Apple's Phil Schiller Initially Opposed 27% App Store Fee on External Purchases

Apple Fellow Phil Schiller testified in court on Monday that he initially opposed the 27% commission Apple now charges on purchases made outside the App Store, citing compliance risks and potential developer backlash (via AP News).

app store blue banner epic 1
Schiller, who oversees the App Store, said he had concerns that the fee would create an "antagonistic relationship" between Apple and developers, and worried about Apple becoming "some kind of collection agency" that might need to audit developers who didn't pay.

"I had great concerns about the collections of funds from developers," Schiller said during his three-hour testimony in the ongoing legal battle with Epic Games. He specifically worried about "the change in the role of the App Store to now an organization that needs to collect money from developers."

Despite his reservations, an Apple pricing committee that included CEO Tim Cook, former CFO Luca Maestri, and Apple's legal team ultimately decided to implement the commission structure.

The reduced 27% fee (down from Apple's standard 30%) was established after the 2021 Epic Games lawsuit ruling. Judge Yvonne Gonzalez Rogers rejected claims that Apple operated a monopoly. However, she ruled that Apple's anti-steering conduct was anti-competitive, and ordered the company to allow developers to link to alternative payment methods outside the App Store.

Apple complied by creating a system where developers can apply for a "StoreKit External Purchase Link Entitlement" to direct users to external payment options. However, Apple still demands a 27% commission on these transactions made within seven days of clicking the link. For developers in Apple's Small Business Program, the rate is 12% instead of the usual 15%.

Epic Games CEO Tim Sweeney previously criticized Apple's approach as "bad-faith" compliance with the court order, arguing the minimal commission reduction and other restrictions undermined the ruling's intent to foster more competition.

The current hearings are scheduled to continue until Wednesday, and are focused on determining whether Apple has violated the original court order. Judge Gonzalez Rogers has expressed frustration with Apple witnesses' hazy recollections about how they developed rules for the alternative payment system.

According to court documents, Apple extensively analyzed how the "less seamless experience" of external purchases would affect transaction completion rates, which helped the company work out when developers would likely return to using Apple's in-app purchase system.

The dispute between Apple and Epic dates back to 2020 with Epic seeking to overturn Apple's App Store rules requiring content purchases within iOS apps to go through Apple, which takes a 15% to 30% cut of the revenue.

Popular Stories

iCloud General Feature Redux

iPhone Users Who Pay for iCloud Storage Receive a New Perk

Thursday March 20, 2025 12:01 am PDT by
If you pay for iCloud storage on your iPhone, Apple has a new perk for you, at no additional cost. The new perk is the ability to create invitations in the Apple Invites app for the iPhone, which launched in the App Store last month. In the Apple Invites app, iCloud+ subscribers can create invitations for any occasion, such as birthday parties, graduations, baby showers, and more. Anyone ...
iPhone 17 Pro Render Front Page Tech

iPhone 17 Pro Launching Later This Year With These 10 New Features

Sunday March 23, 2025 10:00 am PDT by
While the iPhone 17 Pro and iPhone 17 Pro Max are not expected to launch until September, there are already plenty of rumors about the devices. iPhone 17 Pro's alleged design via Front Page Tech Below, we recap key changes rumored for the iPhone 17 Pro models as of March 2025: Aluminum frame: iPhone 17 Pro models are rumored to have an aluminum frame, whereas the iPhone 15 Pro and iPhone...
Generic iOS 19 Feature Mock

iOS 19 Coming in June With These New Features

Thursday March 20, 2025 2:04 pm PDT by
While the first iOS 19 beta is still more than two months away, there are already plenty of rumors about the upcoming software update. Below, we recap the key iOS 19 rumors so far. visionOS-Like Design In January, the YouTube channel Front Page Tech revealed a redesigned Camera app that is allegedly planned for iOS 19. According to Front Page Tech host Jon Prosser, the Camera app...
iOS 18

Top 5 New Features Coming in iOS 18.4

Friday March 21, 2025 3:26 pm PDT by
We're not getting new Siri Apple Intelligence features in iOS 18.4 as expected, but the upcoming update does have quite a few new additions that will be worth upgrading for. We've rounded up the five best features to look forward to, and if you're not running the beta, you can expect to get access to these in early April. Priority Notifications If you have an iPhone or iPad that supports...
Windows Vista

