Apple was forced to change its App Store purchases, but still found a way to win
The long-simmering dispute over Apple’s App Store commissions and practices has just resulted in some pretty substantial changes to the way you can now pay for apps. But in some ways, not much has changed – and you may not save any money at all.
Recently, a judge dismissed all pending appeals in Apple’s lawsuit against Epic Games. The end result is that both parties must adhere to the original judgment, undoing a major App Store practice that caused much controversy among developers.
Previously, developers were prohibited from allowing users to sign up for in-app purchases (IAPs) on their own websites (or anywhere other than in the app itself). In fact, the developers weren’t even allowed to tell users that they could save money by paying elsewhere.
Now, as noted by Apple InsiderApp makers can apply to Apple for the right to include a link to a payment portal on a third-party website they operate. Apple must approve the link and it only applies to iPadOS or iOS apps in the US App Store.
In theory, those sound like pretty big changes, since you were previously forced to use Apple’s proprietary IAP method for purchases. One of the complaints about this process was the 15-30% cut that Apple charges developers for in-app sales. If users no longer have to pay through IAPs, that means they can avoid higher prices due to these charges, right?
Well, not quite. The latest change actually makes little difference in this situation – and it’s unlikely the prices you pay will drop anytime soon.
High costs and obstacles
Although developers can now prompt users to pay through a system over which Apple has no control, they still have to pay Apple a significant commission on these payments. One of the conditions of the link right is that IAPs must remain an option within the app. That means developers can’t prevent users from paying using a method that gives Apple a piece of the pie.
There is one more warning. Even if a user pays via a link right, Apple charges a commission of between 12% and 27% on the purchase. That’s slightly lower than the standard rates of 30% and 15%, but not by much.
The only exception is if a user purchases something that can be used in the app via a method that does not involve link permissions or IAP. Developers can therefore realize direct sales generated through, for example, online advertisements or email marketing, without paying a commission. In that case, we may pay a lower price for apps.
There are many more obstacles for developers. While they may mention that a third-party payment method may be cheaper, they cannot actively discourage anyone from using Apple’s IAP method. The external link can only appear once in the app and cannot be served via a pop-up or modal window.
There is more. App developers cannot include their external link as part of Apple’s IAP process, and must also show a “system disclosure” sheet when a user selects the link that tells them they are leaving the Apple ecosystem and going to an external website. External links may not contain tracking measures and cannot be opened in an in-app browser. The App Store information page cannot list the third-party payment method, and the linked website cannot mimic Apple’s IAP system, which Apple says is intended to minimize fraud and user confusion.
In other words, there are a lot of hoops for developers to jump through. Even if they manage to do that, the benefit of going external isn’t that great at all. While some developers had hoped that overcoming Apple’s IAP stranglehold would reduce the cut Apple would take on their revenues, the most likely outcome is that little will change this way.
And with all these requirements, actually using the link permissions method can also be a hassle for users.
What is Apple’s motivation?
Why does Apple insist on receiving a large commission despite the unpopularity of this move? That’s simple: Apple views its commission as fair compensation for the service it provides to both users and developers. That includes allowing developers to make their apps visible, distributing the apps, ensuring a secure environment for users to download and pay for apps, marketing, support, and more.
If these changes are in effect, users may not save much money, as Apple charges developers almost exactly the same rates whether they use the IAP system or not. In fact, the user experience will likely be worse as external payment involves more taps and may require additional account registrations.
Developers will likely be frustrated by the way Apple has implemented these changes, as it also means more work for them (both to implement third-party payment methods and to avoid falling foul of Apple’s rules) without much tangible benefit to their users.
Still, we probably shouldn’t be too surprised that it turned out this way. For starters, Apple believes that it has put a lot of work into its operating systems and App Stores, and therefore should be given the opportunity to monetize those systems. On the other hand, the judge ruled in Apple vs. Epic process made it clear that Apple charging a commission was not an issue.
So don’t expect major changes in the way you pay for apps or their content anytime soon. Things may seem different on the surface, but underneath they remain largely the same.