Apple makes sweeping changes to App Store after class action lawsuit

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Apple has made sweeping changes to the App Store rules as part of its response to a class action lawsuit.

The decision could allow developers to advertise other ways of paying for services that are offered through apps, something that has been banned on the iPhone until now.

The changes are one of several concessions proposed by the iPhone maker to resolve a class-action suit from US developers and comes amid investigations by regulators into alleged anti-competitive behaviour.

But critics have called it a “sham settlement offer”.

When a person pays for an app on the iOS store or makes a purchase within apps for digital goods, Apple takes a cut from developers - between 15% and 30% on each purchase.

If a customer subscribes outside of the app - such as on the creator’s website in a web browser - Apple does not take a percentage.

Until now, developers were not allowed to contact users promoting alternative payment options.

The rules for transactions made inside apps themselves remain unchanged and push notifications tempting people to pay outside the app are not allowed.

Apple said users will have to consent to being contacted by developers and must have the opportunity to opt-out.

Meghan DiMuzio, executive director of the Coalition for App Fairness (CAF), said: “Apple’s sham settlement offer is nothing more than a desperate attempt to avoid the judgment of courts, regulators and legislators worldwide.

“This offer does nothing to address the structural, foundational problems facing all developers, large and small, undermining innovation and competition in the app ecosystem.

“Allowing developers to communicate with their customers about lower prices outside of their apps is not a concession and further highlights Apple’s total control over the app marketplace.

“If this settlement is approved, app makers will still be barred from communicating about lower prices or offering competing payment options within their apps.

“We will not be appeased by empty gestures and will continue our fight for fair and open digital platforms.”

The changes are pending court approval, for a case against US developers originally filed in 2019. If approved by the judge, Apple will apply the new rules globally.

In a further attempt to appease app makers, the firm plans to make pricing more flexible, increasing the number of price points from less than 100 at present to more than 500 by the end of 2022.

The company will also publish a new transparency report revealing the number of apps rejected on the store.

Steve Berman, one of the lawyers representing developers in the case, said: “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.

“Plus, the creation of the Small Developer Assistance Programme, like the Small Business Programme - both of which our clients’ suit helped to bring about - could not come at a better time, given the pandemic.”

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.”

Apple - along with Android owner Google - still faces separate legal action from Fortnite maker Epic Games over claims of unfair control of payment systems.

Additional reporting by agencies