Under EU digital market law, Apple is required to allow developers to freely notify customers of alternative offers outside of the App Store.
Gabby Jones Bloomberg via Getty Images
apple The iPhone maker announced Tuesday that alternative third-party app stores in the European Union will now collect a 5% fee on in-app purchases. The iPhone maker said this would “resolve” disagreements with regulators arising from the implementation of the European Digital Markets Act.
Under the new rules, apps purchased through Apple’s App Store using Apple’s system will pay a 26% fee on digital goods and services. Apps that use their own payment processing system and accept credit cards directly pay Apple 20%. Apps that link to a website to complete a purchase will be charged 15%, and apps distributed through third-party app stores or the web will be charged 5%. Apple calls this the “Core Technology Committee.” By participating in Apple’s various programs, you can cut some prices in half.
This is an alternative to a more complex system that Apple proposed last year. The new pricing levels will go into effect on October 1st.
Previously, Apple charged 30% or 15% on all iPhone in-app purchases and required all non-enterprise iPhone apps to be installed through the App Store. But Apple’s App Store model has come under attack from lawsuits and government regulators around the world over the past decade, and has been criticized for operating as a monopoly for iPhone software and imposing fees on developers and users.
Apple argued that its App Store and in-app purchase requirements are designed to increase trust and safety and enforce concerns about security and inappropriate apps.
The European Commission passed the Digital Markets Act in 2022, forcing “gatekeepers” like Apple to open up other Apple services and products, such as the App Store and Siri, to third parties. However, friction arose between Apple and the EC over the company’s App Store proposal, and Apple was fined a large amount of money.
Only a few regions require Apple to enable third-party app stores that can sell iPhone apps, and Europe is the only region where users can install iPhone software from the web. Japan and Brazil also mandate third-party app stores.
In the US, Apple is fighting to restrict users from linking payments on the web as part of the protracted Epic Games lawsuit. We recently proposed imposing a 15% fee on link-out payments in the US.
Apple said Tuesday’s proposal resolved its disagreements with the European Commission on the issue. It also said it worked with the EC to put child safety measures in place, including adding parental controls to some in-app purchases.
Apple generates significant revenue from the App Store, which is reported in its highly profitable Services segment, but the most recent quarter did not feature the App Store as the biggest driver of services growth for the first time since 2023, according to a Morgan Stanley memo. CFO Kevan Parekh pointed to slowdowns in mobile games and other factors impacting App Store performance during a conference call with analysts in July.
“Keep in mind that we have also made some changes to the App Store business model in certain countries,” Parekh said.
