Thoughts on changes in the Apple rules for App Store in EU

Apple Jan 26, 2024

As expected, Apple recently announced new terms for EU non-App Store sales, closely aligning with the predictions I made in my previous article:

  • Developers will still need to sign apps with a certificate from Apple
  • Apple will review #iOS apps installed from the 3rd party marketplaces
” Notarization for iOS apps — a baseline review that applies to all apps, regardless of their distribution channel..."

Changes in Business Terms

“What would stop Google from opening their own alternative iSO App Store now?” - I read in a few discussions this morning. It appears Apple has anticipated such scenarios and adjusted their business terms for apps in the EU. Notably, developers have the option to either embrace these new terms or stick with their existing contracts if they do not plan to distribute apps outside the official App Store or engage external in-app payment providers for In-App Purchases.

So, what are the new business terms?

  • A reduction in commission from 15% to 10% for those in the Small Business Programme.
  • A processing fee of 3% levied by Apple.
  • A charge of €0.50 per first annual install, applicable after surpassing the threshold of 1,000,000 installs.

On top of that, alternative marketplaces are required to secure a standby letter of credit from an A-rated financial institution amounting to €1,000,000.

One might think, “Google can easily meet such financial prerequisites!”
And indeed, they can. However, this doesn't imply they'll opt to distribute popular free apps, which constitute the majority in the App Store.

Here is an example

Imagine if Google established their marketplace and migrated all its 50+ apps – including YouTube, Google Maps, Docs, and others.

The cumulative annual installs for Google could reach approximately 1,000,000,000.

Based on Apple’s Fee Calculator, this would translate into a staggering monthly fee of €41,625,000 for Google, equating to €500M annually, excluding any In-App Purchase processing fees (as some Google apps offer IAP, like the YouTube premium subscription).

Using Google as an example really applies to any company considering starting their own app marketplace. The numbers just don't add up for a store focusing on free apps. Those numbers don’t include the marketplace infrastructure costs, those are just fees paid to Apple.

Even for selling paid apps, the benefits aren't clear. The fees and rules make it hard for such a store to make sense or even make money.

Summary

"Apple is killing indie developers!" - This statement has been echoed numerous times today, yet it's a clear misconception. For developers who choose not to switch to alternative marketplaces, the old business terms remain intact. Nothing really changes for the vast majority of developers.

It seems Apple has meticulously crafted these policies to pose challenges for alternative marketplaces, ensuring they maintain control over developers and apps while complying with the EU’s stringent “anti-gatekeeper” regulations.

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Alexey Rashevskiy

Founder @ Appuchino