In a significant decision for tech-focused competition law enforcement, the Rotterdam District Court has largely upheld a penalty order by the Dutch competition authority (ACM) regarding Apple’s App Store practices for dating app providers. The court also confirms the ACM’s decision that Apple forfeited a €50 million penalty fine for non-compliance with the order. This ruling offers vital insights into how courts may address market definition, abuse of dominance, and remedies in digital platform cases. Below is an overview of the court’s key findings and several takeaways for competition counsel.

1. Factual and Procedural Background

The Dutch competition authority initiated an investigation into Apple’s conditions for dating app providers on the iOS App Store, particularly the requirement that these providers exclusively use Apple’s in-app payment system (IAP) and avoid steering users toward alternative payment methods. In 2021, the ACM issued an order requiring Apple to allow dating app providers either to integrate their own in-app payment systems or to link externally to alternative payment options.

Apple contested this order, but the Rotterdam District Court upheld most of the ACM’s requirements, finding that Apple holds a dominant position in the market for iOS app store services for dating apps and has abused that dominance by imposing unfair trading conditions. Although the court allowed Apple to provide either in-app payment alternatives or external links (instead of both), Apple nonetheless incurred fines totaling €50 million for failing to comply in full and on time.

2. Market Definition and Dominance

The court affirmed a narrowly tailored market definition delineated by the ACM: “app store services on the iOS mobile operating system for dating app providers”. It rejected Apple’s arguments that broader alternatives, e.g. Android app stores, or websites and Progressive Web Apps (PWA) should be considered part of the relevant market, emphasizing that dating app providers cannot realistically forgo iOS users. The court also rejected Apple’s argument that the user side should be taken into account, extending the relevant market to include alternative platforms for (online) dating services.

The court also confirmed ACM’s finding that Apple has a monopoly for iOS app distribution of dating apps because Apple is the sole distributor of apps on iOS devices. It reasoned that consumers using dating apps on their Apple mobile devices are “locked in” to Apple’s closed ecosystem because of ‘single homing’, and developers have scant ability to circumvent the App Store’s platform or conditions for reaching Apple users. The court also refers to the fact that dating app providers, despite their clear objections against Apple’s terms and payment conditions, have not been able to find a substitute for distribution in Apple’s app store.

3. Abuse of Dominant Position

The court agreed with the ACM that Apple had abused its dominant position by imposing unfair conditions on dating app providers by requiring them to use its IAP system exclusively, refrain from steering users to any external payment options, and pay commissions to Apple on all in-app revenue. The mandatory use of Apple’s proprietary payment solution, coupled with anti-steering provisions, was deemed to restrict competition unfairly and undermine developers’ freedom to offer alternative payment channels.

The court considered that a dominant undertaking must demonstrate having valid justifications for restrictive measures, such as privacy or security. The court found that Apple’s broad discretion to reject third-party payment service providers (PSPs) went beyond legitimate quality controls. While Apple argued that it sought to protect users, the court held that such legitimate aims could have been achieved through less restrictive means—for instance, by setting clear PCI security standards for authorized PSPs rather than imposing broad or vague requirements.

4. Apple’s failure to comply with the ACM order 

The ACM’s order of 24 August 2021 had obliged Apple to:

1. Permit dating app providers to use an alternative in-app payment system, or
2. Allow these providers to link to an external payment method.

Initially, Apple tried to require developers to publish a separate app binary solely for the Dutch market if they wanted to adopt alternative payment methods. The court deemed this requirement disproportionate, as it forced developers to maintain multiple versions of the same app worldwide.

Because Apple delayed full compliance, it incurred ten weekly penalty payments of €5 million each, reaching the maximum fine of €50 million for non-compliance with the ACM’s order. The court validated the fines, emphasizing that Apple’s partial non-compliance and attempted workarounds (such as imposing additional burdens on developers) did not satisfy the ACM’s conditions.

Apple also introduced consumer notification requirements suggesting that alternative payments might be less safe or reliable than Apple’s IAP. The court found these notifications unjustifiably deterred users from non-Apple payment methods, stifling competition and diminishing the effectiveness of the remedy. Only neutral, fact-based disclosures were allowed.

The ACM’s decision to publicly disclose Apple’s non-compliance with the penalty order was affirmed. The court ruled that since the fines and the substance of the violation were upheld, publication was appropriate to safeguard transparency and enforcement objectives.

While Apple succeeded in contesting one aspect of the ACM’s order—specifically whether it had to offer both alternative in-app payments and external links—the court upheld all other contested points. Apple was awarded only modest procedural cost compensation, as the partial victory was limited to a narrower remedy interpretation.

5. Some Key Takeaways 

1. Narrow Market Definitions for Digital Platforms - Courts may define markets around specific platforms and app categories rather than broader digital ecosystems. This case underlines the risk of focusing too little on how closed ecosystems lock in users and developers.
2. Dominance in Closed Ecosystems - Having a closed ecosystem that precludes realistic alternatives can lead to a finding of dominance. Even if there are other operating systems, courts may hone in on a single ecosystem if consumers tend to “single-home”.
3. Unfair Payment Obligations - Imposing mandatory in-app payment systems and restricting developers’ ability to redirect users can constitute an abuse under both national and EU competition law. Counsel should review client platforms’ payment policies, especially where high commissions and anti-steering clauses are implemented.
4. Proportionality of Remedies - Remedies must not exceed what is necessary to restore competition. The Dutch court tweaked the ACM’s requirement from “two alternatives” to “choose one of the two,” highlighting the importance of proportionality. Still, the broad thrust of the remedy was upheld, pointing to regulators’ willingness to enforce structural changes on major platforms.
5. Severe Fines for Non-compliance - Penalties can mount rapidly when timely and/or full compliance with a penalty order is lacking. A series of weekly fines reached a total of €50 million for non-compliance in this case, underscoring that partial or delayed remedy implementations can prove costly.
6. Consumer-Facing Communications - Notifications or disclaimers about alternative payment methods must be impartial. If dominant platforms frame third-party payment tools as riskier or less secure without objective evidence, regulators may deem this an unfair barrier to competition or abusive conduct.
7. Global Implications - Although the order applies only to dating apps in the Netherlands, this ruling has broader significance and may foreshadow stricter regulation of app store practices across Europe. It aligns with ongoing EU efforts to address digital gatekeepers under legislation such as the Digital Markets Act (DMA).

Conclusion

This Dutch court ruling illustrates the heightened scrutiny facing dominant tech platforms across the EU. It reinforces regulators’ readiness to impose narrow market definitions, demand changes to entrenched business models of gatekeepers, and levy significant fines for non-compliance if such changes are not implemented in time or in full. Digital platform operators should anticipate more extensive oversight of closed ecosystems, payment structures, and user steering practices. Conversely, app developers and smaller market participants may find greater support from competition authorities as courts continue to scrutinize digital gatekeepers.

By focusing on proportional remedies and robust enforcement, this case serves as a bellwether for competition law enforcement in digital markets. With further appeals and parallel actions looming in other jurisdictions, the scope of permissible platform conduct in Europe is still evolving—underscoring the need for vigilant monitoring by in-house compliance teams.

For more information or further guidance in this area, please contact Pauline Kuipers. 

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