Apple Pays $100 Million to Settle Developer Lawsuit and Agrees to Multiple App Store Changes
Under the terms of the deal, Apple will let developers use communication methods like email to tell customers about payment methods available outside of iOS apps, and it will expand the price points that developers can offer for apps, in-app purchases, and subscriptions. Apple also plans to create a $100 million "fund" for small developers as part of the settlement, and it will release annual transparency reports on the app review process.
Apple says that the settlement will make the App Store an "even better business opportunity for developers" while maintaining the safety of 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," said Phil Schiller, Apple Fellow who oversees the App Store. "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."
To establish a settlement, Apple and the developers involved in the lawsuit have come to an agreement that "identifies seven key priorities shared by Apple and small developers." Apple will implement the following measures, as outlined in court papers:
- Apple will maintain the App Store Small Business Program in its current structure for the next three years. Businesses earning less than $1 million annually will continue to pay a reduced 15 percent commission, while developers earning over that target will pay the standard 30 percent commission.
- App Store search results will continue to be based on objective characteristics like downloads, star ratings, text relevance, and user behavior signals. Apple will maintain the current App Store search system for at least three years.
- Apple will allow developers to use communications like email to share information about payment methods available outside of their iOS apps. Developers will not pay Apple a commission on purchases taking place outside of the app or the App Store. Users must consent to the communication and can opt out.
- Apple will 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 had complained about the $0.99 minimum price available in the App Store and the inability to offer price points not ending in $0.99, so that may change.
- Apple will maintain the option for developers to appeal the rejection of an app based on perceived unfair treatment. Apple will add content to the App Review website to help developers better understand the appeals process.
- Apple will create an annual transparency report based on App Store data, which will provide 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 is paying $100 million to developers to settle the lawsuit, and the money is being distributed as part of a "Small Developer Assistance Fund." Developers can claim between $250 and $30,000 based on their historic App Store participation. Eligible developers must have earned $1 million or less through the U.S. 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, a figure that encompasses 99 percent of U.S. developers. More information will be provided at a later date, and there is a settlement website, but it is not yet working.
The class-action lawsuit dates back to 2019 when a group of iOS developers accused Apple of using its App Store monopoly to impose "profit-killing" commissions. The lawsuit took issue with Apple's 30 percent cut of App Store sales, and was largely addressed with the late 2020 announcement of the App Store Small Business Program that cut the commission that small developers have to pay to 15 percent.
The developers who filed the lawsuit were also unhappy with Apple's minimum $0.99 purchase price for apps and in-app purchases, and they took issue with the $99 Apple Developer fee.
Apple will be implementing these changes pending approval from Yvonne Gonzalez Rogers, who is overseeing the case. Rogers is also handling the ongoing Epic v. Apple lawsuit.