Apple set to let app developers alert users to alternate payment methods

The shift will make it easier for some apps to steer customers toward other forms of payment, rather than using the App Store, where Apple charges a commission of up to 30%. The company last year halved most commissions to 15% for developers that generate no more than $1 million in revenue through the software platform, and the potential settlement will preserve that change.

In 2019, a group of app makers sued Apple, accusing the company of breaching antitrust laws in how it managed its App Store.

The company will also establish a $100 million fund for small developers. The Small Developer Assistance Fund will allow developers whose sales were less than $1 million a year from June 2015 to April 2021 to collect between $250 and $30,000. It will benefit more than 99% of developers, according to the plaintiffs.

The potential deal is a partial concession to app makers, who have long wanted to get customers to pay them directly for services rather than through Apple to avoid the commission. The company previously prohibited developers from using information about customers they obtained through Apple to inform them directly about other payment options. The potential settlement removes that prohibition, according to plaintiffs. Consumers must consent to such communication, according to Apple.

“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,” said Steve Berman, one of the attorneys who is representing app developers in the lawsuit.

Apple said the settlement followed a “productive dialogue” with developers and said the changes would help improve the App Store for users and software makers. It is “the safest and most trusted place for users to get apps,” said Phil Schiller, who oversees the App Store.

The settlement must be approved by U.S. District Judge Yvonne Gonzalez Rogers.

The deal won’t resolve an antitrust lawsuit brought by “Fortnite” maker Epic Games Inc. against Apple over broader claims that the App Store is an improper monopoly. In that trial, which concluded in May, Epic argued that Apple improperly limited distribution of apps on the iPhone and required in-app purchases through its own payment system.

Apple disputed the claim that it has a monopoly, noting that people play videogames on many platforms, and said its control of software downloads and payments was necessary for the security of users.

In the Epic case, over which Judge Gonzalez Rogers also presided, she pressed Apple Chief Executive Tim Cookduring his testimony about why Apple doesn’t allow developers to suggest cheaper options for in-app purchases outside of Apple’s system. “I understand this notion that somehow Apple brings the customer to the gamers, the users, but after that first time, after that first interaction…the developers are keeping their customers, Apple is just profiting off that,” she said.

Mr. Cook disagreed and said Apple has a right to choose a business model that relies on commissions from apps and in-app purchases. He also said that the many free apps available on the App Store attract customers and benefit game developers.

“If we allowed people to link out like that we would in essence give up our total return on” intellectual property, Mr. Cook said.