Category: AAPL

AAPL – 'A cynical ploy to divide and conquer': Apple's big App Store fee cut enraged its biggest adversaries in its developer war, including Spotify and Epic Games

Tim Cook, Apple CEO

Apple CEO Tim Cook. Evan Agostini/Invision/AP

  • Apple announced Wednesday it was cutting the usual 30% commission it takes on App Store in-app payments to 15% for small developers.
  • This enraged Spotify, Match Group, and Epic Games, all of who have been fighting with Apple over the 30% fee and have accused the company of abusing monopoly power.
  • Epic Games CEO Tim Sweeney called the move a “cynical ploy to divide and conquer.”
  • Spofiy said in a statement to Business Insider that Apple’s change was “arbitrary and capricious.”
  • Visit Business Insider’s homepage for more stories.

Apple’s latest move in its developer war has enraged its biggest adversaries, Spotify, Match Group, and Epic Games.

Apple on Wednesday announced that it’s cutting the commission it takes on in-app purchases from 30% to 15%, but only for small developers.

The fee cut only applies to developers whose apps generated $1 million or less over the past year. This means three of its most vocal critics — Spotify, Match Group, and “Fortnite” maker Epic Games — do not qualify for the cut, and they reacted angrily to the news on Wednesday.

“Apple’s anti-competitive behavior threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious,” music-streaming giant Spotify said in a statement to Business Insider.

The in-app payment fees have been at the center of a bitter fight with developers for more than a year and have exposed the company to antitrust scrutiny

Spotify filed an antitrust complaint against the iPhone-maker in March 2019, claiming it’s anticompetitive for Apple to inflate Spotify’s prices on iOS while simultaneously launching a competing service, Apple Music.

The complaint resulted in the EU opening an investigation into the App Store.

“We hope that regulators will ignore Apple’s ‘window dressing’ and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all,” Spotify added.

Match Group, the dating-app conglomerate behind Tinder, put out a similar statement.

“What more evidence of Apple’s anti-competitive and monopolistic behavior does anyone need?” the company said.

“If you manage to grow your revenue over $1 million, they then double their cut – arbitrarily – making it even harder for the startup to continue to grow,” Match added.

Epic Games CEO Tim Sweeney addressed the news during the DealBook virtual conference on Wednesday. He said while the news was “fantastic” for smaller developers, it was not good for consumers.

Data provided to the New York Times by analytics firm Sensor Tower showed that although the new commission cut will affect 98% of the apps on the App Store, all those apps only accounted for 5% of revenue generated on the App Store last year.

“It’s not awesome for consumers because 95% of iOS transactions are in major apps built by larger companies. And so, you know, 95% of all transactions are still undergoing Apple’s 30% to you,” Sweeney said.

“In some ways, it’s a really great progressive improvement for these small developers, but also a cynical ploy to divide and conquer,” Sweeney added. He pointed to the fact that Apple allowed Amazon to avoid the 30% fee.

“[Apple] hope that they can reduce the complaints to the point where they can get away with the scheme perpetually. And we’re certainly not going to fall for that,” he added.

Read more: Now Apple wants to bulldoze the fitness app industry, even though many of these companies rely on the App Store and dutifully pay Apple its 30% cut

Apple booted Epic Games’ wildly popular game “Fortnite” off the App Store in August after it deliberately circumvented Apple’s payment system. The two companies have been locked in a legal battle ever since, and during the conference on Wednesday Sweeney repeatedly compared Epic Games’ actions to the struggle for civil rights.

Some smaller developers have also criticised the move. “Machiavelli would be so proud of Apple,” tweeted David Heinemeier Hansson, CTO of app developer Basecamp. Heinemeier Hansson is also CTO of premium email service Hey, which locked horns with Apple over the 30% tax in June.

“Trying to split the App Store opposition with conditional charity concessions, they – a $2T conglomerate – get to paint any developer making more than $1m as greedy, always wanting more,” he added.

