Natasha Lomas, TechCrunch:

One big change Apple announced Thursday is that developers who include link-outs in their apps will no longer need to accept the newer version of its business terms — which requires they commit to paying the Core Technology Fee (CTF) the EU is investigating.

In another notable revision of approach, Apple is giving developers more flexibility around how they can communicate external offers and the types of offers they can promote through their iOS apps. Apple said developers will be able to inform users about offers available anywhere, not only on their own websites — such as through other apps and app marketplaces.

These are good changes. Users will also be able to turn off the scary alerts when using external purchasing mechanisms. But there is a catch.

Juli Clover, MacRumors:

There are two fees that are associated with directing customers to purchase options outside of the App Store. A 5 percent initial acquisition fee is paid for all sales of digital goods and services that the customer makes on any platform that occur within a 12-month period after an initial install. The fee does not apply to transactions made by customers that had an initial install before the new link changes, but is applicable for new downloads.

Apple says that the initial acquisition fee reflects the value that the App Store provides when connecting developers with customers in the European Union.

The other new fee is a Store Services Fee of 7% or 20% assessed annually. Apple says it “reflects the ongoing services and capabilities that Apple provides developers”:

[…] including app distribution and management; App Review; App Store trust and safety; re-discovery, re-engagement and promotional tools and services; anti-fraud checks; recommendations; ratings and reviews; customer support; and more.

Contrary to its name, this fee does not apply solely to apps acquired through the App Store; rather, it is assessed against any digital purchase made on any platform. If an app is first downloaded on an iPhone and then, within a year, the user ultimately purchases a subscription in the Windows version of the same app, Apple believes it deserves 7–20% of the cost of that subscription in perpetuity, plus 5% for the first year’s instance. This seems to be the case no matter whether the iPhone version of that app is ever touched again.

I am not sure what business standards apply here and whether it is completely outlandish, but it sure feels that way. The App Store certainly helps with app discovery to some degree, and Apple does provide a lot of services whether developers want them or not. Yet this basically ties part of a developer’s entire revenue stream to Apple; the part is unknown but will be determined based on whichever customers used the iPhone version of an app first.

I think I have all this right based on news reports from those briefed by Apple and the new contract (PDF), but I might have messed something up. Please let me know if I got some detail wrong. This is all very confusing and, though I do not think that is deliberate, I think it struggles to translate its priorities into straightforward policy. None of these changes applies to external purchases in the U.S., for example. But what I wrote at the time applies here just the same: it is championing this bureaucracy because it believes it is entitled to a significant finder’s fee, regardless of its actual contribution to a customer’s purchase.

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Jason Snell, Six Colors:

Last quarter, Apple made about $22 billion in profit from products and $18 billion from Services. It’s the closest those two lines have ever come to each other.

This is what was buzzing in the back of my head as I was going over all the numbers on Thursday. We’re not quite there yet, but it’s hard to imagine that there won’t be a quarter in the next year or so in which Apple reports more total profit on Services than on products.

When that happens, is Apple still a products company? Or has it crossed some invisible line?

The most important thing Snell gets at in this article, I think, is that the “services” which likely generate the most revenue for Apple — the App Store, Apple Pay transactions, AppleCare, and the Google search deal — are all things which are tied specifically to its hardware. It sells subscriptions to its entertainment services elsewhere, for example, but they are probably not as valuable to the company as these four categories. It would be disappointing if Apple sees its hardware products increasingly as vehicles for recurring revenue.

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