$100M Apple settlement clears some restrictions on app makers

Apple agreed to lift some restrictions on app developers in a $100 million settlement, including one prohibiting developers from steering customers into payment methods through which the company cannot take a commission.

The policy change in the deal announced on Thursday makes it easier for developers to avoid Apple's toll on their sales, but it appears one of the settlement terms characterized as a major concession by Apple was implemented months ago in an update to its App Store guidelines.

In a June update, Apple changed its rules to permit developers to communicate with users to share information about payment options in which they are not subject to a commission. Apple said in a statement the new settlement "clarifies" that developers are allowed to do so and can also contact users about alternate payment methods using contact information obtained inside of their iPhone apps.

While the deal facilitates the ability of developers to reach out to their customers, it's a far cry from striking a policy banning the advertisement of payment methods inside of apps that allow the circumvention of Apple's commission. The issue has been a sticking point for developers and regulators seeking to loosen Apple's control over the App Store.

The Coalition for App Fairness, which was created to change app store policies, called the deal a "sham settlement" and 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," the group said in a statement. "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."

Small app developers brought the lawsuit in 2019, alleging Apple maintains an illegal monopoly over the App Store. They targeted practices such as charging commissions of up to 30% on all transactions and prohibiting them from notifying users inside of apps that they do not have to use Apple's in-app payment system. Cameron v. Apple Inc., 19-cv-03074 (N.D. Cal., filed June 4, 2019).

Apple still awaits a decision in a separate lawsuit from Fortnite creator Epic Games that seeks to free developers from having to sell apps exclusively through the App Store. Epic Games v. Apple Inc., 20-cv-05640 (N.D. Cal., filed Aug. 13, 2020).

Under the settlement, Apple maintains most of the business practices that have been alleged to violate antitrust law. It will instead create a $100 million fund for small developers, whose proceeds from app sales were less than $1 million per year from June 2015 to April 2021. A class of roughly 67,000 developers will be able to claim sums ranging from $250 to $30,000 based on their participation in the App Store.

Apple also agreed to preserve for three years the commission rate for small developers, which it cut last year from 30% to 15%, and to publish an annual transparency report on the app review process.

Prior to the deal, Apple's policies barred developers from using contact information obtained from users who sign up for their apps through the App Store from informing them of alternative payment methods, which are sometimes cheaper because they are not subject to a fee. The federal judge who oversaw the trial between Epic Games and Apple questioned whether the policy violates antitrust law.

Steve Berman of Hagens Berman, one of the lead attorneys for the plaintiffs, said "This hard-won settlement will bring meaningful improvements to U.S. 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."