App Store Rules to Allow Third-Party Payments
After a years-long legal battle, Apple is finally opening up its App Store to external payment processors—although there will be a stiff cost for app developers who want to cash in on that new opportunity.
Apple’s rule changes for its app marketplace were revealed in a legal filing Tuesday that showed that app-makers would be allowed to link to external payment processors of their choosing if they pay a 27 percent commission fee to Apple for the pleasure of doing so. Naturally, developers are pissed.
The change to Apple’s app policies is the result of a long, arduous legal battle between itself and Epic Games, the likes of which started back in 2020, when Epic sued the company and accused it of “anti-competitive practices.”
That lawsuit was largely spurred by Apple’s controversial, “walled garden” approach to apps. Historically speaking, Apple has required all in-app purchases to be made through its own payment system and has charged a 30 percent commission to app developers for doing so.
That substantial sum is the price of admission to Apple’s popular marketplace, which puts companies in direct contact with millions of iPhone and iOS users. In 2020, Epic problematically tried to circumvent those commissions by launching its own in-app payment system for Fortnite’s virtual currency, V-Bucks. As a result, Epic and, consequently, Fortnite, were kicked out of the App Store. This was problematic for Epic for a number of reasons, not least of which that Fortnite is its top money-maker.
Epic subsequently sued Apple, claiming that its App Store constituted a “monopoly” and that it had engaged in anti-competitive practices. For three years, this lawsuit wended its way through the U.S. Justice system, only to land, eventually, at the feet of the Supreme Court. This week, the Supreme Court denied to hear the case, which meant that it got kicked back to the judgement made at the last stop on the judicial circuit.
The previous judgement in the case was brought by federal judge Yvonne Gonzalez Rogers, of the Northern District Court of Northern California. In 2021, Rogers ruled largely in Apple’s favor, but found that the company’s policy of barring app-users from accessing alternate payment processors was anti-competitive. As a result of Rogers’ ruling, Apple was forced to institute the changes that went into effect this week, the likes of which would allow developers to direct app users to third-party payment processors.
Yet even if Apple is now allowing app developers to link to outside payment methods, the company is still charging app-makers a hefty 27 percent fee if they want to link to their external payment systems of choice. Developers, naturally, aren’t thrilled. When attempting to use external payments, Apple has also apparently appended a notification to the screen that warns app users they are about to “go to an external website” and that Apple is no longer “responsible for the privacy or security of purchases made” by the user.
The results of the long-running legal drama have largely been viewed as a success for Apple and a pretty raw deal for Epic. The gaming company and, thus, Fortnite, remain kicked off of Apple’s App Store and, to add insult to injury, Epic now owes Apple $73 million in legal costs. Epic’s CEO, Tim Sweeney, is obviously pissed. On X this week, Sweeney laid into Apple for what it dubbed “anti-competitive” practices, and signalled that the long-running legal war with its corporate foe might not yet be over: “Epic will contest Apple’s bad-faith compliance plan in District Court,” Sweeney added.
1) What recent change has Apple made to its App Store policies? – Apple is now allowing app developers to use external payment processors if they pay a 27 percent commission fee for the privilege.
2) Why are developers upset about this new policy? – Developers are upset because they believe the 27 percent commission fee is too high and will cut into their profits.
3) What sparked the legal battle between Apple and Epic Games? – – – Epic Games accused Apple of anti-competitive practices in its App Store, particularly its requirement for all in-app purchases to go through Apple’s own payment system and the 30 percent commission fee.