Apple Says No Major App Developers Accept New Outside Payments

11/05/2024

Apple said in January that it would would let all third-party apps sold in the US include an outside link to a developer website to process payments for in-app purchases.

(Bloomberg) — No major app developers have signed up to use outside payment options that Apple Inc. introduced earlier this year for its App Store because the fees they pay would be at least as high as they were before, according to testimony presented to a federal judge.

The apparent lack of interest in the changes Apple offered as a remedy for anti-competitive practices drew harsh criticism Friday from US District Judge Yvonne Gonzalez Rogers, who has been overseeing the technology giant’s court fight with Fortnite maker Epic Games Inc. for almost four years.

“It sounds to me as if the goal was to then maintain the business model and revenue you had in the past,” Rogers said to an Apple executive during a multi-day hearing to address Epic’s complaint that the iPhone maker isn’t abiding by the terms of a corrective order the judge issued in 2021.

Apple said in January that it would would let all third-party apps sold in the US include an outside link to a developer website to process payments for in-app purchases. Since then, Apple has received just 38 applications for outside links out of an estimated 65,000 app developers that offer in-app purchases, company executives testified.

The reason: Apple will charge a 27% fee to developers who want to use the link entitlement program — and when combined with payment processing fees, the total is even more than the 30% the App Store has taken for itself for years, the judge was told at the hearing in Oakland, California.

Why App Store Fees Are Drawing Fire Worldwide: QuickTake

Years of complaints from app developers and scrutiny from governments globally have already forced Apple to rewrite some of the rules protecting its dominance in the app distribution marketplace that generates revenue of more than $200 billion a year.

Epic has argued that Apple’s January revisions to the App Store’s rules don’t amount to meaningful changes, while Apple contends it has delivered the remedy Rogers ordered three years ago following a trial between the two companies.

Rogers indicated that Apple hasn’t convinced her it has done enough. Testimony revealed that the 27% fee was approved by a committee that included Chief Executive Officer Tim Cook and other top executives.

“You’re telling me a thousand people were involved and not one of them said maybe we should consider the cost” to the developers? the judge said. “Not a single person raised that issue of the thousand that were involved?”

None of the 38 applications for the new outside payments program came from developers of major apps, said Apple’s vice president of finance, Alex Roman.

At one point, an attorney for Epic, Yonatan Even, questioned Roman about whether there is evidence supporting Apple’s claim that the changes it made to the App Store would lower prices for app users.

Even said in addition to Apple’s fees, app developers face costs related to alternative payment solutions. But Apple did no analysis into the latter bucket of costs and still said that its App Store changes would translate to lower prices for users, the lawyer argued.

The judge seemed to agree.

“I’m looking for data and it sounds like you all made lots of decisions without data,” she said.

The hearing will continue next week.

The case is Epic Games Inc. v. Apple Inc., 20-cv-05640, US District Court, Northern District of California (Oakland).

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