system.

The focus on dating apps is particularly relevant in this case, however, as it helps to establish an area in which Apple really does have a dominant market position. As the ACM notes, dating apps, by their very nature, are designed to reach as many people as possible, which means that the companies behind these apps are more compelled to do business with Apple.

On iPhones, dating apps can only be offered through the App Store, which makes dating-app providers highly dependent on Apple. Dating-app providers thus have little choice but to accept Apple’s conditions. ACM therefore establishes that Apple has a dominant position.Netherlands Authority for Consumers and Markets

Apple’s Proposal

Although Apple did make some effort to comply, it also made it clear that it was being forced to do so, stating that “We are obligated to make the mandated changes.”

However, it seems Apple hasn’t moved quickly enough to comply with the new regulations, with the ACM noting that it hasn’t actually rolled out support for third-party payment providers in the Dutch App Store — it’s merely created a form for developers to express their interest in using alternative payment systems.

Apple has failed to adjust its conditions, as a result of which dating-app providers are still unable to use other payment systems.Netherlands Authority for Consumers and Markets

The ACM also takes umbrage with the fact that Apple is forcing app developers to choose to either point users to an external website outside their app or use an alternative in-app payment system. However, it doesn’t appear that apps will be able to use both options, which the ACM says is a mandatory requirement of the new order. “Providers must be able to choose both options,” the ACM says.

As a result, the ACM has now imposed a fine on Apple of 5 million Euros per week (around $5.6 million) until such time as it comes into compliance with the new regulations.

Naturally, Apple is appealing the ACM’s decision to a higher Dutch court, noting that it doesn’t believe these decisions are in its users’ best interests, and that they “could compromise the user experience, and create new threats to user privacy and data security.”

Regardless of what happens, however, Apple also still intends to take a cut of purchases made through alternative payment systems, as it is also doing in South Korea. The ACM hasn’t ruled on this, but of course, Apple’s more vocal opponents, like Epic’s Tim Sweeney, offered his usual vitriolic commentary, calling Apple’s proposed solution a “sham” from the start.

Meanwhile, the battle between Apple and Epic continues, with Epic firing its opening salvo in an appellate court last week, asking it to overturn the September ruling in favour of Apple, in which it claims that the judge erred in nearly all of her findings that led to the decision that Apple is not a monopoly.

It will likely be some time before that gets untangled in the courts, but with so many antitrust regulators around the world starting to chip away at the dominance of the App Store’s payment systems, it’s beginning to look more likely we’ll see more gradual give-and-take adjustments in the coming months, rather than an overarching ruling that changes the entire game all at once.

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