KA day currently goes by without any rule changes in the App Store. Apple has now announced an agreement with the Japanese competition regulator, which should bring innovations for app developers around the world. In the future, the electronics giant wants to give a certain group of apps more options to register users outside of its platform. That would make it easier for the operators of these apps to bypass Apple’s own payment system, which is associated with a commission of up to 30 percent.
This agreement comes just a few days after a law was passed in South Korea, according to which operators of app platforms such as Apple and Google are no longer allowed to force application developers to use their own payment systems. Last week, Apple also reached a settlement to settle a lawsuit brought by a group of app developers. In the future, it should be made easier for them to inform their users about alternative payment options.
With the concession that has now been announced, Apple achieved that the Japanese competition regulator has stopped an investigation that has been ongoing for five years. The regulator had accused the American company of preventing consumers from better shopping opportunities by banning references to the possibility of paying via external Internet sites. He saw it as a possible violation of competition law. With its iPhones, Apple has a 46.5 percent share of the smartphone market in Japan. Around 30 million smartphones are sold in Japan each year.
Reader apps are now allowed to link external payment processes
The agreement expressly relates only to programs that Apple classifies as “reader apps”. This includes providers of subscriptions to digital media content such as music, films and books. Examples of this are the video service Netflix, the music app Spotify and the book platform Kindle from Amazon. Some of these providers are already circumventing Apple’s payment system, but are forced to do so in a way that is not particularly user-friendly. Netflix, for example, does not allow you to set up an account directly there after downloading its app onto an iPhone, as this would result in the commission being due. Instead, they have to register elsewhere, for example on the Netflix website, and only then can subscribers use the iPhone app. According to the agreement that has now been concluded, reader apps should in future place a single link within the app that leads to their website, where the account can then be set up and managed.
Spotify is now benefiting from the concessions, but called them “limited” in a press release and said that this did not solve all problems. The music service is one of the sharpest critics of Apple’s business practices in the App Store. He has filed a complaint with the EU Commission, which became the basis of antitrust proceedings that were opened last year.
Video game manufacturers are also making demands
The Japanese supervisory authority also emphasized that the agreement with Apple only relates to certain digital content. However, she said investigations in other segments such as video games are still possible. Video games are currently the focus of one of the most spectacular confrontations around Apple’s App Store. Almost exactly a year ago, the video game manufacturer Epic Games (Fortnite) filed a lawsuit against Apple, accusing the company of exploiting its monopoly on iPhones to impose its conditions on app developers, for example a 30 percent commission on transactions within the apps. A trial took place in this dispute this spring, and the verdict is expected in the near future. In its lawsuit, Epic called for a change in Apple’s business model. Epic CEO Tim Sweeney is unimpressed by the company’s recent concessions. He tweeted that Apple was tweaking its strategy every day in the hopes of maintaining its core practices. The reader apps would now get a “special deal”.
Japan’s regulators have meanwhile underlined that it is not forbidden for providers in the Apple Store to transform their apps into reader apps in order to benefit from the new rules. As part of the deal, Apple pledged to regularly report to Japan’s competition regulator about improvements to the guidelines for approving apps in the App Store over the next three years. The main concern is the monopoly regulator that Apple is restricting competition with unclear licensing rules. Apple is also facing increased pressure from politicians and regulators in its American home market. In the Senate, representatives of both parties recently presented a bill that could bring about significant changes in the business models of app platforms. Their operators should therefore no longer force app developers to use their own payment systems, and they would have to allow users to download apps outside of the app stores.