Ch, ch, ch, changes for Apple in the EU
The EU has been on Apple’s (AAPL) case concerning its rules for developers on the App Store since early 2019 when Spotify (SPOT) filed a formal complaint with the commission, followed by a formal investigation commencing 15 months later. The heart of the Spotify complaint was the fact that it was forced to charge higher prices for its upper tier subscriptions through the Apple App Store because of the 30% commission charged to developers. It could steer users to its website for in-app purchases, but that alternative was made difficult by Apple rules. The EU fined Apple €1.8 billion in March of last year for what it called abusive practices concerning music streamers, primarily in response to the anti-steering rules Apple had in place for years.
The DMA (Digital Markets Act), finalized last year, provides legislation in the EU that protects against these kinds of practices, and Apple is continuing to modify its App Store rules in order to comply with DMA and not incur additional fines. Most recently they made a number of changes relating to the App Store that they hope will convince the EU Commission that they are not creating unfair trading conditions, reducing competition, or ultimately limiting consumer choices and causing higher prices.
Here are the key changes Apple has made to its EU APP Store Policies:
Store Service Fee – This replaces the flat commission model that Apple had previously used if developers used an external payment link within their apps.
Tier 1 – 5% - This tier comes with App Review, Content moderation, Privacy labels, Trust & Safety features, and basic app delivery. It does not include auto App updates, ratings & reviews, Downloads across devices, natural language search, Apple Store featuring & marketing, app tabs, and advanced app insights & performance metrics, essentially cutting away many of the App Store’s promotional tools.
Tier 2 – 13% - Includes all App Store features including those omitted in Tier 1. Small businesses (earning less than $1m) and those apps with auto-renew can lower the fee to 10%. Tier 2 is the default, but developers can opt to Tier 1 once per quarter for each app on each storefront.
Initial Acquisition Fee – This 2% fee applies to sales of digital products made by new users who are ‘acquired’ through the App Store and then make an external purchase. This 2% fee continues (on monthly subscriptions or items) for the first 6 months of the new user’s timeline. Small business developers can waive this fee.
Core Technology Commission – 5% - This is a new commission that replaces the previous and highly controversial CTF that was charged when a user made an external purchase through an App Store application. As of now, the previous CTF (Core Technology Fee) is still in effect but is being phased out (Target 1/1/2026) and the CTC phased in. The old CTF was a €0.50 fee charged to the developer for each install after the first install over 1 million each year. The big complaints about this fee came from developers who provided their apps for free, having no sales offset to the fee for popular apps.
Other than fees, Apple has made a few other changes to assuage the forces in the EU, such as allowing developers to promote their applications and goods on external websites (other than their own) and alternative marketplaces, and has reduced the number of times the “You are leaving the App Store…” warning appears when users click on an external payment link in an app. Apple still has not implemented a choice of payment options for individual apps (either App Store in-app or ‘alternative’ payment options) but seems to be heading in that direction, albeit less than voluntarily.
The developer community seems mixed about Apple’s new EU system, some continue to criticize Apple for maintaining a structure that is anti-competitive while others see the new tiered structure more flexible, but the bottom-line comes from the EU commission who must determine whether the new rules meet DMA standards. If not Apple could face another round of massive fines for even small violations.
The DMA (Digital Markets Act), finalized last year, provides legislation in the EU that protects against these kinds of practices, and Apple is continuing to modify its App Store rules in order to comply with DMA and not incur additional fines. Most recently they made a number of changes relating to the App Store that they hope will convince the EU Commission that they are not creating unfair trading conditions, reducing competition, or ultimately limiting consumer choices and causing higher prices.
Here are the key changes Apple has made to its EU APP Store Policies:
Store Service Fee – This replaces the flat commission model that Apple had previously used if developers used an external payment link within their apps.
Tier 1 – 5% - This tier comes with App Review, Content moderation, Privacy labels, Trust & Safety features, and basic app delivery. It does not include auto App updates, ratings & reviews, Downloads across devices, natural language search, Apple Store featuring & marketing, app tabs, and advanced app insights & performance metrics, essentially cutting away many of the App Store’s promotional tools.
Tier 2 – 13% - Includes all App Store features including those omitted in Tier 1. Small businesses (earning less than $1m) and those apps with auto-renew can lower the fee to 10%. Tier 2 is the default, but developers can opt to Tier 1 once per quarter for each app on each storefront.
Initial Acquisition Fee – This 2% fee applies to sales of digital products made by new users who are ‘acquired’ through the App Store and then make an external purchase. This 2% fee continues (on monthly subscriptions or items) for the first 6 months of the new user’s timeline. Small business developers can waive this fee.
Core Technology Commission – 5% - This is a new commission that replaces the previous and highly controversial CTF that was charged when a user made an external purchase through an App Store application. As of now, the previous CTF (Core Technology Fee) is still in effect but is being phased out (Target 1/1/2026) and the CTC phased in. The old CTF was a €0.50 fee charged to the developer for each install after the first install over 1 million each year. The big complaints about this fee came from developers who provided their apps for free, having no sales offset to the fee for popular apps.
Other than fees, Apple has made a few other changes to assuage the forces in the EU, such as allowing developers to promote their applications and goods on external websites (other than their own) and alternative marketplaces, and has reduced the number of times the “You are leaving the App Store…” warning appears when users click on an external payment link in an app. Apple still has not implemented a choice of payment options for individual apps (either App Store in-app or ‘alternative’ payment options) but seems to be heading in that direction, albeit less than voluntarily.
The developer community seems mixed about Apple’s new EU system, some continue to criticize Apple for maintaining a structure that is anti-competitive while others see the new tiered structure more flexible, but the bottom-line comes from the EU commission who must determine whether the new rules meet DMA standards. If not Apple could face another round of massive fines for even small violations.
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