Australia sharing competition intel as Tinder takes on Apple to cut app fees

The Hague: Australian and European regulators are sharing information about the market power of big tech companies ahead of a pivotal court ruling on popular dating apps and the hidden fees passed on to consumers who spend billions of dollars at Apple’s App Store and other services.

The test case in the Netherlands will decide if Apple must overhaul its App Store across Europe to comply with competition laws at a time when governments are muscling up against tech giants over their market power in search, music and advertising.

Apple takes up to 30 per cent of purchases made through its App Store.Credit:AP

The sanctions on Apple would make it give app developers more ways to charge customers without forcing them to pay the company up to 30 per cent on every sale by putting all transactions through the App Store as in-app purchases.

“These are not secret cartels, this is not criminal conduct – this is a practice that has a detrimental effect on society and on consumers,” said Martijn Snoep, chairman of the Authority for Consumers and Markets in The Hague.

“And we want to change that practice.”

The dispute is being watched closely by regulators around the world and came up in talks at the International Competition Network in Berlin in May when Snoep discussed the digital economy with Australian Competition and Consumer Commission (ACCC) chairman Gina Cass-Gottlieb.

While the ACCC has taken on Facebook and Google over news content and won a settlement that adds revenue for media outlets including this masthead, it is separately looking at the dominance of Apple and Google with their app stores.

Snoep imposed sanctions on Apple last year after a dating app provider lodged a formal complaint over the in-app purchases because they had to pay fees of up to 30 per cent on every transaction and were not allowed to bill their clients directly, a problem also bedevilling other app providers.

At the centre of the test case is Match Group, which owns Tinder and other dating apps, and has repeatedly warned the 30 per cent fee is too high and pushes up prices.

Snoep said the problem was global and required regulators to share information so they could protect consumers.

Tinder is one of the world’s biggest dating apps.

“The way we’ve worked together as competition regulators around the world is that we really understand each other’s language,” he said in an interview.

“We think the best way to tackle these global problems is by co-operation.”

Asked if the problem was growing worse, Snoep said “small problems are being solved” but the market was changing quickly and new challenges were emerging.

“You have new competitors coming up and that’s a new development. So we’ll get more problems like artificial intelligence and the application of algorithms,” he said.

“Things move pretty quickly and the only way for government agencies to catch up is to share knowledge and resources and experience.”

Apple outlined some changes to its payments on June 11, but is fighting the Dutch regulator through the courts because of the sweeping impact on its revenue if it loses, which means the case could go to the European Court of Justice in Luxembourg.

Services generated $US19.8 billion ($29.2 billion) in revenue for Apple in the three months to March 26 and are the company’s fastest-growing division covering advertising, cloud services, digital content and payments. Services grew 17 per cent while iPhone sales grew 5 per cent. The company posted sales of $US97.3 billion in the quarter.

Apple does not publish sales results for each part of the services division in its quarterly reports but US media outlet CNBC said last year that the App Store had revenue of about $US16 billion each quarter in 2020.

Snoep described Cass-Gottlieb and her predecessor, Rod Sims, as thought leaders in digital regulation because of the importance of the ACCC inquiries in recent years.

“I think Australia plays an enormously important part in the international competition network and Sims and his successor are very well known in the community and have very interesting views and ideas in the entire debate,” he said.

Snoep interviewed Cass-Gottlieb on digital regulation and her background when the ACCC boss appeared at the ICN conference in Berlin in May, given both were appointed to competition regulators after years in private practice.

South Korea has also acted against Apple over its payment services and the United Kingdom’s Competition and Markets Authority said in June it would investigate Apple and Google over cloud gaming restrictions and app store payment practices.

While gaming and dating comprise a big share of App Store payments, information about the revenue is tightly held. Snoep acknowledged there was no reliable estimate on the impact of the oligopoly on the fees customers are paying around the world.

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