Apple avoids another legal battle with app developers

Apple, in a legal settlement announced Thursday with a group of app developers that it would allow developers to ask customers to pay for them outside of their iPhone apps.

The move would allow app makers to avoid paying Apple a commission on their sales and could appease developers and regulators who are concerned with control over mobile apps, including strict guidelines to force developers to pay a cut in their sales .

The deal seems like a small price to pay for the richest company in the world to avoid another lengthy litigation that could have put its business at great risk through the targeted attack on the iPhone App Store. In practice, some large companies like Spotify are already pushing their customers to bypass Apple’s commissions.

Apple is still awaiting a decision by a federal judge in a separate lawsuit filed by Epic Games, maker of the popular game Fortnite, which aims to force Apple to allow app developers to avoid App Store commissions entirely. Consumers have also sued Apple over its app commissions, in one case, the the US Supreme Court has approved go to federal court, and that seeks class action status.

As part of the new agreement, Apple also said it would create a $ 100 million fund to pay out to small app developers, and agreed not to increase the small developer commission rate, which it did reduced from 30 percent to 15 percent last year, for at least three years.

In a briefing with reporters, an Apple executive said it was a huge concession for Apple to allow developers to notify customers of alternative payment methods through email and other channels. Apple will continue to prohibit developers from informing customers about other payment options in their iPhone apps.

The Apple executive added that Thursday’s settlement showed that small app developers are largely okay with sticking to the current App Store policies, including the reduced commission. However, larger developers paying the higher price continue to complain.

Apple prevented reporters from naming the Apple executive or directly quoting them.

Some companies are already pushing their customers to use other payment methods. Spotify, for example, has long prevented customers from signing up for subscriptions to its music service in its app – and it sometimes has that advertised. Apple’s decision on Thursday appears to override a rule that has already been selectively enforced.

Steve Berman, an attorney for plaintiffs in the lawsuit, who moved for class action status, said, “We are really proud to have a case of two developers replacing tens of thousands of US iOS developers could bring about so many important changes. “

The Coalition for App Fairness, a group of companies fighting to change Apple’s App Store policies, said in a statement that the agreement was a “bogus settlement” designed to appease courts, regulators and lawmakers.

“This offering does nothing to solve the structural, fundamental problems that all developers, large and small, face that undermine innovation and competition in the app ecosystem,” said the group, which includes Epic Games, Spotify and Match Group belong. “Allowing developers to communicate with their customers about lower prices outside of their apps is not a concession and underscores Apple’s total control over the app marketplace.”

In the settlement, Apple also agreed to publish an annual report on the number of apps it rejects or removed from its app store, as well as data on its search results. The New York Times reported in 2019 that Apple preferred its own apps over its competitors in search results. In the settlement, Apple agreed to ensure that its search results “continue to be based on objective characteristics” for at least three more years.

The settlement requires approval from Judge Yvonne Gonzalez Rogers of the US District Court for the Northern District of California, the same judge who leads the Epic Games and consumer lawsuits against Apple.

Developers who made less than $ 1 million a year on the App Store from June 2015 to April 2021 are eligible for payouts of between $ 250 and $ 30,000 from Apple’s proposed $ 100 million, according to plaintiffs’ attorneys. Dollar fund.

Separately, Apple said Thursday that it would also allow news organizations to pay the reduced 15 percent commission on subscriptions sold through their iPhone apps, however only if they participated in Apple’s news service Apple News. The Times and several other news organizations have pulled from Apple News in recent years because it has taken control of their relationship with readers and potential subscribers.

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