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The bankruptcy in the ongoing lawsuit between Epic and Apple came to an end when the U. S. Supreme Court refused to hear additional arguments from either company. The ruling leaves the case where it left off after the 9th U. S. Circuit Court of Appeals ruled on it in April. 2023.
The main question to be resolved (to summarize in a few sentences the days of debate and multiple long and technical court decisions) was whether Apple could continue to obtain the 15 to 30% reduction it takes on all App Store acquisitions on its platforms and in in-app purchases and subscriptions purchased in those apps. The decisions, widely considered victories for Apple, did not open iOS or iPadOS to third-party retail app stores or app downloads as Epic had initially sought. The rulings established that Apple’s so-called “anti-direction” regulations (language that prohibited developers from mentioning cheaper or selective purchase features that might be available outside of an app) were anti-competitive.
Apple has updated its App Store rules to allow developers to provide external links to other payment options, technically circumventing its normal fee structure. But they come with many extra conditions that developers have to meet. And instead of paying Apple a 15 or 30 percent cut, Apple will collect a 12–27 percent commission. After factoring in the fees from whatever non-Apple payment processor these developers decide to use, the revenue they give up will remain essentially unchanged.
The new rules, which apply only to the U. S. App Store, apply to the U. S. App Store. In the U. S. , they cover what Apple calls a right to an external StoreKit purchase link. This right comes with a long list of additional requirements, which Apple says are “designed to help protect people’s privacy and security. “, save you scams and fraudulent activity, and the overall quality of the user experience. “
Most notably, external links must adhere to Apple’s “design and language requirements,” cannot “mimic Apple’s in-app purchase system,” and can only be displayed in one place in your app. Developers still can’t include language about going directly to their websites for a discounted rate. And whenever users click the external purchase link in your app, they’ll be shown a full-page warning screen explaining that Apple is not responsible for the site’s privacy or security and that you won’t be able to use your Apple account to manage purchases or subscriptions.
Developers who do not download Apple’s approval will not be able to use this linking right and will be subject to the same regulations and restrictions related to external purchase links as before. Developers who offer third-party purchase links will also be required to offer popular in-app purchases through Apple, and developers “cannot discourage end users from making in-app purchases. “
The new commission reporting needs can be even more onerous, especially for smaller promoters. In short, developers who would have owed Apple 15% of all in-app purchases will owe Apple a 12% commission on any one-third in-app purchase made. -Site of the party. Developers who owed Apple a 30% reduction will instead owe a 27% commission. Apple says those fees “explain the really hefty price that Apple offers developers, as well as facilitating similar transactions. “
To put those fees in context, payment processors charge a small percentage of all online transactions, plus a small flat fee. Square and Stripe, to take two prominent examples, take 2. 9% of each sale plus an additional 30 cents (NerdWallet has a clever comparison list).
Depending on what a developer qualifies for in-app purchases, this can be just under 3% or more than 3%. Regardless, most developers would struggle to make more money than employing Apple’s built-in payment system, especially when you think about overhead. assembly costs of Apple’s filing requirements. Developers will be required to record monthly transaction reports with Apple, and will be billed based on those reports. Apple will tax interest on overdue payments, and if the company ever “develops an API for easier reporting,” developers will be required to upload their apps within 30 days.
Developers who attempt to circumvent any of Apple’s requirements may have their apps removed and their developer accounts suspended at Apple’s discretion.
Apple’s structuring of this lien right is due to speculation advised by Judge Yvonne González Rogers in the original Epic v. Apple resolution.
“Even in the absence of in-app purchases, Apple can also continue to charge developers a commission. It would simply be more difficult for Apple to collect that commission,” Rodriguez wrote, before continuing in a footnote. “In such a hypothetical world, developers can also potentially avoid the commission while profiting from Apple’s innovation and intellectual assets for free. The Court assumes that in such circumstances, Apple would possibly rely on the imposition and use of a contractual right to audit developers’ annual accounts to ensure compliance with their commissions, among other methods. Of course, any IPR choice (including the above) would impose higher financial and time prices for both Apple and developers.
Regardless of Apple’s intention, it’s clear that most developers will continue down the path of least resistance: Apple’s in-app payment formula, which bundles Apple’s commissions and payment processing fees into one payment. fixed 15-30%, is not in discussion. to the same restrictions or caveats as Apple’s external acquisition link rights formula and does not require the same amount of administrative costs.
And the new regulations may simply open bankruptcy in the Epic vs. Epic CEO Tim Sweeney called the new regulations a “bad religion enforcement plan” and vowed to challenge them in district court.
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