Apple’s Controversial Compliance with EU Digital Market Act on External Payments

Since the implementation of the EU Digital Markets Act (DMA) in 2024, Apple has faced numerous fines for “anti-steering” practices. On April 23, the European Commission revealed that Apple has less than three months to comply with the ruling, which mandates allowing in-app links to external stores or payment methods, or face recurring fines until compliance.

Ahead of the deadline, Apple introduced a set of terms and rules specifically for the 27 EU member states. While it appears to open external payments, the options are largely superficial.

Apple introduced a “tiered App Store service fee system” targeting developers using external payments. The level of services unlocked depends on whether developers use external payments and how much commission they pay Apple.

Currently, there are two tiers: the “Level 1 Store Service” requires a 5% commission on in-app purchases but offers only basic features like app review, privacy labels, and limited Apple support. The “Level 2 Service” requires a 13% commission and includes 29 additional features such as automatic updates, app downloads, store recommendations, expedited reviews, and access to app ratings and reviews.

Most developers will likely have no choice but to opt for Level 2 due to the essential features it offers.

For third-party payments, Apple offers two options: using App Store in-app purchases with a reduced commission plus a 3% payment processing fee, or using external links with additional fees including a 6-month initial user acquisition fee, 12-month store service fee, and a “Core Technology Commission.” These fees can total up to 20% if developers do not qualify for the App Store Small Business Program or have not secured over a year of auto-renewals.

Developers using external links must also display a popup warning users they are leaving the Apple ecosystem.

The “Core Technology Commission” is a new fee Apple introduced following EU investigations, set to transition to a “single business model” next year, charging 5% commission on external sales through the App Store.

Critics argue Apple is engaging in “malicious compliance,” superficially meeting DMA requirements without genuinely addressing the issues or sacrificing profits.

Epic Games CEO Tim Sweeney labeled Apple’s actions as “malicious compliance, blatant illegality, and a mockery of fair competition.”

Epic previously fought a long legal battle against Apple’s 30% “Apple tax,” resulting in a court ruling allowing Fortnite back on the App Store and prohibiting Apple from blocking third-party payment methods. However, Apple has appealed this ruling.

In the EU, Apple plans to appeal the Commission’s ruling despite making changes, with the Commission yet to confirm if Apple can avoid fines.

Inspired by the DMA, Japan enacted the “Smartphone Act” last year, imposing specific regulations on Apple and Google.

This ongoing platform battle shows no signs of ending soon and may expand in scope globally.