Apple has submitted its proposed commission rates for purchases made outside the App Store's in-app purchase system in the United States, marking a significant step in the long-running Epic Games antitrust case. The proposal, filed with the District Court, would allow Apple to charge up to 15% for external link-outs, along with tiered rates for specific developer categories.

Key facts at a glance

• Apple proposes a 15% commission for standard apps that are subject to the usual 30% in-app purchase commission.
• Apple proposes a 10% commission for the Video Partner Program, News Partner Program, Mini Apps Partner Program, and subscription renewals.
• Apple proposes a 5% commission for Small Business Program apps.
• The Supreme Court denied Apple's request to pause lower-court proceedings while it reviews a related contempt issue.
• Epic responded by arguing that Apple's proposed rates fail to align with the Ninth Circuit's definition of necessary costs.

Apple submits off-App Store commission proposal

For months, Apple sought to delay the District Court proceedings that will determine what fee, if any, the company can charge for purchases made outside of the App Store's IAP system. Apple attempted to pause the proceedings while the Supreme Court considers whether Apple should be held in contempt for charging a 27% commission on off-App Store purchases. That contempt dispute stems from an injunction issued by Judge Yvonne Gonzalez Rogers, which required Apple to let developers direct users to alternative purchasing methods without imposing what the court viewed as prohibitive fees.

The Supreme Court denied Apple's request to pause the lower-court proceedings, allowing the fee-setting process to move forward. Apple filed its proffer just as the denial was made public. In its submission, Apple argued that the Supreme Court's review could affect the outcome of the fee-setting proceedings and that the lower court should wait for a decision. The Supreme Court disagreed, clearing the way for the District Court to continue evaluating what Apple may charge developers for link-outs to the web.

Apple's proposed commission structure

Apple's proposal outlines a tiered fee structure based on the type of developer program and the commercial arrangement between Apple and the developer. For standard apps, which are already subject to a 30% in-app purchase commission, Apple proposes a 15% linked-out commission. For developers in the Video Partner Program, the News Partner Program, the Mini Apps Partner Program, and for subscription renewals, Apple proposes a 10% commission. For apps enrolled in the Small Business Program, Apple proposes a 5% commission.

Apple said that factual and expert evidence supporting these proposed rates was submitted at the same time as the proffer. The company argued that its proposed commissions are designed to create substantial competitive pressure on Apple's own in-app purchase system, which the court has repeatedly said is a goal of the injunction. Apple also contended that the rates would allow large numbers of U.S. developers to link out profitably, covering a significant share of App Store revenue.

Apple further claimed that its proposed linked-out commission is reasonable compensation for the value of its intellectual property, tools, technologies, and services. The company noted that the District Court and the Ninth Circuit have repeatedly recognized that Apple is entitled to some compensation for the services it provides to developers. In Apple's view, the proposed rates are not prohibitive and do not undermine the court's directive to permit developers to steer users to outside purchasing mechanisms.

Legal background and the path to this proposal

The case began when Epic Games challenged Apple's App Store policies, including the requirement that developers use Apple's in-app purchase system for digital goods and services. After a lengthy trial, Judge Yvonne Gonzalez Rogers ruled that Apple was not an illegal monopolist under federal antitrust law but did violate California's unfair competition law by preventing developers from telling users about cheaper purchase options outside the App Store. The court issued an injunction requiring Apple to allow external links and other communications that direct users to alternative purchasing methods.

Apple appealed, and the Ninth Circuit largely upheld the injunction but reversed the outright ban on commissions for linked-out purchases. The appellate court said that Apple could charge a commission for off-App Store purchases as long as the fee is not effectively prohibitive. That ruling set the stage for the current rate-determination proceedings, where the District Court must decide whether Apple's proposed commission is permissible.

Apple later began charging a 27% commission on off-App Store purchases, which Epic argued violated the injunction. Judge Gonzalez Rogers found Apple in contempt, and Apple asked the Supreme Court to intervene. The Supreme Court declined to pause the lower-court proceedings, meaning the rate-determination case can continue while the contempt issue is reviewed.

