Apple Offers Settlement in App Store Dispute

John Lister's picture

Apple has agreed to allow app developers to tell users how to save money on app payments. It's part of a settlement in a long-running dispute but it's not enough to satisfy some developers.

At the moment, app developers who sell apps in the official Apple store can gather email addresses of customers. However, the developers are not allowed to use those addresses to tell customers about how to pay them directly for subscriptions and one-off payments relating to the app.

In-App Messages Banned

That's a blow to developers who use a "freemium" model where the app itself is free but there's a fee to access additional content or remove advertising. When customers make such payments through the Apple app store, Apple takes a cut of up to 30 percent. Developers say some or all of that gets passed on to customers in higher charges.

That led to a class action lawsuit which has now ended in a proposed settlement, though a court will have to approve it. (Source:

Under the settlement, Apple must let developers send emails detailing direct payment methods, though they will need user consent for the emails, with the right to opt out of receiving them. The settlement only covers the communication and doesn't give developers the right to build their own in-app payment functions.

Competition Issues

Apple will also pay up to $100 million in compensation to settle the case, with individual developers getting between $250 and $30,000. (Source:

Some developers have welcomed the proposal while others say it doesn't go far enough. They are demanding the right to send messages within their apps or take payments directly without going through Apple.

The heart of the case is that developers already have the right to do this, but not if they want to use Apple's system. Developers argue that Apple has a monopoly over distributing apps for iPhones and iPods and that such rules are exploitative. Apple argues that it's in competition with other platforms and developers who don't like its rules can simply make Android-only apps.

What's Your Opinion?

Which side is right in this dispute? Does the settlement go far enough? Should Apple be able to make its own rules for distributing iOS apps or should it be restricted on competition grounds?

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rhcconsulting_14541's picture

I use Apple mobile devices because I don't like the wild west of the Android system. I LIKE the walled garden approach and pay significantly more for my devices as a result.

Now some whiny developers don't like the fact that they have to live up to the terms of the contract they signed with Apple.

Developers like Epic were never forced to join the Apple store, they could have just developed for Windows and sold from their website or gone strictly Android. Frankly, I think Apple was within their legal rights to ban Epic.

Apple provided help to these vendors in getting started, many of which could never have afforded the cost of setting up their own systems to start with, never mind not having the exposure that being in the Apple App Store provided.

I wonder if they'd be happier if Apple charged them $10,000 for each app to access the store. No 30%, just a straight access fee.

I have little sympathy for these vendors, especially for Epic. In traditional retail, they'd pay stores half the retail cost to carry their product, assuming you could get them into the store in the first place.

russoule's picture

well, if I were selling 1,000,000 apps at $1.99 per, I would GLADLY take the $10,000 fee vs paying 30% of the $1,990,000 ($597,000). now you can claim all you want that Apple is entitled to charge whatever they can get away with and I agree. but don't make silly comparisons that are financially ridiculous. a $10,000 fee is the equivalent of 30% of $33,333 in app sales and I suspect if that is all the app generated in sales dollars, it would cease to exist very quickly.

as for the second part of your comment, that " In traditional retail, they'd pay stores half the retail cost to carry their product, assuming you could get them into the store in the first place.", it would appear you have little experience with retail. the developers might pay the retailer a fee to provide shelf-space for their app, but a 50% payment on EVERY SALE? no. why would any developer pay $.995 to a retailer because his/her app sold for $1.99? to make it a profitable venture, the developer would need to sell such a large volume per store that the market would be saturated, assuming such a sales volume could even occur. the main reason for selling through the Apple Store or Google Store or even Microsoft's Store is the ability to sell for a very low price-per-unit and still generate the volume needed to make a profit.

rhcconsulting_14541's picture

I know the numbers don't add up for selling a $1.99 app, but that's the point.

Small developers could never afford the cost of setting up and marketing their products to the numbers they are exposed to in the app store, something that the app store provides for them. The chances of a small developer getting a boxed app into the store system is extremely unlikely (especially at that price point).

Big developers, like Epic, may be a different matter. They are the sort of developer that has probably spent well over the $10k I mentioned in marketing. Their Fortnite addons are much more than $1.99.

russoule's picture

this is what you stated: "I wonder if they'd be happier if Apple charged them $10,000 for each app to access the store. No 30%, just a straight access fee."

now as I read that, it appears you are saying a "straight access fee" would be GREATER than the 30% of selling price or perhaps their being "happier" is tongue-in-cheek? as I stated, if I were a developer and Apple offered me a straight access fee of $10,000 instead of 30% commission, I would be jumping for joy since the main reason for being in their store is the ability to sell at the million-unit level rather than the hundred/thousands level. if my app was not efficient enough or pleasurable enough to reach 1,000,000 sales, I doubt Apple would talk to me even for an access fee of $10,000. why would Apple clutter its store with apps that only sold a few thousand units?

and I still wonder where you found a retail store that charges the seller 50
5 of the retail price for the app. I have purchased tax prep apps for many years from quite a few different sources, including INTUIT direct and there is very little difference in the price. I find it unbelievable that INTUIT or HR LOCK would pay 50% of the price for their software when they can collect the entire selling price themselves. the penetration into the market does NOT depend on "retail exposure". on the other hand, if you are speaking about the garage-generated-local-boy game - yes they most likely must pay a large percentage for the retail store to give up valuable shelf space for their app. but then that app isn't likely to sell very many units, is it?