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Apple loosens its grip on the App Store but still calls the shots

With no fewer than three major App Store policy changes announced in the past week, Apple is reshaping its immensely profitable services business to be more resistant to discontent and regulation, even as it draws developers and content businesses further into its ecosystem.

The iPhone-maker has been hit left and right with controversies and lawsuits surrounding its App Store over the past few years, with most hinging on the idea that it’s anti-competitive by design; developers say they’re forced to used Apple’s payment mechanisms at a high commission, and face strict rules about how they can make money.

Apple is loosening some of its famously strict App Store rules to reduce backlash.

Apple is loosening some of its famously strict App Store rules to reduce backlash.

Since being on Apple devices is more or less required to reach a wide audience, everyone from Spotify, Microsoft and Fortnite-maker Epic Games, right through to small independent developers, have argued that Apple gets away with policies that would never be tolerated in a free market.

But with decisions in Epic’s major lawsuits still pending, and App Store regulation being considered in many jurisdictions around the world including Australia, and actual laws being introduced in South Korea to oblige big tech to open up, Apple has made a string of behind-the-scenes changes that could get some of its vocal critics onside.

First, it offered a settlement last week in a long-standing lawsuit — which has since become a class action with 67,000 complainants — that began with small developers saying Apple had too much control over their businesses. The case has been bitterly argued since June 2019, and led to Apple lowering the commission it takes from small developers from 30 per cent to 15 per cent last year, but now Apple has agreed to create a fund of $US100 million to pay out affected US-based developers.

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Also as part of the settlement, which was readily accepted by the complainants and is with a judge for consideration, Apple will maintain its lower commission rates for at least three years, publish transparency data about apps that were blocked, and make some small but important concessions. Developers the world over will have a greater degree of flexibility in what they charge and, while they still have to use Apple’s payment mechanism on Apple devices, there will no longer be a ban on contacting users to inform them of alternative payment methods on other platforms.

More recently, Apple on Thursday said it was making a change to the way so-called “reader apps” were allowed to operate, which could make things much easier for some companies.

Currently all apps that offer access to content users have previously bought or subscribed to have to offer purchases through Apple’s payment mechanism, attracting up to a 30 per cent commission. But the change means reader apps (importantly defined by Apple as for digital magazines, newspapers, books, audio, music, and video, not games) will be able to instead link users to an external website for sign-ups. The change specifically addresses a years-long investigation into the App Store by the Japan Fair Trade Commission, which Apple says will now be closed.

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