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

ios 18 4 carplay

Apple Upgrades CarPlay in Two Ways

Wednesday March 12, 2025 6:05 am PDT by
The upcoming iOS 18.4 update for the iPhone includes a smaller but meaningful improvement for Apple's in-car iPhone mirroring system CarPlay. Specifically, CarPlay now shows a third row of icons, up from two rows previously. However, this change is only visible in vehicles with a larger center display. For example, a MacRumors Forums member noticed the change in a Toyota Tundra with a...
Apple More Personal Siri Ad

John Gruber Says 'Something is Rotten' at Apple

Wednesday March 12, 2025 7:39 pm PDT by
Daring Fireball's John Gruber today shared some strongly-worded comments about Apple's delayed personalized Siri features. Gruber is a well-known Apple pundit who has been writing about the company for more than two decades. In a blog post titled "Something Is Rotten in the State of Cupertino," Gruber said Apple's credibility has been "damaged" by the delay:Keynote by keynote, product by...
airpods pro 2 gradient

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

Tuesday March 11, 2025 3:26 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...
Apple Maps vs Google Maps Feature

iOS 18.4 Adds a Highly-Requested Setting to iPhones — But Not in U.S.

Wednesday March 12, 2025 1:05 pm PDT by
iPhones are finally getting a much-requested setting, but availability is limited. The upcoming iOS 18.4 update introduces an option to set a default navigation app, other than Apple Maps, but unfortunately this new setting is limited to users in the EU. There, you can now set an app like Google Maps or Waze as your default navigation app on the iPhone by opening the Settings app and tapping ...
iphone 17 pro asherdipps

iPhone 17 Pro Max Rumors Allegedly Refer to 'iPhone 17 Ultra' Model

Friday March 14, 2025 7:56 am PDT by
If you've been following iPhone rumors over the last few years, you may remember reading reports that Apple flirted with the idea of introducing a super high-end "Ultra" model that would either replace its Pro Max device or sit above it in Apple's smartphone hirearchy. These reports appeared in the pre-launch iPhone 15 and iPhone 16 rumor cycles, but ultimately came to nothing. Now though, the...
iPhone 17 Pro Render Front Page Tech

iPhone 17 Pro Machined Parts Leak Reflects Camera Redesign Rumors

Thursday March 13, 2025 3:07 am PDT by
Apple's upcoming iPhone 17 Pro models are expected to feature a significant design overhaul, and a new image apparently taken on an assembly line for the unreleased devices appears to confirm the biggest rumored change. Render of an iPhone 17 Pro model shared by Jon Prosser The iPhone 17 Pro and iPhone 17 Pro Max are rumored to adopt a horizontal camera bar reminiscent of Google's Pixel...
Generic iOS 19 Feature Mock Light

iOS 19 Will Bring Biggest Design Overhaul Since iOS 7

Monday March 10, 2025 12:17 pm PDT by
Apple is planning for a major design overhaul of the iPhone, iPad, and Mac interfaces with the introduction of iOS 19, iPadOS 19, and macOS 16 later this year, reports Bloomberg. The update will "fundamentally change" the look of Apple's operating system, introducing a more consistent cross-platform experience. Apple plans to update the style of icons, menus, apps, windows, and system...
Sad Siri Feature

Kuo: Apple Knows Apple Intelligence is 'Underwhelming' and Won't Drive iPhone Upgrades

Thursday March 13, 2025 9:32 am PDT by
The Apple Intelligence features that Apple introduced with iOS 18 are not pushing people to upgrade their iPhones, Apple analyst Ming-Chi Kuo reiterated today. Apple's recent Siri failures are also going to have an impact on 2025 iPhone shipments, which the market is beginning to realize. As early as last July, Kuo said expectations that Apple Intelligence could drive iPhone upgrades were...
Sad Siri Feature

Kuo: Cook Should Personally Address Siri Apple Intelligence Failure

Thursday March 13, 2025 4:02 pm PDT by
Apple made a major misstep with the way that it handled the delay of Apple Intelligence features for Siri, Apple analyst Ming-Chi Kuo said today. Announcing the delay through a press statement was a bad decision, and Apple should instead have gone through official channels. Kuo referenced the well-known "Antennagate" PR crisis when the iPhone 4 launched in 2010, and the way that then Apple...

Top Rated Comments

wanha Avatar
3 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
3 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
3 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
3 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
3 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
3 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)