Microsoft Accuses Apple of Unfair 30% App Store Fee, CMA Investigation Moves to Next Stage

Microsoft Accuses Apple of Unfair 30% App Store Fee, CMA Investigation Moves to Next StageEarlier today, the UK's Competition and Markets Authority (CMA) released responses from tech companies regarding its investigation into the UK's supply markets for mobile browsers and cloud gaming. One notable response came from Microsoft, which slammed Apple and its 30% fee charged when customers make in-app purchases

Microsoft Accuses Apple of Unfair 30% App Store Fee, CMA Investigation Moves to Next Stage

Earlier today, the UK's Competition and Markets Authority (CMA) released responses from tech companies regarding its investigation into the UK's supply markets for mobile browsers and cloud gaming. One notable response came from Microsoft, which slammed Apple and its 30% fee charged when customers make in-app purchases.

Apple has historically defended its 30% cut of app and in-app purchase revenue, claiming it needs to maintain infrastructure and make developers' apps more discoverable. Microsoft, however, isn't buying it. It claims Apple makes no contribution to the purchase, discoverability, or accessibility of in-app purchases. Microsoft called Apple's in-app purchase fee "neither economical nor reasonable".

Under Apple's rules, app developers are not allowed to charge iPhone users a higher price to offset the fee, making it impossible to monetize cloud gaming services on iOS. Microsoft argues that Apple's fee for in-app purchases is due to lack of competition in native iOS app distribution.

Microsoft cites a market study on mobile ecosystems conducted by the CMA (page 82), which found that Apples 30% fee is due to the lack of competition in native iOS app distribution. In most markets, Apple does not allow sideloading apps or installing apps from third-party app stores. This stands in stark contrast to Google, which gives Android users significant freedom, such as allowing third-party app stores and sideloading apps.

While Microsoft does not mention any issues with cloud gaming services on the Android platform, it has greater leeway in providing cloud gaming services on that platform, as previously mentioned.

The next deadline for the investigation will be November, when the CMA will release a provisional decision report. The final report will be released in March 2025, giving interested parties an opportunity to respond to the provisional decision report.

Microsoft's response highlights the potential issues arising from Apple's dominant position in the mobile app market. Apple's fee model for in-app purchases could be putting unfair pressure on developers and limiting consumer choice. The CMA's investigation will continue to focus on these issues and determine if Apples conduct violates UK competition law.

Although Microsoft didn't explicitly state any issues with cloud gaming services on the Android platform, it expressed concerns about Apple's restrictions on the iOS platform. This suggests that Microsoft believes Apple is engaging in potentially anti-competitive behavior with regard to app distribution and cloud gaming services.

The CMA investigations outcome will have significant ramifications for the mobile app market. If the CMA determines that Apple has violated competition law, Apple may need to revise its fee model or allow third-party app stores onto the iOS platform. This would have far-reaching implications for both developers and consumers.

The outcome of this investigation will have a profound impact on the entire tech industry. This goes beyond Apple and concerns the mobile app market as a whole. The CMAs findings will serve as a precedent for regulators in other countries and could lead to stricter global regulations on the mobile app market.