- 2024-09-13
Why the EU is tackling the Apple Tax
Recently, the topic of "Apple tax" has aroused wide attention. The so-called "Apple tax", or channel sharing, is reflected in the fact that when users purchase digital content such as apps using Apple's App Store, Apple will withhold part of the transaction amount as a commission, and then transfer the remaining funds to the corresponding APP developers, with a percentage ranging from 15% to 30%. Because of the "Apple tax", the profit margin of APP developers has been greatly compressed.
As to whether the "Apple tax" constitutes a commercial monopoly, the industry has not yet formed a unified opinion. Those in favor argue that it is partly justified because Apple provides a secure and stable platform and invests significant resources in maintaining the quality and security of its mobile apps. Opponents say the high percentage leaves many small developers and content providers feeling constrained by their business growth.
Public data shows that the "Apple tax rate" in the Chinese market is the highest in the world, charging commissions of 30% and 15% for standard enterprises and small enterprises, respectively. In the United States, the figures are 27 percent and 12 percent, in the European Union 17 percent and 10 percent, and in South Korea 26 percent and 11 percent. The high "Apple tax" has caused strong discontent among app developers around the world. In many countries and regions around the world, Apple has faced antitrust investigations and lawsuits, among which the European Union is the most typical.
In March, the European Union fined Apple 1.84 billion euros for abusing its dominant position in the market for distributing music streaming apps. The EU's decision stems from a 2019 lawsuit filed by Swedish music streaming service Spotify against Apple over the 30% commission it charges on its app store. In its ruling, the EU found that Apple's restrictions constituted unfair trading conditions. In 2021, Apple already faced similar antitrust charges and penalties in the Netherlands, where the Dutch Consumer and Market Authority investigated Apple's practices in its app store and found that it abused its dominant market position by imposing unreasonable restrictions on dating app developers in the Dutch app store. The Dutch government has given Apple time to rectify the situation or face fines of 5 million euros per week. "Unfair trading conditions" is not a common ruling in antitrust cases, and Apple has been sued on this issue one after another, which can be said to be caused by the "Apple tax".
In the face of the huge fines frequently issued by the European Union, Apple had to make compromises. In January, Apple announced a major update to its operating system, browser, and app store in the European Union to comply with the European Union's Digital Markets Act. The updates include allowing customers to download software from outside Apple's App Store for the first time, allowing people to use alternative payment systems, and the freedom to choose a default web browser. The update also lowers the maximum 30% commission that Apple has charged developers since the launch of the App Store in 2008.
At present, app developers in the EU market only pay 17% commission to Apple, and in a year's time, this percentage will be further reduced to 10% for most developers and subscribers. Apple said the change would allow more than 99 percent of app developers in the EU to pay Apple less.
Separately, under continuing pressure from a four-year antitrust investigation, Apple reached a settlement with the European Commission this year, agreeing to open its "one touch pay" mobile payment system to competitors, meaning that Apple will allow app developers to access its near-field communication technology to build payment apps from other mobile wallet providers. Increase consumer choice in mobile payments. It is no exaggeration to say that the reason why Apple is the most restrained in the EU market, the least exclusive monopoly behavior and the lowest implementation of the "Apple tax" is largely the result of the EU's heavy punishment.
The EU adheres to the rule first in the development of the digital economy, and provides a strictly standardized legal and policy environment for the activities of digital technology enterprises in Europe with high standards and re-implemented laws and regulations. The EU is highly concerned about the impact of emerging digital technology giants on traditional ethical and normative boundaries, and follows a strict tone in legislation and enforcement, with a clear preference for regulation and regulation. The Digital Market Act is an important antitrust measure issued by the European Union against tech giants, with the core goal of ending the monopolistic behavior of big platforms and ensuring consumers have more choices. Under the bill, tech giants, including Apple Inc and Google Inc's parent company, could face fines of up to 10 percent of their global revenue if they violate the rules, rising to 20 percent if they repeat the violation. In particular, the bill requires the tech giants' apps to be "interoperable" with competitors, meaning they need to open up application programming interfaces so that users can decide which apps to pre-install on their devices.
Apple grew and developed in the optimistic environment of American science and technology, deeply influenced by the idea of "winner takes all", relatively low sensitivity to anti-monopoly and anti-unfair competition, and its successive penalties in the European market, as well as the compromise under heavy penalties, reflect that the EU, as the maker of market rules, will not tolerate the behavior of the monopoly market. This is conducive to avoiding the disorderly activities of the main body of market activities to harm the interests of users and affect the development of the industry. From this point of view, the EU's experience of strict regulation of giants is not without inspiration for other countries and regions.