App Store Apps May Start Including Payment Links to External Websites
I have worked hard to avoid wasting my time and yours on the brain-sucking minutiae of the years-long antitrust challenge brought by Epic Games against Apple. To make a long story short, Epic wanted to break Apple’s hold on the App Store, bypassing it entirely or at least reducing the 30% commission. At trial in 2021, however, the judge decided in favor of Apple on nine of ten counts. On the remaining count, she ruled that Apple violated the anti-steering provisions of the California Unfair Competition Law by refusing to allow developers to mention external payment options. Both Apple and Epic appealed, and the US Supreme Court just declined to hear either appeal, putting the lower court judge’s ruling into effect.
The practical upshot is that Apple now allows developers to add external payment links, so you may start seeing the option for out-of-app payments in apps. Developers will have to jump through numerous hoops, abide by draconian Apple restrictions about the text and graphic treatment of external payment links, and put up with a scary-sounding warning about how Apple isn’t responsible for anything that happens with purchases made on the Web. Developers must also report all transactions to Apple within 15 days after the end of each month.
That’s because these external payments aren’t commission-free. Apple has long said that the 30% is a commission fee, not a transaction fee (online transaction fees are usually about 3%), and it will continue to charge commissions for external payments. In the end, external payments enjoy only a slight savings—3%, in fact. Apple charges 30% for App Store purchases or 15% for small developers and for the second and subsequent years of auto-renewing subscriptions. The commission structure for external purchases made within 7 days of the link being followed is 27% or 12% for small developers or subscription renewals.
In other words, because developers will have to pay 3% transaction fees to process credit cards, there’s no financial win in adopting external payments—they’ll be paying 30% or 15% regardless. Despite the commission fee wash, some developers, particularly larger ones, may see the extra work involved in external payments as worthwhile in exchange for being able to interact more directly with customers.
And a year or two down the line, renew subscriptions without going through Apple at all. Long term, developers will be able to avoid the commission entirely.
The downside: I think we all know how easy it as users to cancel subscriptions from the App Store. Other stores may not make it so easy. I know from experience that trying to cancel, say, a NY Times subscription takes a phone call plus stringent insistence on canceling.
Also, privacy to me is relatively important. I really don’t want some developers having all of my contact info, etc.
That said, some of Apple’s policies about payments and the past inability to link to direct payment to developers, plus their new insistence on a 27.5% commission and auditing by developers and stores, is I think a mistake. Apple should have relaxed this long ago, and taken far less commission even in their App Store. Perhaps Apple would have better relations with developers; perhaps more big developers would be willing to allow their iPad apps on VisionPro; perhaps some of this contention never would have happened.
I’m still struggling to understand the benefit of this to me, the consumer. I get the marginally cheaper prices (though I note that software prices have plummeted over the last decade, created at least partly by the competition that the App Store allows), but I share the concerns about having trouble canceling subscriptions, privacy, and the confusion inherent in having to jump out to a web page to make a payment. I understand why developers don’t like the (former) requirement but I’m not sure why I shouldn’t have.
As I read the requirements, developers will still have to pay 12% for auto-renewing subscriptions in the second and subsequent years.
If one sees a link to an external web site one could simply log out of the App Store without using the link and go directly to the web site for the software. Would that avoid any “commission” to Apple?
This would work fine for Mac apps - which don’t have to be installed via the App store. Non-app-store Mac apps can’t use certain APIs, but they also have the freedom to do what they want with everything else (e.g. use a completely independent payment processor).
But on the embedded device platforms (iPhone, iPad, Watch, TV, etc.), that’s not an option. Apps can only be installed via the App Store, and as such are subject to Apple’s App Store rules.
Actually, no. If you read Apple’s rules, the app cannot display the link, only offer a button. So the end user has no idea of the URL. (Keep in mind the button is supplied via the OS, so Apple knows when it’s been clicked.)
Secondly, the rules state that the app developer must track the visits to the URL that come via the link and if that same user comes back within 7 days and buys something, Apple is owed their commission.
Apple has the right to audit the developer’s records, etc. too, so trying to get out of the commission doesn’t sound like fun.
Can’t imagine this would be worth it for most developers just to save 3% (and their own credit card processing fees would probably be that much anyway, so net savings is zilch, plus a lot of administrative headaches).
Seems like a better way to do this would be to offer ads in your app and pay to advertise your own website that way! (But there’s probably rules against that, too.)
Apple’s policies strike me as a corporate middle finger to Epic and perhaps the court. I wouldn’t be surprised to hear that this issue is back in front of the judge in the near future.
Apple had to submit its plan to the judge, so it’s already there.
It’s definitely that. But not to the court. This is exactly the same solution Apple implemented in the Netherlands for dating apps over a year ago when they were required to open up third-party payments by the government. Epic should have seen this coming.
I doubt Match and the others were happy with this solution, but apparently the court accepted it. I would imagine the court here will as well.
I find it rather funny. If Epic and the others attacked Apple complaining the fees were too high, they’d be laughed out of court. In a free market, there’s nothing illegal about charging for access or having high prices. Grocery stores do it every day (that’s why the brand name products are on end caps and at eye level on the shelves, while generic stuff is on high shelves or at the bottom – because the brands pay for that better location). Epic themselves do it on their own game store!
So instead these guys attacked Apple complaining they should have the right to use their own payment systems, which is a bit more of a reasonable argument. Apple says fine, but you still owe us our commission, and now they’re still upset!
These app developers need to understand they’re not paying processing fees: they’re paying for access to Apple’s customers (the best in the industry) and paying for Apple’s reputation. Apple’s rep on privacy, security, etc. is what gets people to spend money on the App Store. People love having a reliable payment system that they can trust, that doesn’t give out their email and person info, etc. If people had to pull out their credit cards and enter in all that info every time they wanted to buy a $1 app or monthly subscription, the percentage of customers would be microscopic. Apple makes it so easy that millions do it every day. That’s what these app developers are paying for.
If they don’t like it, they can go to a different platform. (If enough did that, Apple might change their policies.)
Of course, if that is the real reason, they they should be satisfied with the result. After all, with their own payment processor, they will get access to all of it’s transaction data, which (I assume) they will mine for their own marketing purposes.
Of course, if the real reason was to just pay less money, well, that didn’t work.
Long term…I see a bifurcation of app and payment options. A switch in Settings that says allow them or not…with appropriate warnings that bad things could happen, tracking in logs someplace of moving that switch, disavowal of issues that happen with 3rd party stores and payment systems, and potentially making apps from 3rd party unavailable if you’ve selected Apple and vice versa if you’ve selected 3rd party.
Apple is justified in getting financial benefit from their ecosystem, store, and servers…and should not be forced to allow Epic or eBay or whoever to use their resources cost free. OTOH…the EU and some users demand ‘choice’…and I believe they’ll get that choice…but governments, developers , and users will have to accept the consequences of those choices.