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AAPL – Apple's App Store Settlement: Another Win For The Company

Back in August, Apple (AAPL) revoked Epic Games’ license to list apps on its App Store after the latter tried to bypass Apple’s in-game payment system. The Fortnite creators argued that Apple’s 30% cut was unfair, as Apple has created a monopoly on its devices and were hurting the consumer as a result. This was further established by recent moves by Apple to block any other platforms from offering games or apps on its devices. When Epic dropped the price of its in-game currency by 20%, it did so by routing around Apple’s in-store purchases and dodging the 30% purchase fee that the company mandates for its app developers. After this action, it did not take long for Apple to remove Fortnite from its App Store. Following this, Epic Games immediately launched a lawsuit against Apple, alleging that the latter’s practices violated the Sherman Act and California’s Cartwright Act. The company didn’t seek financial damages, but rather a ramification for the problem that it deemed to be inherent in Apple’s business model. On November 18, Apple announced that it would be cutting its App Store tax in half for smaller developers.

What’s in Store for the Future?

Apple’s new App Store regulations will become effective on January 1st, allowing smaller developers to operate with a slight advantage over their more established peers. This will tie in to Apple’s “App Store Small Business Program,” which aims to unburden small businesses that may have been affected by the pandemic. It appears that this program will now continue as a means to promote greater app diversity by allowing smaller developers to gain a slight advantage over their larger competitors. With this in mind, it is seeming increasingly unlikely that Apple will lose its suit against Epic Games. With details released from preliminary hearings, it seems even more unlikely that Apple will face a form of punishment, as Judge Rogers’ interjections point towards the multi-device support available on the iOS variant of Fortnite as an existing means to bypass Apple’s in-game payment tax.

(Source: TechCrunch)

American companies face far more scrutiny from Europe than they usually do in their native land. Taking Amazon (AMZN) as an example of this, large American firms are far from immune overseas, and instead, tend to be the exact opposite. Back in June, the European Commission launched a probe into Apple’s App Store practices after Spotify (SPOT) and an e-book publisher launched complaints. However, following Apple’s decision to cut rates for small developers, the EU confirmed that its investigation remains ongoing. In Europe, the company will be investigated on two restrictions that it imposes on users of its devices:

  1. The mandatory use of Apple’s own proprietary in-app purchase system (“IAP”) for the distribution of paid digital content. Apple charges app developers a 30% commission on all subscription fees through IAP.

  2. Restrictions on the ability of developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to consume content such as music, e-books and audiobooks purchased elsewhere (e.g., on the website of the app developer) also in the app, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper.

Both of these have a clear correlation with what Epic Games raised an issue with, as the IAP referred to above is the App Store, and the second issue addresses what Epic Games tried to do with its in-game currency, which ultimately got it banned. The EU’s decision to clarify its intent to continue its investigation is not a positive sign for Apple, but this doesn’t mean the company will be penalized. What I anticipate to happen is Apple will be forced to allow third-party payment systems within apps sold on the App Store, but will be allowed to continue to implement its proprietary IAP. Essentially, the company will be found guilty on its second investigation, but not the first. This is because, as Spotify has demonstrated, its inability to lower the price of Spotify Premium to compete with Apple Music is a clear violation of Europe’s antitrust laws. Additionally, going back to Amazon, Europe has a clear precedent of harsher punishments for big tech companies and has no reason not to continue this with Apple. It also seems logical that the EU will determine that Apple devices running off of the proprietary IAP is the most efficient way for the devices to operate, as Huawei’s app store fiasco demonstrates that introducing new IAP’s is awfully inefficient.

Why This Doesn’t Matter

Looking at why this new revelation doesn’t matter too much has to do with how Apple defines a “small developer.” For Apple, a small developer is one that makes less than $1 million per year, based on 2020 total revenue. If this doesn’t sound like much, that’s because it’s not. Individually, these developers contribute very little to Apple’s total revenue, and the halving of revenue gained from each of them is likely to be very little. Morgan Stanley’s analysis has gone so far as to determine that this will correlate to a mere $.03 drop in EPS for the year 2021.

(Source: The Verge)

Apple’s operations in Europe carry far less weight, meaning the company has much less to worry about in the overseas market. Europe consisted of 23% of Apple’s total 2019 sales, while services consisted of 18% of its total sales. Essentially, even if Apple were to completely lose its grasp on the App Store in Europe, this would only account for 4% of its total revenue. This isn’t insignificant, but due to my anticipated resolution with the EU, the actual losses would likely end up being around half of this. Looking at both of these ramifications, the overall losses that will be incurred by Apple are rather negligible, especially when put into context of the company’s greater operations.

