Changes to Apple’s App Store rules draw sharp rebuke from critics

Changes to Apple’s App Store rules draw sharp rebuke from critics

Apple (AAPL) has updated its long-standing App Store guidelines, giving developers the option to allow users to make in-app purchases for iOS apps outside of its App Store. But the changes have yet to go down well with one of the company’s longtime critics.

Under the new rules, app developers can provide customers with links to third-party purchasing options for their apps, but they still must pay Apple a 12% or 27% fee.

Spotify (SPOT), one of Apple’s biggest critics, isn’t a fan of the changes. In a statement, the music streaming service criticized the new rules.

The company said in a statement: “Once again, Apple has proven that it will stop at nothing to protect the profits it earns at the expense of developers and consumers in light of its monopoly on the App Store.”

“Their latest move in the US – imposing a 27% fee on transactions made outside the app on the developer’s website – is outrageous and runs counter to the court’s efforts to enable more competition and user choice.”

Meanwhile, Epic Games CEO Tim Sweeney said the changes were part of a “bad faith compliance plan,” and called the revised fees “anticompetitive.”

The new App Store rules come after the US Supreme Court on Tuesday declined to hear Apple’s appeal of a lower court ruling requiring Apple to allow developers to offer a third-party payment option for purchasing apps. Epic’s appeal was similarly denied.

A smartphone bearing the Epic Games logo is seen in front of the Apple logo in this illustration taken on May 2, 2021. REUTERS/Dado Rovik/Illustration

A smartphone bearing the Epic Games logo is seen in front of the Apple logo in this illustration on May 2, 2021. (REUTERS/Dado Ruvic/Illustration) (Reuters/Reuters)

Epic Games originally filed an antitrust lawsuit against Apple in 2020, claiming that Apple’s refusal to allow app developers to offer third-party payment options in their iOS apps violated antitrust laws. In particular, Epic took issue with the 15% and 30% fees Apple charges developers when consumers purchase apps through Apple’s payment system. They said the fees made the App Store an illegal monopoly that prevented competitors from getting a revenue stream.

U.S. District Judge Gonzalez Rogers held that although Apple did not violate federal antitrust laws, it violated California’s unfair competition law by not allowing developers to offer their own payment options.

Epic Games and Apple appealed Gonzalez-Rogers’ decision to the Ninth Circuit Court of Appeals before trying to bring their case to the Supreme Court.

The appeals court also said Epic failed to establish Apple’s App Store as a relevant marketplace. The court went on to say that Epic failed to meet the requirement to show a substantially less restrictive means by which Apple could maintain its iOS ecosystem.

However, the Ninth Circuit allowed Gonzalez-Rogers to hold that Apple had violated California’s unfair competition law. To address the violation, the court ordered Apple to allow developers to include paths for their users to make in-app purchases outside of the App Store.

Apple on Tuesday updated its App Store rules giving developers the option to include a link to a separate website that users can use to make app purchases. But there is a catch.

FILE - In this photo taken on Sept. 28, 2021, people try on iPhone prototypes at an Apple Store in Beijing.  (AP Photo/Andy Wong, File)

Apple has changed its App Store fee structure, but critics are unhappy. (AP Photo/Andy Wong, Archive) (News agency)

Developers still have to pay fees to Apple. Instead of the 15% or 30% fee, Apple will rate developers a 12% or 27% fee. A 12% fee will apply to developers who participate in the Apple Small Business Program. The 27% applies to senior developers.

In order for developers to offer a third-party payment option to their users, they must include a disclosure sheet that will appear when a user clicks on a link to make a third-party payment. The disclosure sheet warns that Apple “is not responsible for the privacy or security of purchases made on the web.”

Apple’s App Store is under fire across the Atlantic as well. The company recently filed an appeal with the European Commission’s Digital Markets Act (DMA), which could force the iPhone maker to completely overhaul its App Store business model.

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Sign up for the Yahoo Finance Tech Newsletter. (Yahoo Finance)

According to Reuters, Apple is appealing an EU classification that describes its App Store as a single company. Instead, Apple says the App Store is five separate companies each tied to different operating systems: iOS, macOS, tvOS, watchOS, and iPadOS.

However, it is not limited to just DMA. The US Department of Justice is also reportedly preparing to file an antitrust lawsuit against Apple regarding its hardware and software business practices, according to Bloomberg. The Justice Department has not decided whether it will move forward with the lawsuit yet, but if it does, it could happen in March.

Alexis Keenan is a legal correspondent for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

Daniel Holley He is the technology editor at Yahoo Finance. He’s been covering the tech industry since 2011. You can follow him on Twitter @Daniel Holly.

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