Apple, which is perceived to be insincere in its efforts to rectify the App Store, recently drew the wrath of Margrethe Vestager, the head of digital policy at the European Union, who said it would rather pay fines of up to 50 million euros than comply with the Dutch Consumer and Market Authority's (ACM) decision to liberalize third-party payments on the App Store.
Just three days before the remarks came out, Apple had just eaten the fifth 5 million euro (about 35.59 million yuan) fine issued by the Netherlands. Since January 24 this year, Apple has been fined one week and has paid a total of 25 million euros (about 180 million yuan) in fines.
Every week, Apple staged a "I know I'm wrong, but next time dare" drama, which is why Vestager now attacks Apple: "Some gatekeepers of walled gardens may be tempted to try to circumvent the rules." ”
Walled gardens, referring to the closed ecosystem of apples. As for why Apple repeatedly circumvents the rules and sticks to the walled garden, on the one hand, the reason is that Apple CEO Cook followed Jobs's will and continued to circle users in a clean and safe Apple system, unwilling to open third-party payments.
Another reason is that Apple's revenue from the "walled garden" policy is getting a higher and higher proportion of software services revenue, and has become the second growth curve outside of hardware such as iPhones. According to the latest financial report for the fourth quarter of fiscal 2021, Apple's software services revenue was $19.516 billion (about 123.2 billion yuan), an increase of 24% year-on-year, and the daily revenue was about $200 million (about 1.3 billion yuan).
Since 2018, Apple has changed from hard to soft under the leadership of Cook, vigorously developing software service revenue, and hardware new products were absent for the first time at Apple's WWDC (Global Developer Conference) that year, and nearly two and a half hours of speech sessions all revolved around the four-piece set of apple family - iOS, Watch OS, TV OS and Mac OS.
Another potential consequence to consider is that once Apple opens its mouth to the Netherlands, South Korea, India, Japan, etc., which are also regulating apple's App Store, do not rule out the possibility of taking this opportunity to ask Apple to release third-party payments. It's tantamount to carving holes in the fence of an apple-built walled garden.
Compared with the above factors, the fine of 50 million euros that ACM may impose is the price that Apple would rather pay in The Westager's mouth.
A
Apple's "Apple tax," which charges app developers a 30% commission, has caused a lot of complaints.
ACM couldn't stand it back in 2019 and began investigating whether Apple was abusing its dominant market position. It was at the same time that ACM received a complaint from Match Group, the parent company of dating software Tinder, that Apple had restricted their freedom to pay, and the scope of the investigation was narrowed to the dating market application.
At the end of last year, the results of the survey were released, and ACM said that many manufacturers often had no choice but to accept Apple's terms. On Dec. 24, ACM asked Apple's App Store to release third-party payment channels for all dating apps by Jan. 15, 2022, and that "failure to rectify after that date will be subject to a weekly fine of €5 million." ”
At first, Apple also confronted the hard line, issuing a statement: "We believe that this ruling is not in the best interests of our users, and we have appealed to a higher court." We are concerned that these changes could harm the user experience and pose new threats to user privacy and data security. ”
But under the trade-off, in order to continue to develop in the Netherlands, before the deadline of January 15, Apple still made two compromises: one is that Apple said on the official website that they will reduce the original 30% transaction commission to 27%; the other is that Apple announced that it will allow Dutch dating app developers to provide users with third-party payment options. This statement is crucial, after all, Apple has never agreed to a similar request before.
However, while Apple generously said that it would support third-party payments, it still suggested that those dating app developers continue to use Apple's systems: "Because Apple does not understand third-party payments, Apple will not be able to help users in refunds, purchase history, subscription management, etc." Apple's advice seems to imply: "If you don't use our payment channels, I don't care if something goes wrong!" ”
Apple's clothes are soft and careful. On the second compromise, Apple claimed that "developers who publish dating software on the App Store in the Netherlands region are allowed to choose to do any of the following: 1. Continue to use Apple's in-app purchase system, and use a third-party payment system in-app." 2. The embedded link guides the user to the developer website to complete the purchase. ”
On January 17, ACM also said with some satisfaction: "It will evaluate whether Apple's policy adjustments meet the requirements of ACM." "On January 24, after the evaluation, ACM was not pleased to realize that it was perfunctory by Apple.
"Apple only provided a channel for dating software developers to express their 'interest' in using third-party payment systems, but still set up several barriers to using third-party payment systems." This is not allowed, and app developers must be able to choose both options. ”
Beginning Jan. 24, Apple began the process of being fined by ACM, making a last news release every week.
B
In 2008, when the App Store was born, Jobs said: "The App Store is the only download channel for the iPhone, and all apps must be certified by Apple to be used." In his view, the benefit of a closed platform is control.
