WHATABOUTISM: Google counterattacks Tinder operator, says Match Group just wants to make it harder for users to cancel subscriptions with its 'deceptive approach': app store antitrust case

Sometimes the best defense is a strong (counter)offense. That's the spirit of Google's answer and counterclaims to Match Group's antitrust action in the Northern District of California over the Google Play app tax. Here's the document, and I'll comment further below:

https://www.documentcloud.org/documents/22084071-22-07-11-google-answer-and-counterclaims-to-match-group-complaint

Less than two months ago, Google acted defensively and agreed to keep Bandcamp, a music marketplace recently acquired by Fortnite maker Epic Games, on the Google Play app store for Android despite its use of a third-party payment system. Google changed its rules (though it mislabeled it as a mere clarification) to the effect that everyone, even such media marketplaces and dating apps, would henceforth have to use Google Play Billing. Near-simultaneously with Epic's motion for a temporary restraining order (which Judge James Donato of the United States District Court for the Northern District of California didn't have to rule on as Google backed down, thereby mooting the motion for the time being), Match Group also brought an antitrust complaint against Google in the same district and sought emergency relief. Google struck a similar deal with the company best known for Tinder.

Two months ago, Google issued a rapid response to Match Group's complaint on its website. I criticized Google's blog post, parts of which I said were "somewhere between grossly misleading and utterly nonsensical."

Now Google has filed its formal answer to the complaint, and it is countersuing Match Group for damages. Apple did the same against Epic. One of Google's counterclaims is based on the in pari delicto doctrine, which I find puzzling, but we'll see in the further process how Google seeks to substantiate that one.

Those claims are all about Match Group allegedly having entered into the Google Play distribution agreement in bad faith, without ever intending to comply. That may very well be so, but that's because of Google's enormous market power. If Match Group prevails on its antitrust claims, Google's counterclaims are toast. And if Match Group doesn't win the antitrust part, the damages it may owe Google are the smallest problem.

The counterclaims are just tactical. This way Google can demand a jury trial on some claims, and will appear less defensive in the further proceedings.

The most significant accusations Google levies against Match Group are, however, unrelated to the formal counterclaims:

"[...] Match Group aims to undermine user experience to improve its own bottom line. A senior vice-president at Match Group shockingly acknowledged that Match Group’s true concern about Google Play’s billing system is the ease with which users can cancel their subscriptions using Google’s account management tools. [...] Match’s deceptive approach to subscription cancellation has been called out by the Federal Trade Commission (FTC) and other consumer protection agencies. The FTC filed a complaint alleging that Match requires a cumbersome process to cancel certain subscriptions that leads consumers to think they have canceled when they have not. Match executives have acknowledged that the Match cancellation process is 'hard to find, tedious and confusing.' In 2017, Match’s head of customer service admitted that it takes 'up to 7 or 8 clicks to complete the flow to turn off [subscriptions] if you can even figure out how to do it'” [...]"

Google says Match Group has a "history of deceptive business practices":

"Match Group’s financial success has also resulted from a long history of deceptive and unfair business practices specifically in connection with its billing and subscription services. Match Group consistently makes it difficult, if not impossible, for users to cancel recurring paid subscriptions to its apps. Match Group’s billing and subscription practices have been the subject of repeated scrutiny as deceptive by federal and state law enforcement and consumer protection agencies. Match Group has been named as a defendant in litigation relating to its billing and subscription practices filed by multiple California District Attorneys relating to such practices, People of State of California v. Match Group [...], and by the Federal Trade Commission, FTC v. Match Group [...]."

Google believes that the fact that "Google Play offers more convenience to Android customers than Match Group and other app stores"--as opposed to obstructing cancelation--are "the actual reason for Match Group’s objection to Google’s billing policies."

I'm totally in favor of efforts to protect consumers (and the right to easily terminate a subscription is one of the most fundamental ones), and don't doubt that Google may be more consumer-friendly in this particular regard than Match Group. But Google's abuse of its superdominant market position in Android app distribution is a serious issue, and whatever one may criticize Match Group for doesn't justify that Google wants to tax and tyrannize app developers. Google's app tax is the subject of legislative initiatives (such as in South Korea, where Google is now likely to be fined), public antitrust enforcement, and private litigation around the globe. Match Group may not be a saint, but it is making some very valid points as an antitrust plaintiff against Google.

Google's answer to Match Group's complaint amounts to whataboutism.

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Dutch competition agency caught in reality distortion field: Match Group achieved NOTHING of value against Apple, but ACM farcically predicts consumer benefits that won't EVER materialize

The Dutch antitrust watchdog's investigation of Apple's in-app payment rules further to a complaint by Match Group (best known for Tinder) has been a total failure. The Autoriteit Consument & Markt (ACM; Authority for Consumers & Markets), however, is claiming victory regardless. It would be unusual (if not unprecedented) for a competition authority to concede defeat, but the ACM--instead of keeping a low profile in an embarrassing situation--is making things worse with this press release:

• The problem with the headline ("Apple changes unfair conditions, allows alternative payment methods in dating apps") is that it's old news. the enforcement dispute between the ACM and Apple has been going for months, and involved 50 million euros in fines that were imposed after Apple had, in principle, allowed alternative payment methods in dating apps.

  While a few details have changed lately, the one thing that has not changed is that Apple still charges developers such a high commission for using third-party payment systems that it would be a "net negative" for developers to implement their own payment systems (for payments from Dutch users) in dating apps. That's because Apple's commission is only 3% below the App Store commission, and payment services charge roughly that percentage, or potentially even more on small amounts if they have a minimum per-transaction fee. Only if developers could realize a significant saving would it make sense for them to encourage users to sign up for a third-party system.

  Apple's June 10 update to its rules for Dutch dating apps says this:

  "The 3 percent commission discount also applies to in-app purchases that qualify for a lower commission rate (for example, App Store Small Business Program enrollees or subscription services after one year of paid service — both of which already qualify for a 15% commission)."

  I had repeatedly said that Apple's previous rule for Dutch dating apps--27% on revenue generated via third-party payment systems--struck me as incompatible with the Small Business Program (though Match Group obviously isn't eligible for the 15% deal). But even with that oversight having been corrected, the 3% saving simply doesn't make it an economically attractive option for developers to promote an alternative payment system, much less while Apple is still appealing the underlying decision.

