Apple overhauls EU app terms, scrapping per-install fee for 5% commission

Apple has scrapped the most contentious element of its EU app distribution terms, replacing a per-install fee that drew regulatory fire with a straightforward 5% commission on digital transactions. The changes, announced on Tuesday and effective from 1 October, follow months of negotiations with the European Commission and amount to the most significant revision since Apple first opened its ecosystem to alternative distribution in the bloc.

A single set of terms replaces the dual track

When Apple first complied with the Digital Markets Act in early 2024, it offered EU developers a choice: stick with the existing App Store terms, or adopt new terms that permitted alternative distribution and payment processing. The catch was that the new terms came with the Core Technology Fee, a charge of 50 euro cents per first annual install once an app passed one million installations. For a popular free app, that fee could run into millions of euros a year, effectively penalising the very scale that made alternative distribution attractive.

The Commission made clear it regarded Apple's initial compliance as inadequate. Margrethe Vestager, then the EU's competition chief, said at the time that the terms did not constitute genuine choice. Developers including Spotify and Epic Games echoed that view, arguing the fee structure made leaving the App Store economically irrational for most apps. The Commission opened a non-compliance investigation in June 2024, and Apple faced potential fines of up to 10% of global turnover if found in breach.

Under the revised terms, that two-track system disappears. Every developer distributing apps in the EU will operate under a single set of conditions. The Core Technology Fee is gone entirely. In its place comes the Core Technology Commission: a 5% levy on digital transactions in apps distributed outside the App Store. The initial acquisition fee and the store services fee are also eliminated. Apple says developers can sign the new terms immediately.

What the 5% commission means in practice

The shift from a per-install charge to a percentage commission matters because it removes the existential financial risk that the old fee structure posed to successful free apps. A social media app with ten million EU users downloading it per year would have faced a 5 million euro bill under the old Core Technology Fee, regardless of whether it earned any revenue from those users. Under the new model, Apple only takes a cut when money changes hands.

The 5% rate applies specifically to apps distributed outside the App Store, whether through alternative marketplaces or via the web. Apps distributed through the App Store itself remain subject to Apple's standard commission structure, which ranges from 15% to 30% depending on the developer's revenue and subscription duration. Apple says it has adjusted commission rates across all distribution channels, though it has not published a full comparison table.

For developers, the arithmetic is straightforward. A small developer selling a 5 euro subscription through an alternative marketplace will now owe Apple 25 cents per transaction. The same transaction processed through Apple In-App Purchase would cost 75 cents at the small business rate of 15%, or 1.50 euro at the standard 30% rate. The gap narrows for larger developers paying 15% on the App Store, but the alternative route remains cheaper on a per-transaction basis.

Mixed payments finally permitted

Perhaps the most consequential change for users and developers is that Apple will now allow developers to offer Apple In-App Purchase alongside alternative payment options within the same app. Under the previous EU terms, developers who chose alternative payments had to exclude Apple's system entirely. That binary choice forced developers to decide whether to prioritise the security and convenience of Apple's checkout or the lower fees of third-party processors. They can now offer both.

There are conditions. Apple says developers must follow "presentation requirements" designed to give users a consistent and transparent experience. The company has not detailed exactly what those requirements entail, but similar rules in other jurisdictions typically mean developers cannot steer users toward cheaper options through deceptive design. Developers must also select their payment options and maintain them for 12 months, preventing frequent switching that might confuse users or create security gaps.

The four options available to EU developers are: Apple In-App Purchase alone; alternative payment processing within the app; linking out to the web for payment; or a combination of these. The 12-month lock-in means a developer committing to mixed payments today cannot strip out Apple's system in January if it decides the integration costs too much.

Child safety and the web distribution gap

Apple has framed its resistance to opening iOS distribution partly as a safety argument, and the revised terms reflect that concern. For alternative payment flows, the company says it has worked with the Commission to implement child safety measures. In EU member states that require parental consent for digital actions by children over 13, those protections will apply to alternative payments as well.

