Apple’s 27% App Store Fee Plan Met With Skepticism by Judge

(Bloomberg) — Apple’s attempts to justify the 27% fee it charges developers for purchases outside its App Store backfired when a skeptical federal judge questioned an executive about a company-commissioned study showing that half that fee would be reasonable.

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U.S. District Judge Yvonne Gonzalez Rogers in Oakland, Calif., heard a fourth day of testimony to determine whether the iPhone maker is complying with a 2021 court order in an antitrust case brought by Fortnite maker Epic Games Inc. which included allowing app developers to link to payment options not controlled by Apple.

Carson Oliver, senior director of business management for the App Store, testified Friday that Apple hired economic consulting firm Analysis Group Inc. to help create a new commission rate for purchases.

But Rogers has repeatedly criticized Oliver for statements about how Apple decided it would charge developers 27% for purchases of digital goods or services made outside of its App Store, given that the low end of the range in the Analysis Group study is 12.3 %.

“How did you justify the other 15% you are charging?” she said.

Apple provides a number of services to developers, including app discovery, distribution, developer tools and platform technology, along with additional user privacy, trust and security that are not comparable to other platforms, Oliver testified. He said Apple estimates the true low price was 17%.

The Analysis Group estimated the value of each of these categories by comparing them to what is charged by platforms such as Microsoft Corp., Alphabet Inc.’s Google, Etsy Inc. and Google Inc.

The Analysis Group study found that the value of these services would be between 12.3% on the low end or 92% on the high end, depending on factors such as the size of the developer, Oliver said.

“And you’re charging 27%,” Rogers interjected.

Oliver said Apple executives believe the effective commission rate is lower than that.

“That’s a big assumption,” the judge responded. “Your assumptions are just that – they are assumptions. There is no data for that.”

“That’s not true,” said Oliver.

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