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Apple’s ‘Big Assumption’ on App Store Fees Draws Judge’s Ire

A federal judge is questioning Apple’s 27% fee on in-app purchases via outside payment platforms.

U.S. District Judge Yvonne Gonzalez Rogers has been hearing evidence concerning the tech giant’s compliance with an order she handed down in 2021. That ruling requires Apple to allow developers to link to less-costly outside payment options.

According to a report by Bloomberg News, Friday’s (May 17) court hearing included testimony from Carson Oliver, senior director for business management for the App Store, on a study the company had commissioned that seems to contradict the 27% fee.

Per the report, Apple had commissioned economic consulting firm Analysis Group to help set a new rate. 

That study estimated the value of the services Apple offers developers — discovery, distribution, platform technology, etc. — compared to similar platforms like Google and Microsoft. Analysis Group estimated the value to be between 12.3% at the low end or 92% at the most. 

Oliver says Apple estimates the true low end is 17%.

“And you are charging 27%,” Rogers said, to which Oliver replied that the company contends that the effective rate of the commission is lower.

“That’s a big assumption,” the judge replied. “Your assumptions are just that — they are assumptions. There’s no data for it.” 

“That’s not true,” said Oliver.

The report goes on to say that Friday’s hearing also included testimony from Apple Fellow Phillip Schiller, who testified that the 27% fee is the company “trying to enable what the law requires.”

He said that he was part of a group of Apple executives who decided to impose the new fee in January, and testified he’s not against the link requirement in spite of past public statements that it would “detract from the user experience.”

“The world has changed and linking out is being required,” said Schiller. “I do not have a preference against link-out. I want to make the solution safe for our customers. That’s what I’m focused on.”

The court proceedings are part of Apple’s ongoing legal battle with Fortnite maker Epic Games, which is contesting the 27% fee.

“Apple has never done this before, and it kills price competition,” Epic CEO Tim Sweeney said in January. “Developers can’t offer digital items more cheaply on the web after paying a third-party payment processor 3-6% and paying this new 27% Apple Tax.”

Apple has also been targeted by tech giants including Meta Platforms, Microsoft, X and Match Group, who filed a joint action in March asking a judge to reject the plan for allowing outside payment options on the App Store.