Apple fined 1.8 Billion Euro for anti-competitive practices with music streaming subscriptions

[Kisai]

2 hours ago, leadeater said:

 

It costs a fixed amount to list a car or house sale in a realtor/car sale magazine for a fixed length of time for an infinite number of people to view. Apple is not a realtor or car sales, they are only a "magazine". They DO almost nothing other than provide the App aka "the printed copy of the magazine".

 

You do realize that the realtor's commission, the bank's loan is all rolled into the "price" of that real estate up front, and you are paying for it monthly right? You are paying the bank loans interest first.

 

People have this wild disconnect between the cost of providing a service and the cost of all the third party middlemen who want their cut.

 

This is number one reason for inflation. Middle-men who add costs through commissions, administrative fees. Sure it would be nice to buy music directly from the artists, but the artist can't individually deal with millions of customers. We see this all the time with people at conventions. You don't go to a convention to sell a million copies of the thing you made to a million people at the convention, you go to find middle men who want to put your merchandise in their procurement or manufacturing pipeline. Maybe you sell a million copies to two separate companies.

 

The entire drop shipping business flooding market places like Amazon, eBay and Etsy is a crude version of this. Where that 10 cent piece of plastic from China becomes 30 dollars on amazon. Where's the outrage for this here? Where the equally obstinate nerds saying "just buy the same garbage off wish, temu and aliexpress" who have no understanding of how logistics work.

 

That's what I keep hearing every time one of these companies complain about Apple's commission fees. Sure, I'm 100% certain that it costs Apple nothing to operate the app store, or they could be, if they operate it entirely using their own hardware, with their own free peering networks.  Everyone else operating a large, global services does this, and I'm sure Apple isn't stupid and running everything on Azure cloud through third party outsourcers.

 

[Dracarris]

21 hours ago, Spotty said:

Some justification provided by Apple for why they deserve to get paid...

If all of that is true and Spotify actually paid Apple nothing besides the developer fee, then I kind of see the point. They get preferred treatment, devs flown to their HQ to help, and very little in return. Is 30% grossly too much, even though that's the exact same cut that Gabe gets every time you buy a game on Steam (and nobody complains about this, because in theory there are other platforms which see a tiny fraction of the traffic Steam gets)? Yes. Is 0% too little? Also, yes.

 

And no matter what some people stubbornly claim, there's no denying that Spotifys easy availability on the builtin, trusted, and content-reviewed app store on the most popular mobile platform has helped their growth and success tremendously. It's also pretty irrelevant whether Spotify can be bought on third-party App stores or not as only a tiny fraction of the target audience will bother to install those and search for the app there. C.f. Android and the Play Store.

 

TLDR 30% is unfair, 0% is unfair, and not being allowed to properly inform your users about other ways to subscribe is shit and from now on hopefully banned for good.

Having only the possibilities to either get 30% or nothing, however, is also kind of a dumb business model to be frank. 30% for recurring charges is simply way too much.

[Obioban]

While I think everything about the app store situation needs to change, in the interest of everything being accurate-- subscriptions go to 15% App Store commission after the first year.

[wanderingfool2]

7 hours ago, Kisai said:

You do realize that the realtor's commission, the bank's loan is all rolled into the "price" of that real estate up front, and you are paying for it monthly right? You are paying the bank loans interest first.

I think you are missing the analogy.  The magazine/newspaper in Leadeaters case was Apple; all the points you mentioned are moot because those would be equivalent of the App developers own operating costs.  What LeadEaters saying is that Apple shouldn't be getting a cut of final sale of the home because all they did was print it (as we are assuming Apple is just a simple magazine that had an ad for a home in it).

 

7 hours ago, Kisai said:

That's what I keep hearing every time one of these companies complain about Apple's commission fees. Sure, I'm 100% certain that it costs Apple nothing to operate the app store, or they could be, if they operate it entirely using their own hardware, with their own free peering networks.  Everyone else operating a large, global services does this, and I'm sure Apple isn't stupid and running everything on Azure cloud through third party outsourcers.

