Apple Offers Floor in a Strategic Retreat From Strict App Retailer Guidelines


The legal battle with Epic, which was fought in federal court in Oakland, California earlier this year, is arguably the bigger threat to Apple’s App Store business. Epic wants to force the iPhone maker to allow app developers to use App Store Avoiding commissions altogether, which would be a huge financial blow to Apple. In this case, a federal judge should soon pass a judgment.

While Apple has called the changes a huge concession to app developers, critics argue that the moves are more about show than a major transformation of its business.

“A year ago, those concessions probably would have worked and still could be, but lawmakers have built a momentum that could be difficult to stop,” said Paul Gallant, an analyst at investment bank Cowen.

More substantial reforms that Apple is likely to avoid would include drastically reducing or eliminating the 30 percent cut Apple gets from App Store purchases (like an item bought in a game), according to critics, so that other companies can compete in app stores on iPhones, or let customers download apps straight from the Internet.

Apple hasn’t changed its 30 percent cut over the years, with a few exceptions. In 2016, it cut the commission for app users to 15 percent after a year and agreed last year to reduce the cut for small app developers to 15 percent.

The change announced on Wednesday enabled a number of so-called reader apps, which provide content for digital media such as books, newspapers, music and videos, to direct their customers to purchase subscriptions on their own websites.

Until then, under Apple’s longstanding rules, apps like Netflix and Spotify were not allowed to advertise in their apps that users could buy subscriptions on their websites. However, Spotify emails new members a link to its website promoting its paid subscriptions, although it doesn’t specifically ask users to bypass Apple.