Apple

: Apple Introduces New 20% Fee for Developers in EU Amid Regulatory Pressure

10 August 2024

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Zaker Adham

Summary

In response to regulatory scrutiny, Apple is revising its App Store policies in the EU. While the new rules seem to offer developers more flexibility in linking to external purchases, they also introduce a hefty fee structure that could deter usage.

 

Starting this fall, developers in the EU can include links to external purchase options within their apps. These links can direct users to offers on the web, other app stores, or any chosen destination. Users will also have the option to disable in-app warning screens. However, this new freedom comes at a cost.

 

Apple will impose a "store services fee" on digital goods and services sold within one year of the app's installation, regardless of the platform used for the purchase. This fee applies even if the user never clicks the external link. The fee is 20% for apps available only through the App Store and 10% for those supporting third-party app stores, though additional fees may apply.

 

Additionally, Apple will charge a 5% "initial acquisition fee" on digital goods and services purchased within one year of the app's installation. This means Apple could take up to a 25% commission on purchases made within the first year, including off-platform subscriptions and renewals. Developers in Apple's small business program and those with long-term subscriptions may face lower fees. These fees do not apply to subscriptions or renewals purchased before the app's download.

 

Tim Sweeney, CEO of Epic Games, criticized the new terms, stating they make it impractical for developers to distribute apps through both the Apple App Store and competing iOS app stores.

 

Apple defends the fees, claiming they reflect the value the App Store provides in connecting developers with customers and offering ongoing services.

 

Outside the EU, Apple charges up to a 30% commission on in-app purchases and enforces strict rules on external purchase links. These rules include specific formatting guidelines, limited display of external links, and warning screens for users leaving the app. This has led companies like Spotify to avoid selling audiobooks within their iOS apps.

 

The new fee structure is part of Apple's efforts to comply with the EU's Digital Markets Act (DMA). In June, regulators accused Apple of violating DMA rules by preventing developers from directing users to cheaper purchase options outside the App Store. The EU fined Apple €1.84 billion for restricting music streaming apps like Spotify from displaying cheaper subscription deals.

 

The EU is also investigating Apple's policies on alternative app stores and its new Core Technology Fee, which charges developers on third-party stores 50 euro cents per install for apps with over 1 million downloads. The DMA, effective since March, aims to promote competition in digital markets.

 

Tim Sweeney criticized Apple's compliance with the DMA, calling it "malicious" and highlighting a new 15% fee on users migrating to competing stores.

 

Spotify spokesperson Jeanne Moran expressed concerns over Apple's proposal, urging the European Commission to expedite its investigation and enforce the DMA.

 

Apple has made some adjustments to its DMA compliance plans, such as exempting free app developers from the Core Technology Fee and allowing developers to opt out of new business terms if they haven't launched an alternative app store or used third-party payment methods.

 

Despite these changes, the new rules still pose challenges for developers.