Apple's argument in support of the proposed rates

Apple submitted its proposal with an explanation of why the rates are appropriate. The company said expert analysis shows that large numbers of U.S. developers, representing most App Store revenue, would be able to link out profitably under the proposed fee schedule. Apple argued that this would create meaningful competitive pressure on its in-app purchase system, which the court has repeatedly identified as an important objective. Apple also said the rates allow the company to recover at least some compensation for its tools, technologies, and services, which the court and the Ninth Circuit have recognized as legitimate and procompetitive.

Apple compared its proposed commissions to those of competing app stores. The company noted that the Google Play Store charges linked-out rates of 20% for standard apps, 15% for program participants, and 10% for subscriptions. Apple pointed out that Epic agreed to those rates in its own agreements with Google. Apple's proposed rates are lower across the board, except for the 10% subscription rate, which matches Google Play's subscription rate. Apple also mentioned Samsung Galaxy Store and Amazon's Android App Marketplace as competitors with comparable commission structures.

Apple acknowledged that it still believes the rate-determination proceedings should be paused while its Supreme Court case is pending. The company said it submitted the proposal only to comply with Judge Gonzalez Rogers's instructions. Apple also noted that the Ninth Circuit had reversed the District Court's outright ban on commissions for linked-out purchases and said such commissions are problematic only if they are effectively prohibitive. Apple's filing appears designed to demonstrate that its proposed rates are reasonable and within the bounds set by the appellate court.

Epic's response

Epic Games responded quickly to Apple's filing, publishing a statement on X. Epic claimed that Apple admitted that under the Ninth Circuit's definition of necessary costs, Apple would charge 0% for purchases made via linkouts to the web. Epic noted that Apple proposed link-out fees of 15% for standard apps and 5% for Small Business Program apps. Epic believes these fees are inconsistent with the court's guidance and that Apple is attempting to preserve its monopoly over in-app payments through a new fee structure.

Epic's statement suggests that the company will continue to challenge Apple's proposal in the District Court. Epic has long argued that any commission on purchases made outside the App Store is an anticompetitive tax on transactions that do not use Apple's payment processing. The company has also argued that Apple's fees are designed to make external payment options economically unattractive for developers, even if they are technically permitted.

What happens next

With Apple's proffer now submitted, Epic will have an opportunity to respond to the proposed fee structure. The District Court will then decide whether Apple's proposed commissions comply with the Ninth Circuit's ruling. That decision will likely have significant implications for developers and for the broader app economy. If the court rejects Apple's proposed rates, it may impose a lower fee or no fee at all for off-App Store purchases. If the court accepts the rates, Apple will be permitted to charge the proposed commissions while the Supreme Court continues to review the contempt issue.

Apple is expected to file its brief in the Supreme Court by September 14. The Supreme Court's decision on the contempt issue could influence the final outcome of the rate-determination proceedings. If the Supreme Court concludes that Judge Gonzalez Rogers's injunction was overly broad or that Apple's 27% commission was permissible, the lower court's fee-setting work could be revisited. If the Supreme Court upholds the contempt finding, Apple may face additional penalties and will likely need to adjust its commission structure.

The case remains one of the most closely watched antitrust disputes in the technology industry. The outcome will affect not only Apple and Epic but also millions of developers who distribute apps through the App Store. The definition of a reasonable commission for off-App Store purchases is a novel legal question, and courts are still working to establish a clear standard. Apple's proposal is the latest attempt to define that standard in a way that preserves its revenue from the App Store while complying with judicial rulings.

Developers and industry observers will now examine the evidence Apple submitted in support of its proposed rates. The expert analysis could play a central role in the court's decision. Apple has argued that its rates are comparable to or lower than those of competing app stores, but Epic is likely to challenge that comparison by emphasizing the unique market power of the App Store and the limited alternatives available to iOS developers. The court will have to weigh these competing arguments and determine what fee, if any, is justified under the existing legal framework.

Apple's filing is the latest development in a legal battle that has already produced major rulings on app store policies, antitrust law, and the boundaries of judicial injunctions. The proceedings are expected to continue over the coming months, with both sides preparing for further litigation. The ultimate decision will shape how app stores operate in the United States and could influence similar cases around the world. Regulators and lawmakers have also been watching the case closely, and the final outcome may prompt changes to App Store policies even beyond the specific dispute between Apple and Epic.

Source: 9to5Mac News