By Natalie DeCoste
Apple has made a significant concession related to the antitrust cases the company is currently in by changing one of its most anti-competitive practices.
Apple said that it would allow developers of “reader” apps, apps such as Netflix, Spotify, and Amazon’s Kindle app, to directly link customers to their own sign-up websites, where they could potentially avoid Apple’s 30% cut and unpopular in-app payment system.
The Big Tech company has spent the last year fighting in multiple legal battles over its business practices related to its App Store. One of the most notable fights the company has been in is between it and Fortnite creator Epic Games. In August 2020, Epic sued Apple and accused the tech giant of engaging in monopolistic behaviors when Apple pulled Epic’s game Fortnite from its App Store. Apple had removed Fortnite after Epic added a direct payment option to the app to circumvent the 30% cut that Apple takes from all digital transactions.
Epic is not the only company with issues with Apple and the 30% cut, as Spotify and other technology companies have said Apple’s restrictions were unfair and anti-competitive for years. Apple has long prohibited Spotify and these other companies from directing their users to sign-up options outside the App Store.
Apple announced on Wednesday that App Store policies would change to close an investigation by the Japan Fair Trade Commission (JFTC). While the agreement to change the policy was made with the JFTC, Apple applies the changes globally to all reader apps on its platform.
“Trust on the App Store is everything to us. The focus of the App Store is always to create a safe and secure experience for users while helping them find and use great apps on the devices they love. We have great respect for the Japan Fair Trade Commission and appreciate the work we’ve done together, which will help developers of reader apps make it easier for users to set up and manage their apps and services, while protecting their privacy and maintaining their trust,” said Phil Schiller, Apple Fellow who oversees the App Store.
Reader apps provide previously purchased content or content subscriptions for digital magazines, newspapers, books, audio, music, and video. Apple’s policy on the App Store has been that developers had to sell digital services and subscriptions using Apple’s in-app payment system. However, because developers of reader apps do not offer in-app digital goods and services for purchase, Apple agreed with the JFTC to let developers share a single link to their website to help users set up and manage their accounts.
Currently, many of these reader apps are useless to users who do not have an existing subscription. Netflix and Spotify only offer a sign-in page, with no link out to their website, and a cheeky apology. “You can’t sign up for Netflix in the app. We know it’s a hassle,” reads the Netflix app. Meanwhile, the Amazon Kindle app offers a basic “Create a new Amazon account” page inside the app but doesn’t let you buy books there or in the standard Amazon app. To make such purchases, users have to go to a mobile browser to purchase.
The changes to the App Store will go into effect in early 2022. Prior to the implementation, Apple will update its guidelines and review process to make sure reader app users continue to have a safe experience on the App Store.
The changes will not impact Epic Games or companies like Epic who make games. Most of Apple’s App Store money is made in the cut the company takes from gaming companies.
In response to the change, Netflix declined to comment. At the same time, a spokeswoman for Spotify said the company would need to evaluate the changes but noted that such an amendment to guidelines would not solve all of its disputes with Apple.
