After Dutch antitrust order, Apple starts letting local dating apps use alternative payment options

0
147

Apple has yet another regulatory stumbling block in its path: The iPhone manufacturer agreed this weekend to modifications to its App Store in the Netherlands aimed at dating applications. The company agreed to enable Dutch dating app developers to accept non-Apple-based payments in addition to Apple-based payments (via Reuters).

The Netherlands Authority for Consumers and Markets (ACM) found Apple in violation of national competition rules in December, ordering the company to modify what it described as “unreasonable conditions” in the App Store that applies to dating app providers. Apple was ordered to make the necessary changes.

If Apple did not make the necessary adjustments by the weekend, the company would face a financial penalty.

Last month, the internet giant moved to court to seek an injunction against the ruling, arguing that the regulator should be prevented from releasing its judgment and that the order should be temporarily suspended.

Although the court dismissed Apple’s arguments in part, the court gave the corporation until January 15 to comply with the decision that dating app providers provide other payment methods to their customers.

According to the court document, “the issue involves the requirements that Apple puts on dating app providers that want to sell digital material in their applications (such as “superlikes” and “boosts”). Those restrictions require, among other things, that payments from customers be paid to Apple, which acts as a so-called commission agent on behalf of the dating app providers, via the use of specific software (the IAP API) that Apple has integrated into its iOS operating system. “The dating app providers are not permitted to utilize any other payment settlement method and are not permitted to allude to any other payment method in their applications,” the Rotterdam Court noted at the time [translated from the Dutch language using machine translation].

“Concerning this portion of the criteria, the preliminary relief court agrees with ACM’s view that Apple is abusing its dominant position in the market for app store services for dating app providers by imposing these limitations.” In the end, Apple’s claims that it would not have a dominating economic position and that the prerequisites were not met were unsuccessful.

“The ruling means that Apple must allow dating app providers for their dating apps that they offer or want to offer in the Dutch Store Front of the App Store to choose which party they have to settle payments for digital content and services sold within the app and that those dating app providers may refer to payment systems outside the app for in-app purchases,” the court added, giving Apple six weeks to comply before the financial penalty for continued non-compliance will kick in. “The ruling means that Apple must allow dating app providers for their dating apps that they offer

After everything is said and done, Apple has opted to comply with the judgment while battling to have the decision overturned in court.

Apple alerted developers of the change in how it manages its store in the Netherlands in a statement sent late Friday, far ahead of the court-imposed deadline to comply with the ruling.

As previously announced, Apple has confirmed that it will appeal the ACM ruling, laying out its argument that the changes risk degrading the user experience and creating risks for user privacy and security. Apple wrote in a statement: “Because we do not believe these orders are in our users’ best interests, we have appealed the ACM’s decision to a higher court.” We are afraid that these modifications would degrade the user experience and introduce new concerns to user privacy and data security. We are required to make the needed modifications, which we will begin implementing today, and we will offer more information as soon as possible.”

Also Read for More Info:   7bridges raises $17M to automate logistics supply chains using AI

Apple also takes great care to warn local developers that if they choose to include non-Apple payment options in their apps, the services Apple can provide to their users will be reduced as a result — while also emphasizing that app makers can choose to continue to use Apple’s in-app payment system without the need to make any changes to how they conduct their businesses.

The relevant section of the text is as follows:

According to the ACM’s order, we’re establishing two optional new entitlements available only for dating applications on the Netherlands App Store and will give consumers additional payment processing alternatives. Developers of dating apps who choose to continue to use Apple’s in-app purchase mechanism are free to do so; no more action is required. It is essential to understand that some App Store features that you may use will not be available to your customers if you apply for one of these entitlements. This is because we cannot validate the security and safety of payments outside of the App Store’s private and secure payment system. In addition, because Apple will not be directly aware of purchases made through alternative methods, Apple will not be able to assist users with refunds, purchase history, subscription management, or any other issues that may arise when purchasing digital goods and services through these alternative purchasing methods. Alternative purchasing methods include but are not limited to: You will be in charge of dealing with consumers that have such problems.”

According to TechCrunch, an Apple spokesman confirmed that the restrictions on local dating apps that offer users non-Apple-based payment methods for in-app purchases pertain to refunds, subscription management, and other similar services. He pointed to the portion of the statement that emphasizes how app users will be on their own if purchasing digital goods from a developer accepting payment through non-Apple infrastructure.

Apple underlines the following in its different instructions to local dating app developers: “It will be your obligation to help your customers if queries or difficulties emerge as a result of the usage of other payment alternatives.” Because Apple will not be aware of purchases made in other ways, Apple will not be able to help consumers with refunds, payment history, subscription management, or any other difficulties that may arise from buying digital products and services through alternative methods. You will be in charge of dealing with consumers that have such problems.”

Developers who do not want to utilize Apple’s In-App Purchase (IAP) technology may either opt-out or use a third-party payment mechanism inside the app, according to a representative for the company, who pointed to further information it has supplied developers here.

The fact that local developers are moving away from Apple’s IAP technology does not seem to indicate that they will obtain completely commission-free payments.

Also Read for More Info:   Nigerian restaurant management platform Orda gets $1.1M, wants to be the Toast of Africa

Among the other points made by Apple in its developer material is the following: “By the ACM’s ruling, dating apps that are given the right to connect out or utilize a third-party in-app payment provider will be required to pay Apple a commission on transactions.”

