Lawsuit settlement brings changes to Apple’s App Store relationship with developers

Apple has settled a class-action lawsuit with small iOS developers, agreeing to create a $100 million Small Developer Assistance Fund as well as a number of changes to App Store policies.

The lawsuit, filed two years ago in U.S. District Court, alleged that Apple had a monopoly on the distribution of iOS apps and in-app purchases and unfairly overcharged developers for its services. The settlement between Apple and the developers will need to be approved by the judge presiding over the case.

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The settlement proposal includes seven main items, several of which will affect all developers and not just those with under $1 million in annual revenue who were involved in the lawsuit.

The biggest change is possibly that Apple will allow developers to share information with customers about payment methods outside of their app—that is, they can’t tell users about a separate payment method (like subscribing to an app through a website rather than the App Store) in the app itself. Instead, they can use customer email lists or other methods to market to customers and Apple will not receive a cut of purchases or subscriptions purchased outside the App Store. This has previously been a contentious issue between Apple and developers.

Apple is going to expand the number of currently limited possible price points for developers to sell their apps and services from fewer than 100 possible prices to more than 500.

Developers will continue to be able to appeal the rejection of an app from the App Store to an appeal board, and Apple is going to expand its documentation for developers on how the process works. The company is also going to create an annual transparency report about the app review process, including the number of rejected apps, the number of customer and developer accounts that are deactivated for various reasons, apps removed from the App Store, and data regarding search queries and results.

The company will keep the current App Store Search system in place for at least three years. This means that search on the App Store will be based on things like downloads, star ratings, relevance and user behavior signals, according to Apple’s press release.

Finally, Apple has promised to keep its Small Business Program around for at least three years. This program allows developers with less than $1 million in annual revenue to keep 85% of their app sales revenue, with Apple taking a 15% cut. This is a 50% drop from the 70/30 split that Apple typically charges developers. Apple says that 99% of U.S. developers are covered by this program.

On top of that, Apple is creating a Small Developer Assistance fund for those same small developers, allowing for developer claims from the fund between $250 and $30,000. Details on this fund will be forthcoming.

Assuming the judge signs off, this settles one legal battle for Apple, but larger ones with Epic Games and potentially with federal regulators still remain. 

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