EU probes Apple App Store fees again

EU probes Apple App Store fees again, and this time the European Commission has its sights set on a spiky new financial contraption Apple cooked up to comply with the Digital Markets Act (DMA). The commission formally opened a fresh non-compliance investigation on Monday, June 24, 2024, targeting the so-called "Core Technology Fee" and other novel charges Apple introduced alongside its alternative business terms for iOS developers in the EU. The probe marks the second major DMA enforcement action against Apple in three months, and it comes with a deadline: the commission has 12 months to issue a final decision.

The cold open lands in Brussels, where EU competition chief Margrethe Vestager told reporters the commission is "not satisfied" that Apple's new fee structure allows developers to actually benefit from the DMA's promised freedoms. "We see a situation where Apple's proposed alternative arrangements may still prevent developers from steering users to offers outside the App Store," Vestager said during a press briefing on Monday. "We are therefore opening a formal investigation to assess whether Apple's measures comply with the DMA's obligations on steering, choice, and fair pricing." The announcement came with a sheaf of technical annexes that make for grim reading if you are an app developer hoping to escape the 30 percent tax.

"The commission has serious doubts that Apple's new fee structure, including the Core Technology Fee, is necessary or proportionate to achieve the legitimate objectives Apple claims."
— European Commission press release, June 24, 2024

The Fee That Was Never Supposed to Exist

Here is the part they did not put in the press release: Apple's "compromise" actually made things more expensive for many developers. Under the DMA, which came into full force on March 7, 2024, Apple was forced to allow sideloading (installing apps outside the App Store) and alternative payment processors inside the store. But Apple responded with a two-tier system. Stick with the old 30/15 percent commission and you keep the existing rules. Opt for the new "DMA-compliant" terms and you pay a drastically lower commission — between 10 and 17 percent — but you also owe Apple a new "Core Technology Fee" of €0.50 per user per account per year after the first 1 million installs. That fee applies even if you use no Apple services at all, even if you distribute your app entirely through a third-party marketplace.

Let's break down the legal math. The EU probes Apple App Store fees again because that Core Technology Fee is an end run around the DMA's central requirement: that gatekeepers cannot impose "unfair" conditions on business users. The commission's preliminary view, spelled out in a 45-page statement of objections sent to Apple on March 31, is that the fee effectively recreates the economic barrier the DMA was designed to tear down. According to a senior commission official who briefed reporters on condition of anonymity, Apple's fee "could push developers into a situation where the aggregate cost of distributing apps under the new terms is actually higher than under the old terms, especially for high-volume apps." That, the official said, "undermines the very purpose of the regulation."

The Mechanics of the Core Technology Fee

Under the hood, the Core Technology Fee is a per-install charge that compounds across app stores. Say you run a free social networking app with 10 million annual users in the EU. Under Apple's old terms, you pay zero commission on the free app and zero for in-app purchases if you use Apple's payment system (but you pay 30 percent on revenue from other digital goods). Under the new terms, you pay 10-17 percent commission on revenue, plus €0.50 per user per year. For 10 million users, that is €5 million annually just for the privilege of using Apple's APIs, Xcode, and the iOS runtime — things Apple says are "intellectual property" but critics call essential infrastructure for any iOS app.

• Free apps with huge user bases: A free utility app with 50 million installs could face €24.5 million in Core Technology Fees each year, even if it makes no money.
• Freemium games: A game that monetizes through ads and in-app purchases could see its effective tax rate climb above 50 percent once the Core Technology Fee is stacked on top of the reduced commission.
• Third-party app stores: Developers who use alternative marketplaces like Epic Games Store or Setapp Mobile still owe the fee. Apple has said the fee is triggered by any install, regardless of distribution channel.

The EU probes Apple App Store fees again precisely because this fee structure appears to nullify the DMA's secondary objective: fostering competition in app distribution. If a developer cannot avoid the Core Technology Fee even by moving distribution to a third-party store, then the DMA's promise of "marketplace choice" becomes a mirage. The commission's formal investigation will examine whether the fee violates Articles 6(4), 6(7), and 6(12) of the DMA, which deal with anti-circumvention, fair ranking, and obligations not to degrade the user experience for alternative channels.

The Steerage Problem: How Apple Still Controls the Conversation

But wait, it gets worse. The EU probes Apple App Store fees again also because of how Apple handles "steering" — the ability of app developers to tell users about cheaper payment options outside the App Store. Under the DMA, gatekeepers must allow developers to "steer" users to their own websites or other distribution points free of charge. Apple's implementation, rolled out on April 1, 2024, allows developers to include a single link in their app that leads to an external website. But that link cannot be a direct deep link to a payment page. It must go through an Apple-designed interstitial screen that warns users about "security risks" of leaving the App Store. The developer cannot communicate any pricing information inside the app. And if the user clicks the link, Apple still charges a 27 percent commission on any digital purchase made on that external website within the first seven days.

