NIX Solutions: Apple Defends 27% Fee on External In-App Purchases

Philip Schiller, Apple’s Senior Vice President of Marketing, recently testified in front of U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California. Schiller stated that the 27% commission on in-app purchases made outside the App Store is a good-faith effort to comply with legal requirements and the court’s demands. As one of the most senior Apple executives to testify, Schiller explained that this fee was established by a decision involving himself, CEO Tim Cook, and CFO Luca Maestri. This move comes in response to a 2021 ruling mandating Apple to allow developers to link to cheaper payment options within their apps.

NIX Solutions

Schiller emphasized that while he does not object to posting links to alternative payment methods, he believes it would “impair the experience for users.” His testimony, lasting an hour and a half, highlighted Apple’s perspective on maintaining user experience while adhering to legal obligations, notes NIX Solutions.

Judge’s Concerns and Apple’s Response

Judge Gonzalez-Rogers expressed doubts about the proposed 27% commission rate for payments outside the App Store. Carson Oliver, Apple’s Senior Director of Business Management, mentioned that the company hired consulting firm Analysis Group to determine the new commission rate. Analysis Group’s study indicated that the lower limit of possible rates is 12.3%. The judge questioned how Apple justified the additional 15%.

Oliver explained that this extra amount covers a comprehensive package of services for developers, including application recommendation, distribution, development tools, platform technologies, and user privacy, trust, and security that are unmatched by other platforms. According to Oliver, Apple’s own estimates place the true lower limit at 17%. Analysis Group’s assessment compared Apple’s rate with fees charged by Microsoft, Google, Etsy, and Shopify, resulting in a suggested rate range from 12.3% to 92%, depending on the developer’s size.

Judge Gonzalez-Rogers challenged this explanation by pointing out the lack of concrete data to support Apple’s assumptions. Oliver maintained that their calculations were based on thorough analysis and not mere guesses. The discussion will continue as Schiller resumes his testimony on May 22.

We’ll keep you updated on the latest developments as this case progresses.