Apple has reached a tentative settlement in a class-action lawsuit filed in 2019 by a group of U.S. app developers who asserted that Apple engaged in anti-competitive practices in relation to the App Store and that it charged developers exorbitant commisions on in-app purchases.
Apple confirmed the settlement terms, which still require a judge’s approval, in a lengthy news release issued Thursday evening. Apple confirmed that significant changes are coming to the App Store and its behind-the-scenes systems and procedures. Apple will pay $100 million into a Small Developers Assistance Fund to support independent developers with more advantageous terms on app transactions and commissions. It will also expand the number of price points available to app developers from less than 100 to more than 500.
The tech giant with a $2.43 trillion market cap (as of Thursday) gave no ground on whether the App Store has been an overall positive in the economic prospects for software entrepreneurs. The settlement in the Cameron et al class action suit, first filed in federal court in Oakland, Calif., in June 2019, touted enhancements and new features rather than the legalese of the settlement.
“From the beginning, the App Store has been an economic miracle; it is the safest and most trusted place for users to get apps, and an incredible business opportunity for developers to innovate, thrive, and grow,” said Phil Schiller, the Apple executive who oversees the App Store. “We would like to thank the developers who worked with us to reach these agreements in support of the goals of the App Store and to the benefit of all of our users.”
Just over half of the class-action group will receive payments of $250 as part of the settlement, according to court documents. Another 6% will receive $2,000 and 1% will receive as much as $30,000. The detente in the Cameron case is a separate issue from the larger battle that Apple is waging over App Store business terms with Epic Games over the lucrative Fortnite franchise.
“In a validation of the App Store Small Business Program’s success, Apple and the developers agreed to maintain the program in its current structure for at least the next three years,” Apple stated. “Businesses earning less than $1 million annually will continue to benefit from the reduced commission, while larger developers pay the App Store’s standard commission on app purchases and in-app payments.”
The biggest breakthrough for developers was securing the right to communicate with customers about alternative ways to pay for purchases aside from the Apple-provided pathway built into App Store downloads.