Apple to change App Store policies in $100 mn settlement with developers

The lawsuit alleged that “Apple monopolized U.S. distribution services for iOS apps and in-app digital products, which resulted in commission overcharges to U.S. iOS developers.”

As part of the settlement agreement, Apple said it would create a $100 million Small Developer Assistance Fund to pay the complainants. “The Small Developer Assistance Fund created as part of the settlement will benefit over 99% of U.S. iOS developers, whose proceeds from app and in-app digital product sales through all associated accounts were less than $1 million per calendar year during the period from June 4, 2015 to Apr. 26, 2021. These developers can claim sums from the fund ranging between minimums of $250 to $30,000, based on their historic participation in the App Store ecosystem,” attorneys from the law firm of Hagens Berman, said in a statement.

The company is also going to allow developers to reach out to customers using information collected using their apps, to inform them about alternative methods of payments. The company had communicated the same through a change to its App Store policies in June this year. It’s worth noting that the company still isn’t going to allow developers to communicate alternate methods of payments for subscriptions and in-app purchases (IAPs) within their own apps.

At the moment, firms like Google and Apple make companies use payment methods built into the Android and iOS platforms for selling products and services through their apps. They have to pay a fee to the companies in return, and both have committed to charging only 15% in fees from developers who earn less than $1 million in revenues from their apps.

Apple calls this the App Store Small Business Program, and the company promised to continue this structure for at least the next three years. The iPhone maker will also publish a transparency report for the App Store, which includes statistics about its app review process. In addition, it will offer more ways for developers to price their products, offering 500 price points for IAPs, subscriptions and paid apps. While the Small Developer Assistance Fund is only applicable to developers in the US, the other changes will apply to Apple’s platform globally.

The lawsuit in question was brought against Apple in 2019 in the US District Court for the Northern District of California. It accents an issue that developers have had against platform companies like Google and Apple for years. Indian developers, including billion-dollar startups like PayTM, have criticised Google about the same. They have even taken the matter to the Competition Commission of India (CCI) in the past.