Investor Relevance

Quite frankly, this article serves mostly as a reassurance to investors in the company that may have been concerned about recent probes into Apple’s operations. In its recent 10-K filing, Apple stated, “If the rate of the commission that the Company retains on such sales is reduced, or if it is otherwise narrowed in scope or eliminated, the Company’s financial condition and operating results could be materially adversely affected.” This, understandably, raised some concerns as the company faced its initial probes by the US government and Europe. However, as I’ve outlined, these concerns no longer carry as much weight.

As such, those currently invested in Apple shouldn’t concern themselves too much with these probes into the company’s app policies and should feel confident in their holdings. Short-sellers of the company may wish to reevaluate their philosophies around their thesis if recent probes have had anything to do with this. As a dominant force in the American tech industry, Apple will maintain its grip on its digital content marketplace and continue to profit off of the content downloaded to its devices. As such, those who may not yet be invested in Apple could consider taking a long position, as the company’s services segment will likely only continue to grow as it sees a greater user base in the coming years.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

AAPL – Apple Commission Cut Shows App Store Worries

In business, sometimes giving in — just a bit — is a strategy.

Better to walk away with something, the thinking might go, then be left with nothing.

To that end, Apple said Wednesday (Nov. 18th) that had cut the commission it charges on smaller firms that sell offerings on its App store from 30 percent to 15 percent.

As reported in this space, app developers earning less than $1 million after commissions in annual revenues would be eligible to participate in a small business program that would cut those rates.  With a bit more granular detail, the halved commission rate will apply to all paid app revenue and in-app purchases.  The company has said that a “vast majority” of its more than 28 million registered app-focused developers and enterprises would qualify for the program.

The 30 percent structure remains in place for developers whose sales exceed the $1 million mark.

The program takes effect next year, and can be construed as an effort to keep smaller companies on board while still levying the high rates on the larger companies who, ostensibly, can shoulder the cost (such as Epic Games, which is the firm behind the wildly popular game Fortnite and Spotify).  Epic has been in the midst of a legal battle with Apple over the App Store and the commission structure.

Indeed, as quoted in The Wall Street Journal, Tim Sweeney, chief executive of Epic stated, “Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases. But consumers will still pay inflated prices marked up by the Apple tax.”

The move also comes as Congress is mulling various ways to look at Big Tech’s competitive (or depending on how it is framed, anticompetitive) practices. Apple’s App Store concession may reflect worries about this scrutiny.

A US House subcommittee report also said earlier this fall that the Apple pivot toward services entails, in part, “collecting commissions and fees in the App Store. In the absence of competition, Apple’s monopoly power over software distribution to iOS devices has resulted in harms to competitors and competition, reducing quality and innovation among app developers, and increasing prices and reducing choices for consumers.”

The Great Services Pivot 

As for the App Store itself….PYMNTS has noted in past coverage that Apple has been relatively opaque about its services businesses.  Services garnered about $14.5 billion in revenues for the company — a record — and management noted double-digit gains in the segment without breaking out its contribution to overall results.

As to how it all might play out in terms of economics: As reported by Apple Insider, per a note to investors, Morgan Stanley analyst Katy Huberty said cutting the commissions would result in an “immaterial” impact to the firm, chiefly because the “vast” majority of the top line that comes from the App Store comes from larger developers.  Of the roughly $43.9 billion generated in revenues from 23 million developers thus far into the year, the overwhelming majority, at $40.3 billion, came from only 1,500 of them, as estimated by SensorTower data.

In other words – Apple’s gesture seems a concession that doesn’t rock the boat all that much.

Read More On Apple:



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

AAPL – Apple will pay $113 million to settle a 'batterygate' investigation into its practice of intentionally slowing down old iPhones

tim cook apple

Tim Cook in Cupertino in September 2019. Christoph Dernbach/picture alliance via Getty Images

  • Apple will pay $113 million in a settlement for an investigation into its past practice of intentionally slowing down people’s iPhones.
  • The payout is the latest Apple has made in regard to the matter — the company paid $500 million to settle a class-action lawsuit in May.
  • Apple admitted to slowing phones down in 2017 and said it was to prevent old batteries from randomly shutting devices off, not to force customers to buy newer smartphone models, as some believed.
  • Visit Business Insider’s homepage for more stories.

Apple will pay a $113 million settlement in an investigation into the company’s practice of intentionally slowing old iPhones down, a move that some customers perceived as a tactic to force them into purchasing new, more expensive models. The Washington Post first reported the news.