• Martijn Snoep, Chairman of the Board of ACM, is quoted in the agency's press release, and the last two sentences are utter nonsense:

  "That offers app providers more opportunities to compete. And consumers will ultimately reap the benefits, too.”"

  For the reason I just explained, app developers have nothing to gain. Changing their software costs money; promoting the alternative payment system to consumers won't be easy (as developers can't profitably offer consumers a discount in exchange for using a non-Apple payment system). It's simply not worth it. And as a result, there won't be any consumer benefits--unless developers are prepared to promote an alternative payment system through discounts, in which case developers make less money than by going through Apple Pay.

  Again, I don't blame the ACM for not saying "we lost." It would be the only honest thing they and Match Group could say in this situation, but for institutional reasons they can't. However, at least they shouldn't spout total nonsense. The part about benefits to developers and consumers is a disgrace. As a result of this, I will view whatever announcement the ACM makes in any context--including but not limited to App Store issues--as skeptically as, say, statements by the propaganda ministries of totalitarian regimes.

As I've said before, if the ACM had ever really had Dutch consumers in mind, it would have had to investigate Match Group itself.

The outcome that was announced yesterday (with Apple making its latest rule change public the day before) absolutely validates my previous feeling that the ACM decision was weak and it didn't really take much for Apple to comply with it. It was always clear that the real issue was the 30%. That problem is not tackled by a deal under which Match Group and others pay Apple 27% instead of 30%, as the 3% difference--which is eaten up by payment providers--doesn't make it a prudent and profitable choice for developers to implement and promote an alternative payment system.

The European Union could address the real issue through the Digital Markets act. Maybe that's what the Dutch ACM was hoping for when it decided not to tackle the heart of the problem through enforcement of traditional antitrust law.

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Google now has to decide whether to grant Bandcamp (acquired by Epic Games) and Match Group's apps (like Tinder) a grace period of likely less than a year: change of in-app payment policies

On Thursday, Judge James Donato of the United States District Court for the Northern District of California (San Francisco Division) held a case management hearing that he scheduled at the same time he stayed a preliminary-injunction motion by Epic Games relating to Epic's recently-acquired Bandcamp music marketplace, whose Android app Google has threatened to kick out of the Google Play Store unless Bandcamp complies with an in-app purchasing (IAP) policy change (mislabeled by Google as a mere clarification). That same day, Google had to defend itself against allegations of monopoly abuse not only on the West Coast but also on the East Coast, where it came away unscathed with its "Communicate with Care" policy.

All I know about what the judge and the parties said at the San Francisco hearing I learned from Courthouse News reporter Maria Dinzeo's highly informative coverage.

Not only did Judge Donato discuss the Epic v. Google motion but also a more recent one by Match Group (the Tinder company). Shortly after its complaint (on which I commented earlier this week), Match Group filed a motion for a temporary restraining order (PDF).

The Courthouse News report mentions two different types of reservations on Judge Donato's part. One is that the case presents "difficult and challenging issues" he'd rather not decide on the fast track, especially since the Epic Games v. Google trial has been scheduled for next January anyway. The other is that Bandcamp has known since August 2021 of having to switch to Google Billing, and that it appears its new ownership (i.e., Epic, which was already embroiled with Google and Apple in app store antitrust litigation) is the reason for which it now, all of a sudden, needs emergency relief from the court: "You can’t waiver for eight months and come in and say the house is on fire."

Judge Donato also describes this as "a problem of [Epic's] own making," which is a huge issue not only but especially in the Ninth Circuit, where self-inflicted harm weighs strongly against a preliminary injunction. That was Epic's problem in 2020 when it wanted to bring Fortnite back to Apple's App Store.

The house-on-fire metaphor also reminded me of another antitrust case--in the Southern District of California--in which the same vaunted law firm, Cravath Swaine & Moore, literally claimed that its client Qualcomm's house was on fire because of Apple having ordered its contract manufacturers to stop making royalty payments. That one went nowhere because Qualcomm was financially too strong that the cessation of royalty payments could have put the company in jeopardy. Qualcomm's concern related to the possibility of other licensees doing the same, but then there would have been a new situation.

PI motions are part of a vigorous representation of clients, and movants may sometimes like the idea of finding out early how the other side presents its case and on what questions the court still needs to be convinced. But the Bandcamp motion has already made much more of an impact than the aforementioned ones: Judge Donato encouraged the parties to work it out and to show some flexibility so he wouldn't have to adjudge Epic's PI motion and Match Group's TRO motion.

Epic's position is that Google should not kick out Bandcamp until the trial. If Google rejected that demand categorically, the judge would definitely not be amused. What I guess Google will do now is to attach some strings to such a grace period that the court may consider reasonable but that will be somewhat burdensome on Epic and Match Group. However, that is not easy to do: Epic and Match Group have plenty of cash, so if they have to post a bond, they'll do it.

I interpret the Courthouse News report as Judge Donato not being too likely--even if Google disappointed him by being inflexible or making unreasonable demands--to grant Epic's or Match Group's motion. In that case, the question is whether the parties would appeal the matter to the Ninth Circuit. In the Apple case, Epic didn't do so, presumably because of a near-term trial date. For Match Group the calculus may be different.

Judge Donato may even suspect--and if he did, it wouldn't be unreasonable in the slightest--that the app store dispute was the primary reason for which Epic acquired Bandcamp. In the market definition context (also in the Apple dispute), Epic stressed that it offers more than games, but buying Bandcamp has given it another tool for challenging the major app stores' IAP rules, especially with the benefit of standing up for content creators (which, however, also exposes Epic to the accusation of holding those content creators--and end users--hostage).

At any rate, the judge has a point that this here is partly a manufactured conflict. It's not 100% self-inflicted as Google indeed wants to enforce a different policy, but it made its intent known a long time ago and Match Group and Epic's Bandcamp could have filed for a preliminary injunction a lot sooner. Now the deadline is June 1, and of course the court could theoretically enjoin Google by means of a TRO, which would then have to be replaced by a PI.

