Apple settles class action with $100m payout and App Store changes

27 Aug 2021

Image: © Aleksei/

The settlement is the latest chapter in the App Store policy saga about commission charges and external revenue streams.

Apple has reached a settlement agreement in a class-action lawsuit taken by small app developers in the US, which will see it pay $100m and change policies in the App Store.

The main rule change is to Apple’s anti-steering policies. Makers of apps will now be allowed to communicate with customers, with their permission, outside apps to invite them to make purchases without going through Apple’s in-app purchase system. This means app makers could avoid the 30pc cut on sales Apple takes through the App Store.

Developers may also use information obtained from apps to initiate this communication. They still cannot, however, directly do this communication in-app.

The $100m will go to a Small Developer Assistance Fund from which qualifying US app makers can claim a minimum of between $250 and $30,000, depending on their history of distributing through the App Store.

In order to qualify, developers must have made less than $1m in revenue from apps and in-app sales between June 2015 and April 2021, a categorisation which reportedly includes more than 99pc of US developers.

The lawsuit was filed in a US federal court in California in 2019, alleging that the tech giant “monopolised US distribution services for iOS apps and in-app digital products, which resulted in commission overcharges to US iOS developers”.

Other elements of the settlement include at least a three-year continuation of the App Store Small Business Program, which reduces Apple’s commission on app sales to 15pc for developers earning less than $1m per year.

Apple also promised not to alter the search system on the App Store for the next three years, and will publish an annual transparency report about the internal workings of the marketplace.

The report will include “meaningful statistics about the app review process, including the number of apps rejected for different reasons, the number of customer and developer accounts deactivated, objective data regarding search queries and results, and the number of apps removed from the App Store,” it said.

Steve Berman, managing partner of law firm Hagens Berman and an attorney representing app developers in the suit, described the settlement as “hard-won” and said it would bring “meaningful improvements” for app makers.

“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.”

The fight over Apple’s App Store anti-steering policies has been a long-fought one and may not necessarily end with this lawsuit, not least because it only applies to the US.

Basecamp became embroiled in a public dispute with Apple last year over the issue, and Epic and Facebook have publicly criticised the App Store policies too.

The European Commission specifically cited anti-steering while accusing Apple of anti-competitive behaviour earlier this year. A German competition investigation announced in June did not specify anti-steering, but said it would focus on “the operation of the App Store as it enables Apple in many ways to influence the business activities of third parties”.

The class action settlement is significant in that it marks Apple’s first major concession to developers in allowing them to avoid its commission structure by using external purchase methods. However, limiting communication about this to outside apps themselves will limit its effects.

Yesterday (26 August), Apple also announced the introduction of the News Partner Program. In essence, this will allow news outlets to reduce the commission the company takes from their subscriptions and in-app purchases on their iOS app if they participate in Apple News.

Outlets that publish in the proprietary Apple News Format and fulfil a number of other requirements will be eligible to reduce the commission they are charged on their app revenue from 30pc to 15pc.

Jack Kennedy is a freelance journalist based in Dublin