Apple declined Business Insider’s request for comment and pointed to a part of the filing that stated Apple’s settlement does not imply admittance of wrongdoing.

The so-called “batterygate” scandal dates back to 2017 when customers began noticing that their devices were slowing down after downloading new versions of Apple’s software. Apple at the time did admit that the updates indeed slowed down the phones to prevent their aging batteries from causing the devices to randomly shut down. Some customers and critics questioned if the move was instead designed to prompt more sales of new iPhone models, which Apple pushed back on.

This new investigation was launched by more than 30 states, including Arizona, Arkansas, and Indiana, according to a press release. The investigators alleged that Apple was aware that its updates were slowing devices down but failed to inform customers of the practice. In addition to the fine, Apple also legally committed to greater transparency.

“Big Tech companies must stop manipulating consumers and tell them the whole truth about their practices and products,” Arizona Attorney General Mark Brnovich said in the press release. “I’m committed to holding these goliath technology companies accountable when they conceal important information from users.”

This isn’t the only financial penalty levied against Apple for the matter, but many of the payments amount to a drop in the bucket when compared to Apple’s sales — last month, the company reported $26.4 billion in revenue from iPhones alone in its fiscal fourth quarter earnings. A French competition watchdog fined the company $27 million in February for purposefully slowing performance on older iPhones without telling users about it. And in March, Apple agreed to cough up $500 million in a class-action lawsuit that claimed the company slowed phones to prompt customers to upgrade to newer ones.

In July, Apple offered eligible iPhone 7 and 7 Plus users a $25 payout if their devices were running on iOS 11.2 or later and experienced slow performance before December 21, 2017. The offer ended in early October.

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AAPL – Apple will slash App Store fees as antitrust pressure mounts

The change for small businesses will go into effect on Jan. 1, Apple (AAPL) said, while apps that earn more than $1 million a year will continue to be covered by Apple’s existing fee structure, which charges 30%.
It was not immediately clear how many small app developers will be affected by the change; Apple’s announcement said only that the update will benefit “the vast majority of developers” on the App Store. Apple declined to elaborate.
More than 97% of iOS app publishers tracked by app metrics firm Sensor Tower generate less than $1 million a year in app-based consumer spending. Those developers’ economic activity accounted for an estimated 5% of the iOS App Store’s total revenues in 2019, Sensor Tower told CNN Business.
Apple’s App Store fees have increasingly come under scrutiny as lawmakers and regulators have zeroed in on Apple’s dominance over iOS.
Apple's in a war for the future of the App Store. Here's what's at stake

Apple's in a war for the future of the App Store. Here's what's at stake

Leading members of the House Judiciary Committee found in a landmark report this fall that Apple, along with Amazon, Facebook and Google, enjoy “monopoly power” and have wielded that power in anti-competitive ways.
In addition to app store fees, Apple’s developer policies have been criticized as helping to preserve the company’s dominance. This summer, Epic Games, the maker of the hit online game Fortnite, filed an antitrust lawsuit against Apple that could reshape how app stores work in the United States. This week, Epic expanded its litigation against Apple to Australia.
Apple has previously said that its fee structure reflects common practice across the digital services industry — this year, it commissioned a report by the Analysis Group, a consulting firm, affirming that claim. Apple has also said its policies are meant to enhance consumer security.
Asked whether the recent antitrust scrutiny may have played a role in Wednesday’s announcement, an Apple spokesman did not provide a direct answer but told CNN Business that it has only ever lowered the fees developers must pay.
Advocates of aggressive antitrust action hailed Wednesday’s decision as an outgrowth of the public pressure.
“Just the specter of antitrust action creates market structure change,” tweeted Matt Stoller, director of research at the American Economic Liberties Project, citing the House investigation and the Epic litigation.

AAPL – Epic Games founder Tim Sweeney likens fight against Apple to fight for civil rights

Earlier today, Apple announced it will reduce the App Store commissions for smaller businesses so that developers earning less than $1 million per year pay a 15% commission on in-app purchases, rather than the standard 30% commission.

Tim Sweeney, founder of Epic Games, says the move — an apparent reaction to current investigations into Apple by Congress, the European Union, the Justice Department and the Federal Trade Commission on antitrust grounds — doesn’t go nearly far enough. He told the Wall Street Journal that Apple is merely “hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases. But consumers will still pay inflated prices marked up by the Apple tax.”

