This analysis was first published in SvD Näringsliv, in Swedish, on January 17th, 2024. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

A court ruling on the so-called “Apple tax” looked set to cost the American tech giant billions. But a similar case reveals how the company plans to circumvent the court’s intent.

Critics have called it a tax — but one levied by one of the world’s largest companies.

Every time an iPhone user buys something digitally in an app, the developer must pay Apple a share of the revenue.

Think of it as a kind of commission. Or a tax, if you prefer. To simplify somewhat: it costs 15 percent on all revenue below ten million kronor per year, and 30 percent on everything above that.

The opposition — driven all the way through the legal system — concerns two things: the level of the commission, and the ability to sell apps through other outlets. If you want to sell to iPhone users through an app, there are no alternatives — you must use the App Store and Apple’s payment system.

When the US Supreme Court on Tuesday declined to take up the prominent case between Apple and Epic Games, the ruling from April last year stood. Apple won on nine of ten counts. Both parties had appealed, but this legal process is now over.

A fairly safe prediction is that it will shortly be replaced by a new one.

At first glance, the tenth point — which Epic Games did win — looked like a significant victory for the world’s app developers. It meant that developers could link to their own payment system from within an app, and thus bypass Apple’s payment system and its fees. Had that been the case, many major developers would be celebrating today — including Spotify, which has long been a loud critic of the current system.

But looking at a similar case from the Netherlands in 2022, it becomes clear that Apple will not accept defeat here. In a dispute over dating apps, the Dutch competition authority forced Apple to change its rules. Dating apps were allowed to process payments independently. But if they did, Apple introduced a new fee of 27 percent instead. On top of that came the costs of running one’s own payment system. In total, what was meant to improve app developers’ margins could instead become a loss-making exercise.

Updated guidelines from Apple, published on Tuesday directly after the ruling, show that the same approach will apply outside the Netherlands. Epic Games CEO Tim Sweeney immediately wrote on X that they would launch a new legal challenge in protest.

Apple’s reluctance to concede on these issues is easy to understand. Billions of dollars in revenue flow through these systems every year. That revenue falls within what Apple classifies as “services” — which is of particular strategic importance, given that iPhone sales have stagnated somewhat in recent years. Services have been the highest-growth segment.

The path to maintaining this strong position, however, is looking increasingly complicated.

From March 7th this year, Apple must start complying with the EU’s Digital Markets Act, DMA. This covers alternative payment methods, but also requires Apple to make it possible to install apps on their phones without going through the App Store. Apple has loudly protested the law, arguing that it creates security risks for users.

To comply, Apple is preparing — according to Bloomberg — to split the App Store in two: one for the EU and one for the rest of the world. This ensures that changes for European users do not spill over to customers elsewhere.

What we are witnessing is a billion-dollar legal cat-and-mouse game. Apple removes one fee and replaces it with another. It allows linking to outside payment systems, but in a way that is extremely cumbersome. It works — technically — but so awkwardly that no developer will want to use it.

But the laws are closing in. So are the calls over what constitutes monopolistic behaviour. Apple’s market position has made it one of the world’s largest companies by market capitalisation. It is easy to understand why they so consistently push back against all external demands for change.

The winds are clearly blowing against them, however, and Apple is running out of cards to play. But for every month they can delay the changes, billions more roll into their accounts. They are in no hurry to enter a more regulated future.