Apple has long been the gatekeeper of its iOS ecosystem, but that role is increasingly under siege. The company has fought antitrust regulators on multiple continents, and now it appears to be facing a significant setback in the United States. In a recent regulatory filing, Apple itself conceded that it might no longer be able to collect commissions from purchases made through external payment platforms. This admission marks a pivotal moment in the ongoing battle over how digital marketplaces operate.
For years, Apple’s App Store has been the only official way for iPhone and iPad users to install apps. The company has enforced a strict 30% commission on all digital purchases, including in-app subscriptions, virtual goods, and other transactions. This policy has been a major revenue driver for Apple, but it has also drawn the ire of developers and regulators who argue that the company is abusing its market dominance. Now, with the latest filing, Apple is signaling that it may have to change its business model in the US, just as it has already done in the European Union.
The EU as the Catalyst for Change
The European Union was the first to break Apple’s stranglehold on app distribution. In 2024, the EU’s Digital Markets Act (DMA) forced Apple to allow third-party app stores on iOS devices. This meant that developers could bypass the App Store entirely, distributing their apps through alternative marketplaces without paying the traditional 30% commission. The DMA also required Apple to permit external payment links, allowing developers to direct users to their own payment systems, thereby avoiding Apple’s in-app purchase fee.
This was a seismic shift. For the first time, Apple had to compete with other app stores on its own platform. The company initially resisted, but the EU’s regulatory pressure was too strong. Apple was forced to comply, albeit reluctantly. It introduced new fees and terms for developers who chose to use third-party stores or external payments, but these were also met with scrutiny. The European Commission has since opened several investigations into Apple’s compliance, suggesting that the company is still trying to find loopholes.
How the EU’s Rules Work
Under the DMA, Apple is required to allow developers to distribute apps through alternative app stores and to provide users with the option to set those stores as their default. Additionally, developers can now include links or buttons in their apps that lead to external payment websites, where users can make purchases without Apple taking a cut. Apple is also prohibited from charging excessive fees for this privilege, although it can still charge a reduced commission or a per-install fee under its new business terms.
Despite these changes, Apple has attempted to maintain its revenue streams by introducing a Core Technology Fee (CTF) for apps that are distributed through third-party stores. This fee applies to apps with over one million annual installs, and it charges €0.50 per install. Many developers have criticized this as a way to circumvent the spirit of the DMA, but the EU has yet to rule definitively on its legality.
The US Antitrust Battle
While the EU has been proactive in regulating Apple, the US has been slower to act. However, that is changing. The US Department of Justice (DOJ) filed a landmark antitrust lawsuit against Apple in March 2024, accusing the company of monopolizing the smartphone market and using its App Store to lock in users and developers. The lawsuit specifically targets Apple’s commission structure, its restrictions on external payments, and its refusal to allow alternative app stores.
In response, Apple has been fighting the lawsuit, but its latest regulatory filing suggests that the company is preparing for a possible loss. In the filing, Apple states that it may no longer be able to charge commissions on purchases made through external payment platforms. This is a significant admission, as it indicates that Apple is anticipating a court ruling or legislative change that would prohibit such fees.
The Epic Games v. Apple Case
The most prominent legal battle in the US has been between Apple and Epic Games, the maker of Fortnite. In 2020, Epic intentionally violated Apple’s App Store rules by adding a direct payment option to its game, bypassing Apple’s in-app purchase system. Apple responded by removing Fortnite from the App Store, leading to a lengthy legal fight. In 2021, a federal judge ruled that Apple could no longer prohibit developers from including external payment links, but the judge stopped short of ordering Apple to allow third-party app stores. Both sides appealed, and the case is still ongoing.
However, the recent regulatory filing from Apple goes further than the Epic ruling. It suggests that Apple may not only have to allow external payment links but also stop charging commissions on those transactions. This would be a major blow to Apple’s services revenue, which has become a key growth area for the company.
What Apple’s Admission Means
Apple’s admission in its regulatory filing is not just a legal formality; it has real-world implications for developers, consumers, and the broader tech industry. If Apple can no longer charge commissions on external payments, it will fundamentally change the economics of app development.
