Apple opens its purse to settle developer class-action suit

Apple has agreed to loosen its grip on how mobile apps can be distributed and promised more transparency on app approval processes in a package to settle a class-action suit brought by app developers.

It has reached a settlement agreement with the American developers that filed a class-action suit in California in 2019, called Cameron et al v. Apple Inc., in which Apple is accused of monopolistic behaviour towards developers selling their apps through Apple’s App Store. The announcement looks to be a comprise which allows Apple to keep some of its long-standing practices, including charging 30% commission on apps sold by developers that make over $1 million from the App Store annually, and 15% on those whose annual App Store revenue is less than $1 million. Apple said more than 99% of its developers fall into the second category.

In return, Apple makes an important concession. According to the agreement, developers can communicate with customers directly to share information about payment methods outside of their iOS app, for example discount offers, so long as customers consent to be contacted. This has long been a point of contention, and this concession is also an indirect acknowledgement to the accusations included in the recent Senate bill aimed to curb the tight control over app stores by the operators, primarily Apple and Google.

Another measure with material impact is the creation of a Small Developer Assistance Fund to support the small developers. To qualify for the fund the developers should not have made more than $1 million in any calendar year since 2015 from the App Store’s US storefront. According to details published by Hagens Berman, one of the law firms representing the plaintiffs, qualified developers “can claim sums from the fund ranging between minimums of $250 to $30,000, based on their historic participation in the App Store ecosystem.”

Apple has also promised more transparency with its app approval and appeal processes, including publishing more app store statistics and sharing more information on its appeal page.

Separately, Apple is launching a News Partner Program, to update its business model for news. Till early 2019 Apple News had acted as a showroom for most partner publishers, who could choose to make a selection of stories available to Apple users for free. If readers decided to upgrade and subscribed the publication through Apple, the subscription would be treated as other subscriptions sold through Apple’s App Store or content stores, and a 30% commission would be charged. In 2019 Apple News superseded by Apple News+, a $10 a month subscription service that has been launched in the US, Canada, Australia, and the UK. The News Partner Program announced today will see publishers getting a 15% rebate if a reader upgrades to a paid subscription to a newspaper or magazine through Apple News, effectively making the commission level news publishers paying Apple equal to that paid by small app developers.

Apple spun the settlement agreement, especially the setting up of the Small Developer Assistance Fund, as a generous offer. It may mean something to the small developers but the impact on the bottom line of Apple as a company, or its App Store unit, will be minuscule. According to the Senators who sponsored the recent “Open App Markets Act”, Americans spent nearly $33 billion in mobile app stores in 2020. Given its stronger position in the US than in most other markets and the higher number of paid apps than Google’s Play Store, Apple must have reaped the majority of that business.