At first, the development of the App Store was mainly to add value to the iPhone, firmly hold the application channel in the hand, and have bargaining power in front of the application developer. And, in Jobs's eyes, it is controllable, concise, and charming, and users can avoid being harassed by other inferior applications.
Due to its excellent download speed and safe ecological experience, the App Store attracted 1,500 apps and was downloaded 60 million times in one month.
The apple thus incarnated as a landlord and sat on the ground to collect rent.
According to Apple's App Store Review Guidelines, Apple and developers divide apps in a traditional 3:7 ratio, known as the "Apple Tax."
It is worth mentioning that in 2017, Apple's walled garden policy widened the border. The guideline adds a clause that tips from mobile users to the original author are in-app purchases and must be split 30% of Apple. If it refuses to execute, Apple has the right to remove the app.
Especially after Cook decided to lead Apple from hard to soft, software services were gradually built into the second curve of Apple's growth. At the beginning of 2020, Apple published an article on its official website titled "Apple's service business entered a new era after a milestone year", in which it reviewed the achievements of Apple's service business in 2019 and praised it: "Apple has been committed to the deep integration of hardware, software, and services, so in 2019, they were pushed to new heights." 2019 was the largest year for the services business in Apple's history. ”
In 2019 alone, Apple's developers earned more than $38.75 billion (244.8 billion yuan) in revenue through the App Store. Based on Apple's 30% sharing rule, the App Store's total sales that year can reach up to $50 billion (about 315.8 billion yuan), and with this amount alone, Apple can rank 64th on the Fortune Global 500 list.
However, as the scale of users enclosed in Apple's walled garden becomes larger and larger, it brings Apple a huge amount of wealth while also making Apple under fire.
Tesla CEO Musk satirized Apple's walled garden at last year's fiscal second quarter earnings report: "Our goal is to support the advent of the era of sustainable energy, not to build a walled garden and then use it to hit our competitors, as some companies do." ”
C
In addition to the Netherlands, South Korea, Japan, India, Russia, and even the United States, many countries are staring at Apple's walled garden policy and expecting it to make concessions.
For example, the Korea Communications Commission (KCC) issued a notice to Apple before the ACM, and through the newly revised Telecommunications Business Law, it explicitly prohibits major app store operators such as Google and Apple from forcing developers to use their payment systems.
The United States, where Apple's home base is located, is also asking Apple to allow sideloading, allowing users to install apps without going through Apple's App Store to avoid the "Apple tax" fence. On January 21, Senator Ted Cruz, Republican of Texas, said that in order to prevent the behavior from happening, Cook called the relevant lawmakers directly, arguing that the new bill may prevent Apple from implementing privacy and security features, thereby preventing it from improving its products.
Under heavy regulatory pressure, Apple has indeed made some compromise moves.
One of the more important compromises is the App Store Small Business Plan: Businesses with less than $1 million in annual revenue will continue to receive a commission discount (15% off) for at least three years from 2021. But analyst firm Sensor Tower estimates that 2 percent of top developers contribute 95 percent of App Store revenue, and the remaining 98 percent of small and medium-sized developers have a negligible impact on Apple. But Apple's new deal has really harvested a wave of developer favors.
Apple is clearly aware that their game with any country could be the standard of judgment in the future. Once Apple opens up third-party payments in the Netherlands, more countries will follow suit and more new problems will emerge.
RBC Capital Markets had expected that if apple app stores implemented similar payment method adjustments globally in 2022, Match Group, a leading U.S. dating company, would save $215 million (about 1.36 billion yuan) a year. And if not adjusted, these are likely to be included in Apple's financial report.
Next week, Apple may usher in the sixth time ACM has been fined. In order to guard the walled garden, Cook, who called the lawmaker, may have to think of a new way.
Resources:
1. The Biography of Steve Jobs, Walter Isaacson
2. "Apple Tax Didn't Win, Apple Didn't Lose," Barron's
3. "For the First Time in History!" Apple made its biggest concession in a decade: "Apple tax" is gone? Ray Technology
4. Is it a good time for Apple to "save the hard" from the soft? , Finance Eleven
5. Apple Services' 2019 Report Card, Tiger Sniff
6. "The Next Decade, How the Apple Left You in Its Garden," Geek Park
7. "Global "Shouting and Fighting"! Apple faces another €50 million fine! Apple: Appealed", Daily Economic News
8. "Apple obeys the Dutch order to allow dating app developers to provide third-party payment options", NetEase Intelligence
9. "EU Slammed Apple for Preferring to Pay Fines to Snub Dutch Antitrust Enforcement," cnBeta