Apple has formally submitted its proposed fee structure for purchases made outside the App Store's in-app purchase system, a key development in the long-running Epic Games antitrust case. The proposal, filed with the U.S. District Court, outlines commission rates ranging from 5% to 15% depending on the app's category and program participation.

This submission comes after the U.S. Supreme Court denied Apple's request to pause lower-court proceedings while the company seeks review of a contempt ruling tied to its 27% commission on external purchases. The district court had earlier issued an injunction requiring Apple to allow developers to link to alternative payment methods, and Judge Yvonne Gonzalez Rogers has been overseeing the process of determining what fees, if any, Apple can charge for those out-of-app purchases.

Apple submits off-App Store commission proposal

Apple's proposed fee schedule, filed as a remand proffer, applies to purchases made when a user taps a link inside an app to complete a transaction on the developer's website or another external platform. The proposed rates are:

• 15% for standard apps, which currently pay a 30% commission for in-app purchases;
• 10% for the Video Partner Program (VPP), the News Partner Program (NPP), the Mini Apps Partner Program (MPP), and subscription renewals;
• 5% for apps enrolled in the Small Business Program.

Apple said it has submitted "fact and expert evidence" supporting these rates. In its filing, the company argued that "large numbers of U.S. developers collectively accounting for the lion's share of App Store revenue will be able to link out profitably at the proffered rates, resulting in substantial competitive pressure on IAP," which it called a goal the court has repeatedly emphasized.

Apple also argued that these rates would allow it to recover "at least some compensation for the value that its IP-protected tools, technologies, and services provide to developers," which the court and the Ninth Circuit have acknowledged as legitimate and procompetitive. The company added that its proposed "linked-out commission can also be compared to commissions for app stores that compete with the App Store," pointing to Google Play, Samsung Galaxy Store, and Amazon's Android App Marketplace.

Specifically, Apple noted that "the Google Play Store charges linked-out rates of a 20% 'standard' rate, a 15% program rate, and a 10% subscription rate—and Epic agreed to those rates."

Apple reiterated its belief that the rate-determination proceedings should still be paused while its case is pending before the Supreme Court, and said it submitted the proposal only to comply with Judge Gonzalez Rogers's instructions. The company also noted that the Ninth Circuit reversed the District Court's outright ban on commissions for linked-out purchases, explaining that such commissions are problematic only if they are effectively prohibitive.

Background and prior legal battles

The dispute began in August 2020, when Epic Games intentionally violated Apple's App Store guidelines by adding a direct payment option to Fortnite, bypassing Apple's in-app purchase system. Apple removed Fortnite from the App Store, and Epic filed a lawsuit alleging antitrust violations.

In September 2021, Judge Yvonne Gonzalez Rogers issued a ruling that largely sided with Apple on antitrust claims but found that Apple's anti-steering provisions violated California's Unfair Competition Law. She ordered Apple to allow developers to include links to external payment options. However, the Ninth Circuit affirmed the core findings while narrowing parts of the injunction, and Apple subsequently began charging a 27% commission on purchases made via those external links.

That 27% figure became the subject of a contempt dispute. Epic argued that the injunction implicitly allowed external purchases without any commission, while Apple insisted it had the right to charge a fee similar to its standard 30% minus a small reduction for the absence of payment processing. Judge Gonzalez Rogers found Apple in contempt for charging the 27% commission, leading Apple to petition the Supreme Court. The high court declined to pause the district court proceedings, allowing the fee-setting process to move forward.

Epic's response

Following Apple's filing, Epic published a statement on X (formerly Twitter), reacting to the proposal. The statement read:

"Apple's filing is in, and Apple admitted that under the Ninth Circuit's definition of 'necessary costs' they would charge 0% for purchases made via linkouts to the web. Apple proposed linkout fees of 15% for standard apps and 5% for Small Business Program apps. Epic believes…"

The incomplete nature of Epic's statement suggests the company will expand on its objections in a formal response. Epic has long argued that Apple should not be allowed to charge any commission on purchases made outside the App Store, claiming that Apple's control over iOS distribution and payment processing is anticompetitive. Epic has consistently advocated for the ability of developers to direct users to the web without financial penalty.

Industry context and reactions

Apple's proposed rates are lower than its standard App Store commissions, which have been 30% for larger apps and 15% for small businesses and subscriptions after the first year. The new proposal, if accepted, would mark the first time Apple has formally set a commission for external purchases in the United States, a concept that the company has resisted for years.

