Apple makes App Store concession on payments

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Apple has partially relaxed a restriction on its App Store that prevented app developers from offering lower prices to customers through other channels, as it faces mounting legal and regulatory pressure over alleged anti-competitive behaviour.

While the move marked a concession that could allow some digital transactions to bypass its App Store, it did not include any changes to the iPhone maker’s rules for transactions inside applications themselves, limiting its effect.

The rule change was one of several compromises announced by Apple late on Thursday to partially settle a US class-action lawsuit from developers over its App Store rules.

Those included a promise to publish an annual report detailing the number of apps rejected from the App Store and the number of customer and developer accounts deactivated.

The US consumer technology giant also said it would amend App Store procedures to allow developers more pricing flexibility and to give them more assurances that users would be able to find their apps.

The announcements came as Apple awaited a ruling in a separate, landmark lawsuit from Epic Games over the way the App Store operates. The case strikes at the heart of Apple’s business model for the App Store, challenging its ban on alternative app stores on iPhones as well as a requirement for in-app payments to flow through its own payment system, bringing in fees of up to 30 per cent on many transactions.

Apple’s business practice aired during the Epic trial included a so-called anti-steering policy that prevented app makers from telling customers that they could make purchases outside the app, thereby avoiding paying Apple’s fee. Spotify, Netflix and Match Group are among the companies that have complained about the policy. 

Partially relaxing this rule on Thursday, Apple said it would only allow developers to alert customers through separate communications, such as email, rather than directly through their apps. It added that app makers would only be able to email users who had consented to the communications, as long as they also had a way to opt out.

The Coalition for App Fairness, a pressure group representing Epic, Spotify and others, dismissed the changes as a “sham settlement offer”, and said that “app makers will still be barred from communicating about lower prices or offering competing payment options within their apps”.

Along with the Epic lawsuit, Apple is facing class actions in the US brought on behalf of app developers and customers. The settlement announced on Thursday involved only small developers, who make up 99 per cent of those covered by that legal action, but who are thought to account for only a small proportion of total App Store fees.

Apple also said it would extend a 50 per cent fee discount to small developers for another three years and announced a $100m fund that will make payments to small developers in the US of between $250 and $30,000.