Apple App Tax Apple Is Being Investigated By The European Union

Apple is also eyeing the European Union's anti-monopoly agency. This time it is application store and payment business.

It is reported that the EU antitrust agency has officially opened two surveys to assess whether Apple Apple Pay and App Store are in violation of EU competition law. The European Commission said the investigation would involve Apple Corp's mandatory application of developers to use the "in app purchase system" and the company's prohibition of application developers to inform users of cheaper applications outside the channel.

It is understood that Apple currently sells 15%-30% commission to other companies through App Store platform, which is also known as apple tax in the industry.

In addition to the Apple App store, the European Union has launched another investigation, which mainly involves how Apple Pay can be applied to business applications and websites, and prohibits competitors from using the terms of payment system. Apple Pay is the only mobile payment solution that can access NFC's "click to go" technology embedded on iOS mobile devices to pay in stores.

At present, App Store is the only download channel for iPhone. All applications must be authenticated by Apple certification. Forcing the application developers to use the overlord clause in the application purchase system behavior is disrespectful to the application developers. The move is suspected of abusing its dominant position in the IOS operating system, thereby undermining the normal order of market competition. In an interview with the twenty-first Century economic report reporter, Pan Helin, executive dean of the digital Economic Research Institute of Zhongnan University of Economics and Law, pointed out.

The debate on Apple tax

The "Apple tax", which once caused controversy in the industry, is again "on the matter".

The European Union's investigation involves several corporate complaints. In March this year, Lotte Kobo e-book complained to the European Commission that Apple had pumped 30% of e-book transactions on Apple's Kobo devices. This means that if Kobo wants to sell books through its application, it will pay 30% Commission for every 1 books sold.

At the same time, however, apple is promoting its own product Apple Books, competing with similar products such as Kobo. This means that the sales cost of Apple Books without paying the so-called Commission is substantially lower.

Prior to this, many people familiar with Kobo complaints revealed that Kobo complained in the complaint that in order to avoid commissions on apple, the company could only force customers to purchase e-books on its website, thereby losing many businesses.

This is not the first time Apple tax has caused similar controversy. In 2019, Swedish music streaming service provider Spotify filed a complaint that Apple Corp had unfair restrictions on its music streaming service Apple Music's competitors. Spotify claims that Apple has used its app store to stifle innovation, limit consumer choice, and support its own Apple Music services.

At that time, in an open letter, Spotify CEO Daniel AIKE (Daniel Ek) denounced apple as both a referee and an athlete. Daniel Ike pointed out that if the application developer pays the "Apple tax", it means raising the selling price and losing certain competitiveness on the consumer side. However, if we bypass this payment set, Apple will block it in a variety of ways.

Meanwhile, Tile, known for its Bluetooth tracking device, wrote to the EU competition commissioner last month, accusing apple of its anti competitive behaviour. Tile believes that apple iOS 13.5 updates Bluetooth settings to make the third party tracking products at a disadvantage, while Apple's own FindMy applications are not subject to the same restrictions by default.

Around the survey, Margrethe Vestager, a European competition commissioner, issued a statement saying: "the company seems to have gained the role of" gatekeeper "in distributing applications and content to users of Apple Corp's highly popular devices.

"Apple tax" is actually for developers, but in the actual operation process, in order to ensure revenue, developers tend to increase service pricing, "Apple tax" to consumers, increasing the cost of consumers, consumers will not really buy it. Pan and Lin pointed out that if iOS ecosystem is regarded as a single market, then apple is the sole controller of iOS ecosystem. If the "Apple monopoly" is not adjusted in time, it may damage Apple Corp's user impression and hinder its creativity.

However, Apple Corp criticized the European Commission's investigation. The company said in a statement: "it is disappointing that the European Commission is promoting the unwarranted complaints of a few companies, which only want to get a free ride and do not want to abide by the same rules as everyone else."

Wu Yijie, a guest lecturer at SPACE School of business in University of Hong Kong, also pointed out that although Apple Corp's handling of "Apple tax" and Apple Pay is unfair to developers in the iOS ecosystem, "but this is a behavior that you love me, and developers can make use of Apple's ecosystem conveniently to sell to consumers and pay commissions for granted."

Apple's service business

By establishing a platform ecosystem, the Commission is not the only thing Apple does. In fact, Google app stores will also receive a substantial proportion of commission.

However, by contrast, the Android platform allows users to install third party application stores or download applications directly. This has also forced the apple tax to be criticized by software developers in recent years.

Then, how much revenue has this apple tax brought to Apple Corp? According to research data from Analysis Group, the amount of transactions generated by iPhone and iPad downloaded last year amounted to US $519 billion.

Of these, $431 billion is for physical goods and services transactions, including the retail business platform represented by Taobao and Jingdong, with Ctrip, where to travel, and travel and takeaway platforms. Retail sales of App alone generated US $268 billion in sales.

In addition, $61 billion for digital goods and services revenue, including games, music, video, fitness, education, e-books and audio books, news and dating services and other applications. $45 billion is applied to advertising revenue, of which 44% comes from games.

According to Apple's sharing rules, 85% of the 519 billion US dollars are owned by third party developers and some enterprises. Apple Corp's participation is mainly in digital goods and services. Apple's revenue in app stores exceeded $18 billion last year, according to the highest commission ratio of 30%.

This does not include revenue generated by Apple's own App. Since 2019, Apple has launched a series of paid services such as streaming media, games, news and so on. According to Apple Corp's earnings report as at the end of March this year, iPhone's sales fell 7% to 29 billion US dollars during the quarter, but revenue from services including apple iCloud, Apple Music and other subscriptions reached $13 billion 350 million, up 16% over the same period last year.

However, apple is also facing a lot of competition, and the business of services is not good. Especially in the domestic market, with the emergence of new applications such as small programs, the game is continuing. A series of new application ecosystems will weaken the importance of App Store, and the energy and resources of developers will also be diverted. Apple tax and related businesses will be affected. Pan and Lin judged the way.

Wu Yijie also believes that in the face of the overwhelming superiority of Apple Corp, it is an attempt to try to break the deadlock by establishing its own ecosystem. "China has established its own mobile ecosystem and payment system, which provides options for the developers of the ecosystem. "Wu Yijie said that if Apple arbitrarily" Apple tax "and regulations must use Apple Pay, thereby reducing developers and user experience, eventually participants will vote with feet.

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