Apple agrees to make key App Store changes, create $100M fund to settle developer lawsuit
Apple on Thursday announced an agreement in a lawsuit brought by U.S. developers against the company over its App Store practices, with terms including the institution of a $100 million Apple Small Developer Assistance Fund and more open communication between developers and customers regarding alternative payment methods.
Announcing the settlement in a pair of press releases, Apple and representatives for plaintiffs each focused on negotiations that will result in multiple changes and improvements to the App Store.
One major policy modification pertains to developer communication. App makers in the U.S. can now reach out -- with consent -- to customers via email or other means to discuss alternative payment methods, which if adopted by users would effectively avoid App Store commissions. In-app communication about such topics is still forbidden. Apple's anti-steering strategy has been a major sticking point for App Store critics.
Apple said the agreement was in part a response to concerns from its developer community, a company representative said.
"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 Apple Fellow Phil Schiller, the executive in charge of App Store operations. "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."
As part of the accord, Apple will continue to offer reduced 15% commission rates for developers earning less than $1 million a year, figures that are pulled from the company's Small Business Program. Those terms will carry forward for at least three years.
In addition, Apple is instituting a $100 million Small Developer Assistance Fund to assist small developers in the U.S. Depending on their size, companies that earned $1 million or less annually across all titles between June 4, 2015, and April 26, 2021, can claim between $250 to $30,000 from the fund. That group accounts for 99% of developers in the U.S., with large corporations like Netflix and Epic Games making up the remaining 1%, Apple says.
As for App Store changes, Apple has agreed to preserve Search functionality to show results based on "objective characteristics" that include downloads, star ratings, text relevance, and "user behavior signals." This, too, will remain in effect for at least three years.
Developers are also getting more pricing options for their wares. App Store price points will expand from fewer than 100 to more than 500 for subscriptions, in-app purchases and paid apps, the company said.
Apple will continue to accept app rejection appeals and has agreed to update its App Review website with additional information on the appeals process.
Finally, an App Store Transparency Report is being readied for release and will include key statistics covering the app review process, the number of customer and developer accounts that were deactivated, the number of apps removed from the App Store and data regarding search queries and results.
The proposed App Store changes are applicable to developers worldwide.
"We truly are proud that a case brought by two developers, standing in the shoes of tens of thousands of U.S. iOS developers, could help to bring about so much important change," said Steve Berman, managing partner of Hagens Berman and an attorney for the plaintiffs.
Judge Yvonne Gonzalez Rogers needs to sign off on the agreement before the changes take effect.
The case dates back to 2019, when a group of developers lodged a class-action complaint against Apple, claiming the tech giant wields monopoly power to exert "profit-killing" App Store commissions and fees on app makers.
Today's announcement comes amid wider scrutiny of Apple's App Store practices, both by developers and governments around the world. Critics are unhappy about the company's commission on sales and stipulations that require use of its payment system. Others want to see third-party app stores on Apple's platforms.
It is unclear if the accommodations unveiled today will satisfy Judge Gonzalez Rogers in the separate Epic v. Apple suit, over which she is also presiding. In May, the jurist was seemingly unsettled by Apple's anti-steering provisions and brought up the issue in the waning days of court proceedings in May.
Read on AppleInsider
Announcing the settlement in a pair of press releases, Apple and representatives for plaintiffs each focused on negotiations that will result in multiple changes and improvements to the App Store.
One major policy modification pertains to developer communication. App makers in the U.S. can now reach out -- with consent -- to customers via email or other means to discuss alternative payment methods, which if adopted by users would effectively avoid App Store commissions. In-app communication about such topics is still forbidden. Apple's anti-steering strategy has been a major sticking point for App Store critics.
Apple said the agreement was in part a response to concerns from its developer community, a company representative said.
"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 Apple Fellow Phil Schiller, the executive in charge of App Store operations. "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."
As part of the accord, Apple will continue to offer reduced 15% commission rates for developers earning less than $1 million a year, figures that are pulled from the company's Small Business Program. Those terms will carry forward for at least three years.
In addition, Apple is instituting a $100 million Small Developer Assistance Fund to assist small developers in the U.S. Depending on their size, companies that earned $1 million or less annually across all titles between June 4, 2015, and April 26, 2021, can claim between $250 to $30,000 from the fund. That group accounts for 99% of developers in the U.S., with large corporations like Netflix and Epic Games making up the remaining 1%, Apple says.
