Apple Settlement Gives App Developers a Way to Avoid Its Commission

Apple, in a legal settlement announced on Thursday with a group of app developers, said it would allow developers to urge customers to pay them outside their iPhone apps.

The move would allow app makers to avoid paying Apple a commission on their sales and could appease developers and regulators concerned with its control over mobile apps, including strict policies designed to force developers to pay it a cut of their sales.

The settlement appears to be a small price to pay for the world’s richest company to avoid another extended legal fight that could have posed major risks to its business by targeting the iPhone App Store. In practice, some major companies, such as Spotify, already push their customers to evade Apple’s commissions.

Apple is still awaiting a decision from a federal judge in a separate lawsuit that was filed by Epic Games, the maker of the popular game Fortnite, and that seeks to force Apple to allow app developers to avoid App Store commissions altogether. Consumers, too, have sued Apple over its app commissions, in a case that the U.S. Supreme Court has allowed to go forward in federal court and that is seeking class-action status.

Under the new settlement, Apple also said it would create a $100 million fund for payouts to small app developers and agreed to not raise the commission rate for small developers, which it reduced last year to 15 percent from 30 percent, for at least three years.

In a briefing with reporters, an Apple executive said it was a major concession for Apple to allow developers to tell customers, via email and other channels, about alternative payment methods. Apple will still bar developers from telling customers inside their iPhone apps about other ways to pay.

The Apple executive added that Thursday’s settlement showed that small app developers were mostly fine with maintaining the current App Store policies, including the reduced commission. Larger developers, which pay the higher rate, continue to complain, however.

Apple restricted reporters from naming the Apple executive or quoting her directly.

Some companies already push customers toward other ways to pay. Spotify, for example, has long blocked customers from signing up for subscriptions to its music service in its app — and it has at times advertised this. Apple’s decision on Thursday appears to remove a rule that it was already selectively enforcing.

Steve Berman, a lawyer for the plaintiffs in the suit, which sought class-action status, said, “We truly are proud that a case brought by two developers, standing in the shoes of tens of thousands of U.S. iOS developers, could help to bring about so much important change.”

The Coalition for App Fairness, a group of companies that are fighting to change Apple’s App Store policies, said in a statement that the agreement was a “sham settlement” designed to appease courts, regulators and lawmakers.

“This offer does nothing to address the structural, foundational problems facing all developers, large and small, undermining innovation and competition in the app ecosystem,” said the group, which includes Epic Games, Spotify and Match Group. “Allowing developers to communicate with…