Sweeney — whose company has been embroiled in a battle since launched a direct-payment system in its popular “Fortnite” game to bypass Apple’s fees — went even further today in conversation with Dealbook during a two-day event.

Asked about Epic’s fight with the tech giant — which began in August with its payment system, which led to Apple kicking Fornite off the App Store, which led to Epic filing a civil lawsuit against Apple in the U.S. and more newly to begin legal proceedings against Apple in Australia using the same argument that Apple is acting monopolistically — Sweeney didn’t mince words. He even likened Epic’s ongoing campaign to the fight for civil rights in the U.S.

Said Sweeney:  It’s everybody’s duty to fight. It’s not just an option that somebody’s lawyers might decide, but it’s actually our duty to fight that. If we had adhered to all of Apple’s terms and, you know, taken their 30% payment processing fees and passed the cost along to our customers, then that would be Epic colluding with Apple to restrain competition on iOS and to inflate prices for consumers. So going along with Apple’s agreement is what is wrong. And that’s why Epic mounted a challenge to this, and you know you can hear of any, and [inaudible] to civil rights fights, where there were actual laws on the books, and the laws were wrong. And people disobeyed them, and it was not wrong to disobey them because to go along with them would be collusion to make them status quo.”

While the analogy undoubtedly prompted some eye rolls by attendees, Apple’s announcement today suggests that Epic, which has itself evolving into a powerful and lucrative platform — one valued at $17.3 billion during in August following a $1.78 billion funding deal — is moving the needle.

The question is where it all ends. Interviewer Andrew Ross Sorkin noted that Epic has a price in its own app store, asking if there is any “fair price” in Sweeney’s mind that Apple could charge.

Sweeney noted that Epic itself pays 2% to 3% in transaction costs in developing countries, another 1% for payments support and “maybe 1%” of revenue to cover its bandwidth costs and suggested that an 8% Apple tax, as it has come to be called, might be acceptable in exchange for the service it provides to developers.

In fairness to Apple, Sorkin also observed that similar to Apple, Sweeney talks about “Fortnite” as a platform, one that is “right now not open; there’s not a competitive marketplace where others can effectively develop on top of [the] platform [to] create their own in app purchases right now.” He asked if that might be changing.

Sweeney said the company is “moving in that direction.” Pointing to Fortnite Creative, a mode in Fortnite allows users to freely create content,  he said that “tens of millions of creators are sharing their content with their friends and with the general public, and there’s a little bit of a business model there. But it’s in the very early stages of development.”

AAPL – Fortnite maker Epic Games sues Apple in Australia for App Store ban

The company behind the popular online video game Fortnite is suing Apple in Australia for allegedly misusing its market power by taking a slice of all revenue earned by apps on iPhones, iPads and Macs.

Fortnite is a big money maker for Epic, with millions of daily users logging billions of hours on the game each month. It is forecast to bring in US$5bn in revenue in 2020.

However, Epic Games has long complained about Google and Apple’s policies of taking between 15% and 30% of all transactions made through apps on iOS, and Android devices.

Fortnite was kicked off both the Apple App Store and Google Play Store in August after Epic bypassed the companies’ in-app payment methods for their own cheaper direct billing that prevented Apple and Google taking a share.

Epic has since filed court action in the US, while facing a potential year-long ban from the Apple App Store, and on Monday, Epic Games launched a case against Apple in Australia.

In documents filed in the federal court, Epic Games alleges that through Apple’s control over in-app purchases, and its actions in banning the Fortnite app, Apple has misused its market power, and is substantially lessening competition in app development.

“Apple’s conduct has forced Epic and other app developers to pay Apple monopoly prices [the 30% commission] in connection with all in-app purchases of their in-app content on iOS devices,” the filing states.

“This has led to harms including increased prices for in-app content by iOS device users in Australia and lost profits for Epic.”

Epic Games stated if Apple allowed developers to distribute their apps for iOS outside the App Store, or make payment methods outside Apple’s payment method, it would improve competition.

Epic’s chief executive, Tim Sweeney, said in a statement that Apple was stifling competition by limiting in-app purchases.

