Apple begins to change the App Store after being the target of investigations

The App Store was undoubtedly a watershed in the software sales market. Before that, software for mobile devices was largely distributed through carrier bundles, with a terrible experience for both users and software producers.

A constant since Apple introduced the App Store has been its business model: developers pay nothing to get their free apps published (apart from the small annual subscription fee).

Paid apps or with in-app purchases of digital products keep 70% of the amount collected, that is, they pay a 30% fee to Apple on sales made in-app.

It is important to emphasize here that this commission model only applies to digital products such as virtual currencies in games, streaming subscriptions, unlocking of resources in apps, etc.

Purchases of physical products or services such as e-commerce or delivery applications are not included in this package, being responsible for implementing their own payment system.

Because of this practice, many large companies end up choosing not to allow the creation of an account and subscription to their service within the app. An example of this is Netflix.

If you open the streaming service app without being authenticated, there is no option for you to create the account right there in the app, no link to the Netflix website where you could do it, not even a little text saying what you need to do, nothing.

This is because these large companies do not want to pay the 30% commission to Apple, so they prefer to make their apps available only to those who have already subscribed by other means.

Apple is very strict with this regulation and rejects any app that tries to circumvent the rule.

Last year, Epic Games decided to circumvent the rule, placing the option to purchase virtual currencies directly on Fortnite through a server update. Apple didn’t like it one bit, it removed Fortnite from the App Store and companies are fighting in court to this day.

Until recently, Apple seemed completely adamant about these practices. However, it appears that the company is finally being forced to make changes, thanks to numerous antitrust actions and lawsuits around the world.

Collective process in the USA

It all started with a press release from Apple last week that the company had reached an agreement to end a collective lawsuit filed by developers in the United States.

Initially, that note seemed to be big news, but it was actually a distortion of the facts in favor of Apple.

In short: the agreement announced at that time would not change anything.

Apple has simply pledged to maintain its Small Developer Program, which reduces the fee to 15% for those who make less than $1 million a year on the App Store, for at least another 3 years.

It also pledged to keep the App Store search algorithm “fair” and to allow developers to email their users informing them of payment options other than in-app purchases, which they could have done before.

The icing on the cake in this note on the class action was the supposed creation of a $100 million “small developers aid fund”, which is nothing more than the indemnity of the class process.

It’s as if I was fined for driving over the speed limit and called the fine a “road improvement aid fund.” And there’s more: ironically, 30% of that $100 million will be paid to lawyers who represented the developers.

New law in South Korea

Earlier this week, a new law was passed in South Korea that prevents companies that own platforms (such as Apple and Google) from forcing developers to use their payment system to purchase digital products and services within apps.

This means that, at least when running in South Korea, apps will be able to offer purchases of digital products without going through Apple’s system and therefore without paying the 30% commission.

This is the shift that many app developers and technology companies have long been aiming for.

In its statement on the decision, Apple said the law would put users who buy digital products at risk of fraud, having their privacy violated and making it difficult to manage their purchases, as well as preventing the proper functioning of features that allow parents control of purchases made by children within apps.

This all seems pretty scary, until you remember that millions of people make purchases every day using apps without going through Apple’s in-app purchases system: e-commerce purchases, delivery apps, transportation services, and more.

I don’t believe that an opening to purchase using other payment systems would cause a huge fraud problem, at least not greater than the level of fraud that already exists in apps that use this mechanism today for purchases of physical products and services.

If Apple’s concern with this change were really about user experience and security, the company could very well develop support for purchases with other providers directly in the system, so that you can pay something inside an app using another service like PayPal, for example. , be as simple as making an in-app purchase is today with Apple’s system.

The company even has Apple Pay, which could also work for in-app purchases of digital products.

Research in Japan Brings Changes

None of the cases mentioned above changed much in practice regarding the functioning of the App Store. The new law in South Korea affects only that country, and Apple has given no indication that it intends to comply with it worldwide. But that’s not what happened with an ongoing antitrust investigation against Apple in Japan.

On Wednesday (1), Apple released a note saying that the investigation was being closed with an agreement between the company and the authorities. The agreement is for Apple to allow apps “readers” to provide a link for users to register and subscribe to their services outside the app.

The company said that although the change was prompted by an investigation in Japan, the company will apply the new rule worldwide.

Apple defines “reader apps” as apps that allow the user to consume content acquired through other means, such as music subscriptions, streaming video, books, and so on.

This change ends up solving the Netflix scenario that I mentioned earlier, as well as other cases of companies that complained about this lack of flexibility, such as Spotify.

Apple’s problems regarding the App Store are still far from being fully resolved, there are still antitrust investigations taking place in several places around the world, including the United States and the European Union, but it is possible that this move will help the company regarding these others investigations.