The Dutch Authority for Consumers & Markets (“ACM”) decided in August 2021 that Apple is abusing its dominant position by imposing unreasonable conditions for in-app payment services to dating app providers. After Apple failed to obtain preliminary relief for suspension of the penalty order decision and its publication, the ACM was able to publish a press release and summary decision on 24 December 2021. In the preliminary judgment, which brought the case to light, the president of the Rotterdam District Court upheld the penalty order for Apple to amend its terms & conditions for these dating-app providers in the Dutch Store Front no later than the 15th of January 2022. If Apple does not comply with the ACM’s order, it will forfeit a periodic penalty of EUR 5 million per week, with a maximum of EUR 50 million.
Based on Apple’s terms & conditions in-app payments from apps that are downloaded in the Apple’s App Store need to be processed through Apple Pay. The ACM decided that this is an abuse of dominance by Apple as dating-app providers have little choice but to accept Apple’s conditions. As a result of Apple’s conditions, Apple restricts the dating-app providers’ freedom of choice with regard to the processing of the payments for the digital content and services they sell. Dating app providers are unable to have payments for their in-app services handled by other payment systems and are not able to refer to payment options outside the app. Also, the app providers are prevented from direct contact with the users of their apps e.g. for customer support services.
The ACM finds that Apple’s objectives for the imposition of these payment conditions, inter alia the ability to exploit commercially the App Store and safeguarding the quality, privacy, and safety of its mobile devices and their users, do not justify the conditions as these objectives could be achieved in less restrictive and less harmful ways.
Interestingly, the court’s judgment (in Dutch only) reveals how the court dismisses Apple’s complaint that the order demands far-reaching changes in the App Store. Apple must allow dating app providers to forward the payment of in-app purchases to an external payment processor. The technical adjustments that are necessary for this in an app will be designed by the app provider and presented to Apple for approval. The only thing Apple is then required to do is to review and approve the update. This is not new for Apple with respect to payments either: the vast majority of in-app payments already take place outside the IAP API as Apple allows it for so-called Schedule-1 providers such as Amazon, Booking, Expedia, Uber and Airbnb. Moreover, the required adjustments are not irreversible for Apple.
It should be noted that the order of ACM only applies to dating apps offered through Apple’s App Store in the Netherlands (Dutch Store Front). The ACM appears to have picked these apps for this enforcement action because of their reliance on multi-homing, in-app payments and on mobile devices for providing their services. But without a doubt, other app providers will try to make a case that they should be treated just like the dating app providers.
Although a big – and so far successful – case for the ACM, this is just a small piece of a much bigger enforcement debate for Apple. The European Commission is also investigating the terms & conditions of the App Store following a complaint by Spotify (see our previous article on this investigation here). In the US, Epic is fighting a similar battle with Apple about Apple’s in-app purchase conditions.
For more information, contact Pauline Kuipers or Joost van Roosmalen.