It's Apple blatantly violating the Digital Markets Act, because it thinks it is above the law (and to be fair, in the USA, it is). The EU has acknowledged this and is currently preparing a truly massive punishment for Apple. Apple, being unaccustomed to having rules apply to it, seems to be ignoring this.
I think it's more likely that while the punishment might be significant it will be more profitable to continue as long as possible violating the law or at least pushing the boundaries as much as possible instead of proactively being compliant.
After a court order they will know exactly where the limits are and tiptoe them as much as possible. If they proactively try to be "overcompliant" they might loose more money in the long run.
It's messed up to be honest. I would prefer harsher punishments, but on the other hand if companies are scared all the time it might have a chilling economic effect so there is a balance to strike as well.
> while the punishment might be significant it will be more profitable to continue as long as possible violating the law or at least pushing the boundaries as much as possible instead of proactively being compliant
This is it. The law is ambiguous, and until someone specifies the line it makes no sense for either side to concede. Both Epic and Apple are multi-billion dollar companies taking maximalist positions.
There is also the shadow component of it being an open question—given the present state of European politics—as to which will outlast the other, Cupertino or Brussels.
I mean, if it's too much, they will just pull out of the EU and sell to Europeans via online only. EU citizens will still be Apple customers, just without any EU protections.
To be fair, the EU is being a bit ridiculous sometimes. Apple decided not to compete in the EU because of the restrictions, and the EU seemingly wanted to penalize that decision also.
> Selling your product in the EU means having an EU presence.
Ehhhhhh. Kind of. Maybe. Certainly not always.
I mean, if there is some shitty little porn company in say, California, and they make porn that say, caters to a fetish that is legal in California but illegal in the EU, well, what then?
The porn company isn't doing anything wrong, and EU laws are irrelevant. At this point they can try to firewall off the company, punish ISPs, maybe punish citizens who do business with that company, because it isn't breaking any EU laws, and has no EU presence that can be fined, sieved, etc.
This is very normal, this is the way international laws work barring treaties or other agreements to have a special arrangement outside of that.
So, if Apple pulls out of the EU, maybe they can no longer ship mail to the EU, I'm doubtful of that but let's just say. Well, there are plenty of non EU countries close by, including the UK. Not really a problem for EU citizens to get one at all, so again, the EU can only punish people, not the company.
> Like, I can’t just ship heroin to Europe from abroad and claim I’m immune.
If it was legal to do so in the sending country, sure you could. That isn't true for any country though, so it's not a great analogy.
> So, if Apple pulls out of the EU, maybe they can no longer ship mail to the EU, I'm doubtful of that but let's just say.
Why? Apple has Customs pulling (ironically, actually genuine) Apple parts being shipped.
Customs is built around this whole model, unless what, you propose that Apple starts selling commercial quantities of iPhones by disposable drop shippers?
Excellent point, I clearly wasn't thinking too clearly when I made that point. The main point I was thinking is that trying to stop iPhones coming in to the EU is significantly harder.
Imagine the amount of people wanking through the 'nothing to declare' exit after coming back from pretty much any other country and buying an iphone.
The EU could start blocking payments to that porn studio. Avoiding the block would be money laundering, which is also illegal in California. The EU (or it's constituent countries - not sure) also controls imports, and could seize and destroy illegally purchased iPhones at the border. Every one of my international purchases is already stopped and processed by customs to evaluate import taxes. It would be quite easy for them to simply say "you can't import this."
> The EU could start blocking payments to that porn studio.
Sure, but this is not punishing the company in any way which was the other posters point. If the EU was blocking payments to Apple after Apple withdrew from the EU, they are not punishing Apple or holding them accountable to EU law (specifically in the context of complying with competition guidelines and DMA type stuff).
> Avoiding the block would be money laundering, which is also illegal in California.
Hmmmm. I'm not so sure about that. If the EU barred payments to Apple, that block would be on banks and payment processors, not people. If someone goes to the US and buys an iPhone in this new world, they are not committing a crime unless the EU passes a law prohibiting its citizens to buy iPhones.
> The EU (or it's constituent countries - not sure) also controls imports, and could seize and destroy illegally purchased iPhones at the border. Every one of my international purchases is already stopped and processed by customs to evaluate import taxes. It would be quite easy for them to simply say "you can't import this."
Absolutely, but this has nothing to do with Apple, and it isn't the EU punishing Apple, it's Apple punishing people or organizations.
The other posters point was that if Apple withdraws from the EU, EU law wouldn't apply (in the sense they wouldn't need to allow any 3rd party app store, period), and people could still buy iPhones and Apple products outside of it. It's on the EU to try and deal with that.
So they’d lose 20% of their global revenue just out of spite? Can you name a single rational reason why’d they do that?
> Or bypass
How? They won’t be able to sell directly to EU customers…
> Re-read the comment in context.