For developers, this could mean higher profit margins. Currently, developers who sell digital goods or services through apps must give Apple a 30% cut. If they can direct users to their own payment systems without incurring that fee, they could keep more of their revenue. This is particularly important for small developers who struggle to make a profit under Apple’s current terms.
For consumers, the change could lead to lower prices. Developers who save on commissions might pass those savings on to users, either through lower subscription fees or reduced prices for virtual goods. However, it could also lead to a more fragmented experience, as users would need to create accounts on multiple payment platforms and might lose the convenience of Apple’s unified billing system.
Potential Impact on App Store Revenue
Apple’s App Store is a massive revenue generator. In 2023, the App Store generated over $85 billion in gross revenue for Apple, with a significant portion coming from commissions. If Apple loses the ability to charge commissions on external payments, it could lose billions of dollars annually. This would force the company to find alternative revenue streams, such as increasing the cost of its hardware or expanding its advertising business.
However, Apple is not likely to give up without a fight. The company has argued that its commission is necessary to maintain the security and privacy of the App Store. It also points to the fact that it provides developers with tools, analytics, and a global distribution network. Apple has proposed alternative models, such as a flat annual fee for developers, but these have not been well-received by regulators.
The Global Trend Toward Regulation
Apple’s troubles are not limited to the US and EU. Regulators in other countries, including Japan, South Korea, and Australia, have also been scrutinizing Apple’s App Store policies. South Korea has already passed a law that prohibits app store operators from forcing developers to use their payment systems, and Japan’s Fair Trade Commission has been investigating similar issues.
This global trend suggests that Apple’s ability to control its ecosystem is eroding. The company is being forced to adapt to a more open and competitive digital marketplace, whether it likes it or not. While Apple has often argued that its closed system is a feature, not a bug, regulators are increasingly viewing it as a barrier to innovation and consumer choice.
How Apple Might Adapt
If Apple is forced to stop charging commissions on external payments, it will need to rethink its business model. One possibility is that Apple could shift to a subscription-based model for its developer tools, charging a flat fee for access to the App Store and its associated services. This would provide a more predictable revenue stream and reduce the reliance on transaction fees.
Another option is for Apple to focus on its services ecosystem, such as Apple Music, Apple TV+, and iCloud, which are not subject to the same antitrust scrutiny. By bundling these services with its hardware, Apple could maintain its high profit margins even if it loses App Store revenue.
What This Means for Users
For everyday iPhone users, the changes could be subtle but significant. If developers are able to offer external payment options, users might see more choices when making in-app purchases. For example, a streaming service might offer a discount if you subscribe through its website rather than through the app. However, this also means that users will need to be more cautious about entering their payment information on third-party sites, as Apple’s security guarantees may not apply.
Additionally, the rise of third-party app stores could lead to a wider variety of apps, including those that Apple has previously rejected for content or policy reasons. This could be a double-edged sword: while it increases choice, it also raises concerns about malware and privacy, as third-party stores may not have the same rigorous review process as Apple’s App Store.
The Future of iOS
In the long run, the iOS ecosystem is likely to become more open, but it will also become more complex. Apple will need to balance its desire for control with the demands of regulators and developers. The company has already made some concessions in the EU, and it may eventually have to make similar changes in the US.
One thing is certain: the days of Apple charging a 30% commission on all digital purchases are numbered. The company’s own regulatory filing is a clear sign that it knows the end is near. While Apple will continue to innovate and find new ways to monetize its platform, it will no longer have the same iron grip on app distribution and payments.
Conclusion
Apple’s admission that it may soon be unable to charge commissions on external payment platforms is a watershed moment in the antitrust battle. It reflects a broader shift in how governments around the world view the power of tech giants. As regulators continue to push for more competition, Apple will have to adapt or risk being left behind.
For developers, this is a victory. For consumers, it could mean more choices and lower prices. But it also brings new challenges, particularly around security and user experience. The next few years will be crucial in determining how the digital marketplace evolves, and Apple’s role in it.
