App Store Rules Keep Shifting as Regulators Force Apple and Google to Open Up Payments

What happened?

The rules governing how apps can charge users continue to evolve rapidly, as regulators and courts in multiple jurisdictions push Apple and Google to loosen the restrictions that have long required most app purchases and subscriptions to go through each company's own in-app payment system, typically subject to a commission of up to 30%. Recent months have brought further enforcement actions and compliance changes tied to the European Union's Digital Markets Act, continued fallout from US antitrust litigation, and new regulatory scrutiny in markets including Japan, South Korea and Brazil, each pushing in the same broad direction: allowing developers to direct users to alternative payment methods or app distribution channels without the same fees or restrictions previously imposed.

Key points

• The EU's Digital Markets Act requires designated 'gatekeeper' platforms, including Apple's App Store and Google Play, to allow alternative app stores and payment systems.
• US courts have continued to enforce rulings requiring Apple to allow developers to link to external payment options without additional fees, following the long-running Epic Games litigation.
• Japan's Smartphone Software Competition Promotion Act and South Korea's earlier telecommunications business act amendments have imposed similar requirements in those markets.
• Apple and Google have both introduced new fee structures for developers using alternative payment systems, which critics say still amount to a substantial effective tax.
• Developer groups continue to argue compliance changes fall short of genuinely open competition, while the companies say the changes preserve security and platform investment.

What we know

Under the EU's Digital Markets Act, which designates the largest technology platforms as 'gatekeepers' subject to specific obligations, Apple and Google have both made changes to their European app store policies, including allowing third-party app stores on iOS and permitting developers to inform users of and link to payment options outside the platforms' own systems. The European Commission has opened and, in some cases, concluded formal investigations into whether these compliance changes go far enough, including a finding against Apple's initial compliance approach that resulted in a fine and a requirement for further changes.

In the United States, the long-running Epic Games v. Apple litigation has continued to shape policy, with a federal court having found Apple in violation of an earlier injunction requiring it to allow developers to link out to external payment methods without imposing a commission on those transactions, a ruling Apple has complied with in the US market while continuing to appeal aspects of the underlying case. Google has faced parallel legal pressure following its loss in the Epic Games v. Google case concerning the Play Store, and has likewise made changes to its billing policies in response to court orders.

Background

Apple and Google have operated their respective mobile app stores under broadly similar models since their launches in the late 2000s: developers distributing apps through the platforms have generally been required to use the platforms' own in-app payment systems for digital goods and subscriptions, with the platform taking a standard commission, historically 30% on most transactions, later reduced to 15% for smaller developers and subscription renewals after a first year under both companies' small business programmes introduced around 2021.

This model, often referred to critically as the 'app store tax,' became the subject of sustained legal and regulatory challenge starting in the early 2020s, led most prominently by Epic Games, the maker of Fortnite, which deliberately triggered its removal from both app stores in 2020 by introducing an alternative payment option in violation of platform rules, precipitating lawsuits in the US and complaints to regulators in multiple other jurisdictions. That litigation, combined with growing regulatory attention in the EU, UK, Japan and South Korea, has produced a steady accumulation of legal and regulatory pressure that has gradually eroded the uniformity of the original app store commission model, though enforcement and compliance have proceeded unevenly across different markets.

Detailed analysis

The practical effect of these changes for developers varies considerably by jurisdiction and by how each company has structured its compliance response. In the US, following the enforcement of the Epic injunction, Apple now permits developers to include links in their apps directing users to external websites for payment, without imposing its standard commission on those external transactions, though Apple has introduced a separate, somewhat reduced fee applicable to purchases made within a specified window after a user clicks such a link, a structure that developer advocacy groups including the Coalition for App Fairness have criticised as undermining the spirit of the court's ruling even while nominally complying with its letter.

In the EU, the changes have gone further in some respects, permitting genuinely alternative app marketplaces and payment processing entirely outside Apple's and Google's systems, though Apple's introduction of a 'Core Technology Fee' charged per app installation above certain download thresholds, applicable even to apps distributed through alternative marketplaces, has drawn continued criticism from developers and scrutiny from EU regulators over whether it constitutes a de facto continuation of the restrictive practices the Digital Markets Act was designed to eliminate. The European Commission's ongoing investigations into the adequacy of both companies' compliance measures suggest this back-and-forth between platform compliance changes and regulatory pushback is likely to continue rather than resolve definitively in the near term.

Economists and antitrust scholars have offered varying assessments of how much these changes will ultimately affect consumer prices and developer economics. Some research cited in regulatory proceedings suggests that a meaningful share of the commission previously charged by app stores has been passed through to consumers in the form of higher subscription and in-app purchase prices, implying that increased payment competition could eventually lower prices for some digital goods and services, though the pace and extent of any such pass-through remains disputed and will likely take further time to observe empirically as the new rules mature across different markets.

Why it matters

For app developers, particularly smaller studios and independent developers with thin margins, reduced effective commission rates on at least a portion of their revenue can materially affect business viability, and several developer advocacy groups have argued that the original 30% commission structure represented an outsized toll given the relatively limited additional value the platforms provide for pure payment processing compared with dedicated payment processors that typically charge far lower fees.

For consumers, the changes could eventually translate into lower prices for digital subscriptions and in-app purchases if developers pass through reduced payment processing costs, though critics of the platforms' compliance approaches argue that new fees such as Apple's Core Technology Fee may blunt much of this potential benefit. More broadly, the sustained regulatory and legal pressure on Apple and Google's app store practices represents one of the more significant ongoing efforts globally to address perceived anticompetitive practices in digital platform markets, with implications for how future technology regulation approaches dominant platform 'gatekeepers' in other sectors.

What happens next?

The European Commission's ongoing investigations into Apple's and Google's Digital Markets Act compliance are expected to produce further findings and, potentially, additional fines or mandated changes over the coming months. In the US, Apple continues to pursue appeals related to aspects of the Epic Games litigation, while further state and federal regulatory scrutiny of app store practices remains possible given continued congressional interest in platform competition legislation, even though comprehensive federal legislation specifically targeting app stores has not yet been enacted.

Additional jurisdictions, including several in Southeast Asia and Latin America, are reportedly examining similar regulatory approaches following the precedents set in the EU, US, Japan and South Korea, suggesting the current period of flux in app store payment rules is likely to continue expanding geographically before any new, more stable equilibrium is reached.

Insight Media Opinion

The steady dismantling of the uniform app store commission model represents a genuine, if slow and contested, success for competition policy, achieved through a combination of persistent private litigation and increasingly assertive regulation across multiple jurisdictions rather than any single decisive intervention. That a determined developer, a handful of court rulings and a landmark piece of EU legislation have collectively forced meaningful change in a business model that generated tens of billions of dollars annually for two of the world's most valuable companies is a reminder that sustained legal and regulatory pressure can shift even deeply entrenched platform practices.

That said, the emergence of new fees such as Apple's Core Technology Fee illustrates a familiar pattern in platform regulation: dominant companies retain considerable latitude to restructure their compliance in ways that preserve much of their original economic position even while nominally satisfying the letter of new rules. Regulators should not treat initial compliance measures as the end of the story, and the European Commission's continued scrutiny of whether these new fee structures satisfy the actual intent of the Digital Markets Act is the right instinct. Genuine competition in app distribution and payments will require sustained vigilance, not a single round of rule changes declared sufficient and then left unexamined.