Apple is overhauling the commercial rules governing apps in the European Union, simplifying its fee structure and giving developers broader payment and distribution choices after negotiations with European regulators over the bloc’s competition rules.
The changes, which take effect Oct. 1, settle disagreements between Apple and the European Commission over the company’s business terms and alternative app distribution, according to an Aug. 18 announcement from Apple. Developers can agree to the revised terms beginning immediately, the company said.
The overhaul marks the latest adjustment to Apple’s tightly controlled mobile ecosystem in Europe, where regulators have pushed large technology platforms to open services to greater competition. Apple said the new framework will put developers distributing apps in the EU under a single set of commercial terms, replacing some of the more complicated fees introduced alongside alternative distribution.
One of the biggest changes involves Apple’s Core Technology Fee. The per-install charge will be replaced by a Core Technology Commission equal to 5% of digital transactions made through apps distributed outside the App Store, according to Apple’s announcement. The company is also eliminating its initial acquisition fee and store services fee.
For apps distributed through the App Store and using Apple’s own in-app purchasing system, Apple said its standard commission will be 26%. A 15% rate will apply to most developers participating in certain Apple programs and to qualifying subscriptions after their first year.
Developers that distribute through the App Store but process payments through alternative systems will face a 20% commission, or 10% for developers qualifying for the lower rate. Apps that direct customers outside the app to complete a transaction will carry a 15% commission, falling to 10% for qualifying developers, according to Apple. Apps distributed through alternative marketplaces or directly over the web will instead be subject to the 5% Core Technology Commission.
The changes are significant for the antitrust debate surrounding mobile app stores because they broaden the ways developers can reach customers and collect payments while preserving Apple’s ability to charge commissions across several types of transactions.
Apple also said developers in the EU will be permitted to offer its in-app purchasing system alongside competing payment methods, an arrangement the company said wasn’t previously allowed under its European terms. Developers may choose Apple’s system, their own payment processing, links to external websites or a combination of those options, according to the announcement. Once selected, the payment configuration generally must remain in place for 12 months.
The Cupertino, California-based company has long argued that its App Store rules and review systems provide security and other benefits to developers and consumers. In its announcement, Apple characterized its own payment system as offering a high level of safety and trust. That assertion is Apple’s position rather than an independent finding.
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Apple said it also worked with the European Commission on safeguards for minors using alternative payment systems. Apps in the App Store’s Kids category won’t be allowed to send users to websites to make purchases. Apps using alternative payments or external purchase links will have to use a parental gate for users under 18, while users under 13 won’t be permitted to follow external transaction links from App Store apps, according to Apple. The age thresholds may be adjusted in EU countries with different parental-consent requirements.
The company is also widening eligibility for businesses and organizations that want to operate alternative app marketplaces or distribute software directly through the web. Apple said potential operators may qualify through criteria including financial-stability assessments, public-company status, established venture backing or an audit by a licensed accountant. Government bodies, educational institutions and nonprofits may also qualify.
Even as it loosens distribution requirements, Apple is retaining a measure of oversight. Apps distributed outside the App Store will continue to undergo the company’s Notarization process, which Apple describes as a baseline check for functionality and serious security threats. The company said direct web distribution can pose additional risks because it lacks the continuing oversight associated with the App Store or an alternative marketplace operator.
The revised rules illustrate the balancing act confronting Apple as European competition policy challenges longstanding features of its App Store model. The company is giving developers more routes to distribute apps and handle payments, while maintaining commissions and security requirements that keep Apple involved in transactions occurring beyond its traditional storefront.
Apple said the new framework followed close collaboration with the European Commission and resolves the parties’ disagreements over business terms and alternative distribution. The Commission’s own assessment of the agreement wasn’t included in Apple’s announcement.
Source: Apple
