Apple Fights to Shield Massive Revenue Stream from the App Store
During a trial, Phil Schiller expressed concerns about the commission charged to developers for external payments, fearing it would negatively affect their relationship with Apple.
Apple’s External Purchase Commission Criticized
During a trial on Monday, Phil Schiller, the executive overseeing Apple’s App Store, disclosed his concerns regarding the company’s planned 27% commission on purchases made outside the App Store. Schiller warned that this fee could not only pose compliance risks but also foster an “antagonistic” relationship with app developers.
Context of Commission Reduction
Apple’s standard fee has been 30% on in-app purchases. However, following the Epic Games-Apple legal battle in 2021, this was cut to 27%. The court ruled that although Apple is not a monopoly, it must stop blocking developers from offering alternative payment methods.
Subsequently, the company adjusted its policies to allow developers to redirect customers to their websites for alternative payment options.
Tensions with Developers and Internal Deliberations
Epic Games’ CEO has accused Apple of not fully complying with the court’s decision, criticizing the mere 3% reduction in commission for these transactions. Phil Schiller expressed his concerns about potentially having to pursue developers who fail to pay the commissions.
Significant Financial Impact on Developers
Despite initial reservations, a pricing committee—including Apple’s CEO, CFO, and legal team—decided to maintain the commission on external purchases. Court documents reveal that Apple considered the financial impact on developers who direct customers to their own sites, noting that a less seamless experience might deter consumers.
The company also contemplated imposing stricter regulations on the placement of links, which could decrease the number of apps choosing this method. Apple realized that the commissions might be seen as an attempt to charge for activities conducted on the internet, implying that “It could be perceived as if we were trying to charge for what happens on the internet,” noted an attendee at one meeting.