Apple Loosens App Store Payment Rules for Netflix, Others in Deal With Japan

Apple collects commissions between 15 percent and 30 percent from in-app purchases.

By Reuters | Updated: 2 September 2021 15:43 IST

Apple Loosens App Store Payment Rules for Netflix, Others in Deal With Japan

Apple will still ban developers from taking other forms of payment inside apps on the iPhone

Highlights

Spotify is pursuing antitrust complaint against Apple with European Union
Apple collects commissions between 15 percent and 30 percent
A rule barred reader apps from providing link to sign up for paid account

Apple further loosened App Store rules on Wednesday, allowing some content companies like Netflix to provide links to their websites so customers can sign up for paid accounts.

The concession was part of a settlement with Japan's anti-trust regulator, which said the change was enough for it to close a five-year investigation into Apple that focused on video and music apps but did not consider games.

The US tech giant, however, must still contend with a raft of other legal and regulatory challenges to rules it forces game makers to follow, including a closely watched antitrust lawsuit brought by Fortnite creator Epic Games.

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The ban on providing separate links was lifted for so-called reader apps which provide content such as e-books, video, and music that don't offer a free tier of service, instead requiring payment at sign-up.

The change is set to take effect early next year and will be applied globally, said Apple, which will retain ultimate say over which apps qualify as reader apps.

Some companies said the concession was not enough.

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"A limited anti-steering fix does not solve all our issues," Spotify said in a statement. The music streaming company is pursuing an antitrust complaint against Apple with European Union competition authorities.

Apple's App Store forms the core of its $53.8 billion (roughly Rs. 3,93,250 crores) services segment, and it collects commissions between 15 percent and 30 percent from in-app purchases.

Its rules for game makers have been among its most contentious, particularly the practice that Epic Games is contesting of not allowing developers to take other forms of payment inside apps.

That case may determine whether Apple can retain control over what apps appear on its devices and whether it is allowed to charge commissions to developers.

Responding to Apple's latest announcement on its App Store, Epic Games CEO Tim Sweeney accused Apple of trying to appease with insufficient piecemeal measures.

"Apple should open up iOS on the basis of hardware, stores, payments, and services each competing individually on their merits. Instead, they're running a literally day-by-day recalculation of divide-and-conquer in hopes of getting away with most of their tying practices," he said on Twitter.

Apple should open up iOS on the basis of hardware, stores, payments, and services each competing individually on their merits.

Instead, they're running a literally day-by-day recalculation of divide-and-conquer in hopes of getting away with most of their tying practices. https://t.co/2L9n7EvSo0
— Tim Sweeney (@TimSweeneyEpic) September 2, 2021

An official with Japan's Fair Trade Commission stressed that the scope of its investigation did not cover games.

"There is a possibility of there being an investigation into games too," he told a media briefing.

Apple has a 46.5 percent share of Japan's smartphone market in which more than 30 million are sold annually.

The iPhone maker's latest concession is the second in as many weeks. It reached a deal last week with a group of developers in the United States in a class-action lawsuit, ending a ban on them telling users in email messages about payment alternatives.

In one of its latest challenges, South Korea on Tuesday banned major app store operators including Apple from forcing developers to use their payment systems, effectively stopping them from charging commissions on in-app purchases.

The company is facing similar legislative action in the United States and Europe.

It is also facing a new similar antitrust challenge in India that has been brought by a non-profit group, according to a source and documents seen by Reuters.

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