Apple rewrites the App Store rules and makes peace (perhaps) with the EU Commission
From 1 October, the financial terms for developers distributing apps in the European Union will change. The most significant change is the 5 per cent commission
After two years of negotiations with Brussels, Apple is attempting to resolve one of the most complicated cases. InIn an official statement, the Cupertino-based giant has decided to comply with the EU Competition Authority’s requests by amending certain commercial terms for apps used in Europe. From 1 October, in practice, the financial terms for developers distributing apps within the European Union will change
What’s changing?
The most significant change concerns the Core Technology Fee, one of the most controversial elements of the system introduced to the App Store two years ago. It was previously calculated on installations exceeding a certain threshold and is now being replaced by a Core Technology Commission on digital transactions carried out within apps distributed via alternative marketplaces or directly via the web.
Apple will no longer charge based on the number of installations, but will instead apply a 5 per cent commission on transactions for digital goods and services carried out within apps distributed outside the App Store – that is, via alternative marketplaces or directly via the web. Previously, Cupertino charged €0.50 for each ‘first annual installation’ beyond the first million in the EU. This means the initial acquisition fee – the charge for the App Store’s services – is now being scrapped.
So how is the Apple Store changing?
Within the App Store, however, the commission structure remains complex: 26 per cent for those using Apple’s in-app purchases, falling to 15 per cent for most developers and for certain programmes; 20 per cent if an alternative payment system is used, reduced to 10 per cent in some cases; 15 per cent if the app redirects users to the web to complete the purchase. Apple will also allow its in-app purchases to be used alongside alternative payment systems, an option not previously available in the EU. However, the choice of payment method must remain unchanged for 12 months. Finally, the range of companies able to operate alternative marketplaces or distribute apps via the web is expanding, whilst Apple’s notarisation of apps remains mandatory. In practice, Cupertino is opening a few more doors within its European ecosystem, but continues to hold the keys to security and a share of the revenue.
Why this move?
To understand the reasoning behind this decision, we need to look at the Digital Markets Act, the regulation through which Europe has decided to open a few more gates in the large, walled gardens of the Big Tech companies. Apple has been designated a ‘gatekeeper’ and, from March 2024, will have to allow alternative app stores, external payment systems and greater freedom for developers to direct users to offers outside the App Store.
