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Apple agrees to settle potential class-action suit by U.S. developers

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Apple said Thursday it has settled — pending court approval — a possible class-action lawsuit brought by U.S.-based developers over its App Store terms.

Why it matters: Apple will set up a $100 million fund for small developers and make some changes to its practices but is keeping its overall commission structure. The suit is one of a number of legal challenges Apple is facing over its store.

As part of the settlement:

  • Developers can communicate directly with customers about alternative payment options. Customers have to consent and be given the right to opt-out.
  • Apple agrees to maintain for three years a program that lowers commissions to small businesses.
  • Apple will also set up a $100 million fund for small developers in the U.S., ranging from a minimum of $250 to $30,000 based on the size of the developer. Eligible developers are those who made less than $1 million during each of five years, a group Apple says represents more than 99% of developers.
  • Apple agrees to make sure the search results in the App Store are based on objective criteria.
  • Apple will offer more price points for apps. Today there are less than 100, but the company is committing to increase that to more than 500 options.
  • The company will issue a transparency report that includes at minimum the number of apps rejected, developer, search queries and results and the number of apps removed from the App Store.
  • With the exception of the fund for small developers, the rest of the changes are being made globally.

Between the lines: Apple ceded some ground on issues of interest to developers but gets to keep (at least for now) key structures of its App Store, including the overall commission structure of the store as well as its prohibition against using rival app stores or in-app payment mechanisms.

  • The settlement, which must be approved by Judge Yvonne Gonzalez Rogers, comes as Apple is awaiting a ruling in a separate lawsuit, brought by Fortnite developer Epic Games, which seeks to force Apple to allow rival in-app payment and store options.
  • The same federal judge is hearing the Apple-Epic case and a ruling could come at any time.

What they’re saying:

  • Plaintiffs’ lawyer Steve Berman: “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.”
  • Apple Fellow Phil Schiller: “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.”


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