As for App Store changes, Apple has agreed to preserve Search functionality to show results based on "objective characteristics" that include downloads, star ratings, text relevance, and "user behavior signals." This, too, will remain in effect for at least three years.
Developers are also getting more pricing options for their wares. App Store price points will expand from fewer than 100 to more than 500 for subscriptions, in-app purchases and paid apps, the company said.
Apple will continue to accept app rejection appeals and has agreed to update its App Review website with additional information on the appeals process.
Finally, an App Store Transparency Report is being readied for release and will include key statistics covering the app review process, the number of customer and developer accounts that were deactivated, the number of apps removed from the App Store and data regarding search queries and results.
The proposed App Store changes are applicable to developers worldwide.
"We truly are proud that a case brought by two developers, standing in the shoes of tens of thousands of U.S. iOS developers, could help to bring about so much important change," said Steve Berman, managing partner of Hagens Berman and an attorney for the plaintiffs.
Judge Yvonne Gonzalez Rogers needs to sign off on the agreement before the changes take effect.
The case dates back to 2019, when a group of developers lodged a class-action complaint against Apple, claiming the tech giant wields monopoly power to exert "profit-killing" App Store commissions and fees on app makers.
Today's announcement comes amid wider scrutiny of Apple's App Store practices, both by developers and governments around the world. Critics are unhappy about the company's commission on sales and stipulations that require use of its payment system. Others want to see third-party app stores on Apple's platforms.
It is unclear if the accommodations unveiled today will satisfy Judge Gonzalez Rogers in the separate Epic v. Apple suit, over which she is also presiding. In May, the jurist was seemingly unsettled by Apple's anti-steering provisions and brought up the issue in the waning days of court proceedings in May.
Read on AppleInsider
Comments
i would jack up the developer anual price to $299 to make up for all the BS. Heck Apple should charge $999/year. Nothing is free.
The AppStore is a complete mess for finding programs, more apps isn’t necessary better, the curation of apps is terrible, note this also applies to Apple Music.
I, for one, will continue to use Apple. The last thing I want to do is share my credit card information with numerous developers. There’s a lot of security in only dealing with Apple.
MS keynotes were always the worst.
I'd be happy to pay direct inside an app: provided it was done via a tokenised system such as Apple Pay or similar. Whenever I purchase anything from a website online I am putting myself at risk. I use custom email addresses for each online purchase and get a disturbingly large number of scam and pseudo extortion emails to these custom addresses - it's clear that many companies (including highly regarded companies) lack the security chops to keep data safe, and on the other hand some (especially Amazon stores) sell the data they do get willingly - your privacy choices be damned.
There is a high level of consumer friendliness in having Apple stand in the middle with finances and personal information: it's the reason why I can experiment with small developers that I would not usually trust. It's how a small developer can become a big developer in a market place crowded by big players - it's why companies such as Serif have been able to carve out an audience despite Adobe's overwhelming grip on their industry. The reason why we now have infinitely more choice from the era of box-software retail days is not from digital distribution alone, we had that before the App Store, the secret sauce is trust. Believe it or not: Apple is to software as Disney is to media.
There are unintended consequences to the changes which certain developers (arguably the larger/greedier ones) are trying to enact: the most obvious is that Apple will still need to get their cut and will find other ways to generate that lost revenue (e.g. Fairer fees that are based on downloads/users rather than the current system of one-price-fits-all).
Also up for consideration are some of the less obvious consequences, such as how payment providers will manage the new elevated fraud risk - which will be reflected in their fees and % cut, or how introducing a series of arbitrary rules upon Apple could actually allow them to blanket ban developers from the App Store rather than work through issues (such as if alternative stores are mandated, Apple could push back against claims of competition or abuse.)
This is not to say that changes aren't needed - but real nuance is required when making changes to the plane while it's still flying.
(1) a third party app store with alternate payment systems (but no Apple App store and no Apple software offered through the third party app stores);
(2) a modified OS which had no app store at all, but all software from Apple was free (or maybe not free.) This option doesn't mean "no additional software" because software vendors could allow Apple to rebrand their software as Apple software. So for example you could easily have "Apple Fortnite" if whoever makes Fortnite made a deal with Apple.
