Apple to ease payment rules for media apps such as Netflix and Spotify

Apple Inc updates

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Apple said on Wednesday that it would loosen strict payment rules for certain app developers including Netflix and Spotify, allowing them to include links to their websites that would enable the companies to bypass the fees imposed by the iPhone maker.

The concession was prompted by an investigation into Apple’s App Store by the Japan Fair Trade Commission but will apply globally. From early 2022, Apple will let developers of these apps share a single link to their website to help users set up and manage their accounts, the tech group said late on Wednesday.

The iPhone maker’s decision came after South Korea this week became the first country to pass a law that would allow mobile phone users to pay software developers directly for their apps rather than be forced to do so via the in-app payment systems of platforms such as Apple and Google.

Separately, Apple last week relaxed a restriction on its App Store that prevented developers from offering lower prices to customers through other channels.

The latest change could have far-reaching implications, as the likes of Spotify have long alleged that it was unfair for Apple to have its own competing music service while also playing a gatekeeper role with its App Store and charging Spotify a commission.

Developers around the world have complained for a decade that Apple’s payment rules were too strict and unfriendly to consumers.

Apple generally requires all digital payments to flow through its in-app payments system but it has allowed an exception for “reader” apps, an entertainment category in which users subscribe or purchase digital goods often consumed on multiple devices. Among the biggest services in this category are Netflix, Spotify and Kindle.

Netflix subscribers, for instance, are able to sign up and pay for their account on the internet. But Apple has not previously allowed the service’s app to inform customers of this option, which would deprive the iPhone maker of the 15-30 per cent commission it derives from purchases made through its App Store.

Other apps, including popular games, must still process all digital goods payments through Apple’s in-app payment system. That requirement became the catalyst for a lawsuit, when Epic Games, maker of Fortnite, bypassed the Apple Store with its own, cheaper payment method, resulting in Apple banishing the app last year. A verdict in the lawsuit is expected as soon as this month.

Tim Sweeney, Epic Games chief executive, wrote on Twitter that Apple was merely widening an already-unfair exception to its strict rules. “Apple’s special deal for ‘reader apps’ like Amazon video, Netflix, and Kindle just got more special,” he said. 

He added: “It’s hard to discern the rationale that this is safe while Fortnite accepting direct payments remains unsafe.”

One big reader app developer said: “We need to evaluate the amendments to Apple’s developer guidelines, but a limited anti-steering fix does not solve all our issues.”

Phil Schiller, an Apple Fellow who oversees the App Store, said: “We have great respect for the Japan Fair Trade Commission and appreciate the work we’ve done together, which will help developers of reader apps make it easier for users to set up and manage their apps and services, while protecting their privacy and maintaining their trust.”

The JFTC App Store investigation is now closed.