Apple still hasn’t complied with a Dutch antitrust order to allow local dating apps to have the option to use third party payment tech to sell digital content to their app users.
In a statement today, the Dutch Authority for Consumers & Market (ACM) said it has levied a sixth fine (of €5M) against the tech giant for non-compliance with an order first issued last year.
The iPhone maker is now facing a €30 million penalty over the issue, as the penalty has increased again by another €5M since last Monday — with the prospect of further €5M increases in the coming weeks if it continues to stonewall the regulator (up to a €50M potential maximum).
“We did not receive any new proposals from Apple last week that would make them comply with the requirements of ACM. Therefore, Apple must also pay the sixth penalty,” said an ACM spokesperson.
“In the week of February 14, we once again explained to Apple which requirements we have and why the current proposals are insufficient. It seems that Apple is not going to make any changes to their original proposal to meet the requirements.”
We contacted Apple about the latest penalty but the company declined to comment.
Apple has been maintaining a public silence for weeks on this issue — including after the EU’s head of digital strategy, EVP Margrethe Vestager, called out its behavior last week, accusing the company of a deliberate tactic of choosing to pay fines rather than comply with competition orders.
Although news agency Reuters reported earlier today on a letter Apple sent to the ACM, which it said it had obtained, in which the company argues it has complied with the regulator’s order — arguing that dating app developers wishing to take up the entitlement need only make “a minor technical change”.
The company has previously said it does not support the order, on the grounds that it risks degrading the user experience — while maintaining the claim that it is nonetheless complying by providing two entitlements to developers in question.
In the full letter from Apple to the ACM — dated February 28 — which TechCrunch has obtained, Apple’s chief compliance officer, Kyle Andeer, writes that “Apple believes its solution is fully compliant with Dutch law”.
In the letter, the meat of the tech giant’s defence of its actions focuses on its requirement that dating apps submit a new binary to be able to make use of non-Apple payment tech — which Andeer argues is not an especially unusual step.
“This is a straightforward prerequisite that ensures that Apple complies with its legal obligations in the Netherlands while at the same time having the ability to maintain its standard terms and conditions in the rest of the world,” he suggests, adding: “Apple’s global App Store rules and policies require developers of dating apps that are selling digital goods or services within their apps to use IAP functionality for those transactions, providing a safe, secure and consistent experience for users. That has always been true.”
Andeer goes on to cite examples where he says the online dating giant, Match Group (which owns a large portfolio of dating apps, including Tinder), already offers different versions/binaries of its Pairs, Match and Our Time apps “to accommodate for the different requirements or preferences in various jurisdictions”.
So he argues that this is “the same approach Apple and developers use in other jurisdictions where there are unique legal issues that require a different approach in a particular jurisdiction” — further asserting the requirement to submit a separate binary is “not costly or difficult” for developers.
“Dating apps are familiar with this process and in fact engage in it voluntarily,” Andeer adds. “A new binary for the Dutch storefront would simply require a minor technical change to an existing app consisting of a limited adjustment that allows a developer of a dating app to use a third party payment processor or insert a link to a website for purchase. There are no additional costs associated with this approach.”
For its part the Dutch regulator has previously said Apple is imposing “unreasonable” and “disadvantageous” conditions on developers wanting to use alternatives to its in-app payment API.
And — on a fundamental level — it does seem pretty clear that there is a difference between a developer doing something technical voluntarily vs a technical action being a platform requirement for them to access a provision they are legally entitled to.
Additionally, the ACM has previously suggested it’s unhappy at Apple seeking to limit developers to an either/or choice on payment tech — either use Apple’s in-app API or third party tech — rather than enabling them to make use of all options in the same app.
(And in its letter to the ACM, Apple describes its response to the order in those terms — saying developers offering a dating app on the Dutch App Store have the option of using “either Apple’s In-App Purchase (“IAP”) functionality, a third-party payment processor or a link out of their app to a website” [emphasis ours].)
We reached out to Match Group for a response to arguments Apple cites in its letter to the ACM related to binaries and will update this report with any response.
As we’ve reported previously, the bloc’s lawmakers, meanwhile, are in the process of agreeing the details of sweeping ex ante competition rules that will exclusively apply to the most powerful intermediating platforms — so called “gatekeepers” — and last week Vestager cited Apple’s evasion of antitrust enforcement in the Netherlands to highlight the challenge looming for the Digital Markets Act (DMA).
That suggests Apple’s response to the local antitrust order in the Netherlands could influence the final shape of the DMA, if regional lawmakers feel they need to further strengthen the package in order to shrink the risk of non-compliance.
That said, the DMA already bakes in the threat of very substantial fines for violations — of up to 10% of global annual turnover. (Which would be closer to €30BN than €30M in Apple’s case.)
So for tech giants to snub future Commission behavioral orders made under the DMA would be a far more risky/expensive gambit — at least for those that fall in scope of the incoming pan-EU regulation.
And that’s a big part of why the bloc is reforming and beefing up its approach to digital competition enforcement.