Facing EU regulatory pressure, Apple once again adjusts its App Store terms
2024-08-10
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On August 8, local time in the United States, Apple announced changes to its App Store rules in the European Union. Faced with regulatory pressure from the EU Digital Markets Act, Apple has changed its business terms in the EU several times this year.
Apple announced that it will launch updated terms this fall for app developers that can use StoreKit external purchase links in the EU App Store. Under the new terms, developers will be allowed to communicate and promote with customers outside the App Store, and developers can guide users to the purchase channel of their choice, whether it is other app stores, websites or other apps. Developers can also design promotions related to offers in their apps, including subscription prices or discount information available for other apps.
"(These adjustments are) in response to the European Commission’s announcement in June. We are making these compliance-related adjustments in response to the Digital Markets Act," Apple said.
In June this year, the European Commission announced that after a preliminary ruling, Apple's App Store rules prevented App developers from guiding consumers to use purchase methods outside its app store and guiding users to choose these offers, which violated the Digital Markets Act. If developers want to guide consumers to purchase elsewhere, Apple allows external links. Developers can add external links in the App, but external links are subject to some restrictions, which affects developers' communication and promotion through other channels. If the above allegations against Apple are finally ruled, Apple may face a fine of 10% of its global annual revenue.
The announcement released by the European Commission at that time also stated that it would launch a new compliance investigation into the "core technology fee" established by Apple and the many steps and processes for Apple users to use third-party app stores on their iPhones.
Last year, according to the Digital Markets Act, the EU designated six companies, Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft, as "gatekeepers" to focus on supervising these companies. In March this year, the Digital Markets Act officially came into effect. Facing regulatory pressure, this is not the first time this year that Apple has adjusted its App Store rules in the EU.
In January this year, Apple announced major updates to iOS and the App Store in the EU, allowing users to download software outside the App Store and providing new business terms. According to the terms, the new business terms for iOS Apps in the EU include three elements.
The first of these three elements is to choose to reduce the handling fee, that is, the handling fee paid by iOS apps released through the App Store for digital goods and services transactions is reduced to 10% (applicable to most developers and subscriptions after the first year) or 17%. The second is to choose the payment processing fee. After paying an additional 3% handling fee, iOS apps released through the App Store can use the payment processing function of the App Store. Developers use payment service providers in their apps, or guide users to visit their websites through links to process payments, without paying additional fees to Apple. The third is the core technology usage fee. After the installation volume of iOS apps released through the App Store or other App markets exceeds 1 million times, 0.50 euros must be paid for each first installation each year.
This is also the biggest "slide" in the history of "Apple Tax". "Apple Tax" refers to the commission that Apple charges for digital content consumption in the App Store. In contrast, in China, for example, Apple's tax rate for "standard enterprises" in China is 30%, while the tax rate for small enterprises is 15%.
After being complained by music streaming Spotify and then being investigated by the EU for antitrust violations, Apple received a huge fine from the EU in March this year. The complaint by Spotify was also related to the "Apple tax". The European Commission announced in March that it would impose a fine of more than 1.8 billion euros on Apple. The European Commission said that Apple abused its dominant position in the distribution market of music streaming apps on iOS.
In other parts of the world, Apple's App Store rules have also shown signs of loosening or changing in recent years. Outside the EU, Apple's compromise is mostly not a significant reduction in commissions, but an agreement to open third-party payments under certain conditions. For example, in September 2021, Apple reached an agreement with the Japan Fair Trade Commission that audio-visual and book apps can share website links within the app to register for delivery without in-app purchases. In the same year, South Korea passed an amendment to the Telecommunications Business Act, requiring Apple and Google to fully open third-party payments within the App. Soon after, Apple lowered its commission rate to 26% in South Korea.
In China, except for "existing developers and new developers joining the App Store whose total revenue of the App in the previous calendar year is less than 1 million US dollars", the commission for selling digital goods and services through the App Store is 30% under normal circumstances. At present, there is no sign of a reduction in the domestic "Apple tax" rate. Recently, there are also reports that Apple is increasing pressure on Tencent and ByteDance, requiring the two companies to cooperate in blocking payment loopholes in WeChat and Douyin to prevent developers from using similar loopholes to guide users to external payment systems and avoid Apple's commissions. However, as of press time, the relevant person in charge of Apple has not responded to reporters on the authenticity of this news.
According to the latest financial report, in the quarter ending June this year, Apple's service business sales, including the App Store, increased by 14.1% to US$24.2 billion.
(This article comes from China Business Network)
