$100M Apple Lawsuit Settlement Brings Key App Store Change
A class-action lawsuit between Apple and US app developers could end in a $100 million payout and changes to Apple's App Store policies, allowing app developers to steer customers toward payment options outside of the App Store itself.
The agreement, available here, would allow developers to contact their customers (provided they've received permission from those customers) using information collected in their apps to inform them of payment outside of the App Store. This could allow them to circumvent the commission of up to 30% Apple charges on all purchases made in its App Store.
Although this change could help developers, it's not as big a change as it may at first seem, and it's certainly what many developers have been calling for. Apple updated its App Store Guidelines in June to let developers communicate with customers outside of their apps, but they weren't allowed to tell them about alternative payment options using information obtained inside the app. Contacting a customer required getting their contact information in some other way.
The proposed settlement would eliminate that restriction, but developers have been angling for a way to let users know in-app that they can choose a payment option that skips Apple's commission.
If finalized, the $100 million payout would be split among small developers who earned $1 million or less "for all of their apps in every calendar year in which the developers had an account between June 4, 2015 and April 26, 2021." Apple is calling this the "Small Developer Assistance Fund."
Developers can claim between minimums of $250 and $30,000 from the fund based on their participation in the App Store. After the payouts have all been made, leftover cash will go to the nonprofit Girls Who Code.
The settlement would see several more commitments from Apple:
The App Store Small Business Program will be extended for at least the next three years, allowing developers who earn less than $1 million in a year to apply for a reduced 15% commission from their sales.
Apple will publish at least three annual transparency reports including "meaningful statistics about the app review process, including the number of apps rejected for different reasons, the number of customer and developer accounts deactivated, objective data regarding search quereies and results, and the number of apps removed from the App Store." No date has been set for the first report.
Developers will be able to set more than 500 price points for subscriptions, in-app purchases and paid apps — up from fewer than 100.
Apple will keep the current App Store Search system in place for at least the next three years.
Apple will add additional information about the appeals process to the App Review website. The amount and type of that information has yet to be specified.
The Coalition for App Fairness, a group of app developers that includes Epic Games, Spotify and others, criticized the proposal for failing to go far enough in scaling back Apple's control over the App Store.
"Apple’s sham settlement offer is nothing more than a desperate attempt to avoid the judgment of courts, regulators, and legislators worldwide," executive director Meghan DiMuzio said in a statement. "This offer does nothing to address the structural, foundational problems facing all developers, large and small, undermining innovation and competition in the app ecosystem."
Should the court approve the settlement agreement, Apple would still need to set a date for these changes to live.