Apple has formally submitted its proposed fee structure for purchases made outside the App Store's in-app purchase system, marking the latest development in the long-running antitrust battle with Epic Games. The proposal, filed with the District Court, outlines tiered commission rates that Apple believes are appropriate for transactions completed through external link-outs. The filing comes just as the Supreme Court declined to pause the lower-court proceedings, allowing the fee-setting process to move forward while Apple's broader appeal continues.

Apple Submits Off-App Store Commission Proposal

Apple's submission is a direct response to the District Court's mandate to determine what fee, if any, the company can charge developers when users are directed to external payment methods. The company had repeatedly attempted to delay this process, arguing that the Supreme Court's review of a related contempt order could alter the legal landscape. However, after the Supreme Court denied its request for a stay, Apple was compelled to present its proffer in compliance with Judge Yvonne Gonzalez Rogers's instructions.

The proposed commission rates are structured into three tiers:

• 15% for standard apps that are subject to the usual 30% in-app purchase commission.
• 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, which already benefit from reduced IAP commissions.

Apple contends that these rates are supported by both factual and expert evidence. In its filing, the company states that a significant number of U.S. developers, accounting for a substantial share of App Store revenue, would be able to link out profitably at the proposed rates. Apple argues that this would create meaningful competitive pressure on its own IAP system, a goal that the court has repeatedly emphasized throughout the proceedings. At the same time, Apple maintains that the fees would allow it to recover compensation for the value provided by its intellectual property-protected tools, technologies, and services, which courts have recognized as legitimate and procompetitive.

The company also drew comparisons to rival app store operators, including Google Play, Samsung Galaxy Store, and Amazon's Android App Marketplace. Apple specifically noted that Google Play imposes linked-out rates of 20% for standard apps, 15% for program participants, and 10% for subscriptions, pointing out that Epic had agreed to those terms in its own dealings with Google. Apple used this comparison to argue that its proposed 15% standard rate is competitive and reasonable in the broader market context.

Despite submitting the proposal, Apple reiterated its belief that the rate-determination proceedings should be paused while its case is pending before the Supreme Court. The company made clear that it only filed the proffer to comply with the judge's directive, not as a concession on the merits of the underlying dispute.

Background of the Epic v. Apple Dispute

The conflict between Apple and Epic Games dates back to August 2020, when Epic deliberately violated App Store guidelines by adding a direct payment option in Fortnite, bypassing Apple's IAP system. Apple subsequently removed Fortnite from the App Store, prompting Epic to file an antitrust lawsuit. The case centered on whether Apple's App Store policies, including the mandatory use of IAP and the 30% commission, constituted illegal monopolization.

In September 2021, Judge Yvonne Gonzalez Rogers issued a ruling that largely favored Apple on antitrust claims but also found that Apple's anti-steering provisions violated California's Unfair Competition Law. She issued an injunction requiring Apple to allow developers to include external links to alternative payment methods. However, the Ninth Circuit Court of Appeals later partially reversed that decision, specifically overturning the outright ban on commissions for linked-out purchases. The appellate court clarified that such commissions are problematic only if they are effectively prohibitive, leaving room for Apple to charge some fee.

The case then returned to the District Court for the purpose of determining a permissible rate. Apple sought to pause this process while pursuing its appeal to the Supreme Court, but the high court denied the request, allowing the fee-setting proceedings to continue in parallel. Apple is expected to file its Supreme Court brief by September 14.

Epic's Reaction

Epic Games responded to Apple's filing with a statement posted on X (formerly Twitter). The Epic Newsroom account noted that Apple's own filing admitted that, under the Ninth Circuit's definition of “necessary costs,” Apple would charge a 0% commission for purchases made via link-outs to the web. Epic argued that Apple's proposed rates of 15% for standard apps and 5% for Small Business Program apps are still excessive and inconsistent with the appellate court's guidance.

Epic's statement suggests that the two companies remain far apart on what constitutes a fair fee. The dispute has broader implications for the entire app economy, as developers worldwide watch to see how courts define the boundaries of Apple's control over App Store transactions. A ruling that imposes strict limits on Apple's commission could embolden developers to seek alternative payment systems and reduce their reliance on Apple's ecosystem.

Implications for Developers

If Apple's proposal is accepted, developers would still face a significant cost for transactions completed outside the App Store. The 15% standard rate is half of the traditional 30% IAP commission, but it would nonetheless eat into the savings that developers might hope to achieve by steering users toward direct payment methods. For small developers in the Small Business Program, the 5% rate would be more favorable, potentially encouraging broader participation in that program.

The proposal also highlights the growing complexity of app store economics. Apple has argued that even when a purchase occurs outside its storefront, it still incurs costs related to the App Store platform, including developer tools, security infrastructure, and user trust. The company maintains that its commission is a legitimate return on those investments, a position reinforced by court rulings that recognize Apple's ecosystem benefits as procompetitive.

Critics, however, argue that Apple's fees are designed to maintain its dominance and discourage developers from pursuing alternative payment methods. They point to Apple's history of resisting changes to its App Store policies and note that the company has only made concessions under legal or regulatory pressure. The Epic case is one of several global challenges to Apple's practices, including actions by regulators in the European Union, Japan, and the United Kingdom.

The outcome of this fee-setting determination could set a precedent for how other platforms are allowed to charge for out-of-store transactions. If Apple is forced to lower its rates or abandon commissions altogether, similar rules might apply to Google, Samsung, Amazon, and other app store operators. Conversely, if Apple's 15% proposal is accepted, it could provide a safe harbor for other platforms to adopt comparable fee structures.

Next Steps in the Legal Process

With Apple's proffer now on the record, Epic will have an opportunity to respond. The company is expected to argue that even a 15% fee is excessive and unjustified, given that Apple does not process the payment, host the transaction, or provide the same level of service for external purchases. Epic may also renew its call for the court to impose a 0% commission, consistent with its interpretation of the Ninth Circuit's “necessary costs” language.

Judge Rogers will ultimately need to decide whether Apple's proposed rates are permissible under the appellate court's standard. She could accept the proposal, reject it and impose a different rate, or remand for further fact-finding. The decision will likely be appealed regardless of which side prevails, meaning the final resolution could take years.

Meanwhile, Apple is proceeding with its Supreme Court appeal on the contempt ruling tied to its 27% commission on off-App Store purchases. That appeal is separate from the rate-setting proceedings but is closely watched because it could affect whether Apple is penalized for charging its previous fee. The interplay between the Supreme Court review and the District Court's rate determination adds another layer of uncertainty to the case.

For now, the tech industry awaits the next filings and hearings. Apple has emphasized that its proposal is meant to comply with the court's directive while preserving its right to argue that no commission should be required at all. Epic, for its part, remains committed to the principle that developers should be free to connect with customers without paying a toll to a platform gatekeeper. The clash between these two visions will continue to shape the digital marketplace for the foreseeable future.

As the legal battle unfolds, developers and consumers alike are watching closely. The outcome will influence not only how Apple does business but also how the entire mobile software ecosystem evolves. With the Supreme Court review pending and the District Court preparing to set a rate, the next few months are likely to bring further consequential decisions in this landmark case.

Source:9to5Mac News