App Store Commissions in the EU
Apple has stated that in the EU, it will reduce its App Store commissions to either 17% for digital goods and services or as low as 10% for subscriptions in their second year. This reduction also applies to small business developers who meet certain criteria. However, if developers choose to use Apple’s payment processing technology, they will face an additional 3% fee. Alternatively, developers can continue operating under Apple’s existing terms, which involve a standard commission of 30%, or 15% for small businesses and subscriptions in their second year.
The term “junk fees” refers to the new “core technology fee” imposed on apps that are downloaded outside of the App Store and without relying on Apple’s payment processing systems. Apple seems to believe that it is entitled to a commission regardless of how apps are discovered and installed because the entire iOS platform, not solely the App Store, enables these businesses to thrive. While iOS undoubtedly offers developers a substantial platform due to Apple’s ability to continuously release new iPhones in response to consumer demand, claiming entitlement to any app installed on its proprietary hardware/software combination challenges the purpose of regulations.
This development significantly impacts Sweeney’s plans to run a profitable games store in the market since Epic Games would still be required to pay Apple for sideloaded app installations beyond the first million.
Apple’s Stricter Regulations and Other Requirements
Sweeney also criticizes Apple’s authority to determine which app stores are allowed to compete with its own App Store, which likely refers to Apple’s new “Notarization” requirements. Apple argues that these measures are necessary to protect users from malware and other security issues.
Another surprising requirement pertains to alternative app stores. Apple now demands that providers present the company with a standby letter of credit worth €1,000,000 from an “A-rated” financial institution before developers can gain entitlement to open their third-party app marketplaces. While this may not pose a significant obstacle for Epic Games, it could hinder smaller developers from innovating in this space.
Apple emerged victorious in its legal battle, as the court declared that the company is not a monopolist but must allow app developers to include links to their own websites if they choose to do so. Interestingly, Epic Games won its case against Google, even though Google already permits sideloading. This outcome may be attributed to the fact that the Google case was decided by a jury, allowing regular individuals rather than judges to make the decisions.
Apple’s response to the ruling mirrors its approach to the Digital Markets Act (DMA). The company “legally” complies with the guidelines while simultaneously imposing its own rules, fees, and caveats as it deems necessary.
Sweeney has announced his intentions to challenge Apple’s perceived “bad-faith” compliance with the U.S. District Court’s ruling.