The key to understanding Epic's strategy here as well as in the Fortnite case against Apple is the following paragraph from its PI motion:

"Under the Ninth Circuit's 'sliding scale' approach, the overwhelming evidence showing Epic's likelihood of success weighs strongly in favor of preliminary relief. See Indep. Techs., LLC v. Otodata Wireless Network, Inc., 836 F. App'x 531, 533 (9th Cir. 2020) ('Where a party can show a strong chance of success on the merits, he need only show a possibility of irreparable harm.')."

If one agrees with Epic on the merits (as I do, without reservation in this case), it's a different picture. The question of whether Bandcamp was essentially preparing to comply with Google's policy change is then doubly irrelevant. First, because the timing of the motion wouldn't lend Google's conduct the legitimacy it lacks. Second, because there is nothing illegitimate whatsoever about Epic simply having the financial strengths to duke it out with Google while Bandcamp was presented with a point-blank situation and would have been forced to cave had it not been acquired. What a party does or agrees to under duress does not and must not count. That is, by coincidence, also the core of Apple's case against Qualcomm over license fees paid by its contract manufacturers, but that case settled during opening argument (a great result for Cravath, though in all fairness it had more to do with Apple's need for 5G chips than anything else).

It's what Epic already argued in the #FreeFortnite context in the summer of 2020. I remember how Cravath partner Gary Bornstein told Judge Yvonne Gonzalez Rogers (YGR) at the TRO and PI hearings in 2020 that a party simply should not have to abide by a contract that was unilaterally imposed upon it in violation of the antitrust laws. It was the same logic. He also insisted--in my opinion, rightly and brilliantly--on the single-brand market definition, which Judge YGR rejected at all stages of proceeding (as it turned out later, she appears to have been utterly confused all along about the Kodak case law), and on the merits of the tying claim. We're now in a similar situation, but hopefully with a judge who will understand Kodak and Epic's related argument.

So it's not a simple question of whether Epic's request for a PI is reasonable. If one agrees with them (and, therefore, by extension with me) on the merits, then there's nothing wrong with the timing, and the court should enter a TRO if need be. I don't think Google should be rewarded for having abused its monopoly power against the likes of Bandcamp: it's actually in the public interest that Bandcamp now belongs to Epic (no matter the motivation for the deal) and that this allows them to stand up to the bully. But if one doubts the merits--and Judge Donato at least isn't comfortable with considering it a slam dunk for Epic--then it all looks a lot more complicated.

What Will Google Do? (Yes, an allusion to a book title.)

To be perfectly honest, I could easily see people on Google's legal team (internal or external) argue that they should rigidly enforce their new rule and kick out those apps if necessary, just to show that they're 100% confident of the strength of their position. For Google the risk of Judge Donato enjoining them on a TRO or PI basis appears limited--and with the trial being on the horizon, Epic might not appeal, just like it accepted the denial of its motion in the Apple case. But Judge Donato wouldn't like that, and he's going to preside over the January trial. And it could also be that this time around Epic will actually try to take the matter up with the Ninth Circuit at the earliest opportunity. It has a better chance of success with a panel of three high-ranking judges than when a single district judge has to make a decision.

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Google's rapid response to Match Group's U.S. antitrust complaint talks about User Choice Billing--but what is truly needed is Developer Choice

Yesterday (Monday), dating app provider Match Group (known for Tinder and other services) filed an antitrust complaint in the Northern District of California against a policy change by Google that would now require Match Group to use Google's in-app payment system, after a decade during which Android dating apps enjoyed the freedom to rely on their own billing, avoiding Google's app tax. Match Group previously complained with Dutch competition authority Autoriteit Consument & Markt (ACM, Authority for Consumers & Markets), which is now also investigating Google (while already going into another round with Apple). I strongly doubt that Apple is out of compliance in the Netherlands, and actually think Match Group's own conduct warrants an investigation.

Match Group's U.S. complaint raises some of the same issues as Epic Games already did almost two years ago, with Match Group's complaint coming across as more emotional and vitriolic. There will be a case management hearing before Judge James Donato in the Northern District of California on Thursday. I was thoroughly disappointed to see Judge Donato order a "stay" of Epic's motion for a preliminary injunction, given that the issue is urgent (Bandcamp, a music marketplace recently acquired by Epic, might be kicked out of the Google Play Store on June 1), but there would still be time before June 1, especially for a temporary restraining order. Just like Match Group's dating apps, Bandcamp would be affected by a policy change that Google incredibly mischaracterizes as a mere clarification of its rules.

Google was quick to respond publicly to Match Group's complaint, which makes sense given that Match Group's acerbic complaint was clearly directed not only at the district court but also at the court of public opinion, including politicians and competition authorities. Wilson White, Google's Vice President of Government Affairs & Public Policy, published a detailed and emotional blog post, Setting the Record Straight on Match Group's Cynical Campaign Against Google Play. I guess that one aspect of Match Group's complaint that really hurts Google way beyond the context of Android in-app payments is the pressure the monopolist tried to exert on Match Group ahead of the latter's testimony before a Senate Subcommittee in April 2021. Some senators were outraged at the time, and now that incident is part of the story of a private antitrust lawsuit and quite possibly the subject of depositions. Depending on what comes out, Google could even get into serious trouble with the United States Senate.

Google's blog post contains some of the same red herrings as always, such as arguing (in other words) that with Android itself being free, Google's Android business model depends on its app tax, and pointing to alternative Android app stores and sideloading, though Epic and the three dozen state attorneys-general suing Google over its Android app distribution policies have already shown--partly by virtue of pretrial discovery--to what extreme lengths Google goes in order to disadvantage those alternatives.

Two of Google's bullet points focus on "user choice billing"--and all I'm going to do in the remainder of this post is to show why Google's claims in those paragraphs are somewhere between grossly misleading and utterly nonsensical:

• "Match Group isn’t interested in true user choice billing. While Match Group claims to support user choice, it has yet to offer its users that option in South Korea, where user choice billing is now available on Google Play. Likewise, they inaccurately allege that users “sometimes” pick Match Group’s billing 3 to 1 over Google Play. But many of their apps only offer Match Group’s billing. In the cases where Google Play is theoretically a user choice, it isn’t presented as a fair choice and is hidden in small text at the very bottom of the app."

• "We’re the only major app store piloting true user choice billing. We recently announced a pilot to invite developers to help us test and iterate on user choice billing in other markets outside South Korea. We started with Spotify as our first partner as they have made substantial investments in the platform and have deep product integrations across all of Android’s form factors. We are actively looking to add more partners in the coming months and developers can express interest."

