Apple on Tuesday announced a simplified commission structure for apps in the European Union in an effort to resolve its disagreements with the European Commission over the tech giant’s business terms. Under the new model, Apple will replace its per-install Core Technology Fee with a flat 5% commission on digital goods in apps distributed outside the App Store or on the web. Apple also adjusted its rates for alternative payments and for its own in-app purchases, and made it easier for developers to open alternative app stores.
The changes mark Apple’s latest attempt to create App Store business terms that comply with EU regulations, after years of back-and-forth with regulators over the terms’ complexity and fairness.
The tech giant had adjusted its App Store fees in the EU last year after regulators fined Apple €500 million for noncompliance with the EU’s Digital Markets Act (DMA) and threatened further fines. In doing so, Apple presented a more complex fee structure, which critics called an example of “malicious compliance.” The old structure included an initial acquisition fee, store services fees, and different tiers of service based on developers’ needs.
Now Apple is presenting its latest revision, highlighted by a flat commission of 5% on transactions in apps distributed outside the App Store, either through alternative app marketplaces or the web.
Meanwhile, the new terms set Apple’s in-app purchase fees at 26%, compared with 30% under its traditional terms. Most developers will still qualify for the discounted 15% fee, however, through special programs such as the App Store Small Business Program, Mini Apps Partner Program, and Video Partner Program, and for apps with auto-renewing subscriptions after their first year, Apple said.
In addition, apps using alternative payment processing will pay a 20% commission unless they’re in one of the special programs, in which case the rate will drop to 10%.
Apple also noted that developers will be locked into their chosen payment options for 12 months, whether they use Apple’s in-app purchases, external payments, or a combination of the two.
The company also carves out exceptions for developers allowed to use external links inside their apps, barring such links from apps in the Kids category for safety purposes. Users under 18 years old will also need parental approval before making purchases outside the App Store.
Notably, the new rules loosen the requirements for developers to operate an alternative app store, permitting marketplaces that meet certain financial stability bars.
Previously, Apple required developers to either prove they had significant financial backing or show that they had been in Apple’s Developer Program for at least two years and had an app with more than 1 million first annual installs in the EU in the previous calendar year.
Now Apple doesn’t require developers to show they’ve met those milestones (though that’s still an option), and it’s added other ways to demonstrate financial backing, including public company status, financial audits, qualifying VC funding, and more.
