Apple has dropped a new App Store policy that formally allows the in-app purchase of non-fungible tokens (NFTs) on its platform, but also requires a 30% transaction fee that has been called a de facto ban on their sale.
In addition to applying its standard, mandatory commission to NFT sales, the update to the App Store guidelines that was announced Monday (Oct. 24) also requires apps to have all necessary licenses in any region in which they are sold.
In doing so, Apple has separated the NFTs that hold content like art, videos and music from other cryptocurrencies like bitcoin, ether and dogecoin, which can be sold on exchanges like Binance, Coinbase and FTX without using Apple’s in-app purchase platform.
Aside from the 30% commission, widely considered a dealbreaker on its own, Apple’s in-app purchasing does not support crypto as a currency for payments — which is a big problem as most NFT marketplaces price the tokens in ether and other digital assets, and they have only recently begun to accept dollar-denominated payments.
No Thanks
As a result, NFT marketplaces have refused to go the Apple route. It’s not hard to see why. Even with NFT sales having collapsed this year — with Dune Analytics noting that September’s $466 million in NFT sales are down 97% from January’s $17 billion — Apple would have raked in $140 million last month if those sales went through its apps.
Some, like top marketplace OpenSea, offer an Apple app usable only for browsing. Magic Eden, a marketplace on the Solana blockchain that has become the top alternative to Ethereum for minting NFTs, has simply decided to forego an Apple app due to the price, Co-Founder and Chief Technology Officer Sidney Zhang told The Information.
While the vast majority of NFTs are minted on Ethereum, the cost can be prohibitive — $50 to $75 has been called a fairly common price — leading NFT creators to jump to other blockchains.
NFT sellers are generally charged a 3% to 5% commission on top of the minting fee that is charged by the blockchain, so it’s not only marketplaces that are avoiding Apple apps. Sellers have expressed no interest in taking that kind of hit on peer-to-peer (P2P) transactions.
But it’s not just NFT sales that Apple’s restrictions have limited.
The new rules state: “Apps may allow users to view their own NFTs, provided that NFT ownership does not unlock features or functionality within the app” and that “Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, cryptocurrencies and cryptocurrency wallets, etc.”
This seems likely to rule out other features offered by some NFTs, such as acting as a ticket to an event, proof of payment for a product or providing access to special content.
Broader Opposition
Unsurprisingly, Apple’s rules have tapped into broader opposition to its stranglehold on payments.
Epic Games CEO Tim Sweeney, who is suing Apple over its in-app payments rules after it booted the popular Fortnite game from the App Store after it allowed in-app purchases, called Apple out on Twitter for “crushing another nascent technology” with its “grotesquely overpriced in-app payment service.”
Now Apple is killing all NFT app businesses it can’t tax, crushing another nascent technology that could rival its grotesquely overpriced in-app payment service. Apple must be stopped. https://t.co/4KChp6jtFZ
— Tim Sweeney (@TimSweeneyEpic) September 23, 2022
A September ruling in that case ordered Apple to allow other in-app payments but refused to call Apple’s overall control of iPhone apps or the way developers can process payments an illegal monopoly. That is likely to be delayed while appeals go forward. But the European Union is looking at banning Apple’s refusal to allow third-party apps to be used unless they are uploaded through the App Store.
Beyond that, crypto investment and services firm Galaxy Digital went further, calling out Apple’s 30% NFT fee as a policy that will limit wider adoption of Web3 technology.
Some game publishers are still cautious about web3 integrations. @Ubisoft has walked back on their initial bullish comments towards NFTs. @Apple seems to be sticking with its 30% tax on in-app #NFT purchases, despite likelihood that it will limit web3 adoption.
— Galaxy (@galaxyhq) October 24, 2022
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