Fee Structures for iMessage: How Apple is Trying to Explain the EU’s Biggest Puzzles, and Where Do They Come From?

The regulation is broad, but it includes obligations around letting users install third-party apps or app stores, uninstall stock apps, and change default services; making large messaging services interoperable with rivals; and banning gatekeepers from ranking their own products higher in app stores than third-party rivals or requiring app developers to use a gatekeeper’s in-app payment system.

Under the new terms, apps distributed through the App Store that choose to use an alternative payment system will pay a 17 percent commission (rather than 30 percent) on digital goods and services. For any apps that qualify for the reduced small business rate, the commission rate is 10 percent. The additional 3 percent fee then applies for developers that choose to use Apple’s payment processing system.

The EU would no longer pay Apple’s commission to developers if they chose to distribute their apps in other ways. Apple is making changes to how its fee structures work, both in the App Store and for apps newly distributed outside of it. Developers can either choose to use these new business terms or stick with the existing model and continue to distribute through the App Store as normal.

The European Commission launched an investigation into whether or not iMessage should be included after it was designated as a core platform service, but it is not certain if it will be included in today’s announcement from Apple.

Sweeney will surely have more to say about Apple’s EU policies, too, and it seems like he’s just getting started. There is a lot of hot garbage in Apple’s announcement. The new horror show will take more time to finish, so stay locked up.

One of the companies that has been making the most noise for these kind of changes is the games store run by the company, called the “Epic Games Store”. It battled Apple in the courts over their approach to the App Store.

Still, this is the structure that Apple is offering for now, and the possibilities for iOS developers and the ecosystem at large are huge. They have to jump first and then push through Apple’s multimillion cent fee structure.

There may be more than one conversation going on. When Apple’s new rules go into effect in March, the European Commission will review them. If regulators feel that something in Apple’s plan violates the law, they could push back. This fee already seems to be among the bigger issues that critics will point to.

The new Apple plan to comply with European Union regulations is a complete and total farce, according to theSpotify, one of Apple’s biggest critics. In a post published on Spotify’s website, the company calls Apple’s new app installation fee “extortion, plain and simple” and says Apple is trying to force developers not to leave its store.

Apple’s fee might stop competition from arising altogether. Amazon pays no Apple cut for purchases in its app because it only sells physical goods. Opening an app store would mean subjecting itself to tens of millions of dollars in fees, with only the hypothetical success of its new store on the other side. It is not surprising that the first announcement of an Apple App Store is from Epic, the company that has the biggest game in its category, but is missing from the store. That means no entrenched install base to migrate.

Once apps are popular, the real caveat comes into play. Any app that sees more than 1 million installs per year must pay Apple a 50 euro cent fee (about 54 cents USD) for every new installation over that first 1 million — that fee is charged once per every user each year. App updates count as installations, too. Since no major app goes more than a year without an update, that effectively means any sufficiently popular app is going to be indefinitely paying Apple 50 euro cents per user per year, above that initial 1 million. It is not just apps. Apple requires third-party app stores to pay 50 euro cents per user per year, and they don’t receive the install grace that apps do.

Here’s some extremely back-of-the-napkin math: There are 408 million monthly users on Facebook in Europe. iPhones make up about one-third of the mobile phone market in Europe. If one-third of those Facebook users have the iPhone app installed, Meta would be paying Apple €67.5 million (around $73.4 million) per year, just for Facebook. There would be more than one fee for Messenger, WhatsApp, and other platforms. That number is also just for active users. Meta will have to pay for people who have installed the app years ago and never opened it, but still get automatic updates.

The company needs to launch a third-party app store and the developers have to move their users to that store. And Apple does not make it easy for apps to shift users from one store to another. A user needs to download the old version of the app from Apple’s AppStore, uninstall it, and then install the new one through the new app store.

The 17 percent commission that Apple will still take from the developers who use third-party payment processing is being called out by the company. This will make a “developer’s choice between the status quo and this new program as difficult as possible,” Spotify adds. While Spotify revealed plans to roll out its own in-app payment system in the EU this week, it seems unlikely this will pan out.

As for the €1,000,000 letter of credit, Testut tells The Verge that it’s a “reasonable” ask from Apple. “While it does significantly raise the barrier for entry, I’ve learned first-hand that running an alternative marketplace comes with a strong responsibility to protect users,” Testut says. Requiring proof of credit ensures that marketplaces are legit, reducing the risk of spoof marketplaces taking everyone’s money and leaving.

Testut says he sees this as positive for the platform. “For the first time ever, entirely new classes of apps can exist on iOS, which I believe will push the platform forward.”

Everyone will adopt Apple’s new guidelines even if they have some potential drawbacks. AltStore, an app store that lets users on iOS sideload apps, already has plans to officially launch its app store in the EU. The developer of the AltStore says that it is working toward meeting Apple’s requirements so that users can download the store directly from their website. Testut says developers will be able to publish their apps for free on AltStore, and that they have added deep Patreon integration so developers will be able to distribute Patreon exclusive apps to just their patrons. AltStore doesn’t plan to charge a commission on Patreon-exclusive apps, either.

Other developers are also skeptical of the new changes. A reduction in the high commission Apple charges is a benefit for developers, according to Paul Haddad, the co-founder of Tapbots. However, Haddad also notes that Apple’s Core Technology Fee “is likely unworkable” for freemium apps, as well as those that offer demos. Haddad does not want to risk losing money on each and every app update in order to save a little money on people who actually subscribe to our app.

“The new fees and restrictions simply reinforce Apple’s hold over its ecosystem,” Andy Yen, founder and CEO of Swiss encrypted email and VPN provider, Proton, said in response to the changes.