Apple agrees to establish $100 million fund and make changes to App Store policies to settle a lawsuit by US developers

To resolve a class-action lawsuit from US developers, Apple has agreed on making meaningful changes to the App Store policies and practices. For the first time, the company will allow developers to directly communicate alternative payment methods to the customers. In addition, Apple has also agreed to establish a $100 million fund for small developers who were impacted by the COVID-19 pandemic. The proposal will go into effect after the court’s approval.

In 2019, iOS developers filed a lawsuit against the company’s 30% in-app purchases commission rate,  accusing it of creating an App Store monopoly to impose “profit-killing” commissions.

This settlement also addresses another policy Cupertino tech giant has been criticized for, an anti-steering policy. During Epic Games vs. Apple trial, the company was called unfair and monopolistic for not letting developers redirect users outside of the Apple ecosystem using emails associated with the accounts or through website links to offer lower prices for in-app purchases. Recent efforts by antitrust regulators also focus on providing developers an avenue to offer alternative payment methods.

New changes coming to Apple’s App Store for developers under the agreement

Apple says that the terms of the agreement were decided based on developers’ feedback and ideas to make App Store “an even better  business opportunity for developers while maintaining the safe and trusted marketplace users love.” The proposed changes are as following:

1. Apple’s reduced 15% in-app purchases commission rate will continue for at least the next three years.
2. Search results will continue to be based on objective characteristics like star ratings, text relevance, downloads, and user behavior signals for at least the next three years.
3. Developers will be able to communicate alternative payment methods to users via email. Apple will not be entitled to any commission for all purchases made outside the app or the App Store.
4. Apple will expand the price points to developers from fewer than 100 to more than 500 for in-app purchases, subscriptions, and paid apps.
5. Apple will improve communication with developers for the rejections appeal process and will add content on the App Review website to make the process clear.
6. The company will create an annual transparency report on the App Store which will share data like “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 queries, and results, and the number of apps removed from the App Store.”
7. Apple will establish a $100 million fund to assist small US developers, especially for COVID-19 affectees. The company says the eligibility criteria covers 99% of developers.

Phil Schiller, Apple Fellow who oversees the App Store 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. 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.”