Apple settles lawsuit to allow developers to use payment systems outside of App Store

Prior to the settlement, apps were required to use Apple's payment systems if they were available for download on the App Store.
Written by Campbell Kwan, Contributor
Image: Getty Images

Apple has agreed to a class action settlement that will allow apps developers to implement payment systems outside of the App Store and communicate directly with customers about them.

Previously, an app would be removed from the App Store if it sidestepped Apple's payment systems and in-app purchase commissions. The settlement will lift this restriction and be applicable to all apps.

The settlement [PDF], currently pending approval by US courts, will see Apple create revised "anti-steering" guidelines that allow developers to use communications, such as email, to share information about payment methods outside of their iOS app. Developers will not have to pay Apple a commission on any purchases that take place outside of their app or the App Store.

The settlement brings an end to a two-year class action that was brought on by approximately 67,000 developers whose apps resided within the App Store marketplace.

"The terms of the agreement will help make the App Store an even better business opportunity for developers, while maintaining the safe and trusted marketplace users love," Apple said in a statement.  

"This hard-won settlement will bring meaningful improvements to US iOS developers who distribute their digital wares through the App Store, especially for those small developers who bring so much creativity and energy to their work," the plaintiffs' legal representative Steve Berman said.  

If the settlement is approved, Apple will still maintain its 30% commission structure in relation to purchases that are made within the App Store.  

For the next three years, however, the App Store will have a lowered commission fee of 15% for small businesses. The iPhone maker will also pay $100 million to small developers based in the US, ranging from $250 to $30,000 based on the size of the developer as part of the settlement. Small businesses and developers are those that earn less than $1 million in revenue per year. 

Apple did not clarify whether the 15% lowered commission would continue to apply after the three-year period.

The iPhone maker has also agreed to publishing an annual transparency report that provides statistics on the number of apps rejected and reasons why, the number of customer and developer accounts deactivated, objective data regarding search queries and results, and the number of apps removed from the App Store.

Other changes included in the settlement are an expansion of the number of price points available to developers for subscriptions and in-app purchases as developers had complained about the $0.99 minimum price available in the ‌App Store‌ and new content on Apple's review page so the company's review process and standards are more transparent.

The developer changes come hours after Apple announced it would take a 15% cut of publishers' in-app purchases and subscriptions if they join Apple News instead of the regular 30% commission fee.

The lowered commission fee for publishers is part of Apple's News Partner Program, which will be available to publishers in Australia, Canada, the United States, and the United Kingdom.

The News Partner Program will be a separate addendum to Apple's regular agreement with apps developers.

In the backdrop of these newly announced changes, Apple continues to face various lawsuits from Epic Games. All of Epic Games' lawsuits accuse Apple of conducting anti-competitive and monopolistic practices due to its 30% commission fee structure. The US lawsuit's trial has already been conducted and a verdict will be made later this year. The Australian lawsuit, meanwhile, has received a conditional trial date for November next year.

The legal spat between the companies arose last year when Fortnite was booted off Apple and Google's app stores for introducing a new payment system that sidestepped the tech giants' payment systems and in-app purchase commissions.  


Editorial standards