While Apple has Settled one Lawsuit with US Developers, Chair of the Senate Judiciary antitrust subcommittee said Apple must do more
Late yesterday Apple announced it would make major changes to its App Store as part of a proposed lawsuit settlement with developers, following years of mounting regulatory scrutiny and legal challenges.
The change is in response to a suit brought by small app developers, in which they alleged Apple’s pricing tiers and lack of outside purchasing options were monopolistic. Apple is also expecting an imminent judgment in a suit by Epic Games over similar allegations in front of the same judge in federal court in the Northern District of California.
Sen. Amy Klobuchar (D-Minn.), chair of the Senate Judiciary antitrust subcommittee, said "This new action by Apple is a good first step towards addressing some of these competition concerns, but more must be done to ensure an open, competitive mobile app marketplace, including common sense legislation to set rules of the road for dominant app stores."
Sen. Richard Blumenthal (D-Conn.), who has proposed the legislation to regulate Google and Apple’s app stores, said in a statement that the settlement marks "a significant step forward but doesn’t fix all the problems. Today’s move only adds to the momentum and further exposes rampant anticompetitive abuses in the app markets. The fox guarding the hen house status quo will remain until there are clear and enforceable rules for Apple and Google to play by."
The Coalition for App Fairness, comprised of Epic, Spotify and others, said Apple’s proposed deal did not go far enough. Executive director Meghan DiMuzio said in a statement: "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." For more on this, read The Washington Post's full report.
Deadline reported that "To settle, Apple will pay $100 million into a Small Developers Assistance Fund."
Below is Apple's press release issued late yesterday.
Apple, US Developers Agree to App Store Updates
Apple has announced a number of changes coming to the App Store that, pending court approval, will resolve a class-action suit from US developers. The terms of the agreement will help make the App Store an even better business opportunity for developers, while maintaining the safe and trusted marketplace users love. Apple appreciates the developer feedback and ideas that helped form the agreement, and respects the ongoing judicial review process.
The agreement clarifies that developers can share purchase options with users outside of their iOS app; expands the price points developers can offer for subscriptions, in-app purchases, and paid apps; and establishes a new fund to assist qualifying US developers. [Emphasis, Patently Apple]
Phil Schiller, Apple Fellow who oversees the App Store: "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."
Providing More Flexibility and Resources for Small Developers
Following a productive dialogue, Apple and the plaintiffs in the Cameron et al v. Apple Inc. developer suit reached an agreement that identifies seven key priorities shared by Apple and small developers, which has been submitted to the judge presiding over the case for her approval.
- In a validation of the App Store Small Business Program’s success, Apple and the developers agreed to maintain the program in its current structure for at least the next three years. Businesses earning less than $1 million annually will continue to benefit from the reduced commission, while larger developers pay the App Store’s standard commission on app purchases and in-app payments.
- App Store Search has always been about making it easy for users to find the apps they’re looking for. At the request of developers, Apple has agreed that its Search results will continue to be based on objective characteristics like downloads, star ratings, text relevance, and user behavior signals. The agreement will keep the current App Store Search system in place for at least the next three years.
- To give developers even more flexibility to reach their customers, Apple is also clarifying that developers can use communications, such as email, to share information about payment methods outside of their iOS app. As always, developers will not pay Apple a commission on any purchases taking place outside of their app or the App Store. Users must consent to the communication and have the right to opt out.
- Apple will also expand the number of price points available to developers for subscriptions, in-app purchases, and paid apps from fewer than 100 to more than 500. Developers will continue to set their own prices.
- Apple will maintain the option for developers to appeal the rejection of an app based on perceived unfair treatment, a process that continues to prove successful. Apple has agreed to add content to the App Review website to help developers understand how the appeals process works.
- Over the last several years, Apple has provided a great deal of new information about the App Store on apple.com. Apple agreed to create an annual transparency report based on that data, which will share 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.
- Apple will also establish a fund to assist small US developers, particularly as the world continues to suffer from the effects of COVID-19. Eligible developers must have earned $1 million or less through the US storefront for all of their apps in every calendar year in which the developers had an account between June 4, 2015, and April 26, 2021 — encompassing 99 percent of developers in the US. Details will be available at a later date.