There are details here that don't make sense. The claim that Google Play is "the only major app store piloting true user choice billing" ignores that Microsoft already announced in June 2021, at the unveiling of Windows 11, that developers would be free to implement their own billing system. But the worst part is Google's criticism of Match Group not offering "user choice billing" in South Korea. In that country, the legislature requires Google to allow alternative payment systems, but the law wasn't waterproof, so Google charges developers a commission that renders the use of alternative billing systems unattractive for developers as well as users. That's the same issue as with the enforcement of the Dutch ACM's antitrust ruling against Apple.

"User choice billing" is a fallacy. Users have always had a choice of payment systems: different credit cards, PayPal, or buying Google Play gift cards.

Courts, lawmakers, and regulators shouldn't get confused by that smokescreen.

The problem isn't that users need a choice among billing systems. If a user wants to pay with a Visa card, the user will pay with a Visa card whether it's Google Play or, say, Match Group's own billing system.

What the worlds really needs--and what will ultimately also benefit consumers--is Developer Choice.

Developers must have a choice, including the choice of not using Google's billing system at all. Developers must be able to offer end users lower prices, and what enables them to do that is the freedom not to use billing systems like Google's or Apple's that effectively impose a tax (as Elon Musk has repeatedly pointed out).

If developers decline to use Google's billing system, the question is what Google should be allowed to charge them for using the Android platform. But so-called user choice billing doesn't solve the real issue.

Developer Choice goes beyond billing systems. It also involves a level playing field for third-party app stores. But even if one focuses narrowly on billing, the question simply isn't "user choice"--much less if it's a kind of choice (such as between Visa and Amex, or Paypal and gift cards) that users have always had.

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Apple submitted new proposal to resolve compliance dispute with Dutch antitrust authority ACM, whose contempt fines will hit €50 million cap next week

The Apple-ACM saga over in-app payments in dating apps continues with another €5 million ($5.5 million) weekly fine, but there's more. Dutch tech reporter Nando Kasteleijn published a note (image) from the competition enforcement agency of the Netherlands, the Autoriteit Consument & Markt (Authority for Consumers and Markets; ACM). It translates as follows:

"Apple made new proposals this morning to comply with the ACM's requirements. We are now going to evaluate whether those proposals are sufficient. We will also speak with various market actors. We hope to complete this analysis shortly. It is true [as the reporter apparently asked] that Apple failed to meet the ACM's requirements as of last weekend. Therefore, the 9th penalty payment also became due. The total amount is now at 45 million euros [$49.7 million]."

It would be interesting to know what proposal Apple has put on the table. In late February, Apple merely provided further explanations in support of its position that it was already in compliance with the decision. I realize that this may be a minority opinion, but I don't see why Apple's implementation of alternative payment methods would necessarily contravene the ACM's ruling--and I think the ACM should be more concerned about the impact on Dutch consumers from the complainant's own conduct.

Dating apps are a business built on network effects. If Apple had never imposed its 30% cut, prices would probably be roughly the same today, but the market leader would be more profitable. New entrants couldn't compete on price--for lack of those network effects. The ACM didn't pick the best segment of the app market for its case, let's put it that way.

So what's next? What the ACM indicates in that statement is a market test. It will ask dating-app makers whether they are satisfied with Apple's new proposal. Even without knowing what Apple offered, it's pretty much a given that Match Group--which operates Tinder and other dating services--is still going to complain. They want Apple to waive the 30% altogether, or at least for the largest part. Apple is not prepared to do that, and the ACM's ruling on in-app payments in dating apps isn't a basis for forcing Apple to give Match Group and others a free ride. Another disputes question is whether app makers have to submit a separate app for the Dutch market. The related requirement is neither exceedingly developer-friendly nor user-friendly, but that doesn't necessarily make it non-compliant.

By the end of this week, the ACM will have to decide on whether to impose the 10th and final weekly €5 million fine of the current enforcement campaign. The cap for the current enforcement effort is €50 million ($55 million). The assessment of Apple's latest proposal may not even have been completed by then, but it doesn't matter in practical terms because the ACM would need to make a new decision first, potentially with heftier fines, before it could fine Apple again after the first €50 million.

But before the current enforcement started, the ACM needed approval from a Dutch court. That will be the case again. Therefore, what Apple proposed today was most likely--even almost definitely--just meant to prepare the next round of litigation. The ACM will have to convince the court that Apple is not compliant. Arguably, Apple was already compliant before today's unknown proposal, but with whatever Apple put on the table today to set the stage, it further ups the ante for the ACM with a view to obtaining court approval for the enforcement of its next decision.

There's a key deadline on Thursday in Epic Games v. Apple: Apple will file its opposition to Epic's Ninth Circuit appeal (as I discussed in the final two paragraphs of this recent post) as well as the opening argument for its own cross-appeal of Epic's consolation prize under California Unfair Competition Law.

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Apple facing 8th non-compliance fine from Dutch antitrust authority--total amount now €40 million ($44 million)--with complainant Match Group's own conduct still not being investigated

Two weeks ago, Dutch antitrust authority ACM (Autoriteit Consument & Markt; Authority for Consumers & Markets) slapped Apple with a sixth €5 million weekly fine despite a letter with which Apple sought to explain why it believed to be compliant with a ruling requiring the iPhone maker to support alternative in-app payment systems.

That same week I expressed my view that the ACM should actually be more concerned with the complainant's own conduct: Match Group runs Tinder and other dating apps, and some Tinder users apparently had to pay (according to a Mozilla/Consumers International study) 500% more than others, largely just based on age discrimination. I want competition in app distribution, particularly third-party app stores for iOS (and a level playing field for third-party app stores on Android), but it strikes me as odd that Apple's 30% would be of a greater concern than Tinder's 500%. Moreover, there is no evidence that Dutch consumers would actually pay less in the long run (short-lived PR stunts aside) if Match Group didn't have to pay Apple its 30% commission, while Mozilla and Consumers International delivered evidence that Dutch consumers paid discriminatory premiums to the Tinder company.