This way people can choose what they want: a walled garden or a free-for-all. I'm not really sure which way most customers would go. I for one would choose the walled garden with free Apple software. I would tell my friends and family I wouldn't support them if they bought the free-for-all version.
How could anyone argue against this? The people who demand "freedom" get 100% what they want, and the people who want security and simplicity get 100% what they want. Everyone wins, and yet somehow I think everyone is going to call me insane here, including Tim Cook. So I won't come back here to read what people are saying about me.
Art 5 of the EU GDPR requires adequate security of user data.
EU PSD2 is specifically tailored to Internet payments.
Those are two massive umbrellas to start with.
They may not be bulletproof but they are there to protect specifically against many of the abuses you mention.
On top of that you have other options tailored to you from banking institutions.
I've been purchasing online constantly since the dawn of the Internet without issue.
My current situation situation is this. I have a hybrid (physical/virtual) credit/debit card.
On the credit side I set the card to zero. On the debit side, the card is 'empty' in that there is no money on it until I 'charge' it with the total of the transaction I'm about to initiate with an online purchase. My card number and expiry details are worthless to anyone that might have them.
99% of the online stores I use never even see my card details anyway. I start an order process and prior to actual payment I am sent to an external secure payment processing gateway which takes my card info and begins the payment process. This process requires the transaction to be authorised from within my bank's mobile app. There are 7 minutes to authorise the payment with a simple click. Once authorised the gateway returns me to the store where I purchased the item.
Nothing can happen until I authorise the transaction.
I can also suspend the entire card at will and reactivate it when I need it. It has no direct backward connection to my bank account. There is a forward connection for charging the card.
Some larger retailers are allowed to bypass the authorisation step as they are deemed to have sufficient security measures in place (although I still get notified of any transactions in real time).
The whole process is incredibly streamlined. The only real change on the user side is that now I have to authorise payments from within my bank's app whereas before it was via a code sent to me via SMS (a code that my banking app could actually 'read' so I didn't have to write it down or memorise).
The country where you live and its banking technologies will obviously determine your final user experience but here in Spain, I cannot even remember the last time a small online store processed a payment 'itself'. Everything gets handed over to a secure payment gateway, processed and the user is returned to the merchant.
Some stores will even allow you to add items to already placed orders which is a boon when you forget something and don't want to establish a new order with potentially more shipping costs.
Email and spam are a plague but there is little that can be done against that. Your Apple mail address is equally vulnerable to being spread all over the place. What you actually get in your inbox will depend on your settings, ISP and Apple etc.
5G and network slicing will just add another layer of security to already excellent banking apps and processes.
The alternative to the sales commission is the upfront listing fee. You pay high listing fee in exchange of less commission. Or you pay less listing fee for higher commission. That listing fee + commission model works since decades on eBay, Amazon and many other online venues.
Apple can even host third party app stores. Provided that they pay their rent, obviously, nothing is free. All of these are negotiable business deals that can be concluded without going to the courts. Then why that have never happened or discussed? Because their intention is not to do business, their intention is to destroy Apple. This is a small marginal vocal community (not specifically those mentioned in the article) managed behind the curtains by some other tech giant.
Rob53: "Go to hell, I'll pay full price!!!!!"
Seems completely logical.
"If the proposal would bind class members, the court may approve it only after a hearing and only on finding that it is fair, reasonable, and adequate after considering whether:
(A) the class representatives and class counsel have adequately represented the class;
(B) the proposal was negotiated at arm's length;
(C) the relief provided for the class is adequate, taking into account:
(i) the costs, risks, and delay of trial and appeal;
(ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims;
(iii) the terms of any proposed award of attorney's fees, including timing of payment; and
(iv) any agreement required to be identified under Rule 23(e)(3); and
(D) the proposal treats class members equitably relative to each other.
(3) Identifying Agreements. The parties seeking approval must file a statement identifying any agreement made in connection with the proposal.
(4) New Opportunity to Be Excluded. If the class action was previously certified under Rule 23(b)(3), the court may refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so.
(5) Class-Member Objections.
(A) In General. Any class member may object to the proposal if it requires court approval under this subdivision (e). The objection must state whether it applies only to the objector, to a specific subset of the class, or to the entire class, and also state with specificity the grounds for the objection.
ridiculous.