Apple relaxes App Store policies in $100 million settlement

It's part of a settlement in a long-standing class action lawsuit

Apple has agreed to change its long-held App Store policy, which for years has prevented developers from going outside the App Store for payment.

As part of a proposed settlement to a class action lawsuit, the iPhone maker has said that developers will be able to communicate with customers about payment options outside its official store.

The company says it will pay $100 million toward a Small Developer Assistance Fund to settle the lawsuit, which was first brought against Apple in 2019. It says the fund will benefit more than 99 per cent of US iOS developers whose earnings from app and in-app digital product sales 'were less than $1 million per calendar year,' from 4th June 2015 to 26th April 2021.

Eligible developers who submit valid claims will receive from $250 to $30,000, according to court filings [pdf].

'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 said in a press release.

'Apple appreciates the developer feedback and ideas that helped inform the agreement, and respects the ongoing judicial review process,' it added.

The class action lawsuit, filed by app developer Donald Cameron and Pure Sweat Basketball, accused Apple of monopolising US distribution services 'for iOS apps and in-app digital products, which resulted in commission overcharges to U.S. iOS developers'.

Apple says it will allow developers to use messaging like email to share alternative methods of payments outside of their iOS app, provided users consent to receive them and have the right to opt out.

Developers will not pay Apple a cut on purchases that take place outside of their app or the App Store.

Developers who earn less than $1 million will pay 15 per cent commission as part of Apple's App Store Small Business Program.

Apple has also increased the number of price points (from fewer than 100 to 500) that developers can offer for subscriptions, paid apps and in-app purchases.

Apple also says it will publish a transparency report on the App Store. The report will include statistics about the app review process, such as the number of apps removed or rejected from the store.

In recent years, Apple's commissions have been at the centre of several legal disputes, including one by Fortine maker Epic Games.

Epic filed an antitrust suit against Apple last year, seeking to force the company to allow iPhone users to install alternative app stores, similar to those permited on Mac computers.

Epic claimed that Apple's rules around payments are illegal because they shut out potential rivals.

It also complained that Apple's approach is too restrictive, and that competing technologies should be allowed onto its mobile phones.

Apple has long defended its tightly policed App Store - arguing that allowing iPhone and iPad users to install apps from third parties would be a huge security risk.

'Studies show that third-party app stores for Android devices, where apps are not subject to review, are much riskier and more likely to contain malware as opposed to official app stores,' the iPhone maker said in June.

'As a result, security experts advise consumers against using third-party app stores because they are unsafe.'