Telecompaper now reports that Apple has been fined for eight weeks in a row (though this week's fine could, as far as I know, still be avoided if Apple met the ACM's demands). The aggregate amount of those fines is now €40 million ($44 million). The limit is €50 million and likely will be reached in two weeks.

I remain unconvinced that Apple is out of compliance with that decision, as I explained in earlier posts.

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Tinder pricing scandal: Dutch regulator should also investigate Apple antitrust foe Match Group if 'C' in 'ACM' truly stands for Dutch 'Consumers', not American 'Companies'

Who is hurting consumers more:

1. a dating-app maker that clandestinely charges some of its users up to five times more for the same service than it charges others; or

2. a smartphone operating system maker that transparently and consistently imposes a 30% tax on payments in dating apps (and roughly the same for out-of-app payments)?

Sorry to say so: even a vocal App Store critic like me can't possibly answer the question with "Apple."

Unfortunately, the correct answer is a company that co-founded the Coalition for App Fairness. How is it fair to intransparently charge some users five times more than others, for the very same thing?

Next question; closely related to the first. Who is helping consumers more:

1. non-profit foundations Mozilla and Consumers International, who investigated Match Group's pricing strategies and proved that "Tinder Plus can offer up to 31 unique prices in a single country, and that older users are often charged more" (and that "Tinder's opaque, unfair pricing algorithm can charge users up to five times more for same service"); or

2. competition watchdogs who fire cheap shots at Apple with legally and technically questionable allegations of non-compliance with a ruling that Apple has every right to appeal?

Admittedly, it was a leading question, but that's because the facts are what they are.

Double standards never work in the long run. At least not in competition policy and enforcement.

On the one hand, something must be done about Apple's App Store monopoly. The iPhone maker continues to drip-feed us with microscopic concessions such as removing a prohibition of app transfers from its requirements for getting a small business discount. The real issue--which is app review and, therefore, the unavailability of alternative app stores--is still far from being tackled other than through some legislative initiatives.

On the other hand, this doesn't mean that anything "anti-Apple" is necessarily meritorious, much less principled.

The Dutch Autoriteit Consument & Markt (Authority for Consumers & Markets; ACM)--sort of the Dutch equivalent of the United States Federal Trade Commission--has the potential to make a very significant contribution to the fight against the mobile app store duopoly if it makes prudent decisions that other jurisdictions adopt. Also, EU competition chief Margrethe Vestager is wielding a huge stick, though she has so far not used it much against App Store abuse (other than the Statement of Objections in the Spotify case, which is good but limited to direct competition by music streaming app makers with Apple). But both the ACM and Commissioner Vestager, whose condemnation of Apple's alleged non-compliance with the rule of law actually raises some rule-of-law questions in and of itself, should really think again--and think hard--about whether it reflects sound judgment to be in the tank for Tinder maker Match Group against Apple even to a post-factual extent and while turning a blind eye to Match Group's own questionable practices that harm consumers.

Dating apps were never the most uncontroversial app category to begin with. Why did the ACM focus on that field--when there is no reason why the Netherlands would have to care more about dating apps than literally any other country in at least the Western hemisphere? It's a bit of a mystery. But I'd have welcome anything that helps address the App Store situation, hoping that whatever works in one segment of the app market today may work in another--or all others--tomorrow.

Tinder's chief lawyer testified in the U.S. Senate that Match Group's apps are all about building "meaningful relationships," which is the height of hypocrisy not because I would (as I could not) deny that meaningful relationships indeed come into being as a result of online dating--but because that's just a part of the picture. The fact of the matter is that a lot of it is about cheating on partners, and the line between dating and prostitution is blurred. Yeah, maybe Match Group has some rules that users theoretically get thrown out if they ask for money, but do they enforce those rules vigorously? Weren't their credible media reports at the start of the pandemic that restrictions on a certain industry resulted in parts of the world's oldest profession increasingly going about their business via dating platforms?

Furthermore, just like Apple's app tax is arbitrary, so are the fees charged by services like Match Group's Tinder. They exploit network effects, just that compared to Apple they've made a negligible contribution to innovation. Chances are Apple innovates more on any given day than Match Group did in its entire corporate history.

Sure, dating apps can serve a wonderful purpose, and I'm not a hypermoralist, but Match Group distorts the reality of online dating in general and its own services in particular.

Even if we assumed for the sake of the argument that Match Group is eligible for sainthood among dating-app makers, the pricing scandal that Mozilla and Consumers International uncovered is truly shocking.

The Dutch ACM is not just an antitrust enforcement agency. They have a broader mandate, which is why I likened them to the FTC. They do look into all sorts of issues. Now, the problem they are facing here is simply this: people wonder why they are pursuing their Apple case at all, given that it benefits Match Group and a few other foreign companies, but no major Dutch player, and the answer is the "C" in the Autoriteit's name. The argument is that it's about Dutch consumers. Now, if there is one huge problem affecting dating-app users in the Netherlands that is worth looking into and addressing, the ACM should follow up on Mozilla and Consumers International's first-rate investigative work. Those non-profits do the job that organizations like the ACM should be doing in terms of "your tax dollars (or euros) at work."

They're not going to abandon their App Store case, and I wouldn't even want that. But they should sit back and think again. They should keep a low profile in this enforcement context because Apple's requirement for submitting a separate app for the Dutch market is reasonable even in the eyes of an Apple critic like me. Commissioner Vestager supported the ACM in her recent Berkeley speech despite DG COMP neither having reached any conclusion on the App Store (not even in the Spotify case) that comes close to the underlying Dutch ruling nor DG COMP having to resolve that Dutch enforcement dispute (which will be for Dutch courts, and possibly the European Court of Justice if a question of EU law needs to be sent to Luxembourg).

Maybe the Match Group case against Apple in the Netherlands isn't all that great, neither legally nor technically or politically. Maybe it's like a company putting out a first product and then doing better on the second. There are presumably plenty of complaints, some of which will relate to app categories with a much better reputation and will come from companies that don't charge up to five times more if an older user pays for a particular service than if a younger one does, without at least telling everyone that this is the case.

The ACM should build a better story, a better case, and ultimately impose better remedies--remedies that can clearly be enforced in a way that makes a positive impact. Apple is playing sort of a legalistic game, but it's a pretty universal rule--which the European Commission is also perfectly aware of--that if someone has to comply with a ruling, anything counts as compliance that is not based on a wholly unreasonable interpretation or application of the underlying decision. The standard is not whether another position may make more sense. I would even agree that the ACM's apparent position on what Apple should be doing in the Dutch dating-app market is more reasonable than Apple's--but that doesn't make Apple's wholly unreasonable.