Apple Might Be Having Its Windows Vista Moment, Says Analyst

Thursday March 20, 2025 6:52 am PDT by
Is Apple experiencing a "Vista-like drift into systemically poor execution?" That was a question posed by well-known technology analyst Benedict Evans, in a recent blog post covering Apple's innovation and execution, or seemingly lack thereof as of late. He is referring to Microsoft's Windows Vista operating system, which was widely criticized when it launched in 2007 due to software bugs,...
apple wallet drivers license feature iPhone 15 pro teal 1

Apple Says iPhone Driver's Licenses Coming to These 8 U.S. States, But Rollout Remains Slow

Wednesday March 19, 2025 6:55 am PDT by
In select U.S. states, residents can add their driver's license or state ID to the Wallet app on the iPhone and Apple Watch, providing a convenient and contactless way to display proof of identity or age at select airports and businesses, and in select apps. Unfortunately, this feature continues to roll out very slowly. It has been three and a half years since Apple first announced the...
airpods pro 2 gradient

AirPods Pro 3 Launch Now Just Months Away: Here's What We Know

Tuesday March 18, 2025 9:13 am PDT by
Despite being released over two years ago, Apple's AirPods Pro 2 continue to dominate the wireless earbud market. However, with the AirPods Pro 3 expected to launch in 2025, anyone thinking of buying Apple's premium earbuds may be wondering if the next generation is worth holding out for. Apart from their audio and noise-canceling performance, which are generally regarded as excellent for...
iPhone 17 Pro Render Front Page Tech

Latest iPhone 17 Pro Dummies Highlight Apple's New Part-Glass Design

Thursday March 20, 2025 5:27 am PDT by
Seasoned leaker Sonny Dickson has shared more dummy models of Apple's upcoming iPhone 17 series, with the latest lot revealing a noticeable shift in Apple's iPhone Pro model design that goes beyond the much-talked-about new rear camera bar. Dickson points out that the iPhone 17 Pro dummy models feature an outlined area on the back, beginning just below the camera module and extending to the...
airtag orange

Apple's Next Product is Likely an AirTag 2 With These New Features

Thursday March 20, 2025 2:30 pm PDT by
Following the introduction of the iPhone 16e, new iPads and Macs, and some new accessories over the past month, what will Apple's next product announcement be? Based on rumors, a second-generation AirTag item tracker is likely next up. Last year, Bloomberg's Mark Gurman reported that a new AirTag would be released around the middle of 2025. More recently, a leaker known as Kosutami claimed...

Top Rated Comments

wanha Avatar
4 weeks ago
Phil was right then and he is right now. Not that it matters in today's hyper greedy world.
Score: 24 Votes (Like | Disagree)
Kraszim Avatar
4 weeks ago
Sorry Apple but this business model is gone. I am paying all subs through providers websites, because they are just 30% cheaper. Let go of it. Don't fight your clients
Score: 21 Votes (Like | Disagree)
brofkand Avatar
4 weeks ago

Okay, but then why should Apple hosts your app on their store for free ? You seem to assume they have a moral obligation to offer you access to the Appstore while you’re entitled to direct all the payments for your app to your website . They don’t have any moral obligation to do that. I don’t know any software store that does.

Tim Sweeney’s own Epic Store doesn’t either. They take a 12% cut.
If they don't want to host apps, that's fine. Let me download it from the developer's website and install it myself.
Score: 20 Votes (Like | Disagree)
Velli Avatar
4 weeks ago
The balance of my admiration of Phil vs Tim has shifted immensely over the last few months.
Score: 18 Votes (Like | Disagree)
Kraszim Avatar
4 weeks ago

But why should Apple provide developers the whole AppStore infrastructure for free of they’re all going to direct the payment outside the Store ?

No software store provides their infrastructure for free, why should Apple be the only one ?
Because I paid full price for the phone and app store is one of the features of it. I would never pay as much for a phone if those pesky developers with their little apps weren't there. Besides if I can pay $10 on developers website, or $13 through Apple, then it isn't developer that pays this fee, its me. They get $10 both times.
Score: 11 Votes (Like | Disagree)
springsup Avatar
4 weeks ago
I’m just gonna say it - Phil Schiller would’ve been a better successor to Steve Jobs.

I know, he’s the marketing guy, and Steve always hated what happed to other Silicon Valley tech companies after letting marketing guys run the company.

But Phil was different. He understood Apple in a way that Tim Cook didn’t.
Score: 11 Votes (Like | Disagree)