“This is much bigger than Epic versus Apple – it goes to the heart of whether consumers and creators can do business together directly on mobile platforms or are forced to use monopoly channels against wishes and interests,” he said.

In an FAQ published alongside the announcement, Epic said it had not yet begun proceedings against Google. The company also noted other companies such as Amazon, DoorDash and McDonald’s were all allowed to have their own direct-payment methods in apps, but Apple had restricted it for games and for Epic.

“Adding our own payment system allows us to offer players choice while passing along savings, just like other apps are allowed to do. This choice provides a more level playing field on mobile stores while saving players money, which Apple should agree is a positive thing for everyone.”

In a statement, a spokeswoman for Apple pointed to a US judge’s comments in a ruling against Epic seeking a preliminary injunction in October where she described Epic’s payment bypass as “deceptive and clandestine”. The spokeswoman said Epic’s actions were expressly about violating App Store guidelines designed to protect customers.

“Their reckless behaviour made pawns of customers, and we look forward to making this clear to Australian courts,” she said.

The case will be the first test of misuse of market power when it comes to the Apple App Store in Australia, and a big test of section 46 of the Competition and Consumer Act, which was added in 2017 after a recommendation of the Ian Harper-led review of Australia’s competition laws in 2015, Australian Competition and Consumer Commission chair Rod Sims told Guardian Australia.

“It’s possibly the most significant test of [section] 46, we’ve had to date,” he said. “So from our point of view, it’s a really important case.

“We’re very pleased this will be tested in our jurisdiction.”

Sims said the case will centre on what defines the market – is it anywhere you can buy a game, or is it confined to the market within the App Store itself.

“Apple are clearly going to argue the market is the market for games, and it’s very broad. Epic is going to argue the market is for how you pay things on the Apple App Store.

“So that’s exactly what has to be argued out.”

The case will inform the ACCC’s review of the market power of the Apple and Google app stores announced in September as part of its long-running investigation into the digital platforms.

AAPL – Apple has been hit with privacy complaints from the same digital activist who successfully took on Facebook

Apple previously said that it would tighten its own rules around third-party data usage.

Alastair Pike/Agence France-Presse/Getty Images

Apple faces two strategic privacy complaints in Europe by Max Schrems, a digital activist who has successfully taken on Facebook’s user data practices.

Schrems’ Vienna-based nonprofit Noyb (as in “none of your business”) filed privacy complaints with German and Spanish regulators, alleging that Apple AAPL, +0.70% tracks users without their consent, in violation of European Union law.

The complaints focus on Apple’s Identifier for Advertisers (IDFA), a unique tracking code generated by each iPhone that allows Apple, app developers, and advertisers to track and target ads.

Noyb alleges that the default inclusion of IDFAs on iPhones is in breach of the EU’s 2011 “Cookie Law,” which requires informed and unambiguous consent from users to store their data.

Plus: Google, Facebook and Apple in the crosshairs as lawmakers agree on EU intervention in Big Tech

An IDFA “allows Apple and all apps on the phone to track a user and combine information about online and mobile behavior,” Noyb said in a statement. “Apple places these tracking codes without the knowledge or agreement of the users.”

The two complaints were made through the EU’s e-privacy directive, and not the sweeping General Data Protection Regulation (GDPR), which means that German and Spanish regulators can fine Facebook without cooperating with the bloc’s authorities.

“EU law protects our devices from external tracking. Tracking is only allowed if users explicitly consent to it. This very simple rule applies regardless of the tracking technology used,” said Stefano Rossetti, a privacy lawyer with Noyb.

Schrems is a high-profile activist who has successfully taken on Facebook FB, +0.07% for transferring Europeans’ data to the U.S. He has argued that, given the revelations of government surveillance made public by whistleblower Edward Snowden, the U.S. doesn’t provide sufficient protection for user data.

In 2015, his complaint to authorities in Ireland — Facebook’s base in Europe — led to the invalidation of the Safe Harbour agreement, which governed trans-Atlantic data storage. Earlier this year, the highest court in the EU ruled that Safe Harbour’s successor, the U.S.-EU Privacy Shield, doesn’t adequately protect user data.

Also: Google is being targeted by these tech companies urging regulators to take action against its ‘clear abuse of dominance’

Apple previously said that it would tighten its own rules around third-party data usage, requiring apps to ask users’ permission to opt-in to IDFA tracking, in the latest software update, iOS 14. However, the company backpedaled on the idea in September, delaying the changes until early next year to give developers more time to make adjustments.