Regrettably, the Tinder pricing scandal is also unhelpful to Epic Games. The Fortnite maker co-founded its Coalition for App Fairness with Match Group and Spotify. It's bad enough that an amicus brief proposed by the CAF was rejected by the United States Court of Appeals for the Ninth Circuit, the most important regional appeals court in the world--it's arguably more important to the global economy than almost any national top court. Now a CAF co-founder faces a major credibility problem when it comes to the question of who really overcharges app users.

It didn't help Epic that some internal emails surfaced in the Apple litigation that called its motives into question. But that was really just anecdotal evidence as Judge Gonzalez Rogers called it toward the end of the trial. And Judge YGR may dislike impulse purchases, especially by (Fortnite-playing) kids, which is why she sort of invited litigation against both Apple and Epic over that question. Then dating apps are also about impulse purchases, and there is no type of purchase where transparency is more critical than (in-app) impulse purchases.

As an advocate for the rights of app users not to be overcharged by abusers, Match Group has zero credibility left. Literally zero. This will have major ramifications also for its lobbying efforts. Hopefully more companies will advocate for App Store reform--companies who really practice what they preach when it comes to "App Fairness." If they're large and have been around for a long time, someone will always find something to criticize about what they did, even if it happened ages ago--but at least they shouldn't be App Unfairness hypocrites.

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Apple gets injunction stayed as predicted AND deals major blow to Epic-Spotify-Tinder Coalition for App Fairness: U.S. appeals court denies motion to file amicus brief

Epic fail.

By that wordplay I don't mean the order by the United States Court of Appeals for the Ninth Circuit granting Apple's motion to stay the consolation-prize injunction under California Unfair Competition Law (UCL) that the district court had granted Epic Games. Anything else would have been a major surprise. I explained on a few occasions that Apple handily met the criteria for a stay. In fact, I got a 3 out of 3 for my predictions in this context: I said the district court would clarify the narrow scope of the UCL injunction (as it did, though people are free to still pretend to be obtuse), and would uphold its own injunction, but the appeals court would stay it. Actually, it's even 4 out of 4 as you'll see further below in the context of an amicus brief Apple successfully opposed.

The order granting Apple a stay (that will practically be in effect for a couple of years) is terse and doesn't take a position on whether Apple's conduct raises competition concerns or not. However, a binary outcome is now most likely as the federal appeals court for the West Coast cites California's Chavez case law, according to which the failure of a theory under federal antitrust law (Sherman Act) spells doom for a California UCL claim on the same basis. I continue to wish Epic luck with their own appeal (of the rejection of nine of Epic's ten counts), though the hurdle is high and Epic has made some mistakes that it's too late to fix now. My guess is that the appeals court will not overturn the district court's finding that Apple is not a monopolist, and Epic's failure to prove something that is so obvious to me--that so-called Progressive Web Apps are not a viable alternative to native apps--is not the only issue but that one alone is probably sufficient all by itself to make Epic lose again.

But the real #epicfail here--which has significant implications beyond Epic Games v. Apple has apparently not been noticed yet by others reporting on the case. The largest and most influential U.S. regional appeals court denied a motion by the Coalition for App Fairness and some of its members to submit an amicus brief in support of Epic's opposition to Apple's motion, and the denial of an amicus motion is nothing short of a nightmare for any advocacy group (this post continues below the document):

21-12-08 Order Denying CAF ... by Florian Mueller

This is a 4 out of 4 for me as I wrote last Thursday that I agreed with Apple's opposition to that amicus brief submission.

U.S. courts--and especially appeals courts--normally have a permissive approach toward amicus briefs, above all in high-stakes high-profile cases like this one. It rarely happens that they tell stakeholders they are unwelcome to join a proceeding as "friends of the court" contributing potentially useful information. Here, however, a filing by the Coalition for App Fairness (whose three key members are Epic, Spotify, and Match Group, which is best known for Tinder) and four of its members (Match Group, Tile, Basecamp, and Knitrino) has been flatly rejected by the Ninth Circuit.

As a result, the CAF now faces a credibility issue in any other App Store cases around the globe in which it may try to support Epic or even another one of its large members. Even if other courts ultimately allowed the CAF to join other cases, Apple would point to the Ninth Circuit decision, which at a minimum would diminish the credibility of anything the CAF would say on Epic's behalf. The CAF has now been stigmatized as part of an Epic anti-Apple initiative designed to raise issues regardless of whether those were "organic or manufactured" as the evidence shows.

The CAF and its members even sought to defend their motion by filing a reply brief shortly after Apple's opposition--but to no avail.

What I hope, however, is that courts will apply the same standard at the merits stage when ACT | The App(le) Association intervenes on Apple's behalf, claiming to represent small app developers though it's unclear whether any small app developer ever paid a cent in membership dues to ACT--while Apple is a major financial backer of that lobbying front. Compared to ACT, the CAF is like 100 times more credible--even if not credible enough in the Ninth Circuit's eyes.

The appeals court did not state a particular reason for denying the motion. But again, this is an unusual decision. It means that the CAF was unable to overcome the credibility issues Apple had raised, despite the considerable effort it made. The stay of the injunction was expected: the hurdle for that was relatively low. However, the denial of that amicus motion is unusual, and I suspect some people in Cupertino are really excited about it.

I wish to thank Richard Hoeg of Hoeg Law, who runs a YouTube channel named Virtual Legality. In a video he posted yesterday, Richard recommends my blog (click here to get directly to that part of the video) while clarifying that my take on Apple's App Store policies differs from his in the sense that I'm more critical of Apple's App Store governance (which is true). This shows again that people can agree at a rational and analytical level regardless of their personal preferences and opinions. His commentary on Epic v. Apple is always insightful--and I say that because I mean it, not just to reciprocate his shout-out for this blog.

