To comply with the European Union’s Digital Markets Act (DMA), Apple has updated its policies, now allowing developers to direct users to external purchase options for in-app content without restrictions on messaging. This change marks a departure from Apple’s long-standing anti-steering rules, which previously prevented developers from linking to external payment methods outside of the App Store.
While this update is a victory for developers seeking more flexibility, the introduction of a complex new fee structure has sparked criticism from industry leaders. Developers opting to use external links will now face a commission ranging from 10% to 27%, depending on their agreement with Apple and their participation in the App Store Small Business Program.
This is slightly lower than the previous 15% to 30% commission, but it comes with additional fees, such as a Core Technology Fee that further complicates the cost structure.
Epic Games and Spotify speak out on changes
Tim Sweeney, CEO of Epic Games, was quick to criticize Apple’s new fee structure, labeling it an “illegal new 15% junk fee” and arguing that it makes it financially unviable for developers to distribute their apps across both the Apple App Store and alternative iOS app stores. Sweeney, who has been an outspoken critic of Apple’s practices, accused the company of “malicious compliance” with the DMA, suggesting that the new fees are designed to dissuade developers from using external payment methods.
Apple's terms make it completely uneconomical for developers to distribute their apps through both the Apple App Store and competing iOS app stores, thus denying new app store market entrants any chance of competing and growing organically through better terms.
— Tim Sweeney (@TimSweeneyEpic) August 8, 2024
Spotify echoed these sentiments, describing Apple’s revised rules as “deliberately confusing” and accusing the company of continuing to “blatantly disregard” the DMA’s requirements.
Spotify pointed out that Apple’s fees for basic communication, such as linking to external payment options, could reach as high as 25%, a charge they deem unacceptable under the DMA.
The music streaming giant has called on the European Commission to enforce the DMA more stringently, including implementing daily fines for non-compliance.
The complex fee structure
Apple justifies the new fees by claiming they reflect the value provided by the App Store, including customer acquisition, app distribution, and security features. The fees are divided into three categories: an initial acquisition fee for developers who use links, a store services fee for ongoing support and tools, and the Core Technology Fee for those using alternative payment methods or distributing apps outside of the App Store.
Despite Apple’s defense, the fees have been met with widespread criticism. Major companies like Epic Games and Spotify, who would be subject to the highest tiers of these fees, argue that the costs are prohibitive and undermine the benefits of the new external linking freedoms.
The introduction of these new rules comes after Apple was fined $1.95 billion by the European Commission earlier this year for anti-competitive practices related to streaming music apps. In response, Apple introduced a Music Streaming Services Entitlement, which would require apps like Spotify to pay a 27% commission on website purchases made through the App Store, a fee that aligns with the new Link Entitlement for external linking.
As the debate over Apple’s compliance with the DMA continues, Epic Games is moving forward with plans to launch its own app store for iPhone and iPad in the European Union, set to debut soon. Epic Games’ store will charge developers a 12% commission for payments processed through its platform and 0% for third-party payments, presenting a stark contrast to Apple’s fee structure.
The ongoing tension between Apple and major developers underscores the broader challenges of implementing regulatory changes in a way that satisfies both business interests and legal requirements. As the European Commission continues its investigation, the tech industry will be closely watching how these new rules and fees impact the app ecosystem in the EU.
Featured image credit: James Yarema/Unsplash