It just doesn’t make any sense. Apple wouldn’t be able to sell to clients in the EU on a large scale. It just wouldn’t work due to perfectly obvious reasons.
> So they’d lose 20% of their global revenue just out of spite? Can you name a single rational reason why’d they do that?
If EU fines exceed EU revenue.
> How? They won’t be able to sell directly to EU customers…
The EU would have to police its own citizens from going outsize their walls and buying iPhones from literally any other country.
> It just doesn’t make any sense. Apple wouldn’t be able to sell to clients in the EU on a large scale.
So it made sense, and you understood fine, you just disagreed and decided to be obtuse about it. Sigh.
The point was simply that the EU can't touch a company in another country with no presence in the EU, even if EU citizens are buying from it.
All they can do is try and block payments to it, firewall it off, and similar things.
So sure, the EU could police its citizens buying iPhones online, but that's going to be an awful lot of work considering all the third party sellers, and I don't think it would be terribly successful. Not without enforcement which would be extremely unpopular.
They won’t. Also you’re assuming that Apple’s management is irrational and petulant, because if not it should be “if the cost of compliance with EU regulations exceeds their EU revenue/net income” which isn’t going to be even remotely true.
> obtuse about it
Not at all. It’s just that this seems fairly obvious to me:
A very small fraction of people
buying iPhones in Europe now would buy them if they had to ship them from outside the EU, pay the VAT themselves and have no warranty/support.
So sure it won’t be 100%, just 80-90% which doesn’t change anything
You're awfully cocksure with nothing to back it up.
Apple's global revenue in 2023 was about 120 billion. EU revenue was 24 billion. DMA allows fines up to 10% of global revenue. Two max fines under the DMA is already more than their EU profit.
> Also you’re assuming that Apple’s management is irrational and petulantv
I'm not the one making an assumption here. I'm saying if x then y which is perfectly reasonable. You're saying x would *NEVER* happen, which I would consider foolish.
I think Apple will comply with the EU to a point, I agree they are not trying to leave the EU at all. But ultimately they are still a US company and follow US leadership, who may want to do things or try and circumvent EU policies in a way they think are fine, but the EU doesn't.
I mean, there was already a clash with their first fine, it won't be surprising if more come.
I also really think you are being dismissive and downplaying their decision to not enter the AI market in the EU.
> It’s just that this seems fairly obvious to me:
> A very small fraction of people buying iPhones in Europe now would buy them if they had to ship them from outside the EU, pay the VAT themselves and have no warranty/support.
> So sure it won’t be 100%, just 80-90% which doesn’t change anything
I'm so confused at what point you are making here. You're saying EU citizens, if Apple left the EU, would just, and to quote "ship them from outside the EU, pay the VAT themselves and have no warranty/support."
Is this correct? Because that has been specifically the point I was making. Jesus. My point though, to clarify again, is if they do that, Apple won't be subject to any EU rules. All those iPhones bought outside the EU won't have 3rd party app stores, for example, and the EU would be powerless to enforce that. Seriously. That's the point I made several comments ago that you decided to dispute. Which now you are making yourself?
Sure, like let's not be silly and absurd and refuse to consider the possibility Apple might leave the EU?
> Also it’s the cost of compliance that has to surpass their profit
Right, but the fines the EU issues are from their global revenue. While I think this is reasonable, for the same reasons it's a problem that the rich can speed and not care about a fine, but it could well be enough for Apple to withdraw.
It’s a rough not very educated estimate of what proportion of their global revenue Apple might lose by complying with the regulations ( I’d personally bet it’s significantly less than that). Do you have a better figure?
Once again, you're just making assumptions. So, all this time you've just assuming the max fines won't apply - that's the entire crux of your argument, right?
As where I've been talking about a situation where the max fines are being imposed.
I really don't think you're reading or keeping the context of the discussion in mind when replying. I have no other explanation for you assuming 2% and asking if I have a better figure in spite of me specifically citing the max fine number as a prerequisite for my scenario numerous times.
No, it’s still a problem for apple because they won’t leave. Even in the absurdly inconceivable (to an extent that it’s not even worth discussing) case that they did losing a significant proportion of their revenue would be a much bigger problem for them than the EU.
Less than 20% of Apple’s net income comes from what they call “Europe”, which actually includes Africa and the mid-East.
If Apple pulled out of the EU, which isn’t even all of the European continent much less the “Europe” reporting region, they would probably take less than a 10% hit. Significant, but not a showstopper. I don’t know where everyone gets this idea that pulling out of the EU would kill Apple.
It wouldn’t. It would still be an immensely absurd thing to do. I assume Apple is not run by 12-year olds, why would they lose 15-20% (probably closer to 20%, EMEA seems to be ~27% and besides Britain the EU would be the overwhelming majority of what’s left) of their revenue out of spite when realistically they are only risking 1-2% by staying?
