Apple has accumulated € 50 million in fines in the Netherlands for failing to comply with an antitrust decision from the Dutch competition authority. In December, the authority ordered Apple to adjust the conditions in its App Store to allow dating-app providers to use alternative methods of payment. To encourage Apple to comply, the authority has been imposing a € 5 million fine for every week that goes by without full compliance.
On Sunday, March 27, Apple submitted its latest proposal to the Dutch competition authority, but if it finds that the proposal doesn’t meet the expectations, it could levy new, higher fines to stimulate Apple to comply with the decision.
The main headline in this story so far is that Apple has, willingly or not, failed to comply with the decision for ten weeks because opening the App Store to other methods of payment could have detrimental effects for the company — not only in the Netherlands, but elsewhere.
But for Apple, the cost of a weekly fine (€ 5 million) is nothing compared to the benefits of crafting the right remedy that would not only appease Dutch regulators, but could also be used as a blueprint by other regulators in Europe and the U.S.
The Dutch competition authority ordered Apple to allow dating-apps to use alternative payment methods, but it didn´t specify how to do that. The same principle applies in the recently approved Digital Markets Act (DMA). The law establishes that Apple and other gatekeepers should allow other payments in the App Stores, but it doesn’t provide more information — the law only sets out the required result, not the process.
Therefore, Apple has the opportunity to design a proposal that meets the agency’s expectations and yet does not completely give up the 30% commission that it charges. Google could show Apple the way, as it has been in this situation before. When the European Commission ordered Google to allow other comparison sites to be on top of Google searches, Google didn’t do it overnight — it paid some fines, and it risked further regulatory actions, but it eventually allowed other sites to have a place on its shopping tool. The result was that it complied with the EU antitrust decision and didn’t give up its own place in the shopping box tool.
Despite the accumulation of fines, Apple has submitted proposals to comply with the antitrust decision in the Netherlands. In January, Apple submitted a remedy proposal, but the Dutch authority rejected it because it required the dating apps to develop a completely new app if they wished to use an alternative payment system. In view of the Dutch authority, this constituted an unnecessary barrier, and it was unreasonable. The new proposal submitted last week may be more likely to meet the authority’s requirements.
Additionally, Apple said that it plans to charge developers of dating apps a 27% commission on any in-app purchases made via alternative payment systems in the Netherlands. This announcement followed Google’s proposal to reduce its commission by 4% for developers using alternative payment systems in South Korea. Last week, Google reached an agreement with Spotify to allow users to choose different payment methods, but neither of them disclosed the fee that Spotify will have to pay to Google for in-app purchases using other payment systems.
App Store impenetrable payment walls are showing some cracks, and Apple is aware of the requirements imposed by the Dutch competition authority and the new DMA. The company will have to comply with the law. However, there is still ample room to decide how to comply with these regulations and how much is enough to appease regulators. The steps that Apple takes now may also determine future deals in other jurisdictions. Thus, temporarily paying a weekly fine in the Netherlands may be sufficiently offset if the company manages to design a more favorable remedy acceptable to the regulators or if it saves a few percentage points in the App Store commission that it charges.
Read More: Google’s ‘Dual Billing Option’ Adds Pressure on Apple
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