Epic Games and Spotify object to Apple’s new fees – and there’s only one solution

The controversy over Apple’s fees for apps which are sold outside the App Store continues, with both Epic Games and Spotify objecting to the company’s latest attempt to comply with EU antitrust laws.

Spotify has described Apple’s latest fee structure as “confusing and unacceptable,” while Epic Games has called the fees “illegal” …

A quick recap

For many years, the only way to sell an iPhone app was through the official App Store. Apple set the commissions, and for developers it was a case of take it or leave it.

Apple’s view was that this didn’t amount to a monopoly because the relevant market was mobile apps, and the App Store only had a slice of that market. However, the EU disagreed, and said the relevant market was iPhone apps, and that it was anticompetitive to prevent developers from selling apps either directly from their own websites (as happens with Mac apps) or through third-party app stores.

Apple initially announced a plan to comply, but developers described the terms as “malicious compliance” as they’d have to pay the iPhone maker the same commissions whether or not an app was sold through the App Store. The EU said that it appeared Apple’s announcement was not in compliance with the law, and opened a formal investigation.

Apple’s new fees

The Cupertino company seemingly accepted that its initial plan wasn’t going to fly, and yesterday announced a complicated alternative fee structure.

The Initial Acquisition Fee is a commission on sales of digital goods and services made by a new app user, across any platform that the service offers purchases. This applies for the first 12 months following an initial download of the app with the link out entitlement. 

On top of that, the Store Services Fee is a commission on sales of digital goods and services, again applying to purchases made on any platform. The Store Services Fee applies within a fixed 12-month period from the date of any app install, update or reinstall […]

The rate for these two new fees varies depending on the developer’s circumstances, [resulting] in a complicated matrix of eligibility and fee costs, that developers will need to carefully evaluate.

Spotify and Epic Games object

Spotify and Epic Games were two of the developers who have long argued that Apple was abusing its dominant market position, and whose complaints were partially responsible for the development of the EU’s Digital Markets Act (DMA) antitrust legislation.

Neither company was happy with Apple’s first attempt and compliance, and nothing has changed this time.

Epic Games CEO Tim Sweeney wasted no time in repeating the “malicious compliance” accusation, and alleging that the new fees are illegal.

Apple continues its malicious compliance by imposing an illegal new 15% junk fee on users migrating to competing stores and monitor commerce on these competing stores.

TechCrunch got a statement from Spotify, describing the new Apple fees as confusing and unacceptable.

We are currently assessing Apple’s deliberately confusing proposal,” the company statement reads. “At first glance, by demanding as much as a 25% fee for basic communication with users, Apple once again blatantly disregards the fundamental requirements of the Digital Markets Act (DMA). The European Commission has made it clear that imposing recurring fees on basic elements like pricing and linking is unacceptable. We call on the Commission to expedite its investigation, implement daily fines and enforce the DMA.

9to5Mac’s Take

One thing everyone can agree on is that this is a mess. We have a law which essentially says companies must act fairly, but doesn’t specify precisely what is and isn’t acceptable in terms of app stores.

We have Apple’s initial proposal – which the company could not possibly have believed would satisfy the EU – and now a take two which is horrendously complex, and also seems to defy the intent of the law.

The inevitable result is that the EU will once again open a compliance investigation. That will likely find that Apple has not complied with the law, and we’ll end up with yet another version. The only question is whether the iPhone maker will do that voluntarily, or whether it will go to court.

The only sane way out of this is for EU lawmakers to either amend the law to spell out precisely what it requires from app store operators, or to issue a clear statement on what it expects from them. Apple can then either accept those terms, and comply, or the two sides can go to court and let a judge decide.

What we cannot do is allow this endless cycle of proposals, complaints, and investigations.

Photo by Manh Tuan Nguyen on Unsplash