Further information concerning this was withheld by Apple’s spokesperson, including if the fee Apple would charge on any non-Apple/third-party payments will be lower than its regular IAP commission. However, it is very likely the case. (Or, on the other hand, maybe not…)

The corporation also states on its website that “additional information on all elements of the entitlements will be provided soon.”

Update: In a statement issued today, the Dutch regulator acknowledged that Apple had notified it of the modification — and said that it will now analyze whether or not the corporation is complying with the regulations.

“As part of that evaluation, ACM will meet with dating-app providers, among other interested parties,” the statement said, implying that the organization would take proactive efforts to ensure Apple’s compliance with the law.

When Apple claims that collecting a fee on transactions that utilize third-party payment infrastructure (rather than Apple’s own) is “compatible with the ACM ruling,” we have requested the regulator for a comment, and we will update this report if we get a response.

 

Big Tech’s Big Antitrust Reckoning

Even though this regulator-enforced change only applies to iOS developers in the Netherlands — and only to dating apps— it serves as a preview of additional App Store rule changes that could come as European regulators continue to focus their attention on how Apple operates the store following years of complaints about its “tax” on in-app payments.

Apple has also been the attention of several competition regulators around Asia over in-app payments — and, earlier this month in South Korea, the company agreed to allow local developers to utilize third-party payment choices in their applications due to legislation prohibiting payment mandates.

Meanwhile, in the United States, Apple has filed an appeal against a court ruling issued due to a lawsuit brought by developers, which said that the company must enable developers to communicate with consumers about other payment methods accessible outside their iOS applications.

With open investigations by the European Commission (which issued a formal charge against Apple in April focused on the music streaming market), as well as the United Kingdom’s Competition and Markets Authority (CMA), to name a couple of examples, the App Store continues to be closely scrutinized by antitrust authorities across the region.

This summer, the German Federal Cartel Office launched its investigation into the Apple App Store.

The Competition and Markets Authority (CMA) of the United Kingdom is also conducting significant mobile market research, looking at Apple and Google’s duopoly dominance over the ecosystem. Although the CMA did not issue a final ruling until December, it did provide a strong indication that enforcement would follow. The CMA specifically mentioned in-app payments as a source of concern, stating that Apple and Google’s current approaches could contribute to higher prices for consumers while also squeezing competitiveness.

Britain is now rewriting its digital competition legislation to establish a new ex-ante — and expressly pro-competition — system that will apply to the most dominant platforms, i.e., those deemed to have so-called “strategic market status,” among other things.

Also Read for More Info:   Harry’s files paperwork for fresh $139.9M financing

Although it is unclear whether Apple will meet the requirements of that future law, the company is already in the crosshairs of the CMA — and enforcement actions could be on the horizon as a result of the investigation the regulator launched in March to determine whether Apple imposes “unfair or anti-competitive terms on developers.”

Similar legislative measures aimed against Big Tech are already underway in the European Union, where legislators are working to iron out the last aspects of the Digital Markets Act.

According to the Commission’s proposal, which was submitted at the end of 2020 and proposes a fixed set of operational requirements on gatekeeping Internet giants — coupled with centralized implementation to avoid regulatory capture and enforcement bottlenecks — the biggest tech companies will be subjected to far stricter restrictions on how they conduct business in the European Union shortly.

Germany’s Foreign Office, on the other hand, already has ex-ante authority to punish digital behemoths – in this instance, those with so-called crucial market importance. And, earlier this month, the FCO determined that Google fulfills the legal threshold for extraordinary antitrust powers to be used, giving the internet giant a taste of what it may expect from its more aggressive antitrust enforcement. Within a short period, Google offered operational assurances relating to the way it manages News Showcase, one of its products that is still under investigation by the Foreign and Commonwealth Office.

In a similar vein, the German competition authority is now assessing whether Apple’s company fits the operational requirements for quicker antitrust action. As a result, a steady stream of enforcement actions seems to be on the horizon.

In a series of further competition-related enforcement actions, France has also taken a strong stance against Google on the news front, fining the corporation a record-breaking $1 billion last summers. After a pan-EU amendment to digital copyright legislation was implemented, the country’s antitrust authority utilized the change to extract local operational obligations as soon as the update was codified into national law.

Several charges against Google have also been resolved lately by France’s antitrust authority, which has acquired a series of pledges from the company in the adtech space.

As has the Competition and Markets Authority (CMA) of the United Kingdom, which is now pressuring Google to modify its plans for the Privacy Sandbox. That being the case, if the UK authority accepts the obligations, the internet giant has pledged to extend them to other countries.

The one sure thing is that Big Tech’s operational space for maneuver is rapidly narrowing as regulators throughout the globe increase their interventions and become more sophisticated in their combined working, digital market research, and information sharing.

It is possible that the only bright lining for the IT industry’s greatest behemoths is that discussions about dismantling platform empires have been dialed down in places like Europe.

Greater rigor in competition enforcement seems to be the choice of Europe’s competition authorities, maybe because it is seen as a more feasible (and speedier) approach to reshaping the local market influence of US Internet companies.

If big structural solutions are required that might result in the reshaping of whole digital industries, US titans are now facing several difficulties on their territory.

LEAVE A REPLY

Please enter your comment!
Please enter your name here