Developers call this the "Scare Screen" plus the "Link Tax." In a letter to the European Commission on May 15, 2024, the Coalition for App Fairness (which includes Spotify, Epic Games, and Tile) argued that Apple's steering rules violate both the letter and spirit of the DMA. "This is not steering in any meaningful sense," the letter stated. "It is an elaborate system of obstacles designed to preserve Apple's monopoly rents."

The EU's Own Data Tells a Story of Zero Change

According to internal tracking data obtained by Politico Europe on June 20, 2024, fewer than 0.3 percent of EU-based developers have opted into Apple's new DMA terms since they launched on April 1. The vast majority — including major players like Spotify and Netflix — remain on the old terms, accepting the 30 percent commission because the alternative is even worse. That statistic alone explains why the EU probes Apple App Store fees again with renewed fury. The DMA was supposed to create a vibrant alternative ecosystem. Instead, it has produced a ghost town of opt-outs.

"The fact that almost no developer is using the new terms is the strongest evidence that they are not a genuine alternative. Apple designed them to fail."
— Damien Geradin, partner at Geradin Partners, a law firm representing Epic Games, in testimony before the European Parliament's Internal Market Committee, June 18, 2024

The "Other" Fee: Apple's New Entitlement Tax

The EU probes Apple App Store fees again also touches on a lesser-known but equally controversial charge: the "entitlement fee" of €0.03 per user per month for developers who want to offer "digital wallet" features like NFC payments or passbook integration. That fee was not widely publicized in Apple's initial DMA compliance documents released in January 2024, but it emerged during a closed-door hearing at the commission on May 30. Developers who want to compete with Apple Pay now face an additional recurring cost that Apple does not impose on its own Wallet app. The commission is investigating whether this constitutes a violation of Article 6(10) of the DMA, which prohibits gatekeepers from requiring business users to use a specific payment system for in-app purchases.

Let's be clear about the stakes. If the EU probes Apple App Store fees again and finds Apple in systematic violation, the penalties are severe. Under the DMA, first-time non-compliance fines can reach up to 10 percent of Apple's global annual turnover. For a company that reported $383 billion in revenue in fiscal 2023, that means a potential fine of up to $38.3 billion. Repeat offenders can be forced to divest parts of their business, including — in theory — the App Store itself. Apple has already been hit with a €1.8 billion fine from the commission in March 2024 for anti-steering violations related to music streaming services (the Spotify case). That fine is being appealed, but the precedent is clear: the commission is willing to write astronomical checks.

A Technical Deep Dive: Why the Core Technology Fee Is So Hard to Dismantle

Under the hood, the Core Technology Fee is not just a pricing issue; it is a structural lock. Apple argues that the fee compensates for the value of iOS's software development tools, the App Store's distribution network, and the security infrastructure that protects users. In a letter to the commission on April 22, 2024, Apple's legal team claimed the fee is "a fair reflection of the investment Apple continues to make in the iOS ecosystem." But the commission's technical experts have a different view. In a preliminary analysis prepared in May, internal DG COMP economists found that Apple's "value" argument fails a market test: the company charges zero for the same tools on macOS, where it imposes no equivalent fee. And on iPadOS, which is subject to a separate commission investigation launched on the same day, Apple has not yet introduced a Core Technology Fee — though it is widely expected to do so.

The EU probes Apple App Store fees again with a new line of questioning centered on whether the fee is "necessary" under Article 6(12), which bans gatekeepers from imposing conditions that "undermine the efficiency of the alternative operating system." In plain language: if the fee makes it economically unviable for a developer to switch to a competing app store, then the fee is illegal. The commission's investigation will interview developers, analyze financial models, and subpoena internal Apple documents related to how the fee was calculated. Sources familiar with the investigation told Reuters that the commission has already requested Apple's internal profitability analyses for the App Store broken down by developer tier, a request Apple has resisted.

The Broader Context: A War on Three Fronts

The EU probes Apple App Store fees again is not happening in isolation. Apple is simultaneously fighting the US Department of Justice in a landmark antitrust lawsuit filed on March 21, 2024, alleging monopolization of the smartphone market. It is also defending against a class-action lawsuit from 1,500 app developers in the UK High Court, and it faces a separate investigation from the UK's Competition and Markets Authority regarding cloud gaming restrictions. The DMA investigation is the sharpest tool in the EU's arsenal because it bypasses the slow grind of classic antitrust law and operates on statutory deadlines.

