Apple may loosen rules on App Store fees in bid to settle class-action lawsuit

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Apple said it’s willing to loosen the notoriously strict rules on payments inside the iPhone’s App Store, making it easier for smaller developers to steer customers toward alternative payment methods as they look to sidestep the tech giant’s stiff fees.

In a partial concession as it scrambles to settle a class-action lawsuit from app developers who have accused it of abusing monopolistic market power, Apple said that while developers will remain barred from pitching alternative payment methods through their apps. At the same time, however, they’ll now be allowed to collect contact information such as email addresses, then suggest alternative payment methods through those channels.

“Developers can use communications, such as email, to share information about payment methods outside of their iOS app,” Apple said in a statement late Thursday. “As always, developers will not pay Apple a commission on any purchases taking place outside of their app or the App Store.”

Apple also said it will stick to its promise last year to cut its lofty, 30-percent commission on app revenues to 15 percent for developers who are making less than $1 million in yearly revenue.

The company added that it will shell out $100 million to set up a “Developer Assistance Fund” that will dole out between $250 and $30,000 to developers who sales were less than $1 million a year between June 2015 and April of this year. About 99 percent of developers will quality, according to the plaintiffs.

App Store commissions brought in $22 billion for Apple last year.
AP

The settlement — which still must be approved by a federal judge in northern California — represents a slight loosening of Apple’s control over developers that could be further changed when a ruling is handed down the separate, closely-watched Apple vs. Epic suit, which also centers around Apple’s payments rules. That ruling could come within weeks.

The move may also be intended to assuage concerns raised by lawmakers who have slammed the company’s App Store payments policies as essential parts of its monopoly power.

Since Apple brought in a reported $22 billion from App Store commissions last year, any change to the company’s payments policy could have expensive consequences.

But Apple’s critics do not appear to be letting up. 

“Today’s move only adds to the momentum and further exposes rampant anticompetitive abuses in the app markets,” Democratic Sen. Richard Blumenthal of Connecticut told the Washington Post. “The fox guarding the hen house status quo will remain until there are clear and enforceable rules for Apple and Google to play by.”

Earlier in August, Blumenthal introduced a Senate bill alongside Minnesota Democrat Amy Klobuchar and Tennessee Republican Marsha Blackburn that would bar Apple and Google from requiring app developers to use their payments systems. A similar bipartisan bill targeting the companies’ “stranglehold” has been proposed in the House.

Jason Kint — the head of a trade group representing digital media companies including the Associated Press, NBCUniversal and New York Post parent company News Corp. — said the changes Apple announced Thursday were more style than substance. 

“Apple wants this to be big news,” Kint wrote on Twitter. “I’m digesting but certainly looks like their preferred outcome and attempt to use proactive PR to make this go away.”  

But attorneys for the developers who sued Apple framed the proposed settlement as a big win for the little guy. 

“This hard-won settlement will bring meaningful improvements to US iOS developers who distribute their digital wares through the App Store, especially for those small developers who bring so much creativity and energy to their work,” said Steve Berman, who represented the developers.

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