Apple Introduces New 20% Commission Fee for EU Developers: What You Need to Know

Apple's App Store Rules Under Fire in the EU

In a significant move, Apple is changing its App Store rules in response to regulatory pressures from the EU following charges of breaching the Digital Markets Act (DMA) in June. While the updates seem to provide developers with more freedom to link to external purchases, the introduction of a hefty fee structure raises concerns about the true extent of this freedom.

New Rules Allow External Payment Links, But at a Cost

Starting this fall, developers operating in the EU will be permitted to include links leading to purchases outside of their apps. This alteration enables developers to inform users about deals available on the web or through alternative app stores, facilitating a variety of external payment options.

However, this newfound flexibility comes with considerable strings attached. Apple intends to impose a "store services fee" on digital goods and services generated within a year of the user downloading the app. This fee applies regardless of whether the user clicks the external link, potentially capturing sales made through various platforms, including third-party app stores and developers' own websites, on devices beyond iOS.

What Are the Associated Fees?

• Store Services Fee: Developers will face a 20% fee if their app is exclusively available through the App Store. For apps that allow third-party store support, this fee drops to 10%, though other fees may apply.
• Initial Acquisition Fee: An additional 5% fee will be charged on digital goods and services purchased across any platform within one year after the user installs the app.
• Total Potential Fees: Altogether, this could mean Apple extracts up to a 25% commission from purchases made within a year of installation, impacting off-platform subscriptions and autorenewals.

Concerns from Developers and Competitors

These steep fees have raised alarm among developers. Tim Sweeney, CEO of Epic Games, voiced his concerns on X, stating, "Apple’s terms make it completely uneconomical for developers to distribute their apps through both the Apple App Store and competing iOS app stores." Meanwhile, Spotify has expressed dissatisfaction with Apple's "confusing proposal" and reiterated that it fundamentally disregards the requirements set forth by the DMA.

Apple's Rationale Behind the New Fees

Apple claims that these fees are justified by the significant value the App Store provides to developers. The company argues that the initial acquisition fee reflects the App Store's role in connecting developers with EU customers, while the ongoing services provided account for the store services fee.

Comparison of Apple’s Fees

Aside from the EU changes, Apple's fee structure remains stringent in other regions, where it may charge up to 30% on in-app purchases. The company has long maintained strict rules regarding external purchase links, including formatting requirements and notifications designed to alert users when they are leaving the app.

Ongoing Investigations and Future Implications

As Apple implements these updated rules, the EU continues to scrutinize the company’s practices. Notably, the EU fined Apple €1.84 billion (approximately $2 billion) for hindering competition by preventing music streaming apps from displaying cheaper subscription options beyond the App Store.

The European Commission is still assessing whether Apple’s new fee structure breaches the DMA. Spotify urges the commission to conduct a thorough investigation and impose daily fines on practices deemed non-compliant.

Conclusion

While Apple's recent adjustments signal some progress in adhering to regulatory demands, the coinciding fee structures might overshadow the intended benefits for developers. The ongoing battle between tech giants and regulatory bodies continues to unfold, raising further questions about the future of app distribution and developer autonomy.