Nuremberg, Germany - December 29, 2018: A close-up photo of Apple iPhone screen with icons, includes Tinder, Lovoo, Badoo, Grindr and other dating apps. - Image
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Apple fails to satisfy Dutch ruling on allowing third-party payment options; adds another €5 million to fine

Apple is still afoul of the regulations in the Netherlands concerning its App Store policies. For that, the Authority for Consumers and Markets, ACM, is fining Apple $5 million for another week.

When a country where you are doing business wants you to change how you do business, failure to comply could have financial consequences, as Apple is learning in the Netherlands. The Cupertino-based company has been slammed with another €5 million fine and will continue to get hit if it fails to comply. However, the penalties will be capped at €50 million, at which point the ACM will decide what steps to take next.

The issue is how Apple handles payments that pass through its App Store from the country. The company famously does not allow third-party payment options, in addition to demanding a 30 percent cut of all revenue, including recurring payments like subscriptions.

The ACM had ordered Apple to allow a category of dating apps to be specific and use alternative payment methods in the country. The agency gave Apple till January to comply with the ruling. This is the fourth week that Apple’s attempt to comply has not satisfied the ACM, and it has accrued €20 million (about $22.6 million) in fines.

Apple had agreed to abide by the ruling, even though it appealed to the courts. However, the ACM has said Apple’s solution posed problems with its implementation. The agency is unhappy with what it called barriers that Apple still placed before dating apps that want to use non-Apple payment solutions.

One of such unfavorable conditions is that developers have to create a separate app for the Dutch market. ACM points out that it will only add to the cost of making apps and also force customers to download and install a separate app to take advantage of third-party payment methods.

There are other elements in Apple’s proposal that the ACM wants the company to adjust.

Here is the ACM’s explanation of what is wrong with Apple’s proposal;

“In its revised conditions, Apple imposes a considerable number of conditions on dating-app providers that wish to use an alternative method of payment. For example, dating-app providers must develop a new app and submit that new app to the Apple App Store. ACM believes that this condition hurts dating-app providers. Dating-app providers that opt for an alternative payment system are thus forced to incur additional costs. And consumers that currently use the app have to switch to the new app before they can use the alternative payment method. It will cost app providers a lot of time and effort to inform consumers properly about such a change. For example, consumers will have to delete the old app and install the new one. In addition, ACM has doubts about several other elements of the revised conditions that Apple has imposed on dating-app providers.”

Apple has maintained that letting developers include non-Apple payment methods will degrade the user experience significantly and expose users to threats from privacy and data insecurity.

There is, however, an interesting part of Apple’s proposal that the ACM did not address. Apple proposes charging 27 percent as its own commission on payments made outside the platform, a slight discount from the 30 percent it charges typically. This is essentially another barrier for app developers as it basically eliminates any financial gain from dodging Apple’s app tax. In fact, based on the charges by the third-party payment processor, the app developer might end up parting with more than 30 percent of its revenue.

The Netherlands might represent a small market for Apple, more so with ACM’s ruling applying only to dating apps. However, what happens in the nation might set a precedent in other countries where Apple faces the same issues. For example, in its home country, Apple has to comply with a similar ruling as the outcome of the lawsuit brought by Epic Games ordered it to allow apps to include links to external payment options. It is appealing the verdict, and the judgment is stayed. However, Apple would be wary of the effect of its actions in the Netherlands on the outcome of its appeal in the US.

Apple has also indicated it would comply with new legislation in South Korea that bans app store operators like Apple and Google from blocking external payment options on their platforms.

Written by HackerVibes

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