Apple’s recent App Store policy update, allowing developers to offer alternative payment options but with a 27% commission on in-app purchases processed externally, has ignited a fiery response from industry critics and regulators alike according to a new report by The Verge.
This move, intended to comply with a court order stemming from the Epic vs. Apple lawsuit, seems to have left most stakeholders feeling less than enthused.
Spotify, a vocal opponent of Apple’s App Store policies, wasted no time in voicing its disapproval. Spokesperson Jeanne Moran declared the new 27% tax “outrageous” and an attempt by Apple to “protect the profits they exact on the backs of developers and consumers.” Moran sees this move as essentially recreating Apple’s original fees, essentially undermining the court order’s intended purpose of fostering competition and user choice.
Epic Games echoes the sentiment as its CEO Tim Sweeney swiftly joined the chorus of disapproval, calling the policy “anticompetitive” and a “total undermining” of the court order. He highlights the stifling effect on price competition, as developers, already burdened with third-party payment processor fees, are additionally taxed by Apple, making it virtually impossible to offer lower in-app purchase prices.
The Coalition for App Fairness (CAF) adds its voice too. This group, composed of Apple and Google rivals like Spotify, Epic Games, and Tile, expressed its disappointment through Rick VanMeter, its executive director. He stated that Apple’s approach “will not benefit developers and consumers,” failing to foster either choice or lower prices for in-app purchases. The walled garden, it seems, remains firmly intact.
Apple’s implementation of similar policies in other regions has already ruffled regulatory feathers. The 27% tax levied on Dutch dating app developers in 2022 resulted in a hefty $55 million fine for non-compliance. South Korea, with its recent law barring platform lock-in on payment options, issued similar warnings to both Apple and Google, hinting at potential fines for defying the new rules.
Apple’s App Store tax hike isn’t just stirring the pot in the US and South Korea. Across the Pacific, Japan is gearing up for its own regulatory battle, preparing legislation in 2024 to loosen the grip of tech giants like Apple and Google on the mobile app ecosystem. Similar to the EU’s Digital Markets Act, this initiative targets walled gardens across app stores, payments, search engines, and operating systems. And the core objective is to prevent platform operators from favoring their own services and locking users in.
Japan’s proactive approach, alongside the EU’s Digital Markets Act and recent US antitrust settlements, underscores a growing global consensus against platform monopolies. This regulatory pressure adds another layer of complexity to Apple’s App Store tax maneuver, suggesting that the company might face increasing challenges in maintaining its current model in the long run.
Apple’s latest move appears to be a calculated attempt to navigate the legal landscape while preserving its App Store revenue stream. However, the backlash from developers, regulators, and even consumers suggests that this solution might not be sustainable in the long run. Whether Apple chooses to modify its approach or face further legal and regulatory challenges remains to be seen.
