A study commissioned by Apple indicates that developers in the European Union (EU) have not passed on savings from reduced App Store fees to consumers. The research, conducted by Charles River Associates, analysed 1,000 popular apps across 15 EU countries. It found that prices remained unchanged or increased for 91% of products following the implementation of the EU’s Digital Markets Act (DMA).
The DMA mandates that developers can offer alternative payment systems and app stores. Apple states this has led to a reduction in its commission fees for some developers. Under the DMA, developers can choose to process payments outside of Apple’s in-app purchase system. For apps that do not use Apple’s payment system, a 3% commission reduction is applied. Developers also have the option to distribute their apps through alternative app marketplaces, which can alter fee structures.
Developers Retain Savings
The study surveyed 1,000 apps. It found that 91% did not lower their prices to end-users. Of these, 82% maintained existing prices, while 9% increased prices. The remaining 9% of apps were either new or had insufficient pricing data for comparison. This suggests a significant trend where the financial benefits derived from the DMA’s regulatory changes have been absorbed by the developers themselves, rather than being passed on as direct cost reductions to the end consumer. The implications for market dynamics are substantial, as it raises questions about the effectiveness of regulatory interventions aimed at fostering consumer-centric competition.
Apple states its App Store commission rates are tiered. It reports that 99% of developers and 97% of all transactions qualify for either a 0% or 30% commission rate. Developers who use alternative in-app payment systems are charged a 3% service fee. For developers distributing apps via alternative app marketplaces, Apple charges a 0.5% commission on the sale of paid apps and in-app purchases. This tiered structure, combined with the new DMA-mandated options, creates a complex fee landscape. The Charles River Associates report specifically examined the pricing behaviour of developers in response to these new fee structures, aiming to quantify the extent to which the intended consumer benefits have materialized.
Consumer Savings Not Realized
The research suggests that cost savings intended to benefit consumers have largely been retained by developers. This outcome contrasts with the stated aims of the DMA, which sought to foster greater competition and provide more choice and value to users in the EU’s digital markets. The findings imply that while the DMA has successfully introduced new operational frameworks for app distribution and payment processing, its direct impact on consumer pricing may be less pronounced than anticipated. Businesses operating within the EU’s digital economy will need to monitor these trends closely, as the long-term effects on consumer spending habits and market competition remain to be seen. The study’s methodology, focusing on a broad sample of popular apps, lends weight to its conclusions regarding the widespread nature of this pricing behaviour.
The DMA came into effect in March 2024. It targets large online platforms designated as “gatekeepers.” These platforms are subject to rules designed to ensure fairer competition and greater openness in digital markets. The potential impact of the DMA on consumer pricing and developer behaviour is subject to ongoing observation and analysis. The regulatory landscape surrounding app distribution and digital services is continually evolving, and this study provides a crucial early snapshot of how developers are adapting to the DMA’s provisions. Further analysis will be required to understand the strategic decisions behind developers retaining these savings, whether it’s for reinvestment in product development, increased marketing efforts, or simply to maintain existing profit margins in a competitive market. The timeline for observing significant shifts in consumer pricing may extend beyond the initial implementation phase of the DMA.
DMA Aims Unmet
The study’s conclusion that the DMA’s aims of increased consumer benefit are not yet being met highlights a critical point of discussion for policymakers and industry stakeholders. While the DMA has successfully compelled gatekeepers like Apple to open up their ecosystems, the downstream effects on pricing are not automatic. Developers, faced with new options and potentially reduced fees, appear to be exercising their commercial discretion in ways that do not directly translate into lower prices for EU consumers. This raises questions about the efficacy of regulatory measures that rely on indirect mechanisms to achieve consumer welfare improvements. Future iterations or complementary policies might be needed to ensure that the intended benefits of market liberalization reach the end-user. The ongoing scrutiny of these developments will be essential for understanding the true impact of the DMA on the EU’s digital economy.
