Apple’s EU App Store truce: What changed — and who’s still angry?

Apple has changed its App Store fee structure in the EU in a move to further satisfy the requirements of the Digital Markets Act (DMA). While critics continue to argue the changes don’t go far enough, the European Commission welcomed the changes made and plans to monitor how they’re implemented.

The new fee structure

Specifically, Apple introduced a less complex system than it had offered before, with a lower, but universal, 5% Core Technology fee applied on digital transactions in apps distributed outside the App Store. Apple changed its commission structure and eliminated some fees, including initial acquisition and store services fees. It has also expanded the scope of eligibility to operate alternative app marketplaces. The new changes go into effect Oct. 1, and include (verbatim from Apple’s statement):

For App Store apps using Apple In-App Purchase, the commission will be 26%. For the vast majority of developers, including those in the App Store Small Business Program, Mini Apps Partner Program, or Video Partner Program, and for auto-renewing subscriptions after their first year, it will be 15%.

For App Store apps using alternative payment processing, the commission will be 20%. Developers in the programs mentioned above will pay a reduced rate of 10%.

For App Store apps that link out of the app to complete purchases, the commission will be 15%. Developers in the programs mentioned above will pay a reduced rate of 10%.

For apps distributed via alternative app marketplaces or the web, Apple will charge a 5% Core Technology Commission.

What else has changed

There are additional improvements to what Apple was offering before, Developers, for instance, can now offer Apple In-App Purchase alongside alternative payment options. Also:

Apple has agreed to a set of child safety measures, including that apps in the Kids category will not include links to external websites to complete transactions.

Apps that do use alternative payment systems must require parental approval for the purchase.

In what I consider a major win for most customers, Apple also seems to have convinced Europe of the need to require every alternatively distributed app to go through the company’s Notarization service. This provides a baseline review of an app aimed at ensuring basic functionality and protection from serious threats; that’s important, as it implies that Apple customers can be a little more certain, if not completely confident, that apps purchased outside of the App Store aren’t packed with secret malware or payment scams. While Notarization isn’t able to fully ensure against that, it helps.

Who actually benefits?

Put the changes together and I think large developers will find themselves paying Apple less for the privilege of selling apps on its platform, while for the vast majority of developers a 15% charge remains. Epic, in contrast, charges developers 12%, but arguably offers a much more limited infrastructure as it does not make devices, operating systems, or any of the supporting services that make a good customer experience on the platform. 

The fact that Apple has worked with the EU to reach these new terms, which to a great extent do seem to deliver much of what was required under the DMA in relatively straightforward fashion, should sound like a win to critics of the App Store business. Apple has made it possible to use alternative payment systems and app stores and seems to have coalesced around the 15% fee as a base charge for the vast majority of developers with a much clearer and more straightforward approach. The company would likely argue that while doing this, it has striven to protect its business and its customers — and it can argue it should be able to generate revenue from an app’s distribution on its platform.

The fire and the fury

That’s not how Apple’s fiercest competitors see things. The Coalition for App Fairness, a group that includes competitors Spotify and Epic, put it this way: “Apple’s new terms defeat the purpose of the DMA by keeping fees high and blocking true competition.” 

Meanwhile, Epic CEO Tim Sweeney wrote, “Apple has launched a new junk fee structure in EU, mirroring the terms in Brazil and Japan. They’re still unlawfully charging for linked-out transactions (clearly prohibited by DMA) and add prohibitions and friction to herd kids into high-junk-fee Apple payments.”

The tone of both statements suggests that if the EU finds itself satisfied that Apple has brought itself into compliance with the DMA, some of its competitors might challenge that decision in the courts. They’ll have to if they want to avoid becoming bit-part players in Apple’s history, which is what an EU-approved settlement would reduce them to. 

Where do we go from here?

Apple, on the other hand, will likely continue to say some of its competitors want to compete on its platforms while paying nothing. If this continues, regulators will eventually need to define what they see as a viable revenue model (and why). At the same time, the tone of Apple’s latest statement suggests the new deal already matches regulatory expectation. If so, then it’s all over bar the shouting, and if the new détente holds, it’s reasonable to expect Apple will introduce this new business arrangement elsewhere over time as it firmly closes the door on its Epic struggle.

You can follow me on social media! Join me on BlueSky, LinkedIn, Mastodon and subscribe to my newsletter for news and analysis.ComputerworldRead More