They are just trying to find the “optimal” way of complying with the regulations while maximizing their income.
Apple even continue to follow all Russia demands even though they only sell subscriptions there and accept payments on App Store. E.g few days ago they removed VPN apps from App Store due to demands of Russian government.
The difference is that China’s domestic requirements don’t require Apple to become a non-profit. If the EU’s requirements are actually as many HN’ers would like them to be, Apple will have no reason to sell iPhones in the EU.
Apple still makes significantly more money from selling the actual iPhones than from the App Store.
This such an obvious fact that anyone even mildly interested in the topic (i.e. commenting here and making such strong, yet silly, claims) surely must know..
If that were true, Apple wouldn’t care to poke the bear.
If you were honest, you would read Apple’s SEC filing, which show that (globally) about 43% of Apple’s profits come from Services, while 57% comes from hardware. You could just admit that you don’t understand the difference between revenue and profit. I’m sure you’ll move the goalposts and claim that’s “significantly” more.
The EU wants to zero out Services revenue, while simultaneously removing Apple’s brand value (a curated “walled garden”, where app developers can’t take too much advantage of customers).
The alt stores in the EU will be a race to the bottom of which one allows developers to abuse customers the most. Why would any app stay on Apple’s store when alt stores allow more invasive privacy violations? And then when the app ecosystem on iOS looks like Android, what possible reason could you have to buy an iPhone?
So, yes, the EU very much wants Apple to be a non-profit.
> If that were true, Apple wouldn’t care to poke the bear
They are just searching for the optimal way of complying with the regulations while maximizing their income .
you do have a valid point about services being a larger % of their net income than I implied but that includes Apple Care, iCloud, the estimated $20(?) billion from Google that’s basically pure profit and is massively inflating the services segment’s margins? What proportion is left to the App Store? Who cares let’s just ignore that I guess..
> You could just admit that you don’t understand the difference between revenue and profit
Ok, that’s that, you’re either being obtuse or worse. Either way no point in continuing this silly discussion. But no, most of what you’re saying makes very little sense
So instead of losing 5% or so of their revenue in the EU they’d rather lose > 80-90% seems like a smart business decision…
In any case (not quite the same but gives a glimpse into their mindset) they have zero issues with kowtowing to authoritarian regimes like those in Russia or China
> So instead of losing 5% or so of their revenue in the EU they’d rather lose > 80-90%
They would directly lose ~40% of profit. Additionally, there’s no reason to buy an iPhone if it just works like an Android, so Apple would be competing with Samsung hardware on price instead of on having a superior customer experience. So there go the other ~60% of profits.
So, yes, pulling out of the market completely starts to look like a rational business decision.
How did you come to that conclusion. Doesn’t “services” include the $20 billion get from Google per year which is basically pure profit? Also Apple care, icloud etc etc. how would that be impacted?
> Additionally, there’s no reason to buy an iPhone if it just works like an Android
Why would it work the same as an Android? Most people don’t use third party appstores or side loading anyway…
> So, yes, pulling out of the market completely starts to look like a rational business decision.
> So instead of losing 5% or so of their revenue in the EU they’d rather lose > 80-90% seems like a smart business decision…
Not sure where you're pulling that 5% figure from, but the EU wants to fine companies like Apple a much larger percentage of their global revenue, not just EU revenue.
If the fines the EU wants to impose are greater than Apple's profit in the EU, indeed it would be a smart business decision to pull out.
> In any case (not quite the same but gives a glimpse into their mindset) they have zero issues with kowtowing to authoritarian regimes like those in Russia or China
Well, duh. Apple are not concerned with a government abusing its own people, they are concerned with a government taking 10% of their global revenue.
> Good thing the fines are optional and can be negotiated down
Source? Which of the fines so far have been negotiated down?
> when apple starts complying with the regulations.
Heh. Or, Apple just starts withdrawing from spaces in the EU because they don't like the EU's behavior. For example, they are withdrawing from the AI space citing that exact reason.
If they are already pulling out of cashcows like AI, is it that much a stretch to think they could withdraw entirely?
Not to mention Apple consideres the regulations to be unclear given the the EC seem to want Apple to figure out the 'spirit' of the law and comply with that instead.
> They could do that, that in no way means that they are planning to
They already do that. Look at what the max fines for say DMA or GDPR allow for. I'm going to give you the benefit of the doubt here and assume all your previous replies are because you haven't actually done this yet.
I guess most Iphones are sold in a bundle with a carrier contract. Those bundles would become impossible. Without this scheme, most Iphone users would notice how overpriced their shiny status symbol actually is.
I think that’s pretty rare in the EU these days and seems to be restricted in some countries at least. You might get some nominal discount but you’re still being billed separately for the device/contract each month
