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Apple Settlement to Pay Developers $100 Million; App Store Changes Coming

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A $100 million USD settlement has been reached between Apple and a bunch of U.S. iOS app developers, that took on the iPhone maker in an antitrust lawsuit.

Aside from the $100 million settlement, which will create a Small Developer Assistance Fund, Apple will also modify the App Store, making concessions in the case.

“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, in a statement on Thursday.

“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,” added Schiller.

The antitrust case was brought against Apple in 2019 in the U.S. District Court for the Northern District of California by Hagens Berman, Sperling & Slater, Saveri & Saveri, and Freed Kanner law firms. The case argued Apple had a monopoly on U.S. distribution services for iOS apps and in-app purchases, which resulted in overcharging commissions to developers.

For U.S. developers with less than $1 million digital product sales per calendar year from June 4, 2015, to April 26, 2021, they can claim sums from the newly setup fund, with minimums of $250 to $30,000, based on their history with the App Store.

Below are some other concessions from Apple:

  • Apple will not raise the 15% commission rate that applies for those participating in its Small Business Program.
  • Apple will permit all U.S. iOS developers to communicate with their customers outside their apps about purchasing methods other than Apple’s in-app purchase (IAP) system.
  • Apple also will remove the prohibition against U.S. developers using information obtained within their apps to communicate with their customers outside their apps about the use of purchasing methods other than IAP, subject to consumer consent and opt-out safeguards.
  • Apple has agreed that its Search results will continue to be based on objective characteristics like downloads, star ratings, text relevance, and user behavior signals.
  • The addition of hundreds more app and in-app digital product price points, bringing the number from fewer than 100 to more than 500 by Dec. 31, 2022
  • Apple will maintain the option for developers to appeal the rejection of an app based on perceived unfair treatment
  • Apple agreed to create an annual transparency report based on App Store data and from Apple.com

“This hard-won settlement will bring meaningful improvements to U.S. iOS developers who distribute their digital wares through the App Store, especially for those small developers who bring so much creativity and energy to their work,” said Steve Berman, managing partner of Hagens Berman and an attorney representing iOS app developers in the class action, in a statement to iPhone in Canada.

“Plus, the creation of the Small Developer Assistance Program, like the Small Business Program – both of which our clients’ suit helped to bring about – could not come at a better time, given the pandemic,” added Berman.

Richard Czeslawski, president of Pure Sweat Basketball, Inc. (PSB), the second of the suit’s named plaintiffs, reacted to the settlement by saying, “First, we have guaranteed three more years of the 50% commission drop for developers like PSB. We feel great about the fact that our lawsuit helped bring about such a large price cut.”

“Second, we’ve gained the ability to use contact information obtained from signups in our app to communicate with our users outside the app about purchasing alternatives to IAP. That’s a big deal,” added Czeslawski. He also added the third part of the settlement will also allow developers to set new pricing tiers.

U.S. developers can visit the settlement website at SmallAppDeveloperAssistance.com. Chalk this up as a victory for developers (and lawyers, as always).

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