The Commission Is Only the Visible Price
For Apple’s App Store, the economic question is not simply whether a developer can avoid a 30% commission. It is whether an external route still creates value after a new steering fee, payment operations, customer support, user drop-off, and the loss or gain of platform services are counted together. This chapter examines that decision and the CMA’s proposed way of regulating it. The result is a more useful test than a single percentage: a steering route must leave enough surplus to operate while giving Apple fair remuneration for services that genuinely support it.
The distinction is important because steering changes the shape of the transaction. Under IAP, Apple provides an integrated payment environment and acts as the merchant of record for the sale. Under a steered route, the developer may need to arrange payment processing, refunds, support, and a website, possibly with help from another payment provider. A lower charge from Apple can therefore be offset by costs that were previously bundled into the App Store relationship.
The choice a developer is actually making
The CMA describes Apple’s current UK model as a 30% headline commission for digital goods and services, with a reduced 15% rate for eligible small-business developers. The headline rate is visible, but it is not the complete counterfactual. A developer comparing IAP with steering is comparing two operating systems for a commercial relationship.
The IAP route has an obvious cost: the commission. It also gives the developer access to services that Apple says are part of the App Store’s value, including integrated payment and other store functions. A steered route may reduce the charge payable to Apple, but the developer may have to provide or purchase other services. The CMA lists payment processing, merchant-of-record services, a website, customer support, and refund handling among the possible requirements. Those costs may be fixed, variable, or both.
Fixed costs are incurred to make the route available at all. A developer may need to update an app, build a checkout journey, connect account systems, or set up reporting. Variable costs rise with transactions: payment fees, support requests, fraud controls, or the cost of managing refunds. The distinction affects who can adopt steering. A large developer may already operate much of the required infrastructure, making the additional fixed cost low. A smaller developer may have to create the capability from scratch and may lack the margin or volume to spread the cost.
The CMA records evidence that small developers can be particularly sensitive to lost revenue and additional complexity. A business that sells fewer digital products cannot easily spread a fixed cost across a large number of transactions. It may also be unable to cross-subsidize a thin-margin digital service with revenue from another part of its business. This does not mean that every small developer will reject steering or every large developer will adopt it. It means that a fee that looks manageable in the aggregate can still exclude the businesses for which the alternative would be most valuable.
User behavior adds another variable. Moving the transaction outside the App Store can add steps, require a different interface, or make a familiar purchase flow less familiar. If fewer users complete the external route, the developer loses revenue on those users even when the fee per completed transaction is lower.