Right at the deadline to comply with the European Union Digital Markets Act, Apple is making changes to its developer policies. However, it may not be enough to escape the European Commission's ire.
An EU flag with the App Store logo
Since the introduction of the Digital Markets Act, Apple has been under close scrutiny, with the repeated threat of fines for noncompliance. On June 26, Apple said it is implementing a plan that makes changes to its rules concerning steering and transaction fees.
The move by Apple was expected, considering that June 26 was the last of 60 days Apple had to fall into compliance. After receiving an initial $570 million fine in April, Apple faced the prospect of even higher fines as time moved on.
There are two main areas of change happening on Thursday, which apply to developers operating in the EU. One set involves steering compliance, and the other involves the fees Apple charges developers.
If the EU agrees that Apple's changes go far enough, it may escape those extra fines.
"The European Commission is requiring Apple to make a series of additional changes to the App Store," Apple told ÌÇÐÄVlog in a statement. "We disagree with this outcome and plan to appeal."
Apple officially updated its with news of the EU-specific updates on Thursday. It also said developers could request a 30-minute online appointment to ask about the changes, and to provide feedback.
Anti-anti-steering
The first change, about steering rules, is the easiest to explain.
Under the old rules, developers were not allowed to point users in the direction of a website or an alternative payment platform outside of the Apple ecosystem. Under pressure from the European Commission, Apple allowed a limited change to its anti-steering rules, which allowed developers to make just one link, to their website.
As part of the changes implemented on Thursday, developers will be able to publicize offers across all channels, instead of just their website. This can include a link in an app to their website, other websites, and even other apps.
Developers are also not limited to just one link, as they can also use multiple links within their app. Also, rather than a flat link to their website, they can also include additional parameters, redirects, and intermediate links.
The change could be a big one to developers, due to the great potential of analytics.
Apple will still include a skippable user disclosure sheet when users click on links. There will be a new option for users to mute the sheet, so it doesn't keep on appearing when the same link is used in the future.
Fees out, fees in
The other change involves Apple's 27% Core Technology Fee, which it charged on purchases made from third-party payment processors. This was due instead of the usual 30% fee for using Apple's In-App Purchases mechanism.
The EU was not happy about the fee at all, and Apple has made big changes to it. But rather than removing it entirely, it is replacing it with a series of other fees.
There are now three fees that apply to app transactions that pass through the app without using the App Store Mechanism. They are made up of the Initial Acquisition Fee, the Store Services Fee, and the Core Technology Fee or Commission.
The Initial Acquisition Fee applies a charge of 2% on sales of digital goods and services, for up to six months from the initial download of the app to the user's iPhone or other hardware. This drops to 0% for participants of the Small Business Program or for tenured accounts.
The fees for non-App Store transactions in the EU are lower, but more complicated.
The second Store Services Fee helps pay for the App Store as a platform, and varies depending on what the developer requires from the App Store. A 5% fee is charged under the name of Tier 1, which applies to mandatory services from the App Store.
This includes paying for services like live moderation, App Review, account antifraud, content disputes, privacy nutrition labels, App Store charts, the product page, and even manual app updates.
A second class of fee, Tier 2, is 13%, reduced to 10% for Small Business and tenured accounts. This covers the cost of many other services provided by the App Store.
This ranges from less essential items such as app promo codes, app insights, appearing in App Store Featuring sections, and search suggestions. It is also paid if developers use some more essential elements, including automatic app updates, automatic downloads, using Apple Business Manager or Apple School Manager, and phased releases.
At the end is the Core Technology Fee, which costs 0.50 Euro per transaction if the developer is signed up to Apple's EU Terms, or the Core Technology Commission 5% if they are under the Standard Terms.
However, as Apple wants to transition to a unified terms model, all developers with apps in the EU will shift to it by January 1, 2026. That Core Technology Fee will turn into the Core Technology Fee.
Apple said that the fee would only apply to transactions using actionable links from the app, namely selectable links that take the user to another location. If the developer includes a URL that is static text and doesn't open a browser, the fee structure wouldn't apply to that.
Questionable acceptability
The changes outlined by Apple to meet the EU's rules come after a long period of communication between the two. Apple said that it had worked with the European Commission throughout the two-month period to determine what needed to be changed.
However, depending on your interpretation of the intention of the EU's ruling and what Apple has produced, Apple may not have gone far enough to avoid a penalty.
The anti-steering rule changes certainly go along with the law. Under the changes, Apple has removed pretty much all barriers for developers to link out from apps however they like.
For the European Commission, this will be a very good change.
The fees, however, may not be as useful. What Apple has managed to do is reduce the fee structure from the initial decrease of 30% to 27%, then into a three-stage structure that brings the percentage down a bit further.
