EGDF calls Apple and Alphabet to do more to ensure their compliance with DMA
Only if properly enforced will the Digital Markets Act (DMA) lead to pro-competitive changes in the market practices of the gatekeeper platforms. If the enforcement fails, DMA will open yet another opportunity for the gatekeeper platforms to introduce new anti-competitive market access barriers and secure their dominant position in the game industry value chain. Thus, the successful implementation of the DMA requires close monitoring and, when needed, swift and robust enforcement actions from competent enforcement authorities.
EGDF calls Apple and Alphabet to do more to enable third-party application stores on their gatekeeper platforms
Microsoft PC OS sets the standard for enabling competing third-party application stores. Microsoft has always allowed third-party application stores on its Windows PC operating systems and allows game developers to control their own commercial experiences. Some third-party stores are currently even more popular than the official Windows store. It is important to note that Microsoft is able to provide extensive security services, etc., without charging any additional fees from game developers distributing their games through third-party stores. This clearly demonstrates that Apple and Alphabet’s proposed fee structures are over-extensive.
Alphabet has allowed users to download third-party apps and application stores onto their devices already before DMA entered into force. However, this does not mean that Alphabet would have allowed or would now allow the effective use and installation of third-party application stores. There are a disproportionate and discriminatory number of scare screens for both third-party application stores and direct distribution through sideloading. Alphabet does not allow game developers to communicate and promote offers to their players free of charge as required by the DMA. Furthermore, Alphabet limits access to core OS features to keep developers within the scope of the ongoing service fee.
To overcome these challenges:
- Alphabet must not include link-outs under the scope of the initial acquisition fee or ongoing service fee.
- Alphabet must follow the example set by Microsoft and limit the security pop-ups only to non-trusted app developers.
- At least the protection of minors’ systems, automated app updates, and accessibility features should always be considered to be an essential part of an operating system even though they would technically separated into an alternative service.
Apple has not allowed users to download third-party apps and app stores onto their devices before. However, Apple’s core technology fee creates a significant market access barrier for game developers who are willing to enter third-party application stores or who are willing to build a third-party application store by themselves.
The proposed core technology fee creates a significant financial risk for many European game developers. Most game developers would be under the constant risk of paying the core technology fee if they want to keep their game updated. In practice, this means that it will be difficult for other game developers than those who estimate that their EU sales are going to stay under Apple’s threshold (meaning that the core technology fee makes their business model non-scalable) or whose games are going to generate enough revenues and remain profitable enough to pay the fee, to accept the new terms.
The core technology fee creates a particularly important market access barrier for hypercasual games. If Apple makes it impossible for third-party application stores to sustain hypercasual games in their ecosystem, it also makes it much more difficult for them to retain a huge user base in their ecosystem and maintain a self-sustaining player base for more profitable games. Hypercasual games play a crucial role in the mobile game ecosystem as an advertisement channel for more profitable games like RPG games.
Apple’s measures to protect the integrity of its opening system are not “strictly necessary and proportionate”. Compared to Microsoft and Alphabet, Apple has introduced much stricter measures to control third-party application stores and third-party apps. Apple has introduced a disproportionate threshold for becoming a marketplace developer, and Apple has introduced a disproportionate notarisation process for applications distributed through third-party distribution channels.
Apple justifies the core technology fee with its heavy investment in research and development, as well as in privacy, trust, and safety. However, Microsoft can provide extensive security services on its Windows OS without charging additional fees from game developers who distribute their games through third-party stores. Furthermore, Apple justifies the core technology fee by arguing that it enables further investment in research and development. Both Microsoft and Google can invest in further developing their operating systems without a similar fee structure.
To overcome these challenges:
- Apple should adopt a revenue-based fee within the Apple Appstore, which would not bring as big risks to game developers.
- Game developer studios must be allowed to freely switch between the new EU-specific and old general global business terms.
- To maximise competition, freedom to conduct business, and the most comprehensive possible access to new rights under the DMA, game developers must be allowed to choose between the new EU-specific and old general global business terms for each of their games separately.
- Game developers must be allowed to use both the Apple payment system and third-party payment system parallelly in their game and allow players to decide what payment systems they prefer to use.
- Apple must follow the example set by Microsoft and limit the security pop-ups only to non-trusted app developers.
EGDF calls Apple and Alphabet to improve access to data
Alphabet is the only core platform service limiting data portability rights under Articles 5(9) and 5(10) of DMA. Unlike Amazon and Meta, Alphabet bans ad data transfers to third-party intermediary ad tech providers. However, articles 5(9) and 5(10) of DMA do not allow Alphabet to set restrictions of this kind.
