Technology

Apple thought it dealt with Epic v. Apple — has it really?

Almost three years after the Epic v. Apple trial reached its conclusion, Apple is finally following a court order to let app developers link to outside payment methods. But its solution is being met with backlash.

Apple is giving developers the green light to send app users outside the built-in iOS payment system for the first time, following the instructions of a California court ruling in 2021. Under the terms of the injunction, Apple can’t prevent developers from including links, buttons, and other calls to action that direct users to outside payment methods. In a filing outlining the changes, Apple says it has “fully complied” with the order — but has it really?

While the new system technically lets developers avoid Apple’s fees of up to 30 percent for in-app purchases, it’s a hollow victory. The new policy will see Apple charge up to 27 percent as a commission on each purchase. On top of that, Apple’s compliance plan introduces other hindrances to developers that might deter users from making purchases on an external site. It’s a move that Epic CEO Tim Sweeney has called “bad-faith” compliance, promising legal action in response. 

The injunction doesn’t say Apple can’t take a commission from purchases made on external websites, and Apple is taking full advantage of that. (Judge Yvonne Gonzalez Rogers also mentioned the possibility of Apple taking a commission in one footnote of her ruling.) Last week’s compliance order states Apple will apply the 27 percent commission for transactions that “take place on a developer’s website within seven days after a user taps through an External Purchase Link.” Apple carves out a couple of exceptions: the company will charge the members of its Small Business Program at a discounted 12 percent rate, while transactions that automatically renew will also incur a 12 percent fee in the second year or later.

Apple is going to “poison the one victory Epic secured in their lawsuit so bad nobody would ever think to use it.”

That 27 percent charge is lower than the 30 percent commission Apple takes through App Store transactions, and the 12 percent rate is lower than the normal 15 percent Small Business Program commission. But developers will have to use a third-party payment processor, which typically requires its own roughly 3 percent fee — so they’re likely not saving any money. Meanwhile, the process creates additional burdens. Users must tap through a new warning screen every time they select an external payment link, saying Apple isn’t responsible for “the privacy or security of purchases made on the web,” and that they won’t be able to “access their App Store account, stored payment methods, or manage refund requests through the website.”

Apple also won’t allow links on any page that’s part of “an in-app flow to merchandise” and payments must link out to a webpage opened on the device’s default browser. Not only could this make alternative payment options more difficult for users to find, but it could discourage users from completing the transaction. As noted by Sweeney, this process could force users to log in to the developer’s website again, where they’ll have “to search all over again for the digital item they wanted to buy.” Developers who link to third-party payment processors must provide Apple with transaction reports every 15 days (even if there were no transactions), and Apple says it has the right to audit these records to make sure “the appropriate commission has been paid to Apple.” If Apple doesn’t get its commission on time, the company will charge developers a late fee with interest.

Daniel McCuaig, a partner at Cohen Milstein and a former trial attorney at the Department of Justice’s antitrust division, thinks it’s “unlikely” that the “court ultimately blesses” Apple’s 27 percent tax. “Apple only charges 30 percent when it handles the processing, and the order says they’ve got to let other people do it,” McCuaig tells The Verge. “It doesn’t say you get to keep your full profit margin when you let other people do it … That’s Apple trying to keep any competitor’s margin small and eliminate the possibility of any actual competition in the processing market.”

Yet Apple already applies similar rules in the Netherlands, where the country’s regulator forced Apple to start letting Dutch dating apps link out to alternative payment options in 2022. The only difference is that Apple actually lets dating app developers in the country add third-party payment processors within their apps, too. Besides that, the company still takes the same up to 27 percent commission and requires an (arguably less scary) warning screen when a user clicks on an alternative payment option. 

While the Dutch regulator didn’t seem to take issue with these changes at the time, Bloomberg obtained a confidential ruling in October 2023 that suggests the agency isn’t happy with Apple’s 27 percent tax on dating apps. Apple could also be forced to open up its walled garden to allow third-party payment options under the European Union’s Digital Markets Act (DMA), which aims to clamp down on anticompetitive practices among companies deemed “digital gatekeepers.” Spotify already has plans to introduce its own payment system on its app in Europe, but its implementation all depends on how Apple complies with the new rules. Apple will likely impose a commission on developers in Europe as well, with a report from The Wall Street Journal suggesting Apple is already planning new fees and restrictions on apps that want to allow sideloading.

Here in the US, Epic Games isn’t the only developer frustrated with Apple’s move. Nick Farina, an iOS developer who co-founded a payment app called Kuto, calls Apple’s 27 percent tax a “farce.” “This new policy of Apple’s is not serious and will be used by no one,” Farina tells The Verge. “Processing your own payments will cost you at least 3 percent (as Apple well knows), so you’re back to giving them 30 percent, plus doing a bunch of dev work and special recordkeeping, then reporting to them on your own dime.” Meanwhile, David Heinemeier Hansson, the creator of Ruby on Rails, called out Apple on X, saying that by charging a 27 percent commission, Apple is going to “poison the one victory Epic secured in their lawsuit so bad nobody would ever think to use it.”

The next step, according to McCuaig, would be for Epic to make a contempt filing against Apple in a district court. There, Epic will have to prove Apple isn’t complying with the terms of the order, potentially opening the door for another legal battle after the Supreme Court declined to take up the overall case on January 16th. 

If Epic does decide to contest Apple’s compliance plan in court, the burdens Apple is putting on developers and users certainly don’t help Apple’s case that it isn’t trying to squash competition — even if it’s complying with the court’s minimum requirements. “At the 100,000-foot level, you have to let third parties perform payment processing; I think it looks like they’re doing that,” McCuaig says. “As you drill in any closer, everything that they’re doing is making it impossible for third parties to succeed commercially in providing payment processing.”



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