- App Store critic Kosta Eleftheriou slammed Apple for its strict third-party payment requirements.
- The company’s resistance could ultimately be good for developers, he said.
- He shares key takeaways from what’s happened so far between Dutch regulators and Apple.
App Store critic Kosta Eleftheriou is one of several developers who are slamming Apple over tough new requirements for apps that want to implement third-party payments in the Netherlands.
A Dutch regulator ordered Apple to let dating apps in the country use other payment services outside of its own, which currently takes a 15-30% cut from transactions. Apple responded, but the Dutch Authority for Consumers and Markets ruled on Monday that the company’s solution “raised several barriers” and failed to comply with the order.
Eleftheriou said the burdensome requirements, including making a separate app just for the Netherlands, represent a “flagrant disregard” of the rule of law, which is the first ever to force Apple to let other payment providers in the App Store.
“They’re going out of their way to obstruct developers,” Eleftheriou told Insider in an interview. “Perhaps the calculation is that you’d rather pay the fines, as bad as that may look, than complying and giving in and creating precedence here.”
Apple is facing similar regulatory pressure in South Korea and told the Yonhap News Agency it respects Korean law and has a “strong history” of working with developers in the country. “Our work will always be guided by keeping the App Store a safe and trusted place for our users to download the apps they love,” Apple said.
Eleftheriou has sparred with Apple in the past over App Store security, fraud prevention, and other issues. Here are three other takeaways he shared from what’s happened in the Netherlands so far:
Apple’s resistance could be a good thing for developers
By not complying fully, Apple may encourage a stricter crackdown by the Dutch regulator and other authorities. Regulators are becoming more savvy with App Store technology and related systems, and the company’s pushback could inspire regulators to act sooner and take tougher action. That could ultimately be positive for developers, he said.
Even with other payment options, Apple’s version will remain popular
Apple’s current 15-30% cut of transactions is unreasonable, but a sensible percentage has not emerged because alternative business models haven’t been allowed in the App Store to compete, Eleftheriou explained. Regulators likely won’t impose specific fee caps because they should let an open and dynamic market figure that out.
“If alternative payments methods are allowed, some of which we already know can better preserve privacy and security than even Apple is offering, we’ll force Apple to lower their fees,” he said, highlighting how some payment processors charge as low as 2%.
Apple wouldn’t have to match the cheapest alternatives because the company’s embedded payments service has so many things going for it already, such as having users’ payment credentials preloaded and consumers’ inherent trust in its platform, the developer added. Apple could charge two or three times more than new rivals and still see success among consumers, Eleftheriou predicted.
Apple will guard its App Store model to the bitter end
Given the sudden movement of international crackdowns on Apple, Eleftheriou said the third-party payment landscape could look very different in just a few months. But based on how Apple has historically responded to regulations, he predicts that Apple will try skirting new rules “in any way they can, until they can’t.”
“Either it’s outlawed entirely, or the fines are large enough that the cost is such that it doesn’t make economic sense anymore,” Eleftheriou said, while noting that regulators worldwide are trying to enact legislation that would allow non-compliance fines that are proportional to a company’s revenue.
In terms of the Netherlands, Eleftheriou believes that if Apple does not comply within 10 weeks, the ACM will more than likely impose harsher consequences.
“I would definitely like to see no limit to what fine Apple should be paying for not following the order,” Eleftheriou said. “Otherwise, it’s just a capped amount and then they can have ongoing disregard for the order without any further consequences.”
