Apple is silencing startups

December 6th

France Digitale: Apple is silencing startups by opposing our intervention at the Paris Commercial Court (Tribunal de commerce de Paris). The digital gatekeeper continues to impose the “law of silence” on application developers.

 

The Paris Commercial Court ruled France Digitale’s voluntary intervention inadmissible on Monday 6 December, after Apple firmly opposed the participation of Europe’s largest startup association. The case targets Apple’s practices in the Apple App Store, which startups consider to be unfair.

 

Background

On 18 June France Digitale voluntarily intervened before the Paris Commercial Court (Tribunal de commerce de Paris) to support the action of the French Minister of Economy, Finance and Recovery to put an end to Apple’s unfair practices regarding its App Store.

During two hearings, the last of which was held on Friday 12 November, Apple argued that the association’s voluntary intervention should be deemed inadmissible, so that France Digitale could not take part in the debates or present its findings.

France Digitale regrets the disproportionate effort made by the US digital giant to prevent it from supporting the DGCCRF’s accusations. Apple’s arguments did not in any way address the substance of the case but were purely procedural in nature so as to prevent startups from expressing themselves on the substance of the case.

 

As a reminder, there are a total of 11 contractual clauses imposed on startups that France Digitale points out :

1. The imposition of exclusivity of the Apple payment system on application developers as a condition of access to the App Store (IAP)
2. Clauses imposing a 30% commission on each paid transaction, allowing Apple to benefit, to the detriment of app developers, from the cash flow generated by the sums collected immediately from the end user
3. The imposition on app developers to set the prices of their applications within a price grid
4. Clauses allowing Apple to unilaterally modify the contract
5. Clauses offering Apple the ability in its sole discretion to suspend the distribution of an application or access to its services
6. Clauses offering Apple asymmetrical termination terms for its sole benefit
7. Clauses allowing Apple to use confidential information provided by developers for its sole benefit, without any reciprocal obligation on Apple
8. Clauses allowing Apple to develop an application similar to that of the developer without any possibility for the latter to contest
9. Clauses limiting the legal actions of developers
10. Clauses providing for notification terms more favourable to Apple
11. Clauses exempting Apple from any warranty and liability towards third parties on Apple products and on its certificates and services.

In any event, at this stage, Apple is primarily seeking to avoid the inevitable, insofar as abusive practices against developers are the subject of legal actions, investigations by competition authorities and regulatory initiatives around the world.

 

Reactions from France Digitale’s leaders

Pour le Co-President Benoist Grossmann : “Apple was afraid of our fundamental arguments. That is why it used all the means at its disposal to obtain the inadmissibility of our voluntary intervention. We wanted to show that the firm was condemning startups, SMEs and application developers to the law of silence, and it has done so. We regret that we are unable to continue to speak out on the merits of the case because startups are afraid to speak out individually and fear reprisals. Fortunately, the case will continue thanks to the courageous action of the DGCCRF, which we support”.

Maya Noel, Director General : “France Digitale is more determined than ever to continue to fight so that the arguments of startups and app developers are heard and taken into account, particularly in the European framework of the Digital Markets Act, which will force Apple to put an end to certain unfair practices on its app store.”

 

Reminder

On 18 June 2021 France Digitale officially intervened at a public hearing in support of the claims of the French Minister of Economy, Finance and Recovery in the context of an action initiated by the DGCCRF in 2018 against Apple. France Digitale is challenging the clauses of the membership contracts imposed by Apple on application developers. These clauses create a significant imbalance. Through this action, France Digitale wants to restore the legitimate economic balance between the parties.