Apple's costs are definitely low, but I have an issue with assuming it's free/essentially free.

 

To build out your own network costs in the literal sense billions, the operating cost of that amount of traffic can still reach in billions.  For each datacenter location, because you need it across the globe if you do it yourself, will have to be staffed with employees on call for when hardware fails.

 

The whole issue is the "free apps".  Apple's valid argument has always been that if they allowed other payment methods a lot of apps would start offering their apps for "free" [think Netflix, Spotify, etc] and then charge the customer in their app without Apple seeing a dime to it.  In Apple's argument, they have always stated that it's them providing access to customers and that's how they are also justified in the service.  If  someone creates a free app, Apple is providing the service of getting you the customer without you actually paying Apple.  So in other words Apple would be paying potentially millions to support a popular app that offers no "benefit" to Apple.

 

It's why when Apple did open up 3rd party providers Apple still targeted it with a 27% fee [or something like that].  Now with all that said, I don't think Apple is justified in making billions from it without offering other options to their hardware.  If Apple allowed other App stores/side loading on their platform then I wouldn't have an issue, as it stands though they don't.

 

 

As to your analogy as well with the drop shipping, yes middle-men do add to the overall cost.  It's always been that way...but the MAJOR difference here is if Apple held a monopoly on the cargo vessels; and Apple insisted to be paid 30% of the sold price of the product being shipped.  As it stands anyone could buy the same 10 cent item if they wanted to and have it shipped to them from China instead of paying the $10 (and honestly some people do end up doing things like that, they find enough people to band together to buy thousands of them and they split the cost so it ends up like 20 cents instead of the $10).

 

It's not the same scenario really, but as a note people do rage that the "cheap" products on Amazon have driven off the good quality products and the act of drop shipping has created an issue where you can no longer get proper branded items on Amazon.  Where the scenario is similar though is that the customers are in the dark about it...it's why Apple has gotten away with this for so long because people didn't realize that Apple takes 30% of the fee [even now outside of the tech circle people don't realize].

[leadeater]

4 hours ago, wanderingfool2 said:

The whole issue is the "free apps".  Apple's valid argument has always been that if they allowed other payment methods a lot of apps would start offering their apps for "free" [think Netflix, Spotify, etc] and then charge the customer in their app without Apple seeing a dime to it.

They already do this, Spotify and Netflix, and Apple allows them on the App Store. That is why almost all points and arguments around here are so flawed. This isn't a theory crafting game that we need to play, this is how it is. Apple required a 30% share of subscription fees processed through the App Store and they only allow App payments on iOS to be made through the App Store.

 

Those services which have high operating costs and low profit margin per customer therefore removed the ability to manage subscriptions in the iOS App and you have to "figure out" that you need to do it in Safari or on another device.

• Global scale Apps are on the App Store as free Apps
• Apple allows them on the App Store with their blessing and direct support

This isn't Apple's valid argument and it's not a theoretical fear, this is how companies have already for years responded to this situation. The legal problem that this topic and news story is about is that Apple does not allow Apps on iOS that are on the App Store to have any information in the App about payment information outside of the App Store. All Apple is doing is taking a piss in the pool and forcing everyone to swim in it lol.

 

Now I fully believe and support Apple charging a fair fee for the service they offer, which is entirely unrelated and irrelevant to subscription services and platforms Apple does not operate i.e. Spotify and their subscription fee.

 

There is no situation at all where Apple's costs are related to or proportional to the subscription fee of Spotify to use the topic subject matter as the example. Lets just dumb theory craft here, lets just say Spotify increases the subscription cost to $1 million per month, has Apple's cost increased? No. Yet under their model they would get more money, a lot more money.

 

Anyone that posits an argument to me that Apple is responsible for 30% of Spotify's entire business I can only determine as ludicrous.

 

Apple is only entitled to cover their costs plus some profit margin, something that is actually fair and actually related to their costs.

