On August 8th, local time in the United States, Apple announced changes to its App Store rules in the European Union. Faced with regulatory pressure from the EU's Digital Markets Act, Apple has changed its business terms in the EU several times this year.
Apple has announced that it will release updated terms this fall, applicable to application developers who can use the StoreKit external purchase link in the EU App Store storefront. Under the new terms, developers will be allowed to communicate and promote with customers outside of the app store, and can guide users to their chosen purchasing channels, whether it be other app stores, websites, or other applications. Developers can also design promotions related to discounts in the application, including subscription prices or other available discount information for the application.
These adjustments are in response to the European Commission's announcement in June. We have made these compliance related adjustment plans for the Digital Markets Act, "Apple said.
In June of this year, the European Commission announced that after a preliminary ruling, Apple's App Store rules prevented app developers from guiding consumers to use purchasing methods outside of their app store and guiding users to choose these discounts, in violation of the Digital Markets Act. If developers wish to guide consumers to make purchases elsewhere, Apple allows external links to be added to the app. However, external links are subject to certain restrictions that may hinder developers from communicating and promoting through other channels. If the above accusations against Apple are ultimately ruled, Apple may face a fine of 10% of its global annual revenue.
The announcement released by the European Commission at that time also stated that it would launch a new compliance investigation into Apple's "core technology fees" and the many steps involved in Apple users using third-party app stores on iPhones.
Last year, according to the Digital Market Act, the EU designated six companies, Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft, as "gatekeepers" to focus on the supervision of these companies. In March of this year, the Digital Market Act officially came into effect. Faced with regulatory pressure, this is not the first time Apple has adjusted its App Store rules in the European Union this year.
In January of this year, Apple announced significant updates to iOS, App Store, and other platforms in the European Union, allowing users to download software outside of the app store and providing new business terms. According to the terms, the new business terms for iOS apps in the EU region include three elements.
The first of these three elements is to choose to reduce transaction fees, that is, to reduce the transaction fees paid for digital goods and services through iOS apps published on the App Store to 10% (applicable to the vast majority of developers and subscriptions after the first year) or 17%. The second option is to choose payment processing fees. iOS apps published through the App Store can use the App Store's payment processing function after paying an additional 3% handling fee. Developers can use payment service providers within their app or guide users to their website through links to process payments without paying additional fees to Apple. The third is the core technology usage fee. After the installation of iOS apps released through the App Store or other app markets exceeds 1 million times, an annual fee of 0.50 euros must be paid for each first installation.
This is also the biggest 'landslide' in the history of the 'apple tax'. The "Apple Tax" refers to the commission charged by Apple for digital content consumption that occurs within the App Store. In contrast, taking China as an example, Apple's tax rate for "standard enterprises" is 30%, while the tax rate for small enterprises is 15%.
Previously complained by music streaming media Spotify, and subsequently launched an anti-monopoly investigation by the European Union, Apple received a huge fine from the EU in March this year. The complaint from Spotify is also related to the 'Apple tax'. The European Commission announced in March that it imposed a fine of over 1.8 billion euros on Apple Inc. The European Commission has stated that Apple has abused its dominant position in the distribution market of music streaming apps on the iOS system.
In other parts of the world, there have been signs of loosening or changes in Apple's App Store rules in recent years. Outside the EU, Apple's compromises are mostly not about significantly reducing commissions, but about agreeing to open up third-party payments under certain conditions. For example, in September 2021, Apple reached an agreement with the Japan Fair Trade Commission that allows the audiovisual book app to share website links for registration and delivery within the app, without the need for in app purchases. In the same year, South Korea passed a revised Telecommunications Business Act, requiring Apple and Google to fully open third-party payments within their apps. Shortly thereafter, Apple lowered its commission rate to 26% in South Korea.
In China, except for existing developers and new developers who joined the App Store with a total revenue of less than $1 million in the previous calendar year and participate in relevant programs, the commission for selling digital goods and services through the App Store is normally 30%. At present, there is no sign of a reduction in the domestic "apple tax" rate. Recently, it was also reported that Apple is increasing the pressure on Tencent and ByteDance, requiring the two companies to cooperate in plugging the payment loopholes in WeChat and Tiktok, so as to avoid developers using similar loopholes to guide users to external payment systems and avoid Apple's commission. However, as of the time of publication, the relevant person in charge of Apple has not responded to the reporter regarding the authenticity of this news.
According to the latest financial report, in the quarter ending at the end of June this year, Apple's service business sales, including the App Store, increased by 14.1% to $24.2 billion.