Apple has reached an agreement allowing developers of iPhone apps to send emails to users regarding cost-effective alternatives for digital subscriptions and media, bypassing the commission system that annually generates billions for the tech giant. This concession, announced on Thursday, is part of a preliminary settlement for a nearly two-year-old lawsuit representing U.S. iPhone app developers. The resolution, which covers emailed notifications but excludes in-app notifications, also addresses concerns raised by a federal court judge overseeing a separate case involving Epic Games, the creator of the popular game Fortnite.
As part of the settlement, Apple will establish a $100 million fund to compensate thousands of app developers involved in the lawsuit, with payouts ranging from $250 to $30,000. Developers will gain increased flexibility in setting prices within their apps, expanding choices from around 100 to 500 options.
Historically, Apple’s rules prohibited iPhone app developers from emailing users about payment options outside the app to avoid Apple’s commissions, which range from 15% to 30%. While the concession allows developers to email users and encourage alternative payment methods with user consent, in-app notifications for this purpose remain prohibited.
U.S. District Judge Yvonne Gonzalez Rogers, presiding over the Epic-Apple trial, had questioned Apple’s restriction on displaying a range of payment options within apps, a practice common among brick-and-mortar retailers. While Apple still doesn’t permit in-app notifications for exploring payment options, the ability to email users represents a significant shift for developers critical of Apple’s commission structure.
Richard Czeslawski, CEO of Pure Sweat Basketball and one of the app developers in the lawsuit, praised the freedom to email users as a “game changer.” Developers are expected to leverage this change to reduce commissions paid to Apple.
In response to legal pressure and regulatory scrutiny, Apple had previously lowered its in-app commissions from 30% to 15% for developers with less than $1 million in annual revenue. The settlement guarantees the continuation of the lower commission rate for small developers for at least three more years. However, this doesn’t address the concerns of major app makers like Epic and Spotify, leading a coalition challenging Apple’s control over the App Store. The ongoing debate revolves around whether Apple’s restrictions stifle competition and innovation or safeguard user security and privacy. The court is expected to issue a ruling on the Epic case, as well as approve or disapprove the proposed settlement, on October 12.