Apple is accused of making a "mockery" of the Digital Markets Act

3 March, 2024 Apple

Apple is accused of making a "mockery" of the Digital Markets Act

 

On the face of it, you would think that companies like Epic and Spotify, both long-time critics of the "Apple Tax," would be happy to hear about the changes being forced on Apple in the 27 EU member countries thanks to the Digital Markets Act (DMA). The DMA is forcing Apple to allow apps to be installed from alternate app stores and iPhone users can use third-party browsers powered by non-WebKit browser engines.

 

Apple did make some changes to the "Apple Tax," reducing the range of the commission that Apple takes on processing in-app transactions from 15%-30% to 10%-17%. And Apple is even giving developers the opportunity to present to subscribers an alternative payment option that bypasses Apple's in-app payment platform. Apple gets no cut at all of the in-app transactions using one of these alternative payment platforms.

 

However, those developers seeking to avoid the "Apple Tax" will have to pay Apple a "Core Technology Fee" that amounts to half a Euro for each annual install of a particular app after 1 million downloads are reached. This does not make Epic and Spotify happy. Per The Verge, the two firms, along with 32 more companies and alliances, wrote a letter to the European Commission (EC) stating that Apple is "making a mockery of the DMA and the considerable efforts by the European Commission and EU institutions to make digital markets competitive."

 

Apple is accused of making a "mockery" of the Digital Markets Act

 

App Store app developers have two choices when it comes to in-app payments in the EU. They can stick with the status quo and pay Apple 10%-17% of in-app transactions, or offer subscribers an alternative payment platform but pay half a Euro fee for each annual install above 1 million for each of their apps. This has the companies and alliances writing in their letter that "Neither option is DMA compliant and both options would simply consolidate Apple's stronghold over digital markets."

 

The letter adds, "The new fee structure in the proposed new terms seems designed to maintain and even amplify Apple's exploitation of its dominance over app developers. With a hefty transaction fee and a Core Technology Fee (CTF), few app developers will agree to these unjust terms. These fees will deter app developers from providing seamless in-app experiences for consumers, and will hamper fair competition with potential alternative payment providers."

 

The missive also notes that "Apple's new terms will erect new barriers and reinforce Apple's stronghold over the iPhone ecosystem." The companies signing the letter to the EC say that unless Apple makes some changes, they demand "swift, timely and decisive action against Apple, to protect developers and benefit consumers and do so as soon as the DMA obligations apply. This is the only way to guarantee the DMA remains both credible and delivers competitive digital markets."

 

The changes take effect with the release of iOS 17.4 although the deadline imposed by the EU is March 6th. The EC will hold an Apple workshop on March 18th where feedback on Apple's DMA compliance can be discussed.

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