Apple lets some apps avoid 30% cut after facing scrutiny

  • Apple earns a 30% fee for payments users make to these apps for subscribing to their services when they use the company’s in-app payment systems.
Developers earning less than $1 million per year from the App Store were charged 15%.(REUTERS)
Developers earning less than $1 million per year from the App Store were charged 15%.(REUTERS)
Published on Sep 03, 2021 06:28 AM IST
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ByPrasid Banerjee, New Delhi

Apple Inc. has agreed to allow media apps, including newspapers and streaming services, to add external payments links to avoid paying the iPhone maker a 30% cut of the purchases made through the App Store, amid growing scrutiny of its practices.

In another development, a Reuters report said that a non-profit called Together We Fight Society filed an information in CCI on Thursday about the fees levied by Apple. The complaint alleges that the App Store commissions could lead to “consumer harm” since “some app developers will never make it to the market”.

The concession was announced following a backlash from app developers that eventually led to a probe by the Japan Fair Trade Commission (JFTC).

The change will only apply to developers of so-called reader apps such as Netflix, Spotify and newspaper firms.

These companies will get to bypass Apple’s in-app payments system by sharing a link to their website with App Store users who sign up for a subscription.

Apple earns a 30% fee for payments users make to these apps for subscribing to their services when they use the company’s in-app payment systems.

So far, the firm has forced all developers to use its payment systems, forcing them to share a chunk of their revenue. Developers who earned less than $1 million per year from the App Store were charged 15% on payments.

The company had faced criticism from developers after it announced a new Small Developer Assistant Fund worth $100 million as part of a settlement agreement for a class-action lawsuit in the US.

Many developers said the latest change was barely different from how the company has operated so far. The iPhone maker required developers to use its billing systems and barred them from communicating on alternative methods of payments to customers so far.

The JFTC was investigating Apple for “restricting business activities, such as selling digital contents, of enterprises that distribute applications based on App Store Review Guidelines”.

Indian developers had also approached the Competition Commission of India (CCI) last October, complaining against similar policies imposed by Google. CCI reached out to 17 startups in November, asking them about partnerships with the Google Play Store and the impact of possible abuse of monopoly by the company.

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Friday, January 28, 2022