 

4 hours ago, wanderingfool2 said:

think you are missing the analogy.  The magazine/newspaper in Leadeaters case was Apple; all the points you mentioned are moot because those would be equivalent of the App developers own operating costs.  What LeadEaters saying is that Apple shouldn't be getting a cut of final sale of the home because all they did was print it (as we are assuming Apple is just a simple magazine that had an ad for a home in it).

This ^

 

Now that's not to say Real Estate magazines and websites aren't important, they are in fact quite important but they don't get any share of any house sales proven or otherwise to have been due to their magazine/website. Just the same way Google doesn't get any share of subscription fees of services advertised through them, as is the same of TV and radio advertising.

 

None of these examples are 'exactly the same' as Apple and the App Store situation but just because Apple in some way insignificantly or significantly directs new customers to services that have Apps on their App Store does not mean they are entitled to a share of subscription fees just like nobody else is.

[leadeater]

7 hours ago, Dracarris said:

even though that's the exact same cut that Gabe gets every time you buy a game on Steam (and nobody complains about this, because in theory there are other platforms which see a tiny fraction of the traffic Steam gets)? Yes. Is 0% too little? Also, yes.

People don't complain as much because it's for a one off purchase of the product and if that product has an ongoing subscription Steam/Valve gets, wait for it, 0%. They get nothing. If Steam forced all payments in/for games purchased on Steam including subscriptions i.e. MMO games to be processed through Steam and they took 30% then absolutely yes people would be complaining about it.

 

P.S. Steam revenue share can be as low as 20% if total sales exceed 50 million.

[leadeater]

12 hours ago, Kisai said:

You do realize that the realtor's commission, the bank's loan is all rolled into the "price" of that real estate up front, and you are paying for it monthly right? You are paying the bank loans interest first.

Did you even understand the example I gave? I don't think you did.

 

When you sell your house you commission a Realtor or Real Estate agent/agency. They will advertise the house on their own website and then also 3rd party real estate magazines and websites (my prior example). These 3rd party magazines and websites are the most common way people look for and find real estate listings when seeking to purchase a home or just to look at the market. You can of course also commission an agent/agency to find you a home but that's beside the point here.

 

These 3rd party advertising services do not get any share in sales of houses, land, property etc. They make their money through advertising fees.

 

Apple isn't anything like a real estate agent/agency and this is quite a bad and not very situationally equivalent scenario anyway, but I'll talk to it so much as to address your point.

 

See the problem is any argument you may want to make that Apple in some way leads customers to Spotify doesn't mean they are entitled to a share of Spotify's subscription fees they charge. Nobody else does/is, Apple doesn't deserve any more than anyone else or entitled to special treatment.

 

I absolutely believe and agree Apple is entitled to covering their costs, charging App Store fees etc, I just fundamentally disagree it should have any relation to subscription cost of another business. I don't have a complex argument or point here.

[wanderingfool2]

9 hours ago, leadeater said:

They already do this, Spotify and Netflix, and Apple allows them on the App Store. That is why almost all points and arguments around here are so flawed. This isn't a theory crafting game that we need to play, this is how it is. Apple required a 30% share of subscription fees processed through the App Store and they only allow App payments on iOS to be made through the App Store.

Well it's not totally theory crafting.

 

Can't remember which of the lawsuits it was, if I find the time later I'll hunt down the original lawsuit which it appeared in, but Apple essentially argued that they were entitled to do such a thing because of the concept that Apple would not be able to properly maintain and burden the costs if apps decided to avoid Apple payment services.  Apple very much sees it as adding a "service" as well, which is why it's taking the 30% fee (because to them they are providing the customer).

 

While Apple for most developers did do a 30% share, and tried pressuring larger ones into the 30% share, they did make sweetheart deals with the larger companies as well [although those expired and the companies did change]...but overall Apple has argued that point in the past, and to an extent I do think it's a valid argument that they are providing a service essentially at a loss for others [I don't think it should be 30% and I do think there should be some fair market value applied to what Apple should be able to be charging].

