Apple's EU App Store Armistice
Peace in Europe for Apple? Well, at least on one front, it seems:
Apple today announced changes to its business terms for apps in the European Union, following close collaboration with the European Commission. These changes resolve Apple’s disagreements with the Commission over business terms and alternative distribution. They also reduce complexity by moving every developer that distributes apps in the EU to a single set of business terms. Developers can sign the new terms today, and changes will go into effect on October 1.
Notably, this isn't a proposal, it's the announcement of an agreement Apple has reached with the EC. And that group is obviously quite pleased with themselves for forcing Apple to move here, in a statement to Bloomberg:
A spokesperson for the commission said it “welcomes Apple’s changes to their business terms, which follow a close dialogue” with the company. “Following today’s announcement, the Commission will monitor Apple’s effective implementation of the new terms,“ the spokesperson said in an emailed statement.
So what are the changes? At the highest level, the biggest ones are the change in app distribution and in-app payment fees.
- If you distribute through the App Store and use Apple's payment rails for in-app purchases, their cut is now 26%, down from the old standard 30%.
- But for the "vast majority of developers" – those that qualify for one of the lower-fee programs, it will be 15%
- If you distribute through the App Store but bring your own payment rails to use in-app, Apple gets a 20% cut.
- The lower fee here is 10%.
- If you distribute through the App Store but link-out to the web for payments, Apple gets a 15% cut.
- The lower fee here is also 10%.
- If you distribute through a third-party app store or the web, Apple gets a 5% fee for their "Core Technology Commission".
It's actually pretty straightforward. I suspect people will still complain that 26% is too high,1 but again for most developers, it will actually be 15%. This feels like mainly a way to keep the all-important big gaming fees – which make up most of in-app payments, and as such, most App Store fees – mostly intact.
Many will also complain about the 5% "Core Technology Commission" but this seems like a relatively simple way for Apple to retain some level of compensation for ongoing device platform work – aka, the platform which allows all apps to work on iOS, iPadOS, etc.
But to me, the most interesting thing about this is how neatly it lines up with Apple's recent proposal in the US when it comes to the link-out payments. We just went over this, but quickly: as a result of the Epic trial, Apple was forced to allow apps to link out to the web for payments. Apple tried to take a 27% commission for those payments – which actually would have resulted in a higher cut than Apple's standard 30% in many cases – which pissed off the judge, who then threw the book at Apple and said they had to allow for web payments without taking a cut. An appeals court kept the link-out option intact, but said Apple should be allowed to collect some sort of commission. Apple tried to delay all of this while they appealed to the Supreme Court, but eventually they had to make a proposal, this time ideally in good faith. The number they landed on? 15%.
That does not seem like a coincidence. It seems coordinated.
It sure looks like Apple knew this EU deal was coming down the pike and that the bloc agreeing to their terms would bolster the case that these are "fair". The US judge still gets to decide that, and Epic has already pushed back as Apple seeks to negotiate directly. One big reason for pushing? Epic wants to ensure any changes Apple tries to negotiate be put in place for all developers.
With that in mind, the EC framework sure seems like a potential proposal Apple would be willing to make and take. They technically don't have to, but aligning with these new EU rules would simplify/streamline the App Store rules and potentially alleviate some of the long-mounting pressure on those rules – which are far out of date at best and out of touch at worst.
If I'm right, it will be up to Epic to agree and Judge Yvonne Gonzalez Rogers to decide. Both remain clearly pissed off at Apple so there's certainly no guarantee of any such agreement. But again, the EU signing off on this is an interesting signal, if nothing else. Might Apple want to announce such a new deal at a big, upcoming event that every app developer in the world will be watching? We'll see!
1 Interesting that it's 1% below the 27% which got Apple in trouble. Why? Because that likely puts the acually out-of-pocket cut right back at 30% – rather than 31% – when you take into account payment processing fees... ↩
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