The Netherlands’ competition authority has fined Apple €5 million (~$5.6 million) for failing to comply with conditions in an order requiring it to allow local dating apps to make user of third-party payment technology in their apps.
The tech giant could be on the hook for another €5 million fine next week if it doesn’t meet the regulatory requirement by then, and each week thereafter for a couple more months — up to a maximum of €50 million in relation to this particular order.
The fine relates to an order made by a Dutch watchdog, the Authority for Consumers and Markets (ACM), last year — which found Apple in breach of antitrust rules and ordered it to adjust the conditions it imposes on dating app providers.
At specific antitrust issue are App Store terms mandating the use of Apple’s own in-app payment infrastructure (aka the IAP API) for any sales of digital content, via which the tech giant extracts a commission.
Apple’s terms also ban the use of alternative payment systems by dating apps.
The regulator also took issue with Apple banning dating apps from referring to other payment methods in their apps.
The ACM said today that Apple has failed to satisfy its conditions and must make amendments to bring the rules for dating apps in line with its order.
“In the App Store, dating-app providers must also be able to use payment systems other than Apple’s payment system. In addition, dating-app providers must have the ability to refer to payment systems outside of the app,” it said.
The full detail of Apple’s continued infringements are not clearly stated. But the biggie seems to be Apple has not yet done what it was asked and actually made it possible for dating app providers to use other payment systems.
The Dutch regulator also criticises barriers it suggests Apple has erected to make it more difficult for dating app providers to use non-Apple payment infrastructure.
“Apple has failed to satisfy the requirements on several points,” the ACM writes. “The most important one is that Apple has failed to adjust its conditions, as a result of which dating-app providers are still unable to use other payment systems. At the moment, dating-app providers can merely express their ‘interest’.
“In addition, Apple has raised several barriers for dating-app providers to the use of third-party payment systems. That, too, is at odds with ACM’s requirements. For example, Apple seemingly forces app providers to make a choice: either refer to payment systems outside of the app or to an alternative payment system. That is not allowed. Providers must be able to choose both options.”
The ACM told Apple it would need to amend conditions for dating apps in a decision last year. But — as we reported earlier — Apple succeeded in delaying reporting of the order as it sought an injunction (some parts of the order are still under court seal).
It was also able to delay application of the order until mid January.
Last week it emerged that Apple still intended to collect a commission from local dating apps on any sales of digital content processed by non-Apple payment infrastructure — writing in a developer support note: “Consistent with the ACM’s order, dating apps that are granted an entitlement to link out or use a third-party in-app payment provider will pay Apple a commission on transactions.”
At the time of writing that claim still appears on Apple’s post about “StoreKit External Purchase Entitlement” (as it refers to the ACM order). And it’s possible that parts of the order which remain sealed relate to commissions. But is has not been possible to confirm the detail here.
In a response to a question TechCrunch put to the ACM last week, querying Apple’s claim that it can still charge fees on apps that use non-Apple payment systems, a spokesperson for the regulator declined a response — saying they could “only refer to the part of the order the court upheld and cleared for publication”.
Apple’s support site, meanwhile, still only points interested local developers to a “developer interest form” — instead of offering a clear process for implementing non-Apple payment methods.
Apple’s accompanying text also continues to offer only a vague line that more information will be available “shortly”.
This delay in implementing a procedure for local dating apps to deploy alternative payment methods has cost Apple €5 million in fines so far (and counting).
Of course, a few-million-dollar fine — or even a €50 million penalty — won’t cause much consternation in Cupertino.
But of far greater concern for Apple are the now multiple competition complaints and probes into its App Store terms — which are attacking the commission it collects on in-app purchases — with its developer T&Cs under regulatory investigation and/or order around the world, from the EU and the U.K., to Asia and the U.S.
In the short term — and/or failing a substantial, global competition reform offer by Apple that would make App Store competition complaints go away — a regulatory patchwork looms for iOS app developers as each market/region’s regulators turn their attention to assessing Apple’s small print.
In the short term, consumer and developer wins around competition and pricing of iOS apps look more likely to come grudgingly — hard fought and hard won.
However ex ante regulation of Internet giants’ T&Cs is now on the table in many markets — with the explicit goal of speeding up behavioral corrections. So a strategy of wilful delay looks set to get a lot more expensive in the future.
Apple has been contacted for comment on the ACM fine.