In A Legal Settlement, iPhone App Relaxes Its App Store Payment Policies

BERKELEY, Calif. — Apple has agreed to allow iPhone app developers to contact their users about cheaper alternatives to pay for digital subscriptions and media, bypassing a commission system that earns the iPhone manufacturer billions of dollars each year.

The concession, which includes emailed messages but not in-app notifications, was revealed late Thursday as part of a preliminary settlement of a nearly 2-year-old lawsuit filed on behalf of iPhone app developers in the United States. It also addresses an issue highlighted by a federal judge who is set to decide on a separate lawsuit brought by Epic Games, the creator of the popular video game Fortnite, in the near future.

Apple broke the news to reporters in a “background” conference in which it insisted on anonymity for participating executives and refused to allow any direct quotes.

Long-standing Apple restrictions prohibited app developers from emailing customers with information on how to pay for services outside the app, allowing them to avoid Apple fees of 15% to 30%.

As long as the firms gain consumer agreement, the concession provides one avenue for app developers to more aggressively urge their users to pay in other ways.

In addition, Apple would set up a $100 million fund to compensate thousands of software developers who were named in the complaint with payments ranging from $250 to $30,000. App developers will have additional possibilities to establish multiple pricing within their apps, increasing the number of options from around 100 to 500.

While presiding over the high-profile Epic-Apple trial, U.S. District Judge Yvonne Gonzalez Rogers expressed skepticism about the agreement. She questioned aloud why Apple didn’t enable developers to offer a variety of payment choices within their applications, similar to how brick-and-mortar stores may display a variety of credit cards in addition to cash.

Apple is still refusing to let developers use in-app alerts to encourage users to try out other payment methods.

For developers who have long complained about Apple’s commissions as a kind of price gouging, just being able to contact consumers to explain why they should pay outside the app is a milestone.

One of the app developers who initiated the complaint that Apple is now resolving called the ability to email customers a “game-changer.” “On an Oakland, California courtroom, in a declaration filed. App developers would “take full advantage of this shift in customer communications as a method to further lower the commissions paid to Apple,” according to the report “Czeslawski, the CEO of Pure Sweat Basketball, foresaw this.

Apple has previously tweaked its app store commission structure in response to legal pressure and increased scrutiny from politicians and regulators across the world, who are questioning whether the company’s tight control of the store is suffocating competition and innovation.

Apple reduced in-app fees for developers with less than $1 million in annual sales from 30% to 15% earlier this year, affecting the majority of the apps in its store. Apple has agreed to continue the reduced commission for small developers for at least three more years as part of the settlement announced on Thursday.

The reduced fees, on the other hand, don’t assist the biggest software developers like Epic and Spotify, which are leading a coalition to overthrow Apple’s so-called “walled garden,” which bans outsiders from supplying alternatives. Apple claims it bans other shops from providing apps on its iPhone to safeguard its own users’ security and privacy, while opponents claim the firm is merely attempting to protect a billion-dollar cash cow.

When Gonzalez Rogers announces her decision in the Epic case, those emotions are expected to flare up.

Gonzalez Rogers will also vote on whether to approve or reject the proposed settlement that was revealed on Thursday. On October 12th, a hearing will be held on this topic.