The company is also expanding eligibility to operate alternative app marketplaces or distribute apps via the web, though the source announcement does not specify the precise criteria beyond stating that companies will qualify under broader terms. Web distribution, available only in the EU, remains the least regulated channel. Apple emphasises that there is no marketplace operator providing ongoing oversight for web-distributed apps, and warns that a bad actor could operate for an extended period before detection.

To mitigate that risk, Apple will continue requiring every alternatively distributed app to pass Notarization, its baseline review process. Notarization checks for basic functionality and screens for malware and other serious threats, but it is a thinner process than the full App Store review. It does not assess content, age ratings, or business model fairness. Apple has consistently argued that this gap is the price of regulatory-mandated openness; the Commission has consistently argued that Apple overstates the risk.

Why the Commission pushed for these changes

The European Commission designated Apple as a gatekeeper under the Digital Markets Act in September 2023, requiring it to allow alternative app distribution and payment processing. Apple's initial compliance, unveiled in January 2024, was widely criticised as designed to discourage developers from using the new freedoms. The Core Technology Fee, in particular, was seen as a penalty on scale that made alternative distribution commercially unattractive for any app with a large user base.

The Commission opened formal non-compliance proceedings in June 2024. Those proceedings examined whether Apple's restrictions on steering, its fee structure, and its requirements around alternative distribution met the DMA's obligations. Tuesday's announcement suggests Apple and the Commission have reached a substantive accommodation, though the Commission has not formally closed its investigation. A spokesperson for the Commission did not immediately comment on whether the revised terms resolve all outstanding concerns.

The timing matters. The Commission has been under pressure to show that the DMA produces tangible results for European consumers and businesses. Apple, meanwhile, faces DMA enforcement across multiple fronts, including requirements around interoperability with third-party devices and accessories. Resolving the app distribution question on relatively favourable terms, before any formal infringement decision, allows Apple to avoid a ruling that could set a binding precedent.

The commercial calculus for developers

For small and mid-size developers, the revised terms are unambiguously better than what preceded them. The elimination of the per-install fee removes the biggest financial risk, and the ability to mix payment options means they can offer Apple's trusted checkout alongside cheaper alternatives. A developer earning under one million dollars globally already pays 15% on the App Store; the 5% alternative commission offers meaningful savings, though it comes with the cost of integrating and maintaining a separate payment system.

For larger developers, the calculus is more complex. Spotify, which has been among the most vocal critics of Apple's App Store policies, will need to weigh the 5% commission against the infrastructure costs of running its own payment processing and the risk of fragmenting the user experience. Epic Games, which operates its own store on other platforms, may find web distribution more attractive now that eligibility criteria are broader. The 12-month commitment on payment options adds a planning constraint that did not exist before.

Apple's decision to retain a commission on transactions outside its own payment system is notable. The company is asserting that its operating system, development tools, and APIs create value for apps regardless of how they process payments. That position is consistent with Apple's long-standing argument that it is entitled to a return on its platform investment. It is also consistent with the Commission's view that the return must be proportionate and must not function as a barrier to competition.

What remains unresolved

Several questions are not answered by Tuesday's announcement. Apple has not disclosed the full commission schedule for the App Store and alternative channels, making it difficult for developers to compare total costs across distribution methods. The "presentation requirements" for mixed payments are unspecified, and developers will need to see the detailed implementation before judging whether they create new friction. The expansion of eligibility for alternative marketplaces and web distribution is described but not defined with precise thresholds.

More fundamentally, the Commission's non-compliance investigation remains open. Apple's revised terms may satisfy the Commission's concerns on app distribution and payments, but the investigation also covers restrictions on steering, the practice of informing users about cheaper purchasing options outside the app. Tuesday's announcement does not address steering directly, and that question could yet produce further friction.

The DMA also requires Apple to ensure interoperability with third-party connected devices and accessories, a separate obligation that has generated its own disputes. Apple's concessions on app distribution do not resolve those questions, and the Commission has shown a willingness to pursue enforcement across multiple provisions simultaneously.