Following a court order, developers working on dating apps are not obliged to use Apple’s in-app purchase system in the Netherlands. And because those purchases aren’t handled by Apple, the company isn’t taking its usual 30% discount on digital purchases. But developers who use a third-party payment system still have to pay a commission. And Apple plans to charge a commission of… 27%.
If you haven’t been following the Dutch antitrust saga, the Dutch Consumer and Markets Authority initially said that Apple was in violation national competition rules on a very specific case – digital content sold by dating app developers, such as superlikes and boosts.
This poses another threat to Apple’s integrated payment system. In South Korea, Apple has agreed to allow third-party payment systems following a new digital payments law. There are also several ongoing cases in the United States and Europe.
As for the Netherlands, Apple appealed the antitrust ruling, saying allowing external payments was not in the interest of users.
“Because we do not believe these orders are in the best interests of our users, we have appealed the ACM’s decision to a higher court. We are concerned that these changes will compromise user experience and create new threats to user privacy and data security. In the meantime, we are obligated to make the mandatory changes we are launching today and will provide further information shortly,” the company said last month.
The company has little choice as the Dutch competition authority has already fined Apple 5 million euros ($5.7 million) for missing the first deadline to comply with the law. court order.
Earlier today, Apple updated its documentation which explains how dating app developers can take advantage of alternative payment systems in the Netherlands. It’s a pretty technical document that explains how developers can provide an alternative payment option.
But it also says that Apple plans to charge app developers a commission. Essentially, developers get a three percentage point cut on the App Store commission because Apple doesn’t handle transactions. But the company still thinks it’s fair to charge a 27% commission for the various services it offers:
Per the ACM order, dating apps that have the right to connect or use a third-party integrated payment provider will pay Apple a commission on transactions. Apple will take a 27% commission on the price paid by the user, excluding value added taxes. This is a discounted rate that excludes value related to payment processing and related activities. Developers will be responsible for collecting and remitting all applicable taxes, such as Netherlands Value Added Tax (VAT), for sales processed through a third-party payment provider.
Each month, app developers will be required to submit a report of digital sales related to the app hosted on the App Store. After that, Apple will send an invoice related to its 27% commission.
In other words, developers aren’t going to generate a ton of extra revenue by bypassing Apple’s payment system. But that’s not all. There are also technical overheads with third-party payment systems.
If you are an app developer with users in multiple countries, which is quite common with dating apps, you cannot submit the same app binary. Development teams will need to compile and submit two different binaries: a Dutch app and a non-Dutch app.
Apple wants to make it as difficult and expensive as possible to use a third-party payment system. Chances are most developers will continue to use Apple’s in-app purchase API.
“Dating app developers who wish to continue using Apple’s in-app purchase system may do so and no further action is required,” Apple writes.
But it feels like Apple is just buying time. The App Store remains under close antitrust scrutiny in various jurisdictions. Apple will find ways to circumvent early court rulings and pro-competition reforms. But regulators will likely get smarter if they really want to cut Apple’s commission from app developers.
