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Apple shocks iOS developers with 27% commission on third-party payments

iPhone home screen with the App Store icon displayed.

Getty Images | NurPhoto

Apple has surprised iOS app developers by announcing a plan to charge 27 percent commissions on third-party payments—nearly as high as Apple’s standard in-app payment cut of 30 percent. While Apple is applying the 27 percent commission only to dating apps in the Netherlands in order to comply with a government order, critics worry that Apple will charge commissions in any country where it’s required to allow third-party payments unless such commissions are specifically forbidden.

In a new support document for developers, Apple said the 27 percent commission will apply even when a developer simply links to their own website. “To comply with an order from the Netherlands Authority for Consumers and Markets (ACM), Apple allows developers distributing dating apps on the Netherlands App Store to choose to do one of the following: 1) continue using Apple’s in-app purchase system, 2) use a third-party payment system within the app, or 3) include an in-app link directing users to the developer’s website to complete a purchase,” the document’s introduction said.

Explaining that the 27 percent commission applies to options 2 and 3, the document said:

Consistent with the ACM’s order, dating apps that are granted an entitlement to link out or use a third-party in-app payment provider will pay Apple a commission on transactions. Apple will charge a 27 percent commission on the price paid by the user, net of value-added taxes. This is a reduced rate that excludes value related to payment processing and related activities.

Apple claims “audit rights” over sales

To ensure compliance, developers must provide a sales report to Apple each month. Apple would then send an invoice to the developer.

Apple notes that it “has audit rights pursuant to the entitlement’s terms and conditions,” which “will allow Apple to review the accuracy of a developer’s record of digital transactions as a result of the entitlement, ensuring the appropriate commission has been paid to Apple.” Failure to pay the commission “could result in the offset of proceeds owed to you in other markets, removal of your app from the App Store or removal from the Apple Developer program.”

The ACM issued its order on December 24. “Dating-app providers are currently not able to choose freely a payment system for purchases made in their dating apps by consumers,” the agency said. “If Apple does not adjust the unreasonable conditions within two months, it will have to pay a periodic penalty of 5 million euros per week up to a maximum of 50 million euros.”

Arment expects Apple to use same tactic elsewhere

“Even if you’re not a dating app in the Netherlands, this is worth a read,” Marco Arment, who created Instapaper and Overcast and was previously CTO of Tumblr, wrote on Twitter today while pointing to Apple’s announcement. “This is almost certainly how Apple plans to comply with ALL external-purchase regulations, until and unless they’re forced to be more permissive.”

We asked Apple today if it will eventually charge similar commissions on third-party payments in the US and worldwide and will update this article if we get a response.

South Korea passed a law forcing Apple and Google to change app store payment requirements last year. Last month, “Apple said it plans to provide an alternative payment system at a reduced service charge compared with the current 30 percent charge, as the tech giant turned in its compliance plans to the Korea Communications Commission,” The Korea Herald reported at the time. Google had previously “pledged to provide an alternative payment system on its app store in South Korea at a slightly reduced service charge,” the article said.

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