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Epic Games v. Apple is the wrong vehicle for an anti-anti-steering injunction, but other app makers might bring an anti-steering case against Apple's Google ads

After a See I Told Ya So type of post on the (now clarified by the district judge) narrow scope of the Epic Games v. Apple injunction and a follow-up (Which part of 'external' does a @reckless journalist fail to understand?), I thought I was done with that topic until the United States Court of Appeals for the Ninth Circuit orders the fairly likely stay of the injunction. For two reasons, however, I decided to chime in once more at this stage:

• As a result of too much coverage and commentary that is based on unrealistic assumptions (and in some cases even misconceptions), there still is confusion out there, with people talking about what would happen in a few weeks' time when the injunction would take effect (which it probably won't anyway).

• Forbes contributor John Koetsier has raised an interesting issue of proactive steering by Apple, which I believe could give rise to an interesting case in which app makers would seek an anti-steering injunction (anti, not anti-anti) against Apple: Apple Quietly Buying Ads Via Google For High-Value Subscription Apps To Capture App Publisher Revenue

  Click here if you wish to skip the part on Epic v. Apple and jump directly to the part on that separate (but also steering-related) issue.

It's a funny coincidence that 2021 is the year of the anti-antisuit injunctions (they've been around for a few years, especially since the 2019 Nokia v. Continental ruling in Munich, but are now very much en vogue) as well as the year of the Epic v. Apple anti-anti-steering injunction: an injunction against an anti-steering provision in Apple's App Store guidelines.

Dreamers will be dreamers, but there are overwhelmingly strong reasons for the appeals court to stay Epic's injunction.

The Epic v. Apple injunction isn't stayed until the Ninth Circuit has spoken. But it's possible to predict with a reasonably high likelihood what's going to happen. We just have to look at the whole issue from the perspective of an appeals court:

1. Apple has already started to comply with one part of the injunction under a class-action settlement.

2. The enjoined rule has been in place for about a decade. Why would its abolition be so urgent now that one couldn't just give the appeals court the necessary time to form an opinion on the issue?

3. The appeals court sees that Epic lost on nine counts and prevailed on only the least important one. Of course, a party could also lose on 100 counts and prevail on the 101st, but the analysis at the stay stage is quick and superficial, so it does play a role whether the appeals court gets the initial impression that Epic had a strong case or feels that Epic's case generally appears a bit weak.

4. This is a huge factor: there is no precedent in the U.S. where an anti-anti-steering injunction ultimately got upheld. Much to the contrary, the U.S. Supreme Court held in Amex that anti-steering rules are procompetitive. Shortly thereafter, a healthcare-related anti-steering case got settled, with a result that lawyers described as "opening the door to steering by insurance companies."

   Apple has a very strong argument for a stay here because the Ninth Circuit will think hard and long before allowing the enforcement of an injunction of a kind for which there is no appellate precedent and which at first sight cannot be reconciled with the Supreme Court's Amex decision.

5. Of course, Judge Yvonne Gonzalez Rogers tried to distinguish her anti-anti-steering injunction under California's Unfair Competition Law from Amex, but I believe the appeals court will not be persuaded--at least not immediately, and that's what matters at the stay stage--of her reasoning. She basically said that Amex was about steering in a strict sense, with retailers encouraging customers to use a different credit card, while Apple's rule in question is about whether customers will know about the existence of certain alternatives at all. At the stay stage, it's sufficient for Apple to sow the seeds of doubt. If the appeals court feels that there is a possibility of the injunction not being upheld, that (combined with harm to Apple, which I'll address in a moment) will be enough for the injunction to be stayed pending the appellate proceedings.

   The appeals court probably won't buy that attempted distinction. There is nothing in Apple's rules that prevents cross-platform app makers from promoting their apps for other platforms (where they don't owe Apple any commission) through other channels. It's another story that Apple complicates those efforts (that's the second part of this post--Apple's own proactive steering). From the appeals court's vantage point, it probably won't be immediately clear why it's so very critical that app makers communicate the existence of alternatives to their customers in their iOS app. Apple's analogy is that it's like someone promoting in an Apple bricks-and-mortar (or, more accurately, glass-front) store the availability of certain products at a lower price in another shop across the street.

6. Apple just needs the combination of significant doubt about the injunction's ability to survive the appeal and significant harm to its business. The mere fact that Apple would need a different set of rules for the U.S. market (while based on California law, the injunction applies nationwide, but not worldwide) and other world markets is already an issue. Apple does have the right to replace the enjoined rule with a new one, and that may involve an engineering effort (such as for a reporting system in case Apple collects a royalty on sales generated by links within an iOS app). Epic will dispute all of that, but the appeals court is going to take Apple's averments seriously.

The fact that Judge YGR didn't stay her injunction means nothing. By staying it she'd have shown that a decision that it took her months to make wasn't solid. Now the ball is in the appeals court, and I'd be somewhat surprised if the injunction didn't get stayed.

Anti-anti-steering is the wrong way to tackle the App Store monopoly.

I generally don't believe that tackling Apple's anti-steering rule is a good strategy. There are more fundamental issues, but they involve the fact that Apple doesn't allow alternative app stores (not even "sideloading").

Anti-anti-steering cases have so far failed in other contexts. Why would it suddenly work here?

As long as Apple is not considered a monopolist (and under the Epic v. Apple ruling it is not), it can just change some other rules and promulgate new rules that would render any anti-anti-steering injunction inconsequential.

It would make a lot more sense to challenge Apple's proactive steering than its anti-steering guideline.

John Koetsier's article, which I mentioned further above, reveals some conduct by Apple that to the best of my knowledge has not previously been written about. In order to ensure that subscriptions to certain services (such as Tinder) are made on iOS, which then entitles Apple to its commission (though it cuts it in half after the first twelve months of a given subscription), Apple places Google ads that promote such subscriptions and steer users (through links) directly to the App Store.

Apparently Apple did so without the specific consent (i.e., any kind of cooperative-advertising agreement besides the standard Apple Developer Agreement) of the affected companies, and this is all about steering as opposed to demand generation. By advertising iOS-based subscriptions in connection with specific keywords (presumably always just the brands of the affected services), Apple doesn't drive additional customers to third-party services: instead, it redirects to the App Store some of the traffic that would otherwise reach those companies' websites. If someone already searches for Tinder, but then clicks on an ad placed by Apple that is exclusively meant to ensure that any subscription would be subject to Apple's app tax, there's no benefit--but significant harm--to the actual service provider.

