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Apple  to  let  some  apps bypass App Store fees

Apple earns a 30% fee for payments users make to these apps for subscribing to their services when they use the company’s built-in payment systems. So far, the company forced developers to use its own payment systems and charged them a fee. (REUTERS)Premium
Apple earns a 30% fee for payments users make to these apps for subscribing to their services when they use the company’s built-in payment systems. So far, the company forced developers to use its own payment systems and charged them a fee. (REUTERS)

The concession was announced following a backlash from app developers that eventually led to a probe by the Japan Fair Trade Commission (JFTC).

NEW DELHI : Apple Inc. has agreed to allow media apps, including newspapers and streaming services, to add external payments links to avoid paying the iPhone maker a 30% cut of the purchases made through the App Store, amid growing scrutiny of its practices.

The concession was announced following a backlash from app developers that eventually led to a probe by the Japan Fair Trade Commission (JFTC).

The change will only apply to developers of so-called reader apps such as Netflix, Spotify and newspaper firms. These companies will get to bypass Apple’s in-app payments system by sharing a link to their website with App Store users who sign up for a subscription.

Apple earns a 30% fee for payments users make to these apps for subscribing to their services when they use the company’s in-app payment systems. So far, the company has forced all developers to use its payment systems, forcing them to share a chunk of their revenue. Developers who earned less than $1 million per year from the App Store were charged 15% on payments.

Apple said the focus of the App Store is to create a safe and secure experience.

The company had faced criticism from developers after it announced a new Small Developer Assistant Fund worth $100 million as part of a settlement agreement for a class-action lawsuit in the US. As part of the agreement, the company said it would allow developers to use data such as email ids obtained through the App Store to reach out to customers and inform them about alternative payment systems.

Many developers said the latest change was barely different from how the company has operated so far. The iPhone maker required developers to use its billing systems and barred them from communicating on alternative methods of payments to customers so far.

The JFTC was investigating Apple for “restricting business activities, such as selling digital contents, of enterprises that distribute applications based on App Store Review Guidelines".

The move comes just days after South Korea passed a landmark law that bars companies such as Apple and Google from forcing their payment systems. The new law requires these companies to allow developers to use alternative payment systems, though it doesn’t set limits on what commissions they can charge for using their own systems.

Indian developers had also approached the Competition Commission of India (CCI) last October, complaining against similar policies imposed by Google. CCI reached out to 17 startups in November, asking them about partnerships with the Google Play Store and the impact of possible abuse of monopoly by the company.

“It’s not like we’re partial to Apple or anything. Google is such a dominant player in India with 90-95% market share, which is why we have taken up Google (so far)," said Murugavel Janakiraman, founder and CEO of Matrimony.com, adding that developing for Apple is more expensive as most developers want to build for Play Store, and there is a lack of talent. According to analysts, Apple accounts for 2-3% of India’s smartphone market.

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