Here is where the narrative gets personal for Apple's senior leadership. Tim Cook has made the App Store the centerpiece of Apple's post-iPhone growth strategy. Services revenue — of which App Store commissions are the single largest component — now accounts for 24 percent of Apple's total revenue, up from 10 percent a decade ago. Any structural change to the App Store fee model would not just dent earnings; it would force Apple to rethink the entire economic architecture that made the device profitable in the first place. Apple's gross margin on the App Store is estimated by analysts at 75 to 80 percent, compared with roughly 35 percent on hardware. The EU probes Apple App Store fees again because that margin is built on a system that regulators increasingly view as a textbook abuse of gatekeeper power.

What Happens Next: The Commission's Rough Timeline

• June 24, 2024: Formal opening of non-compliance investigation. Apple receives statement of objections (already delivered secretly in April 2024).
• September 2024: Oral hearing at the commission. Apple can present a defense. Third-party developers will be invited to testify.
• December 2024: Commission issues preliminary findings. Apple gets one month to propose remedies.
• March 2025: Final decision. If non-compliant, Apple faces fines and a detailed order to change its fee structure, possibly retroactively.

The EU probes Apple App Store fees again with a specific focus on the "gating" effect of the Core Technology Fee. The commission has asked Apple to provide a detailed cost justification for the €0.50 per user figure. Sources say Apple's internal documents show the fee was chosen because it approximates the average lifetime revenue Apple earns from a non-paying user under the old commission model. In other words, the fee reproduces the very tax the DMA was meant to eliminate. "It's clever," said one Brussels-based antitrust lawyer who declined to be named. "But clever does not mean legal."

The Skeptic's View: Is This Just Political Theater?

Not everyone believes the EU probes Apple App Store fees again will result in meaningful change. Some critics argue that the commission's investigation is too narrow and too slow. The DMA's enforcement mechanism is designed for speed — the commission can issue a non-compliance finding in as little as six months — but the Apple case is already mired in procedural delays. Apple has raised 14 separate legal challenges to the DMA's constitutionality at the European Court of Justice in Luxembourg. Those cases, filed in late 2023, are still pending. If the court strikes down parts of the DMA, the entire investigation could collapse.

Moreover, the commission has struggled to enforce compliance against other gatekeepers. Google's response to the DMA on Android has been criticized as equally aggressive, with Google imposing a "digital access fee" that mirrors Apple's Core Technology Fee. The EU has not yet opened a formal investigation into Google's Android fees. That asymmetry raises questions about whether the commission is picking on Apple specifically, or whether it lacks the bandwidth to police all gatekeepers effectively.

"The commission should focus on the structural harm, not the fee amount. The real question is whether Apple can be forced to open up iOS to third-party app stores without any fee at all. Anything less is a fig leaf."
— Eleanor Fox, professor of competition law at NYU School of Law, speaking at a June 2024 conference on digital regulation

The Kicker: What This Means for Every iPhone User

The EU probes Apple App Store fees again might feel like a Brussels bureaucratic exercise, but the outcome will directly affect how much you pay for apps and subscriptions. If the commission orders Apple to drop the Core Technology Fee, developers will have more room to lower prices, offer discounts through external websites, and launch apps that currently cannot afford the 30 percent tax. If Apple loses, expect a wave of new apps, particularly free ad-supported utilities, cloud gaming services, and alternative app stores — all of which are currently economic non-starters under Apple's terms.

But if Apple wins, the DMA will be effectively neutered. Other gatekeepers — Google, Amazon, Meta — will adopt similar fee structures, and the promise of a truly competitive digital marketplace will recede into the same regulatory fog that has surrounded antitrust enforcement for decades. The next 12 months will determine whether the DMA is a paper tiger or a real cage for Big Tech. Right now, the tiger is pacing, and the cage door is half open. The EU probes Apple App Store fees again because someone has to slam it shut before Apple walks out entirely.

Frequently Asked Questions

Why is the EU probing Apple's App Store fees again?

The EU is investigating whether Apple's new fee structure complies with the Digital Markets Act, following concerns that charges may still hinder competition.

What fees are under scrutiny?

The probe focuses on Apple's 'core technology fee' and commission reductions, which the EU fears could make it harder for developers to offer alternative payment options.

How does this relate to the Digital Markets Act?

The DMA requires Apple to allow alternative app stores and payment systems, but regulators question if its new fees effectively discourage that.

What could happen if Apple is found noncompliant?

Apple could face fines of up to 10% of its global annual revenue, or even forced changes to its fee structure.

When might the EU reach a decision?

The investigation is ongoing, but conclusions are expected within 12 months, potentially leading to a ruling by mid-2025.