Apple Changes App Store Rules that Violated the EU DMA

Six weeks after an EU investigation determined that it wasn’t complying with the Digital Markets Act (DMA), Apple announced changes to its App Store that it says address the concerns. But even a quick reading of the changes shows that the firm’s malicious compliance strategy remains intact: This is all about confusing developers and regulators alike.

“In response to the announcement by the European Commission in June, we’re making changes to Apple’s Digital Markets Act compliance plan,” a new post to the Apple Developer news and updates blog explains. “We’re introducing updated terms that will apply this fall for developers with apps in the European Union storefronts of the App Store that use the StoreKit External Purchase Link Entitlement.”

In June, the EU Commission said that a preliminary investigation of Apple’s DMA compliance found the company in violation of the steering provisions that require the company to allow developers to communicate with their own customers. Specifically, Apple prevented app developers from communicating pricing information in their app, promoting offers on the web or elsewhere outside the app, and engaging in other forms of communication that might help customers save money outside the Apple ecosystem. (Separately, the EU is investigating another form of malicious compliance by charging developers onerous fees when they interact with customers outside the App Store and implementing a purposefully convoluted fee structure.)

The changes that Apple announced today mean that app developers will finally be able to communicate with their customers and promote purchase offers that will occur outside their apps, and outside of Apple’s control. Which is what was required of it in the first place.

That’s a good thing. But Apple has also further complicated the fee structures associated with purchases that occur outside the apps that it distributes for developers in its App Store. The controversial Core Technology Fee at the center of the second EU compliance investigation remains in place, but new sign-ups can opt for an alternative fee structure with two new fees, the Initial Acquisition Fee and the Store Services Fee, instead. In other words, what was already convoluted has become even more so, and Apple’s overreaching goal–to continue collecting fees for services it does not provide to disincentivize developers from doing this in the first place–remains unchanged.

The Store Services Fee is the more egregious of the two. Apple will charge developers 10 percent for the sale of any digital good or service made on any platform outside its App Store during the first 12 months following the user installing an app that has outside links for purchasing. In other words, if the developer chooses to communicate purchase choices outside the App Store, Apple will charge them a 10 percent fee for nothing, adding to the costs of whatever service they’re using outside of Apple’s ecosystem.

The Initial Acquisition Fee is an additional 5 percent fee on top of the Store Services Fee that will be levied on new app installs only. Apple says the charge covers the cost of introducing new apps to users.

There’s more. This 12-month period for fees on outside purchases kicks in again if a user uninstalls an app and later reinstalls it, and, worse–much worse–every time the developer updates the app. That’s right: If the developer updates an app, the fee window resets. Every. Single. Time.

And if a developer was foolish enough to take advantage of Apple’s previous DMA compliance changes and wishes to switch to this new fee structure, the Store Services Fee rises from 15 percent to 20 percent.

In the (relatively) good news department, small-time app developers who were never going to impact Apple’s bottom line in the first place can register for a Small Business Program that reduces the Store Service Fee to 5 percent, albeit only after the first year. Developers already in this program are being charged 7 percent. In its contorted language, Apple claims that these lower fees cover most developers. What it leaves out is that they do not apply to the developers who generate most of the App Store’s revenues. That is, the biggest developers are smaller in number, but they are also the most lucrative to Apple, and by far, as a group.

Given the history here, it’s unlikely that the European Commission will bless these changes. But that’s the point of malicious compliance: Keep dragging out the time frame in which you can continue charging developers egregious fees for as long as possible.