Apple gives ‘reader’ apps a way around commissions. Who wins?

Apple has made a new concession on the way App Store developers work with customers: it will allow subscription and content apps that it calls “reader” apps, a category that potentially includes Netflix, Disney + and the Kindle. from Amazon, provide users with a direct link to your website for subscriptions, avoiding a commission from Apple.

The move follows some concessions to developers last week and comes as the iPhone maker faces legal and regulatory challenges to the rules it forces app makers to follow, including an antitrust lawsuit filed by Fortnite creator Epic. Games.

WHAT ARE THE ‘READER’ APPS?

Apple says the “reader” apps provide pre-purchased content or subscriptions for app-based magazines, newspapers, books, music, and video services. Determine which companies meet that definition.

Apple doesn’t disclose the apps it classifies as “reader” apps, but e-book readers like Kindle, music and video streaming services like Spotify, Netflix, HBO Max, and Disney +, Hulu are likely to fall into this category.

When a user signs up for such a payment service from an app, the subscription is considered an in-app purchase, which means that Apple requires the app to use its payment system and charges a commission.

Many music and video streams avoid those fees, which range from 15% to 30%, by asking users to sign up and enter payment details on their websites rather than within the app. Apple had prevented developers from providing a link within their apps to do so.

WHAT IS NOT COVERED?

Payment for other services, such as video games, is unchanged, according to Japanese authorities, whose investigation led to the new global policy, although officials said they could investigate game transactions in the future.

That means Apple’s biggest policy fight, the antitrust court challenge from “Fortnite” maker Epic, continues. A judge is expected to issue a decision in that case soon.

Apps that offer physical goods or services, such as Amazon, Uber Technologies and Lyft, do not pay any fees because Apple does not consider their sales as “digital goods.”

DOES THE NEW AGREEMENT SATISFY OTHER REGULATORS AND GAME CREATORS?

Certainly not all. Many app developers, far beyond the “readers,” have expressed anger at Apple’s strict rules and high fees, prompting antitrust regulators and lawmakers in various countries to examine how the company manages. your App Store.

India launched a new antitrust case hours after Japan settled with Apple, while South Korea passed a bill to impose restrictions on Google and Apple’s payment policies.

“If they opened up to this because of regulatory pressure … this could be the start of something, maybe even bigger as it’s not just reading apps but it could also include online dating apps and games. “said Evercore ISI analyst Shweta Khajuria.

Who wins and who loses?

Subscription and content companies like Netflix and Spotify will find it easy to sign up subscribers.

Users of these “reader” apps will find it easier to sign up from a link in the apps, many of which currently do not offer instructions on how to sign up outside of the app and instead offer only a login screen. minimalist for existing subscribers.

Apple is unlikely to lose significant revenue because many of the larger “reader” apps like Spotify and Netflix stopped using in-app payment systems years ago.

Any loss of revenue for Apple is likely to come from emerging content apps that will now have an easier time registering paid users outside of the app and are therefore less likely to use Apple’s in-app payment system.

Even after the change, the extra step of following a link to an external site could discourage many users from completing the registration process.

Analysts said the changes would allow smaller developers, who don’t have the scale to reach millions of users, maintain a direct relationship with users.

“There will probably be some disappointment because no further concessions were made,” said Susannah Streeter, a market analyst at Hargreaves Lansdown.

“Apple is still in a stronghold,” he said, adding that the company will not show any weakness as it awaits a ruling in the Epic case.

The Platform Executive team hopes you enjoyed this article. Machine translation from English to a growing list of languages ​​via Google AI Cloud Translation. Initial reports through our official content partners at Thomson Reuters. Reporting by Stephen Nellis in San Francisco and Nivedita Balu and Chavi Mehta in Bengaluru. Written by Subrat Patnaik. Edited by Arun Koyyur.

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