Apple's settlement with app developers brings major changes to App Store policy

Apple has decided to settle a class-action suit brought by U.S. app developers by changing some of the rules covering what app developers are allowed to communicate with their customers. It also could reduce some of the pressure on Apple from lawmakers related to Apple's demands that developers promote only the tech giant's own in-app payment platform.

Variety reports that as part of the settlement, which still requires approval from the judge, developers will be able to promote the use of third-party payment platforms that Apple does not get any money from. This issue was at the heart of the lawsuit between Fortnite developer Epic Games and Apple. The game developer started to promote its own in-app payment service which reduced pricing for items like game currency compared with the App Store and cut out Apple's 30% cut of the revenue.

By doing that, Epic violated the terms of its agreement with Apple which led the latter to boot the game out of its iOS app storefront. While Apple will now allow developers to give their subscribers information about how to make payments outside of the App Store, these messages will still be banned from appearing inside the app in question. Apple says that it is "clarifying that developers can use communications, such as email, to share information about payment methods outside of their iOS app."

Apple also said that with the settlement, App Store search results will no longer favor certain developers and apps. While the current search algorithms and protocols will remain the same over the next three years, eventually "search results will continue to be based on objective characteristics like downloads, star ratings, text relevance, and user behavior signals." Earlier this year, emails released during the Epic v. Apple lawsuit hinted that App Store search results were manipulated by Apple to favor its own apps.

Phil Schiller, the Apple executive in charge of the App Store, said, "From the beginning, the App Store has been an economic miracle; it is the safest and most trusted place for users to get apps, and an incredible business opportunity for developers to innovate, thrive, and grow. 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."

The settlement covers 67,000 developers who are potential members of the class in the lawsuit titled "Cameron et al v. Apple." If the judge signs off on the settlement, half of the members of the class will receive a $250 payment from Apple while 6% of the plaintiffs will be eligible to receive a $2,000 check. A small number of developers, 1% of the total involved in the class action suit, could receive as much as $30,000.

Still, a lobbying group called Coalition for App Fairness (CAF), which represents several app developers who are extremely critical of the so-called "Apple Tax," is not happy with the settlement. CAF executive director Meghan DiMuzio said Thursday, "This offer does nothing to address the structural, foundational problems facing all developers, large and small, undermining innovation and competition in the app ecosystem. Allowing developers to communicate with their customers about lower prices outside of their apps is not a concession and further highlights Apple’s total control over the app marketplace."

Also unhappy with the settlement is Dallas-based developer Match Group. The owner of several dating apps such as Tinder and Match.com released a statement that continued to knock Apple. It said, "This is a raw demonstration of their monopolistic power: making capricious changes designed to spur good PR for their benefit right as legislation, regulatory scrutiny and developer complaints are closing in on them. We hope everyone sees this for what it is — a sham."

Apple will also put $100 million into a Small Developers Assistance Fund to help support smaller app developers. It also will expand the number of price points available to app developers from less than 100 to over 500.