Last week, Apple agreed to make major updates to App Store policies to settle a class-action lawsuit brought against the company by developers in the U.S. Among the biggest changes is the ability for developers to offer payments options outside the iOS app. In the past, allowing outside payments went against Apple’s terms and conditions and could get a developer and their apps booted from the App Store.
In an August 26, 2021 news release, Apple said, “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 appreciates the developer feedback and ideas that helped inform the agreement, and respects the ongoing judicial review process.”
Proposed App Store policy updates
Apple worked with the plaintiffs of the Cameron et all v. Apple Inc. developer lawsuit to outline needed changes to the App Store. The agreement, which focuses on seven key areas, has been submitted Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California for review and approval. The agreement includes the following:
- Apple will maintain the current commission structure for at least the next three years. Developers earning less than $1 million in revenue per year will pay 15% commission. Developers making more than $1 million per year will pay 30% commission in the first year and 15% per year in subsequent years.
- Apple will make the App Store search feature easier for users to find the apps they want, and they’ll be based on objective criteria like number of downloads, star ratings and text relevance. This change must also remain in place for at least three years.
- Apple will allow developers to communicate with their customers about payment options, including those available outside of iOS. For example, a game developer can email a customer and let them know they can subscribe directly on the developer’s website rather than subscribe through Apple. Users must opt-in to such communications, and they have the option to opt-out.
- Currently, developers have less than 100 price points for subscriptions, in-app purchases and paid apps. Apple will increase this to 500 price points and developers will still be able to set their own prices.
- If an app is rejected by the App Store, the developer has the right to appeal the rejection.
- Apple will create an annual transparency report that will include useful data and statistics that shares the number of apps rejected, the number of customer and developer accounts deactivated, the number of apps removed from the App Store, etc.
- Apple will create a $100 million fund to help small U.S. developers, particularly in light of the pandemic. To be eligible, developers must have earned $1 million or less and have had an account between June 4, 2015 and April 26, 2021, which constitutes about 99% of all developers doing business with Apple. CNBC reports that developers can claim between $250 and $30,000.
Apple’s Phil Schiller, who oversees the App Store, commented on the big news.
“From the beginning, the App Store has been an economic miracle; it is the safest and most trusted place for users to get apps, and an incredible business opportunity for developers to innovate, thrive, and grow,” said Schiller. “We would like to thank the developers who worked with us to reach these agreements in support of the goals of the App Store and to the benefit of all of our users.”
Epic Games versus Apple
This class action lawsuit is completely separate from the one filed by Epic Games against Apple. The three-week trial for that lawsuit was held in May, and both parties are awaiting Judge Gonzales Rogers’s judgment on that case. Upon the conclusion of the lawsuit, some media outlets reported that Apple was favored to win the case against Epic Games, but this new agreement will put that into question, assuming it is approved by Judge Gonzales Rogers.
This was quite an interesting turn of events and an unexpected move by Apple. If the judge approves this agreement, Apple could potentially avoid a costly settlement and future damage to their reputation as a greedy tech company. At the same, developers get a lot more flexibility in terms of payment options, which has been a bone of contention for years. The $100 million small developer fund is icing on the cake, at least for those who benefit.