To overcome these challenges, Alphabet must not be allowed to limit data portability rights.
Apple’s compliance plan focuses on aggregated data but talks very little about access to non-aggregated data.
Firstly, Data access must happen “at their request“. Apple should not be allowed to determine when or how often business users can request data from end-users. Secondly, data access must be “real-time”. When a gatekeeper platform has immediate access to data, it should also provide it for business users. Thirdly, “Aggregated data” provided for or generated in the context of core-platform service must include data on taxes paid by Apple on behalf of the game developer on the purchases made through the Apple payment system. “Personal data” provided for or generated in the context of core-platform service and that the end-user opt-ins by giving their consent must include IDFA (Identifier for advertisers).
Apple and Alphabet must do more to enable access to OS features
Alphabet is claiming that many of the operating system features are not under the scope of Article 6(7). As notified in Alphabets’ compliance plan, it is important to understand what platform features are part of the Google Android operating system, which are part of Google Play Services and which are a part of the Google Play Store itself. Alphabet itself acknowledges that features controlling basic functions of the Google Play Services are part of Android OS. However, by limiting the scope of the basic functions, Alphabet can block free-of-charge access to many other basic features (e.g. protection of minors) that are part of the core operating system features on competing operating systems. Furthermore, by limiting access to key operating system features, Alphabet can steer players not to give their consent for the discontinuation of the use of Google Play Service by game developers and thus not being eligible to stop paying the Ongoing services fee.
To overcome these challenges, at least the protection of the minors systems, automated app updates, and accessibility features should always be considered to be an essential part of an operating system even though they would technically separated into an alternative service.
In principle, Apple must allow third-party payment systems to access the same iOS features as Apple’s own payment system so that game developers can provide a similar smooth user experience for players through all competing payment systems in their in-game stores. According to the DMA, this means that third-party payment systems must have access to the same operating system, hardware and software features as Apple’s own payment system. Firstly, “Operating system features” like managing subscriptions on the operating system level and parental control tools (for in-app purchases) could be implemented through a simple API connecting generic iOS-level restrictions set by parents with games using third-party payment systems. If parents cannot use device-level parental control tools for a game using a third-party payment system, it disincentivises them from downloading it. Secondly, third-party payment tools should have access to “Hardware features” like authorising payments by double-clicking the side button, Touch ID, or Face ID. Making payments through third-party payment systems should be as easy as making payments through Apple’s own payment system.
While Apple allows alternative payment channels under the Alternative Terms Addendum for Apps in the EU (“Addendum”), the following prerequisite measures Apple sets for them undercut their impact. Developers are further prohibited from identifying the users in the link out to alternative payment systems, which practically forces the user to log back into the developer’s services when using out-of-app payment services. Secondly, enabling payment service web views in-app is also prohibited, which significantly challenges the utilisation of any existing payment service provider solutions, and developers would need to wait for such in-app capabilities to be built or build it themselves. The use of two-factor authentication for payments is not possible without web views. Thirdly, alternative payment processing and links out are only compatible with devices on iOS 17.4 and later.
To overcome these challenges:
- Apple should be allowed to include only the same warning messages for third-party payments it uses with its own payment system. Apple should only be allowed to inform end-users of the payment system used (Apple payment system or third-party payment system) to deliver the purchase when the first purchase is made.
- Apple should not be allowed to set restrictions hindering the user payment experience when third-party payment systems are used (e.g. ban of identification links and in-app payment web service views). Furthermore, there is no need for Apple to restrict third-party web payment services only to users who have updated their iOS to version 17.4.
- Game developers must be allowed to use both the Apple payment system and third-party payment system parallelly in their game and allow players to decide what payment systems they prefer to use.
- Link-out payment systems should be allowed under terms similar to Apple’s payment system. This should also apply to link-outs to external player community platforms and other external services that improve player experience. In the long run, this would help build alternative stores and sideloaded games.
Please access the EGDF statement in a pdf format here: https://www.egdf.eu/wp-content/uploads/2024/04/202404-EGDF-RESPONSE-ON-THE-DMA-COMPLIANCE-PLANS-2.pdf
Please access the full EGDF vision on how to regulate the platform economy here: https://www.egdf.eu/documentation/5-fair-digital-markets/8-how-to-regulate-platforms/
For more information, please contact:
Jari-Pekka Kaleva,
Managing Director, EGDF
jari-pekka.kaleva@egdf.eu