Apple Makes Changes for App Developers, News Publishers

Facing increased regulatory scrutiny, Apple announced significant changes to its App Store, enabling developers to inform customers about ways to pay outside the App Store and expanding prices they can offer for subscriptions as well as in-app purchases and paid apps. The company settled a class-action lawsuit with software developers and is expecting a judgment in a suit filed by Epic Games over many of the same issues. Apple’s move is the biggest it’s ever made in response to developers alleging anticompetitive behavior. The company separately announced plans to cut its commission rate for publishers on Apple News.

“Apple agreed to settle a class-action lawsuit with software developers who challenged the tech giant’s practices in connection with the App Store,” reports The Wall Street Journal. “The company said it would set aside $100 million to compensate certain U.S. developers who distributed apps through the App Store on or after June 4, 2015 and April 26 of this year. The settlement class includes developers who made less than $1 million a year. While some developers in the class could receive payments of $30,000, roughly 74 percent are slated to get $500 or less.”

The settlement also addresses “anti-steering rules, or guidelines around developers potentially sending users outside Apple’s ecosystem to save money,” notes WSJ. “Apple agreed to drop restrictions on developers from using information captured from apps — like customer email addresses — to alert them about other purchasing methods beyond Apple’s in-app payment system.”

The Washington Post reports that, “earlier this summer, a bipartisan pair of senators introduced legislation that would have prohibited companies from requiring developers to use their payment system.”

Senator Amy Klobuchar (D-Minnesota) stated that, “this new action by Apple is a good first step towards addressing some of these competition concerns, but more must be done to ensure an open, competitive mobile app marketplace, including common sense legislation to set rules of the road for dominant app stores.”

Senator Richard Blumenthal (D-Connecticut), “who has proposed the legislation to regulate Google and Apple’s app stores,” noted that the “move only adds to the momentum and further exposes rampant anticompetitive abuses in the app markets.”

WaPo adds that, “the proposed changes could be relatively minimal for Apple … [since] people are still blocked from downloading iOS apps from outside app stores or on the Web … [and] no other app store is able to sell iOS apps on iPhones and iPads.”

App developers also will not be able to “include directions or link outside payment options in their apps … [and] its commissions on purchases made within the App Store will remain the same.”

The Coalition for App Fairness, founded by Epic, Spotify and others, “said Apple’s proposed deal did not go far enough,” with executive director Meghan DiMuzio calling it a “sham settlement offer” and a “desperate attempt to avoid the judgment of courts, regulators, and legislators worldwide.”

Apple also plans to “begin issuing an App Store transparency report that includes information such as how many apps were rejected.” Its proposed App Store changes “are still pending court approval.”

The Verge reports that Apple is halving its commission rate for publishers on Apple News to 15 percent of in-app purchases and subscriptions from 30 percent. To be eligible, publishers “must maintain a robust Apple News channel in Australia, Canada, the United States, and the United Kingdom, and publish all content to that channel in Apple News Format.”

If they’re based outside those regions and do not publish in Apple News Format, they must share content via an RSS feed. The app’s primary function “must be to deliver original, professionally-authored news content” and the app “must be available on the App Store and allow users to purchase auto-renewable subscriptions through Apple’s in-app purchase system.”

Apple also stated that the News Partner Program would “support and fund organizations that educate readers on news media literacy” and “further efforts to diversify newsrooms and news coverage.” The Verge notes that, “it’s not clear if the News Partner Program will entice former publishers like The New York Times.”

Related:
Apple Settles Class-Action Lawsuit with U.S. App Developers Over Pricing Terms and Commissions, Variety, 8/26/21
Apple Makes App Store Concessions to Settle Developer Suit, Axios, 8/27/21