Apple to let media apps avoid 30% fee after global scrutiny

Apple will allow developers of some apps like Netflix to link from its App Store to external websites for payments by users, a modest concession to global scrutiny of the 30 per cent cut it typically takes from services and purchases on the iPhone.

The Cupertino, California-based technology giant said the change will go into effect globally early next year for so-called reader apps spanning content like magazines, newspapers, books, audio, music and video. To date, Apple has forced such applications to use its in-app purchase system, which gives Apple up to a 30 per cent commission on downloads and in-app subscriptions. That rule will still apply to games, the most lucrative class of mobile apps, as well as in-app purchases.

“When it comes to in-game content purchases, which make the bulk of revenues for the App Store, they have kept their walled garden locked to outsiders,” said Amir Anvarzadeh, senior strategist at Asymmetric Advisors. “Nevertheless, Apple is clearly under the spotlight” and “lower royalty fees or handling fees in the case of in-game content purchases are inevitable.”

The announcement comes at a time of rising regulatory scrutiny and criticism of the market dominance of Apple and Alphabet’s Google on mobile platforms. On Tuesday, a new bill passed in South Korea that’s set to force the two leading app store operators to allow users a choice of online payment methods. The first legislation of its kind, the bill will become law when signed by President Moon Jae-in and similar measures are under consideration by US lawmakers.

Apple’s historic resoluteness about maintaining its 30 per cent cut was relaxed in November when the company announced it would reduce its fee to 15 per cent for app makers earning up to $1 million a year. The latest news helps the company achieve a settlement with Japan’s regulator, which is now closing its investigation into the App Store. Apple has committed to improving the transparency of its app reviews and give annual reports to the country’s Fair Trade Commission for the next three years as part of the settlement.

“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,” Phil Schiller, who oversees Apple’s App Store, said in a statement.

Concession in easing App Store rules (Reuters)
 

Apple will let some apps like Netflix provide links to their websites for user payments, a small concession that would allow app developers to bypass the controversial 30 per cent App Store fee the iPhone maker charges.

The concession was part of a settlement with Japan's anti-trust regulator, which said the change was enough for it to close a five-year investigation into Apple that focused on video and music apps but did not consider games.