Apple Adjusts 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.
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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% 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 refused to hear the case, which meant that it got kicked back to the judgment made at the last stop on the judicial circuit.
The previous judgment 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% 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.
Aside from the warning regarding privacy and security, it’s unclear how these changes will affect iOS customers. Developers could require all of their customers to go through the longer payment process of going to another website to complete a transaction to save a little bit on fees thus making it a bit more inconvenient for customers who before could just handle the transaction via the App Store. There’s also the possibility that more developers will increase their fees to make up for Apple’s fee similar to how Twitter Premium is more expensive for iOS users.
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 signaled 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.