How far that drop goes depends on how much you need from Apple. If you can get away with the absolute basics of the App Store existence, servicing existing users or being part of the Small Business program, the fee can be 10% at its lowest.
By contrast, the highest fee would involve the 2% Initial Acquisition Fee for new users, the 13% Tier 2 Store Services Fee, and the 5% Core Technology Commission, making it 20% in total.
The reality to developers who do rely on many elements of the App Store is that they will be forced to pay the Tier 2 cost, increasing the percentage they pay. All because some features that they deem essential are considered Tier 2 costs to Apple.
For the EU, it will have to weigh up whether the 10% at best and 20% at worst three-fee structure is enough of a cut from the 27% Apple had before. Apple is trying to justify the cost in the structure itself, which may help its cause, but it's still down to the opinion of the regulator of how the DMA should be interpreted.
Noncompliance ruling
The April fine was hefty by most companies' standards, and was said by EU antitrust chief Teresa Ribera to "send a strong and clear message" that the Digital Markets Act will force fairness in digital markets.
The fine itself was because the EU ruled that Apple failed to comply with anti-steering rules. The EU made this clearer on May 27.
Apple had changed its ways from its previous stance, which prevented developers from publicizing alternative ways to make payments for services other than through Apple's In-App Purchases system. However, the European Commission disagreed with what Apple introduced instead.
Rather than miss out on the 30% commission from its own payment system, Apple decided that it would allow the purchases through third-party payment mechanisms. But Apple still insisted on getting a 27% fee from developers for those transactions.
Apple also still applied limits to the ways that developers could share links to users.
The EU still has to decide if Apple's changes go far enough.
The European Commission decided in its ruling that the old and new ways were not in compliance, due to restricting how developers promoted their non-App Store transactions. It also disagreed with the imposed fee, as well as a limitation of one URL per app.
Apple also argued that it shouldn't be fined at all, claiming that the novelty of the regulation and Apple's own "good faith efforts to engage" with the European Commission counted for something. The ruling stated that Apple's arguments over the fines were convincing at all.
Evidently, the European Commission had and has intentions for how the Digital Markets Act was meant to function, and Apple didn't want to play ball. There's the spirit of the regulations and what their aims are, and then there's Apple's interpretation.
That interpretation involved doing whatever it could to avoid paying fees and to try and maintain business as usual. At one point, it even argued over the definition of the word "free" as read in the regulation, due to the nuances of its publication in different languages.
And, there's a series of he-said, she-said accusations between Apple and the EU, regarding the Digital Markets Act, compliance, and interpretations.
The hope of change and avoiding fines
By June 23, there was a faint glimmer of hope that Apple would do something to deal with the ticking fine time bomb. Reports that the EU could delay the imposition of fines on Apple seemingly turned into claims that Apple was working with the European Commission on the topic.
To the EC, the talks with Apple were "to discuss effective compliance."
While the actual topic of the talks are officially unknown, it was believed that Apple would offer concessions on steering provisions. There was also talk of that 27% fee.
The details of each were not described at the time. However, given the prospect of more fines for noncompliance, it is most probable that there was some talk of concessions occurring.
Those potential fines can be very high under the DMA. Its regulatory powers under the act can include fines of up to 5% of Apple's average daily global revenue, not just regional and covering Europe.
With an annual income in excess of $400 billion for the 2024-2025 financial year, 5% of daily revenue is approximately $55 million.
That $55 million figure doesn't seem that much to Apple, especially compared to the previous $570 million figure. But as a daily fee, that can quickly add up, turning into practically a billion dollars if the EU applies the fee for just 18 days.
By implementing the new policies, Apple is trying to avoid this fate. But it remains to be seen if the new fee structure is enough to keep the EU from wanting more change from the Cupertino iPhone giant.
Trump fine threat
The possibility of a further fine was, and still is, considerable, but Apple could've had it worse, and earlier too.
The $570 million fine was the result of multiple threats by the EU to urge Apple into actually complying fully with the DMA. The fact that it took multiple attempts for the EU to actually apply fines was in part prompted by the threat of retaliation.
In the lead-up, it was reported that the EU was delaying fines to try and appease President Donald Trump. There was even talk of the fine being lower than it could've been, for similar reasons.
However, after the EU actually imposed the fines, it seemed that it was not enough to keep the U.S. happy. In response, the White House called it a "novel form of economic extortion" that wouldn't be tolerated by the U.S.
The strong talk from the Trump Administration in April may go some way to force the EU into weakening its potential Apple fine, in favor of avoiding other threats from across the Atlantic.