Apple exec Phil Schiller was initially concerned over App Store commissions on outside sales
In 2020, Phil Schiller became an Apple Fellow after a long career at Apple that began in 1987.
Phil Schiller, an Apple Fellow and the executive overseeing the App Store, took the stand on Monday to reveal that he had initially voiced worries about the 27% commission Apple intended to impose on app developers for purchases made outside the App Store. He cautioned that, beyond posing a possible compliance issue, the fee could sour the relationship between Apple and developers, creating tension. Schiller also pointed out that it appeared to necessitate Apple having the authority to audit developers’ records to verify if they owed the company money for transactions occurring beyond the App Store’s walls.
Apple typically charges a 30% commission on in-app purchases, but the reduced fee of 27% was a result of the Epic Games-Apple ruling. In 2021, the court determined that although the tech giant was not a monopolist, it would have to stop blocking app developers from linking to other ways for customers to pay beyond Apple’s own in-app purchases (IAP).
Apple technically complied with the ruling by changing its App Store Guidelines to permit developers to link to their websites from their iOS and iPadOS apps to give customers an alternative way to pay. However, Apple only reduced its commission by 3% for these purchases.
Apple and Epic Games have since returned to federal court so [U.S. District Judge Yvonne Gonzalez] Rogers could determine whether Apple violated her original order that forced the App Store to open to more competition.
According to Schiller’s testimony, he initially objected to commissions on these outside purchases… Despite the initial concerns Schiller raised, a pricing committee that included Apple CEO Tim Cook, former CFO Luca Maestri, and Apple’s legal team, alongside Schiller, ultimately decided to charge developers a commission on these outside purchases.
MacDailyNews Take: Rogers’ order is as nonsensical as the day she issued it.
This is akin to a judge forcing Best Buy and Target to place signs next to each product that advertise lower prices for the same items at Walmart…
If developers like Epic Games want to advertise lower prices [to be had elsewhere via] Apple’s App Store, Apple should simply begin charging an “In-Store Advertising” fee, because that’s exactly what it would be. – MacDailyNews, July 27, 2023
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