Apple said it had made major concessions, but a closer examination suggests that the tech giant and the app makers’ lawyers were big winners.
Apple said Thursday that it had reached a legal settlement with app developers who accused it of abusing its control of the mobile-app market. The settlement of the lawsuit was complex, and various people in the tech industry had widely different reactions to it. Apple and the people who sued it framed the deal as a major concession from Apple and a victory for developers. Some of Apple’s critics, including companies that pay it millions of dollars in app fees, called it a “sham” that did little to change Apple’s control over apps. Here is an explanation of the settlement and what it means. Courts, regulators, lawmakers and developers have been scrutinizing Apple’s practice of collecting a commission of up to 30 percent on the sales of other companies in its App Store, a business that generates, according to some estimates, nearly $20 billion a year for Apple. Many companies that reach their customers through apps don’t want to pay Apple a hefty cut, and they are increasingly fighting to change the rules. Apple argues that its commission rewards it for creating the “economic miracle” of the App Store, and it is fighting to keep the status quo. Billions of dollars are at stake in one of the most consequential fights over the power of Big Tech. Not much. It agreed to keep its commission rates flat for three years and to continue to base search results in its App Store on “objective characteristics” like downloads and user ratings, also for three years. At a granular level, it said, it will let developers sell their apps at 500 different price points, up from 100. (For instance, now an app could charge $32.99 instead of $29.99 for a subscription.) And it agreed to create a $100 million fund for small app developers. (More on this later.) But what is receiving the most attention is a “clarification” in Apple’s rules: Companies can now send an email to customers telling them about ways to pay other than in their iPhone (or iPad) app. Apple says so. But it appears to be a minor change to a set of rules that are at the center of complaints about how Apple controls its App Store. Apple forces companies to use its payment system inside their iPhone apps, which enables it to collect its commission on their sales. Most companies would prefer to direct customers elsewhere to complete transactions so they can avoid Apple’s fees. But Apple also generally bars companies from telling customers to pay elsewhere. Apple has long banned such steering.
