Apple has acknowledged that it could eventually earn no commission at all from some app purchases made through alternative payment systems, as regulators and courts continue to weaken its control over App Store payments.
In its latest regulatory filing, Apple said that developers using alternative distribution and payment methods could result in the company earning a lower commission or no commission. Apple warned that such changes could hurt its revenue, profit margins, financial results, and stock price.
Apple Has Been Fighting Regulators Around the World
Apple traditionally charges developers commissions of up to 30% on digital purchases and subscriptions processed through its App Store payment system.
However, regulators around the world have been forcing the company to loosen those restrictions.
The European Union required Apple to allow alternative app marketplaces and payment options under the Digital Markets Act. Similar regulatory changes have also emerged in countries including Japan and Brazil.
These changes give developers more ways to distribute apps and collect payments without relying entirely on Apple’s App Store infrastructure.
Apple Tried Charging 27% on Outside Payments in the US
The situation developed differently in the United States.
A 2021 court injunction in the long-running Epic Games v. Apple case required Apple to let developers direct users to payment methods outside the App Store.
Apple responded by introducing a 27% commission on purchases made through external payment links, only slightly below its standard 30% rate. Developers would also have to pay their own payment-processing costs.
US District Judge Yvonne Gonzalez Rogers later found Apple in civil contempt, ruling that the company had willfully failed to comply with the injunction. The 27% fee was blocked.
The Ninth Circuit subsequently upheld the contempt finding but said Apple could return to the lower court and argue for a commission based on allowable costs.
Apple Now Wants Up to 15%
Apple has since proposed a much lower commission structure for purchases completed through external links.
Under its proposal, standard apps would pay 15%, while developers participating in the Video Partner Program, News Partner Program and Mini Apps Partner Program would pay 10%. Subscription renewals would also carry a 10% fee.
Developers in Apple’s Small Business Program would pay the lowest proposed rate at 5%.
The proposal has not yet settled the dispute, meaning Apple could still end up receiving substantially less than it wants.
Apple Admits the Commission Could Fall to Zero
Apple’s latest Form 10-Q makes that risk clear.
The company said that when developers use alternative payment and distribution methods, Apple may receive a smaller commission or “may not earn a commission at all.”
Apple also confirmed that it is currently subject to a US court order preventing it from charging any commission or fee on certain purchases. The company said the Ninth Circuit has instructed the lower court to modify the injunction to allow some form of commission, but the final structure remains unresolved.
Apple’s Services Business is Already Feeling the Pressure
The issue matters because App Store commissions form part of Apple’s highly profitable Services business.
Apple reported $30.7 billion in Services revenue for the June quarter. While that was a record, it fell below Wall Street expectations of around $31.4 billion. Its Services gross margin of 75.6% also came in below expectations.
Appfigures estimates that Apple’s US App Store commission revenue has fallen 18% so far this year, while Sensor Tower found that US consumer spending through the App Store declined 6% during the second quarter.
Apple’s filing warns that if courts and regulators continue narrowing or eliminating its commissions, the impact could extend beyond App Store revenue to the company’s overall margins, financial performance, and valuation.
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