Spotify and Epic Games have called Apple’s new compliance plan in the EU region as “misleading” and “malicious” after the big tech firm announced last week that it will allow developers to distribute iOS apps through alternative app stores in accordance with EU’s landmark Digital Markets Act (DMA).
Allowing third party app stores on Apple devices was one of the key demands of many developers including Spotify and Epic Games, in addition to seeking lower app store commission and an alternate payment processing system. Though Apple has agreed to make concessions on most of these demands, developers feel their cost burden will not ease as Apple’s revised business terms for iOS apps in the EU will introduce new charges and fees.
Under the new terms, iOS apps on the App Store will pay a reduced commission of either 10% (for subscriptions after the first year or 17% on transactions for digital goods and services. Also, an additional fee of 3% will be charged from iOS apps if they use App Store’s payment processing mechanism. Apple also introduced a new core technology fee of €0.50 for each first annual install per year on apps with over 1 million annual installs in the EU, whether they are downloaded from the App Store or another app marketplace.
Prior to this, Apple charged a commission of 15% (for small developers) to 30% on an app’s annual revenue and in-app purchases which includes both subscriptions and one-time payments.
Spotify CEO Daniel Ek said in a post on X that Apple's DMA announcement is at best “vague and misleading”.
“Under the false pretense of compliance and concessions, they put forward a new plan that is a complete and total farce. Essentially, the old tax was rendered unacceptable
under the DMA, so they created a new one masquerading as compliance with the law,” Spotify said in a blog post.
Epic Games CEO Tim Sweeney also has called Apple’s manner of compliance with the DMA as malicious as it is filled with junk fees that will continue to hurt developers.
“Forcing developers to choose between App Store exclusivity and the store terms, which will be illegal under DMA, or accept a new also-illegal anticompetitive scheme rife with new junk fees on downloads and new Apple taxes on payments they don’t process,” Sweeney said in a post on X on January 26.
Sweeney also warned that Apple can still block his company from launching the Epic Games Store and distribute battle royale game Fortnite through it on Apple devices.
Epic Games took Apple to court in August 2020 after Fortnite was banned from the App Store for violating rules and offering links for third party payments in the game. In April 2023, A US appeals court ruled against Apple and called Apple’s practice “anticompetitive” and “harmful” to consumers.
That said, the court rejected nine other antitrust allegations including the one related to 30% commission on in-app purchases and subscriptions. The court also rejected the claim that blocking third-party app marketplaces on iPhones was a violation of antitrust laws.
Under DMA, EU recognised Apple, Google, Meta and Microsoft as gatekeepers and services provided by them as “core platform services”. Passed in October 2022, DMA aims to restrict gatekeeper companies from using their dominant position in different online markets to harm rival businesses and trolley innovation. It also aims to improve user choices by allowing interoperability between social media and alternative services such as alternate payment processing and third party app stores.