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Apple To Charge Developers Using Third Party Payment Processors A Whopping 27 Percent Tax

Apple announced changes to comply with a court-order in a years-long lawsuit between Epic Games over Apple’s restrictions on app makers

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Based on the Epic Games v Apple lawsuit that saw much activity this past few months, Apple has come up with a new way to provide developers the freedom they have long sought. Apple is allowing US app makers to use outside payment systems. The catch is however that it charges a whopping 27% for the privilege – which is far higher than what is fair, according to the app makers.

Late Tuesday, Apple announced changes to comply with the court-order in a years-long lawsuit between Epic Games over Apple’s restrictions on app makers. The supreme court declined to review the case this week, leading Apple to implement a lower court’s 2021 decision. This decision had been suspended pending appeal so far.

Earlier, Apple had required developers to use its in-house payment system which charged upto 30%. Now it intends to allow external payment systems but with a charge of 27%. Further the company declared the right to audit the developers’ accounts to verify that they are paying.

The high commission rate caused a stir amongst app developers. Epic Games CEO Tim Sweeney called it a “bad-faith compliance plan” in a post on X and said Epic will contest it in district court. “Apple has introduced an anticompetitive new 27% tax on web purchases,” Sweeney wrote. “Apple has never done this before, and it kills price competition. Developers can’t offer digital items more cheaply on the web after paying a third-party payment processor 3-6% and paying this new 27% Apple tax.”

Daivd Heinemeier Hansson, the creator of app-development framework Ruby on Rails also commented on X calling Apple’s 27% fee “insane”. He also stated that, “Apple is making the same mistake Microsoft did in the 90s. Given absolute power, they act with absolute disdain toward developers”. Additionally, music streaming platform Spotify also called this movie “outrageous”.

The larger concern for Apple however must be the time crunch they are in to comply with the European Union’s Digital Markets Act (comply by early March), which prohibits the companies to favour their own app stores and other services over third party ones.

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