EU vs Apple

2024.12.26   prev     next

SOME computing platforms are hardware free-for-alls, where software developers can do basically whatever they want. Of course, the device comes with an OS, and some other end-user software, but you can strip that off and install something completely different. Or you can jack with the OS in ways that have the potential to cause problems. (Or the developers can do that — maybe even without your knowledge.) These devices include:

• past “home computer” platforms (Apple II, Commodore 64, Atari 400, Amiga)
• current personal computers (Windows PCs, the Mac, Linux PCs)
• tiny hobbyist computers (Raspberry Pi, Arduino)
• Android phones and tablets

Other computing devices are locked-down, curated systems, where the device maker explicitly approves software developers and their apps, heavily limits what they can do on the device, and takes a serious cut of revenue. These include:

• game consoles (PlayStation, Switch, Xbox)
• recent-past mobile devices (BlackBerry, maybe Palm Pilot)
• iPhone and iPad

Dissent

While most users of, and developers for, locked-down, curated systems are OK with the device being that way (maybe even very glad it’s that way), some people dislike the fact that locked-down, curated systems even exist. Maybe those people like the freedom of tinkering with the device and taking control. Maybe they want to cheat at games, or pirate apps and games for free. Maybe they want to develop low-level utilities that control the OS and the third-party apps. Maybe they want to write malware, or anti-malware security software. Maybe they don’t like the idea that the device maker gets a cut of app revenue. Maybe they want to harvest personal data about the end users. Maybe they use a competing platform, and they want to see this platform harmed in any way possible. There are a lot of reasons — some arguably noble, others definitely not — that some people want the device maker’s control to be broken, and the locked-down, curated device involuntarily transformed into a hardware free-for-all.

Naturally, those devices’ makers don’t want that to happen, and not just because they might lose a revenue stream, but also because it could cause massive problems on their platforms, which might ruin their desirability to typical users and developers. The people who want to break the curation don’t care a­bout that possibility, even the apparently noble-motived ones: they feel that once platform control is broken, whatever happens happens, and that’s what should happen.

Of all platforms, both locked-down and free-for-all, one and only one stands out as massively more successful than any of the others: iOS (iPhone and iPad). So Apple is the natural target of the people who want to break locked-down curation.

The EC’s Strategy

The EC (European Commission of the EU) has become the current, hot battleground in this fight. The strategy of Apple’s enemies within this body seems to go like this:

• Given that we can’t get enough votes to pass laws explicitly requiring Apple to do what we want — e.g. stop charging for anything but hardware, let software developers do anything they like with the hardware and the OS, and make those changes everywhere in the world — instead we will craft laws similar to what we want, laws that can be rationalized in noble terms of antitrust, and thus glean enough votes to be enacted.
• Hopefully, once these laws pass, Apple will find it too difficult or annoying to try to preserve control over iOS, and so will just relent and give us what we really want (even though that wasn’t explicitly required by the laws that did pass). But — if Apple does find a way to comply with the new laws while simultaneously preserving control over iOS, then:
• Hit Apple with an enormous, scary fine (10% of its global revenue, which is nearly six times its current EU profits, or roughly equal to all EU profits from all Apple products since iPhone launched in 2007), and threaten to hit it again soon for twice that much, then to escalate even further. Do this without really specifying what Apple did wrong or what exactly it needs to do next: simply say that the “spirit” of our law is being violated.
• Hopefully, Apple will be so shocked, frightened, and panicked by the size of the fine and the vagueness of the charge, that it will quickly decide to give us what we want (again, even though that wasn’t explicitly required by the laws that did pass).

Apple’s Counter-Strategy

So far, Apple has shown its plan to be:

• Go to whatever trouble is needed to comply with the letter of the new law, but without relinquishing control or profitability of our platform, nor applying the changes outside the EU.
• If fined, appeal the fines to EU courts, on the grounds that the actually enacted laws were obeyed, and that the “spirit” of the law needs to be clearly specified (and enacted) before fines can be legitimately levied.

That’s where it stands now. But here’s my best guess as to how Apple’s strategy might continue:

• Hopefully the appeals are successful, the fines are voided, and the whole campaign to turn iPhone and iPad into hardware free-for-alls ends there. But if the appeals fail and the fines stand, then:
• Exit the EU, without paying tens of billions in fines on the way out. Announce publicly that while iPhone and iPad had a splendid, eighteen-year run in the EU, now the legal atmosphere has changed, and the EU is no longer a viable market for the products that we have made and prefer to continue making — nor for those of any other company the EC may next choose to target in this manner.

Update 2025.01.04 — Examples:

1. The new EU law requires Apple to reduce its maximum app mark­up from 30% to 17%. So Apple did that (in the EU), but also introduced (in the EU) a new, Core Technology Fee, which is €0.50 per new unique-user-app download (but waived for the first million downloads each year). This fee is believed to bring Apple to about the same third-party app income overall. In an interview, the EC’s Margrethe Vestager warned Apple, “Don’t do this [new fee],” by which she apparently means, “I wasn’t able to get a law prohibiting new fees, nor requiring you to make less money — but you know that’s what I want, so do it anyway or we’ll fine your ass off.”

2. When Apple (at least initially) declined to bring Apple Intelligence and some other new iOS 18 features to the EU, for fear that they would be considered violations of the new EU laws, Vestager commented that the delay is a “stunning declaration” of how an­ti-competitive Apple is, by which she apparently means, “If you bring just about any new feature to iOS in the EU, without first cracking open your whole system to the degree that third parties have equal power to develop that feature on their own, we’ll definitely be fining your ass off.”

3. Tim Sweeney (Epic Games), Dan Ek (Spotify), Dave Hansson (Basecamp), and Mark Zuckerberg (Meta), who for various selfish reasons have a strong desire to force the conversion of iPhone and iPad into hardware free-for-alls, are pressuring the EC to do exactly that, and have spoken out with anger and dismay at Apple’s letter-of-the-law observance of the new EU rules, calling it “Malicious Compliance.”

4. Mozilla and Google were thrilled that the EU enacted a requirement for Apple to permit third-party HTML rendering engines in iOS, then expressed extreme disappointment that Apple plans to comply only in the EU. They seem to have thought that Apple surely would throw up its hands and make the change everywhere in the world, just because the EU said so.

Meanwhile, Apple has actually decided to comply more broadly than legally required, with some of the EU’s new rules, when it felt that doing so would benefit its products, users, or developers:

1. The new EU rule that all smartphones must have a USB-C charging port is effectively rendered moot by Apple’s decision to replace its own Lightning connector with USB-C, worldwide.

2. Required by an EU rule to give third-party developers full, arbitrary access to iPhone’s NFC radio, Apple voluntarily chose to extend this capability to many major markets outside the EU.

3. After a heavy-handed, public, Google campaign to pressure Ap­ple into adopting RCS, Apple surprised everyone by announcing that in the near future, it will support RCS (as the preferred fallback to its own iMessage, instead of going directly to SMS) — albeit the GSM standard RCS, not the proprietary, Google-controlled version that Google has been pushing on Android phone makers.

But on the other side of the coin: Apple explicitly promised to end FaceTime and iMessage in the UK, if the UK enacted a requirement for Apple’s encryption to have an emergency back door. Seven weeks later, the regulators backed down.

See also:
When Starting A Game of Chicken With Apple, Expect To Lose

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