 

After all, this is the company where Steve Jobs essentially told Phil Schiller to essentially force Amazon off their platform or make them use Apples payment system.

9 hours ago, leadeater said:

Apple is only entitled to cover their costs plus some profit margin, something that is actually fair and actually related to their costs.

I agree with this, but the reality is that Apple does argue that they are entitled to it for providing customers, and for burdening the essential cost of the eco-system....it might have been the e-book price fixing where it was Apple showing it's colors in regards to how they argue [but I can't really look up and search for it].

 

I don't think Apple is justified in it, and I definitely don't think they are anywhere justified in the 27% to allow a 3rd party payment provider either...it is my firm opinion that Apple's marketplace should be ruled a monopoly to allow for  monopoly laws to come into effect.  The thing is though people genuinely believe Apple and their argument (because I think most don't see the corporate side of things)

[Alex Atkin UK]

On 3/5/2024 at 7:52 PM, Brooksie359 said:

Honestly I do think if this goes through then maybe they need to change the way they monetize because it does cost money to have Spotify on apple apps store so if they can no longer get their 30% cut then how do they pay for those costs? Do they just eat the cost? Regardless I think there does become and issue if Spotify can completely circumvent paying for their app to be on the app store. 

Sure it costs, but I don't see how that gives them a right to a cut of subscription fees.  As I recall they already charge a hefty fee just to develop apps for their ecosystem.

 

If you're going to demand people MUST use your store and only your store, you took on that burden.

[creat0r]

17 hours ago, leadeater said:

Most people I know search the App store for something they actually want, the App, not to find "stuff".

They absolutely do! I'm an app developer and I make a good monthly income from people using my apps. My apps are not advertised anywhere, they are not famous, you have never heard of them - 100% of the users comes from people searching for a particular thing they need on the App Store, finding my app as the solution for what they need, and downloading it. I have a lot of apps where I just went into the App Store and entered a generic search term, found the app, and downloaded it even though I've never heard of the app or developer before.

Examples:

• Fake Call Me - searched for something like "escape awkward" and downloaded this because I got tired of stranger hitting on me in public and needed a way to quickly trigger a call to get out of awkward situations.
• Quote Widgets - searched for something like "inspiring widgets" since I wanted to have some feel-good widgets on my homescreen.
• Supi Player - searched for something like "youtube background player" since wanted to be able to play YouTube videos in the background without premium.
• Poliskartan - searched for "brott" since I wanted to know when crimes happens close to my home here in Sweden.
• InSave - searched for "save from Instagram" since I wanted to download images/videos.
• Scaniverse - searched for "3D scan", wanted a 3D scanning app for iPhone.
• Mockview - searched for "mockups" since I wanted a way to create mockups easily.

 

...and these are just a very few examples of many. I doubt people who are looking for a LiDAR, YouTube background players, or public toilet finding apps knows exactly the name of the app or the developer.

[creat0r]

18 hours ago, Spotty said:

Don't underestimate the number of people who just type "music" in to the app store to see which apps come up then choose one

This is VERY true. This is why App Store has tens of millions of apps and why millions of small, random developers find that paying the annual Developer Program fee is worth it.

[leadeater]

20 minutes ago, creat0r said:

-snip-

That is true, I search for odd ball Apps like that. I guess my point was they don't do it for services like Spotify, YouTube, Netflix etc of the huge incumbent services that are well known and heavily used. What I haven't done is go searching App stores for things like that because I'd directly search the App name rather than looking for a music service, and even if I was looking for one Google would be my first place to do that searching while an App like a compass or medical AED map I would search the App Store first.

 

It was probably wrong to say nobody does it ever, since I do, but there are definitely categories of Apps where the method of discovery is different.

 

aka I absolutely don't believe App Store searches has any significance for Spotify other than the necessity to be on there to avoid people choosing not to use them because they aren't. Honestly I rank word of mouth higher than Apple Store searches for how people hear of and decide to use Spotify.