Tim Cook at WWDC21 on June 7, 2021.
Apple app developers will email their users about non-Apple purchase options, in a major change to App Store policy.
Previously, Apple banned app makers from emailing users to their websites to pay for digital products. App makers want to contact their customers directly to encourage them to pay directly and avoid Apple’s App Store fees, which range from 15% to 30% of gross sales.
Now developers can use information obtained in their apps, such as an email address, to communicate with their customers and encourage them to pay directly rather than through Apple.
“To give developers even more flexibility to reach their customers, Apple is also clarifying that developers can use communications, such as email, to share payment method information outside of their iOS app,” Apple said. said in a press release. “As always, developers do not pay Apple commission on purchases made outside of their app or the App Store. Users must agree to the communications and have the right to opt-out.”
The policy change is because Apple settled a class action lawsuit with developers alleging that Apple monopolized distribution for iOS apps and in-app purchases, leading to excessive commissions.
Apart from this settlement, Apple is also facing significant pressure on its App Store policies and commission rate from regulators and lawmakers around the world, and was involved in a high-profile antitrust lawsuit against Fortnite maker Epic Games. A judge’s ruling in the Epic Games lawsuit is expected later this year.
“By informing customers about alternative payment options, developers can avoid paying Apple’s commissions and also put competitive pressure on Apple to penalize its prices,” plaintiffs’ lawyers said in a lawsuit.
Developers who made less than $1 million dollars a year between 2015 and 2021 can claim between $250 and $30,000 from a fund to which Apple pays $100 million.
The law firm representing the plaintiffs, Hagens Berman, said more information would be available at a: settlement website, although it is not yet operational. The settlement must be approved by Judge Yvonne Gonzalez Rogers, who will also rule on Epic Games’ antitrust case.
The agreement between the plaintiffs and Apple included several other changes to App Store policies.
- Small Business Program. Apple will keep its 15% lower commission for companies making less than $1 million on the App Store for at least three years
- Search and discover. Apple will experiment with App Store searches, including to “give new, high-quality apps a chance to be found,” according to a legal filing.
- Price points. Apple will allow developers to choose different prices. Previously, developers in the US were only allowed to pick near-round dollar figures ($0.99). Now they can price apps and in-app purchases for, say, $1.49.
- App rejection. Apple will continue to allow app makers to appeal their decisions and will post additional information about the appeals process on its website.
- Transparency. Apple will publish an annual report detailing app rejections, searches and other developer issues, according to a court filing.
The inability for app developers to email their customers about payment alternatives has been a focus of the European Commission. Spotify especially rubbed against the rule. Apple will remove the restriction from its App Store Review Guidelines, according to a court file.
“If you’re a rival to Apple Music, you can’t email your subscribers telling them to go to your website to subscribe at a no-commission price,” EC competition chief Margrethe Vestager said in April after filing a formal Statement of Objections against Apple.
However, app developers will not be able to direct new users within their apps to a website to sign up to pay outside of Apple’s App Store.
Apple’s “anti-steering” rules were a focus of Judge Yvonne Gonzalez Interrogates Rogers Apple CEO Tim Cook in an antitrust lawsuit against Fortnite maker Epic Games earlier this year. A decision is expected later this year.
Individual, Apple announced Thursday that it would reduce App Store costs for publishers who provide content to Apple News.
In a statement to CNBC in response to the Apple News announcement, Epic Games CEO Tim Sweeney said Apple had a “divide and conquer” strategy of offering special deals to different segments of developers “in an effort to group to buy into their monopoly on distribution and payments.”