Developers have watched the case closely, as the outcome could reshape the economics of the App Store. Many third-party developers have complained about Apple's 30% fee, arguing that it is excessive and that the company uses its monopoly power to stifle competition. Others, including Apple, point to the value of the App Store's tools, security, privacy protections, and customer reach.

The proposed rates are also notable when compared with other app stores. Google Play charges a 15% standard commission for subscriptions and 30% for one-time purchases, but Google reduced its linked-out fee to 20% in some cases. Samsung Galaxy Store and Amazon's Android App Marketplace also have their own structures, which Apple cited in its filing to justify its rates.

Potential impact on app prices

If Apple's proposal is accepted, the 15% commission for standard apps could still be significant for developers operating on thin margins. For a small utility app that sells for $2.99, a 15% commission equals about $0.45 per sale. For larger apps like games, which often generate hundreds of millions of dollars in revenue, the difference between a 15% and 30% commission amounts to substantial profits.

However, developers also have to consider the costs of processing payments themselves, building a web storefront, and managing customer support. Apple's 15% fee might still be lower than the combined cost of those expenses for many developers, especially those who rely on subscriptions. The 10% rate for subscription renewals is particularly interesting, as Apple currently charges 15% for subscriptions after the first year. If the new proposal lowers that to 10% for external subscriptions, it could encourage more developers to push users toward the web.

Legal and regulatory implications

The case is part of a broader global push to regulate app store commissions. In the European Union, the Digital Markets Act has forced Apple to allow third-party app stores and alternative payment systems, although Apple still charges a Core Technology Fee. In South Korea and the Netherlands, Apple has been required to permit external payment links, and it has implemented fees in those jurisdictions as well.

The U.S. Supreme Court's decision to let the lower court proceed means the rate-determination hearing will move forward. Apple is also expected to file its brief with the Supreme Court by September 14, arguing that the Ninth Circuit's ruling was flawed and that the district court's contempt finding was improper. The high court could ultimately decide whether Apple's 27% commission was a violation of the injunction, which would set a precedent for how the proposed 15% rate is evaluated.

Analysis of Apple's strategy

By proposing a lower commission for external purchases, Apple may be trying to preemptively show the court that its fees are reasonable and not prohibitive. The company's emphasis on "fact and expert evidence" suggests it intends to present economic data demonstrating that developers can thrive under these rates. Apple's reference to competitors' rates is also a direct attempt to position its fees as market-consistent.

But Epic is likely to argue that any commission on external purchases is inherently punitive and that Apple's true goal is to preserve its monopoly. Epic has also pointed out that Apple's own expert admitted that if the fee were based strictly on "necessary costs" as defined by the Ninth Circuit, the rate would be 0%. That admission, even if partial, could be a powerful tool for Epic during the hearing.

The issue of "necessary costs" is central to the case. Apple had argued that its 27% commission was justified because it covers not only payment processing but also the broader value of the App Store ecosystem. However, the Ninth Circuit narrowed the definition of what Apple can recover for external purchases, likely limiting it to actual costs directly attributable to the transaction. If the district court adopts a similar interpretation, Apple's proposed 15% fee may need to be justified with detailed cost data.

Next steps

Epic now has an opportunity to respond to Apple's proposal, and the district court will schedule further proceedings to determine the final rate structure. The Supreme Court's decision on whether to review the contempt ruling is also pending; a grant of certiorari could delay the rate-determination process, while a denial would allow it to proceed without interruption.

In the meantime, Apple continues to maintain that it submitted the proposal only under duress from the court. The company said it still believes the proceedings should be paused, and its filing emphasizes that it is acting in compliance with the court's instructions rather than voluntarily.

The outcome of this case could have far-reaching consequences for how app stores charge fees, both in the United States and globally. Developers on both sides of the issue are waiting to see whether the court will adopt Apple's numbers, modify them, or reject the idea of any commission on external purchases altogether.

As the legal process continues, one thing is clear: Apple's proposed fees are substantially lower than its standard App Store rates, but they still represent a significant revenue stream that the company has fought to protect. Epic, for its part, has shown no intention of backing down, and the coming months are likely to bring more filings, hearings, and potentially a final decision that could redefine the relationship between app developers and the platforms they depend on.

Source: 9to5Mac News