Several app developers accused Apple, the most significant innovative tech company, of abusing their mobile-app market control. Later, on August 26, 2021, the company revealed it had landed a legal settlement with those app developers.
Nevertheless, the lawsuit settlement was quite complex, and the entire tech industry reacted differently. Apple and other people portrayed the deal as a victory for developers and a significant concession from Apple. Numerous companies and critics called this a “sham,” which did very little to change their control over apps.
Here’s an elucidation of the settlement and what it meant.
Above all, what’s the controversy about?
From lawmakers to courts and developers to regulators, all have been extensively scrutinizing the commission collection practice by Apple. The tech company acquired up to 30% commission on sales made by other companies in its App Store. This business segment of Apple generates an estimated $20 billion every year.
Numerous companies are unwilling to pay the hefty cut for reaching out to their potential customers. And that is why more and more companies are standing against Apple to change the rules. On the other hand, Apple says that it rewards the “economic miracle” and deliberately tries to keep the status quo.
Nevertheless, the fights over the power of Big Tech have led billions of dollars to remain at stake.
But what did Apple give in the settlement?
The Big Tech did nothing much to agree with the settlement. The only thing they decided to do was to flatten the commission rates for three years. Besides, they consented to base search results on their App Store for three years.
Apple also allowed its developers to sell their apps at 500 different price points. And it also offered to formulate a $100 million fund for all small app developers. They made a clarification in their rules, which is currently receiving the most attention. The new rule states that all companies can mail their customers to inform them about other new payment methods.
Is it noteworthy?
Apple believes so. Nevertheless, the changes over the set of rules seem to be minor.
Big Tech forces all companies to use their payment system from their iPhone applications. This is how they collect their commission on every sale. The majority of the companies prefer directing their customers to other payment methods to avoid the exorbitant set by Apple.
But Apple plays the upper hand and deliberately restricts companies from redirecting their customers’ payments. Moreover, it has banned companies from sending such emails to their customers. But now, they have lifted all the restrictions and have permitted them to do the same.
And what was the response?
The App Association sent out enormous praises in this regard. The group mentioned that they wanted Apple to continue leading on security, privacy, and safety. It is because Apple can preserve the trust of consumers.
So, where’s the confusion?
Ever since the settlement was announced, lots of confusion has been prevailing. An Apple executive clearly described the settlement as a win for the app developers. So this change was naturally framed as a significant avenue for companies to avoid Big Tech’s commission.
But in reality, Apple deliberately paid a small price to get rid of the legal headache.
And how did Apple’s court fight with Epic Games turn out?
Still, now, Apple is awaiting a federal judge’s decision from a lawsuit filed by Epic Games. The developer of Fortnite is forcing Apple to exempt App Store commissions for developers altogether.
Lastly, who will win $100 million?
Even though Apple is paying $100 million in the settlement, they mentioned it was not a legal payoff. They said that the fund was only for assisting the small app developers of the U.S. This assistance was mainly because the world is still suffering from the effects of COVID-19.