Following the Supreme Court’s refusal to hear appeals in the Epic Games v. Apple lawsuit, Apple is making significant changes to its U.S. App Store guidelines.
Developers can now link to an external in-app payment method. However, they still will need to pay Apple a commission of 12% to 27% on these transactions. And the mechanism for allowing such external payments might prove so onerous that developers take a pass.
Epic Games CEO Tim Sweeney called it a “bad-faith ‘compliance’ plan” Tuesday — and vowed that his company will contest Apple’s plan in District Court.
New iOS App Store guidelines allow for an external payment method
Apple and Epic Games have been locked in a legal battle since 2020. The Fortnite developer dragged Cupertino to court over its App Store policies. While Epic Games lost the case, courts ruled that Apple must drop its “anti-steering” rules and allow app developers to notify users of alternative payment methods. Federal district and appeals courts ruled against Apple in this matter, and the U.S. Supreme Court declined to hear the cases.
After the Supreme Court’s decision, Apple updated the iOS App Store guidelines to allow app developers to include a link to an alternative payment method on one screen. However, they must also offer an option to use Apple’s in-app purchase system. Developers can promote their alternative payment method by saying, “Lower prices offered at [sitename]” or “For special offers, go to [sitename].”
And that’s just the start.
To use an external payment system, developers must submit an external Link Entitlement request form to Apple with relevant information. To qualify, the developer must not be a member of Apple’s Video Partner Program or News Partner Program. The Link Entitlement is only available on the iOS and iPadOS App Store in the United States.
Apple to charge 27% commission on all transactions
To be clear, using an external payment method does not help developers avoid Apple’s traditional transaction fees. The company will charge a 27% fee on all “digital purchases initiated within seven days from link out” in the first year. That will drop to 12% for subscriptions in the second year.
Those fees are 3% lower than what Apple charges large developers to use its payment system. App developers eligible for the App Store Small Business Program pay a 15% commission.
Plus, developers need to submit additional paperwork to Apple each month to track their external sales. Developers must provide Apple “transaction reports within 15 calendar days following the end of each calendar month.” They will be required to submit this report even when there are no transactions. Developers also must collect and remit the commission to Apple within 30 days of the invoice being issued.
On X, Epic’s CEO blasted Apple’s proposed implementation.
“Apple has introduced an anticompetitive new 27% tax on web purchases,” Sweeney said. “Apple has never done this before, and it kills price competition. 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.”
He also accused Apple of crafting a cumbersome mechanism for users wanting to pay on an external website.
A quick summary of glaring problems we've found so far:
1) Apple has introduced an anticompetitive new 27% tax on web purchases. Apple has never done this before, and it kills price competition. Developers can't offer digital items more cheaply on the web after paying a… pic.twitter.com/YkHuapG7xa
— Tim Sweeney (@TimSweeneyEpic) January 16, 2024
“Epic will contest Apple’s bad-faith compliance plan in District Court,” Sweeney wrote.
Find more information on the StoreKit External Purchase Link Entitlement on Apple’s website.