Apple Updates its Policies Concerning App Distribution and In-App Purchases
5 February 2024
Apple has recently announced material changes to its policies, including changes in the App Review Guidelines and App Store, to accommodate for regulatory changes in various territories. Such changes include the long-awaited updates to payment processing and app distribution on iOS.
In this update we highlight the main policy changes and their practical implications, per jurisdiction.
The EU Digital Markets Act (“DMA”) is coming into effect in March 2024, and the EU Commission designated Apple as a “gatekeeper” under the DMA (along with Amazon, Meta, Microsoft, ByteDance, and Alphabet).
Following these regulatory developments, Apple announced significant changes to its policies in the EU, aiming to address compliance requirements under the DMA. The key changes are the following:
- Third-party app stores: Apple will allow the distribution of apps via third-party app stores, which will be available to download via Apple’s App Store. Apple will still enforce a baseline review and a notarization process that will apply to all apps distributed via third party stores, to protect iOS users from security threats, illicit and harmful content, fraud etc.
- Alternative payment methods: App developers will have the option to offer alternative payment methods besides Apple’s In-App purchase mechanism, as long as such mechanisms will be native to the app and will not include any hidden payment functionalities. It should be noted however that developers will not be able to implement Apple’s In-App purchase system alongside external solutions but will have to choose between one or the other.
- Changes in fee structure: Apple will update its fees in the EU, such that all apps, regardless of the payment processing method selected, will be required to pay a commission of either 10% or 17% of the transaction. Developers using Apple’s payment processing solution will pay additional 3% fee. In addition, Apple will charge a “Core Technology Fee” of €0.50 per annual install exceeding the first million installations.
- Contactless payment API: Apple will enable developers to use NFC technology in banking and wallet apps, allowing users to select third-party contactless payment apps as their default, instead of Apple’s.
As part of the update, Apple also has published new business terms for the EU, and developers can choose whether they would like to adopt these new terms or stay subject to the existing terms. Acceptance of the new terms is required in order to use these new functionalities and fee structure.
Additional guidelines and resources are expected to be published by Apple in March 2024.
Following the recent decision by the US Supreme Court not to reconsider a federal court ruling requiring Apple to allow developers to use alternative payment methods, Apple has announced adjustments to its App Review Guidelines in the US, relaxing its in-app purchase policies. The key policy changes are the following
- Alternative payment methods: Developers in the US will be permitted to include, in addition to Apple’s In-App Purchase mechanism, a link to their external website where users can make purchases. Following the change, developers will be allowed to notify users within their app where and how to purchase those in-app purchase items, and the fact that such items may be available for a comparatively lower price. When users follow such external links, iOS will surface a system disclosure sheet reflecting to the users that they will be leaving the app, requiring their consent.
- Update fees: Apple’s commission for external payment transactions has now been adjusted to 27% on proceeds from sales to users for digital goods or services, even if purchased via such external links. Participants in the Small Business Program and auto renewal transactions in their second year or later will be subject to a 12% commission. The fees do not include payment processing fees that may be charged by the respective payment processor.
- Reporting: Developers using external payment processing will now be required to provide Apple with transaction reports within 15 business days following the end of each calendar month.
- Support: Apple states that it will not be able to provide support if questions or issues arise with regards to payments made outside the App Store, including handling refund requests, subscription management, and purchase history.
In addition to the above, Apple is introducing changes to its policies worldwide, allowing for the distribution of game streaming apps through the App Store. Following the change, developers can submit single apps with the capabilities of streaming various games offered in their catalog.
All apps, including the games and experiences therein, will be required to adhere to the App Store Review Guidelines and maintain an age rating in accordance with the highest age-ranked content included in the app.
Moreover, mini-apps, mini-games, chatbots and plug-ins will be able to incorporate Apple’s in-app purchase systems to pay for subscriptions, content and services.
Apple also introduces new analytics for developers in the form of more than 50 new reports available through the App Store Connect API, to help developers analyze their app performance. The new analytics include additional data on user engagement, downloads and sales, information on app usage and app’s interaction with OS functionality.
Lastly, Apple also updated its App Review Guidelines for using Sign in with Apple. Under the change, developers who offer third-party or social login within their apps will no longer be mandated to sign in with Apple. Instead, they can offer an alternative login service, as long as it provides users with equivalent privacy protections.
Feel free to contact us if you have any questions regarding the new policy changes and their practical implications for your operation.