Noyb’s position is that Apple’s proposed changes aren’t enough to satisfy EU privacy requirements. “These changes seem to restrict the use of the IDFA for third parties (but not for Apple itself),” the group said. “However, the initial storage of the IDFA and Apple’s use of it will still be done without the users’ consent and therefore in breach of EU law.”

“The IDFA should not only be restricted, but permanently deleted. Smartphones are the most intimate device for most people and they must be tracker-free by default,” Rossetti said.

MarketWatch reached out to Apple for comment.

AAPL – Apple responds to Gatekeeper issue with upcoming fixes

Apple has updated a documentation page detailing the company’s next steps to prevent last week’s Gatekeeper bug from happening again, as Rene Ritchie spotted. The company plans to implement the fixes over the next year.

Apple had a difficult launch day last week. The company released macOS Big Sur, a major update for macOS. Apple then suffered from server-side issues.

Third-party apps failed to launch as your Mac couldn’t check the developer certificate of the app. That feature, called Gatekeeper, makes sure that you didn’t download a malware app that disguises itself as a legit app. If the certificate doesn’t match, macOS prevents the app launch.

Many have been concerned about the privacy implications of the security feature. Does Apple log every app you launch on your Mac to gain competitive insights on app usage?

It turns out it’s easy to answer that question as the server doesn’t mandate encryption. Jacopo Jannone intercepted an unencrypted network request and found out that Apple is not secretly spying on you. Gatekeeper really does what it says it does.

“We have never combined data from these checks with information about Apple users or their devices. We do not use data from these checks to learn what individual users are launching or running on their devices,” the company wrote.

But Apple is going one step further and communicating on the company’s next steps. The company has stopped logging IP addresses on its servers since last week. It doesn’t have to store this data for Gatekeeper.

“These security checks have never included the user’s Apple ID or the identity of their device. To further protect privacy, we have stopped logging IP addresses associated with Developer ID certificate checks, and we will ensure that any collected IP addresses are removed from logs” Apple writes.

Finally, Apple is overhauling the design of the network request and adding a user-facing opt-out option.

“In addition, over the the next year we will introduce several changes to our security checks:

  • A new encrypted protocol for Developer ID certificate revocation checks
  • Strong protections against server failure
  • A new preference for users to opt out of these security protections”

AAPL – Privacy activist files complaints against Apple's tracking tool

BERLIN (Reuters) – A group led by privacy activist Max Schrems on Monday filed complaints with German and Spanish data protection authorities over Apple’s AAPL.O online tracking tool, alleging that it allows iPhones to store users’ data without their consent in breach of European law.

Slideshow ( 2 images )

It is the first such major action against the U.S. technology group in regards to European Union privacy rules.

Apple says it provides users with a superior level of privacy protection. The company had announced it would further tighten its rules with the launch of its iOS 14 operating system this autumn but in September said it would delay the plan until early next year.

The complaints by digital rights group Noyb were brought against Apple’s use of a tracking code that is automatically generated on every iPhone when it is set up, the so-called Identifier for Advertisers (IDFA).

The code, stored on the device, allows Apple and third parties to track a user’s online behaviour and consumption preferences – vital for the likes of Facebook FB.O to be able to send targeted ads that will interest the user.

“Apple places codes that are comparable to a cookie in its phones without any consent by the user. This is a clear breach of European Union privacy laws,” said Noyb lawyer Stefano Rossetti.

Rosetti referred to the EU’s e-Privacy Directive, which requires a user’s prior consent to the installation and use of such information.

Apple’s planned new rules would not change this as they would restrict third-party access but not Apple’s.

Apple accounts for one in every four smartphones sold in Europe, according to Counterpoint Research.

The claims were made on behalf of an individual German and Spanish consumers and handed to the Spanish data protection authority and its counterpart in Berlin, said Noyb, a privacy advocacy group led by Austrian Schrems that has successfully fought two landmark trials against Facebook.

In Germany, unlike Spain, each federal state has its own data protection authority.

Rossetti said the action was not about high fines but rather aimed at establishing a clear principle whereby “tracking must be the exception, not the rule”.

“The IDFA should not only be restricted, but permanently deleted,” he said.

Reporting by Kirsti Knolle. Editing by Jane Merriman