As the article explains, this also drives up advertising costs for those services in connection with the relevant keywords (i.e., their brands).

It might be hard (though not necessarily impossible) to challenge that practice under federal antitrust law. But the broader concept of unfairness under state competition law might have scope for preventing Apple from doing this. On the one hand, it prohibits steering on iOS, which (again) it may just be in its right to do (even if one believes, like I do, that Apple should be forced to allow alternative app stores). On the other hand, Apple itself engages in steering (on Google) and distorts the market by making it harder for app developers to promote alternative ways of buying subscriptions.

After the recent Japanese "e-reader" settlement, which is about competition in content distribution, this issue is even more relevant than before.

What Apple is doing according to the Forbes article is like if governments spent money on advertising designed to drive airline passengers into non-duty-free stores. It's just absurd when a tax authority spends advertising dollars just to prevent customers from discovering and accessing legally tax-free channels.

That kind of advertising does nothing to generate incremental sales of Apple devices. It is purely about Apple torpedoing efforts by service providers like Match Group (which offers Tinder) to promote ways in which end users can obtain Apple-tax-free subscriptions.

Google's role in this raises questions, too. Google obviously benefits from this directly, and Google itself might at some point want to do the same. But let's stay focused on Apple. An injunction that would prohibit Apple from placing such ads (without explicit prior consent by the service providers in question, which presumably all of them would withhold) would be an anti-steering injunction against Apple. It would be novel, but to me it would make a whole lot more sense than an anti-anti-steering injunction like the one in Epic v. Apple.

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Political clout of newly founded Coalition for App Fairness will depend on more app firms joining Epic, Spotify, Match Group (Tinder), others

Through a Wall Street Journal article (behind paywall) I just became aware of the announcement of the newly created Coalition for App Fairness (CAF). Its Twitter handle is @appfairness.

The primary location, as per the website and the Twitter profile, is Washington, DC, but the press release states two locations: "BRUSSELS and WASHINGTON D.C." This means the CAF seeks to influence not only the Antitrust Division of the Department of Justice and the Epic v. Apple and Epic v. Google lawsuits in the Northern District of California, where an Epic v. Apple preliminary injunction hearing will be held on Monday (September 28, 2020), but also the ongoing investigation of Apple's App store terms by the European Commission's Directorate-General for Competition (DG COMP).

The EU investigation was instigated by Spotify, which has been running a "Time to Play Fair" website for a while, with no signs of others throwing their weight behind Spotify's cause. It appears that the "AppRising" (as some call it) of app firms against Apple's App Store and Google's Play Store terms has some momentum now as a result of Epic's aggressive action against Apple. Epic prepared a multi-level campaign against Apple, initially sneaking a Trojan horse-style payment system past Apple's App Store review only to activate it via the cloud after emailing down the gauntlet to Apple's leadership at an ungodly hour, provoking the removal of the non-compliant version of Fortnite from the App Store, doing the same with respect to Google's Android app store, and filing complaints of approximately 60 pages against either company and publishing a "Nineteen Eighty Fortnite" campaign video. Epic's legal team is led by former U.S. antitrust chief Christine Varney and former federal judge Katherine Forrest, both of the Cravath firm, which many of my contacts in the legal community profoundly admire.

Spotify was quick to publicly welcome Epic's private antitrust lawsuits--and Tim Sweeney, the outspoken CEO of Epic Games who had criticized Apple's App Store terms on Twitter long before bringing suit, said shortly after the filings that he was working on the creation of a broadbased coalition of companies.

Here's an overview of the founding members of the Coalition for App Fairness, in alphabetical order:

• Basecamp: describes itself as "the all-in-one toolkit for working remotely"

• Blix (maker of BlueMail): according to Israeli newspaper Haaretz the two brothers alleged that Apple "copied their email app and removed it from the App Store"

• Blockchain.com, a cryptocurrency trading app that claims to administer 54 million "wallets" and having enabled transactions worth more than $620 billion

• Deezer: a French music streaming app

• Epic Games: no introduction needed

• European Publishers Council: unlike Epic, Spotify, Blix, Blockchain.com etc., this is actually a group of traditional media companies, and while they claim to "uphold the freedom of expression, media diversity, and democratic debate," they just want to preserve partly obsolete business models, such as through overreaching copyright laws, which I publicly opposed last year (Article 13/17 etc., though this group was more interested in the news snippets part of the EU copyright reform bill)

• Match Group: the operator of online dating services, most notably Tinder, but also Match.com, Meetic, OkCupid, Hinge, PlentfyofFish, Ship, and OurTime

• News Media Europe: this is the complement to the European Publishers Council, claiming to represent "the progressive news media industry in Europe – over 2500 European news brands in print or online, and also on radio and tv [sic]"; News Media Europe issued a press release today declaring itself in support of the CAF

• Prepear: maker of a "connected cooking" app and embroiled in a trademark dispute with Apple

• ProtonMail: a Swiss company that offers a "secure email" service

• SkyDemon: flight planning app

• Spotify: no introduction needed

• Tile: lost-and-found network

The diversity of those companies and their interests may appear to be a strength, but it will presumably be a challenge for them to agree on anything other than the benefits to them of reducing Apple's and Google's app distribution fees. That's because their business models are so different. Spotify, for instance, is concerned with subscription revenues, while Epic Games sells virtual items through in-app purchasing.

In the short term, the CAF's activities may be more focused on Apple, but as the list of founding members shows, some longstanding Google foes are on board as well.

How influential this new group is going to be will depend on its ability to attract more members. On the group's website there's already a mentioning of a disagreement between the founder of WordPress and Apple, making it a possibility that his company (named Automattic) might join at some point.

The role model for the CAF is presumably the European Committee for Interoperable Systems (ECIS), an anti-Microsoft lobbying group that was effectively managed by a Clifford Chance antitrust lawyer in Brussels. But in the Microsoft EU antitrust context, a few major companies like IBM, Oracle and Sun were all it took for such an organization to be credible. If the CAF wants to convince policy-makers that there's widespread disagreement with Apple's and Google's app distribution terms, the group will need to represent a far more significant percentage of the millions of smartphone apps out there than it does today, with several of its members having very specific disagreements with Apple that are not per se representative of the relationships with Apple and Google that the app developer community at large enjoys.

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