Apple opens up to payments outside its app store, a turning point

Apple is now allowing app publishers in the United States to use a payment platform other than the company's own App Store, free of charge and commission, in a move that will comply with a court ruling . The company has made this major change by updating its app policy, which it has published on its website.

On Wednesday, federal judge Yvonne Gonzalez Rogers in Oakland, California, accused Apple of not complying with its ruling issued more than three years ago, which theoretically requires it to open iPhones to app stores competing with its own. In September 2021, the judge ruled that Apple could no longer force app publishers to use the App Store, its online store, as well as its payment system, which charges an average commission of 30%.

App Store exclusivity has traditionally been a huge source of revenue for Apple. The services business, which includes the app store, music (Apple Music) and video (Apple TV) streaming platforms, and remote data storage (iCloud), now accounts for 28% of the company's revenue.

Apple's legal defeat opens a new world for app developers.

David Heinemeier Hansson, technical director of app development company 37signals

In Europe, the Digital Markets Act (DMA), which came into effect last year, requires the six largest global tech players, including Apple, to open their platforms to competition. Under pressure from regulators and the courts, Apple had already allowed some publishers to use an alternative payment system, via a website, but still charged a 27% commission. The new version of the regulation does not mention a commission, meaning that using a third-party platform is now free of charge. The change currently applies only to the United States.

In her ruling issued Wednesday, Judge Yvonne Gonzalez Rogers ordered Apple to stop charging fees for transactions made outside of its app store. She also ordered it to stop sending messages to users who want to use a third-party store or app, except to inform them that they are not using the App Store. Apple explained in a message posted on its website that the update to its rules was intended to "compliance with a court ruling in the United States." The company indicated that it plans to appeal.

"Apple's legal defeat opens a new world for app developers," David Heinemeier Hansson, technical director of app development company 37signals, said on X (ex-Twitter). "Entire business models were impossible under the 30% commission regime . " "The cards have been reshuffled," Hamza Alsamraee, founder of artificial intelligence (AI) startup NewForm, said on X.

Apple Services is breaking records quarter after quarter because there are more and more Apple devices in circulation and people are doing more and more things from their phones.

Avi Greengart, analyst at Techsponential

On Friday, music streaming platform Spotify announced that Apple had allowed it to update its app to now offer the ability to pay outside of the App Store. "If Apple loses commissions on the App Store, they could try to increase revenue from other sources, such as developer fees or advertising, which could create new challenges" for the company's customers, warns Jin-Hyuk Kim, an economics professor at the University of Colorado.

Avi Greengart, an analyst at Techsponential, doesn't expect the overhaul to "have that much of an impact on Apple's revenue." "Apple Services is breaking records quarter after quarter," he says, "because there are more and more Apple devices in circulation and people are doing more and more things on their phones." In fiscal year 2024, which ended in late September, services revenue was close to $100 billion (96).

"For smaller developers, the App Store remains the best way to find customers without having to invest the kind of money Epic Games or Spotify will spend to set up alternative payment methods," said Carolina Milanesi of Creative Strategies. "And for most consumers, the extra steps (required to pay outside of Apple's system) aren't worth it if they don't spend a lot," she continued. "It's easier to go through the App Store."