Late Thursday, Apple announced that it had settled a class-action lawsuit with developers over App Store Guidelines. The headline was dramatic: “Apple, US developers agree to App Store updates that will support businesses and maintain a great experience for users.” I think that’s debatable.
The lawsuit, known as Cameron versus Apple, Inc., alleged that Apple violated antitrust law because of its monopoly control over the iOS app market. As a result, Apple is able to charge unfair commissions since developers have no alternatives.
Apple’s control over iOS app distribution has come under fierce scrutiny in the last few years. The company is involved in a high-profile case against Fortnite maker, Epic Games, which is seeking to force Apple to allow both third-party payment systems within the iOS App Store, as well as allowing users to install third-party apps stores.
The company is also facing regulatory pressure, including laws in the U.S. and other countries that seek to force many of the same changes. While this lawsuit involved mostly smaller developers, the same judge that is overseeing the case with Epic will have to approve this settlement. We’ll get to why that’s important in a minute.
First, however, if you read the press release from Apple, you might think that the company is finally serious about listening to developer concerns and changing its stance on the App Store. The release touts that Apple is giving $100 million to developers, paid out based on their total earnings on the App Store. Oh, and instead of only being able to price apps at an amount ending in .99, developers will have more options to set prices.
You might even think Apple has finally made substantial changes to the App Store rules that would make it easier for developers to use third-party payment systems–arguably the reason for the lawsuit in the first place. Except, that’s not really the case.
Instead, what Apple did was change the App Store guidelines to no longer prohibit developers from telling customers about third-party payment options. Well, it won’t prohibit them from telling customers about it via email. It still won’t allow developers to mention anything about any kind of alternative payment within their app.
According to the proposed settlement, the parties agree that “by informing customers of alternative payment options, developers can avoid paying Apple’s commissions and, moreover, exert competitive pressure on Apple to discipline its pricing.” That’s quite a leap.
Just to be clear, this change means a developer has to acquire a customer through the App Store, collect their contact information within the app, gain consent to contact them for promotional purposes by email, only to then finally be able to let them know there are other payment options available. For the app they already presumably purchased.
Never mind that the real issue has always been Apple’s prohibition against telling customers within the actual app. That’s the reason that if you download the Netflix app for the first time, it has no information at all about how to actually sign up for Netflix. In order to avoid Apple’s 30 percent commission, Netflix won’t allow you to sign up with the app, you have to visit the company’s website, but it is still prohibited from telling you that.
As a result, the user pays the price of a terrible experience. Nothing about that has changed. That’s why this settlement doesn’t really settle anything.
Of course, I’m sure there’s motivation on Apple’s part to propose this settlement, considering that the same judge is expected to soon issue a decision in its case with Epic. The company has far more at stake in that case considering a decision to require third-party payment systems or third-party app stores could be devastating to Apple’s services business. There are legitimate concerns that the latter could be a real security issue as well.
Here, Apple gets to look reasonable and show that it’s willing to change–just not too much, and not where it really matters. The settlement goes to great length to explain the vigorous and hard-fought negotiations that went into its proposed result. While that’s mostly pro forma, it does make the whole thing a bit laughable.
Sure, the named plaintiff in the case, which the filing says has made less than $150 for his app, walks away with $5,000 for his trouble. That’s a great deal for him. And, of course, the lawyers think it’s a good deal. They walk away with as much as $30 million for their trouble, according to the proposal. For context, that’s 120,000 times the amount that the majority of developers are eligible to receive under the settlement.
Considering the vast majority of developers, according to the settlement proposal, have never made more than $1000 from the App Store, a small settlement payment might make them happy. However, it changes almost nothing about their relationship with Apple, or the control it exerts over their business. In fact, as far as I can tell, this settlement really doesn’t settle anything.