February 1, 2024
Currently, anyone with an iPhone or iPad can only download apps compatible with those devices from Apple’s own App Store. Developers of such apps can only sell them via the App Store under rules where Apple retains a fee of up to 30% of the sale price. This practice has been the subject of US legal proceedings brought against Apple by Epic Games alleging that the practice, which does not allow app developers to signpost alternative payment options outside Apple’s app store such as those on the app publisher’s own website, is illegal.
On 25 January 2025, Apple announced that it will make changes to iOS, Safari and the App Store in the EU to comply with the EU’s Digital Markets Act (“DMA”) following the European Commission’s designation of Apple as a “gatekeeper” under the DMA in respect of its iOS, Safari and App Store businesses. Designation under the DMA means that the provider of the service concerned is prevented from treating their business and end users unfairly. This can include not allowing their business users to promote their products and conclude contracts with their customers outside the platform.
In respect of the App Store, the changes include new options for app developers to process payments for digital goods and services within their apps using payment service providers. App developers will also be able to allow users to complete a transaction for digital goods and services on the developer’s external website, and inform EU users of promotions, discounts and other deals available outside their apps. In its announcement, Apple states that, for apps that use alternative payment processing, Apple will not be able to issue refunds, and will have less ability to support customers encountering issues, scams, or fraud. Helpful App Store features — like Report a Problem, Family Sharing, and Ask to Buy — will also not reflect these transactions. Users’ purchase history and subscription management will only reflect transactions made using the App Store’s In-App Purchase system.
New business terms will apply to developers using the new capabilities for alternative distribution or alternative payment processing. Otherwise, developers can remain on Apple’s existing terms. The new business terms for iOS apps in the EU include:
- Reduced commission — iOS apps on the App Store will pay a reduced commission of either 10% (for the vast majority of developers, and subscriptions following their first year) or 17% on transactions for digital goods and services.
- Payment processing fee — iOS apps on the App Store can use the App Store’s payment processing for an additional 3% fee. Developers can use a payment service provider within their app or link users to their website to process payments for no additional fee to Apple.
- Core Technology Fee — iOS apps distributed from the App Store and/or an alternative app marketplace will pay €0.50 for each first annual install per year over a 1 million threshold.
The changes will become available beginning in March 2024.
As for the UK, businesses like Spotify have pinned their hopes on the UK’s upcoming Digital Markets, Competition and Consumer Bill, currently proceeding through the legislative process (previously reported by Wiggin), which could force a similar change to Apple’s rules on its UK App Store.
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