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Apple said on Thursday reached a legal agreement with app developers who accused him of abusing his control in the mobile app market.
The resolution of the case was complex, and various people in the tech industry reacted very differently to it. Apple and its litigants described the deal as a major concession for Apple and a victory for developers. Some critics, including companies that pay Apple millions of dollars in app fees, have called it a “fake” that will little change Apple’s control over apps.
Here is a description of the placement and what it means.
First of all, what is the discussion about?
Courts, regulators, lawmakers and developers are reviewing Apple’s practice of collecting commissions of up to 30 percent from other companies’ sales in the App Store. about 20 billion dollars One year for Apple.
Many companies that reach their customers through apps are unwilling to pay Apple a high stake and are increasingly struggling to change the rules. Apple argues that its commission rewarded him for creating the App Store’s “economic miracle” and fought to maintain the status quo.
Billions of dollars are at stake in one of the most important fights over Big Tech’s power.
So what did Apple give up in the deal?
Not much. It has agreed to keep commission rates flat for three years and continue to base search results in the App Store on “objective attributes” like downloads and user ratings for another three years.
On a granular level, he said, it will allow developers to sell their apps at 100 to 500 different price points. (For example, an app can now charge $32.99 for a subscription instead of $29.99.)
And it has agreed to raise a $100 million fund for small app developers. (More on this later.)
But what stands out most is a “clarification” in Apple’s rules: Companies can now email customers telling them how to pay outside of their iPhone (or iPad) apps.
Is this important?
Apple says so. But it appears to be a minor change to a set of rules that have been at the center of complaints about how Apple controls the App Store.
Apple forces companies to use the payment system in iPhone apps, allowing them to take commissions on their sales. Most companies prefer to refer customers elsewhere to complete transactions to avoid Apple’s fees. But Apple also often discourages companies from telling customers to pay elsewhere.
Apple has long banned such redirects. It has even banned companies from using email to inform customers about other payment methods if customers get their email addresses from their iPhone apps.
Now Apple says it’s OK for companies to send such emails if they get the customer’s permission.
Some companies already seem to be partially violating Apple’s rules. To avoid Apple’s commission, music service Spotify, for example, doesn’t allow people to sign up for a subscription on the iPhone app. Still, once someone creates a free account on the app, Spotify sends a link to the website where it advertises their paid account, even though it doesn’t explicitly tell users to skip Apple’s commission.
An Apple spokesperson said the companies: Spotify includedhas complained for years about Apple’s restrictions on sending emails to certain customers.
What was the reaction?
There was tentative praise from some lawmakers who proposed legislation to change App Store rules. Connecticut Democratic Senator Richard Blumenthal said on Twitter that the deal “is an important step forward, but does not fully and vividly fix market abuses and practices that are still prevalent in app markets.”
The biggest accolades came from the App Association, a less successful organization that claims to “give a voice to small tech companies.” funded by big tech companiesIncluding Apple. “Our members need Apple to maintain leadership in privacy, security and safety to protect consumer trust in the platforms,” the group said.
Many companies that paid Apple’s commission weren’t that kind. The Coalition for App Fairness, a group of firms struggling with Apple’s rules, said the deal “does nothing to address the structural, fundamental issues faced by developers big and small, undermining innovation and competition in the app ecosystem.” The group added that Apple’s restrictions on what companies can say in private communications with customers demonstrate Apple’s inappropriate control over the app market.
Entrepreneur and app developer David Heinemeier Hansson, an outspoken critic of the Apple rules, He said in a post on Friday The fact that companies take a narrow path to divert customers to other payment options only gives Apple protection to defend the ban on such communications in key places, such as a transaction page in an app.
“If the developer community had hopes for this class action lawsuit, the result would be a dagger in the heart. It’s much worse than no lawsuits at all,” he wrote. “If anything, this agreement reinforces the tremendous power Apple has and uses. , bromide and can be bought with bribes.”
Why was this so confusing?
There was a lot of confusion after the deal was announced, in part because of the way Apple announced it. The company told reporters and then aired its press briefing one evening, two hours before it began. a muddy newsletter just as the briefing begins.
That meant reporters were already rushing to tweet and file first drafts of articles, as one Apple executive described the deal as a win for developers. The incentives for digital news today reward the first ones, not the more detailed or accurate ones. (An Apple PR official asked reporters not to name or quote the executive to hear the briefing.)
As a result, headlines initially framed the change as an important way for companies to avoid Apple’s commission. This has been good for Apple as any perception that it has made significant changes to its App Store rules could help appease developers, courts, regulators and legislators.
In reality, Apple seems to pay a small price to potentially get rid of a huge legal headache.
How does this affect Apple’s court battle with Epic Games?
Apple is still awaiting a federal judge’s decision in a separate lawsuit filed by Epic Games, the producer of the popular game Fortnite. Epic wants to force Apple to allow app developers to avoid App Store commissions entirely.
Thursday’s settlement requires the approval of US District Court Judge Yvonne Gonzalez Rogers for the Northern District of California. He is also the arbitrator in the Epic Games case.
Apple probably hopes the rule change can help convince Judge Rogers that the developers are addressing their concerns in a meaningful way. In May, he said he hopes to make a decision this month.
Who will get the $100 million?
Apple is paying $100 million for the deal. The company said it was not a legal payment, but rather “a fund to help small US developers, especially as the world continues to suffer from the effects of Covid-19.”
The developers are scheduled to receive $70 million of the money. App makers earning less than $1 million a year in the App Store from June 2015 to April 2021 are eligible to receive payments between $250 and $30,000 each.
The plaintiffs’ lawyers are seeking the other $30 million.
One of the attorneys, Steve Berman, said in an email that attorneys typically get 25 percent of such deals, and more money is possible if they provide other benefits for their clients. “We think an upward adjustment is deserved because of a series of job changes that will help developers,” he said.
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