Apple to allow developers link to external websites for user payments

Move addresses a long-standing complaint and settles Japanese investigation

Apple has agreed to loosen payment restrictions on its App Store. Photograph: Chris Delmas/AFP via Getty Images

Apple has agreed to loosen payment restrictions on its App Store. Photograph: Chris Delmas/AFP via Getty Images

 

Apple will allow developers of some apps such as Netflix to link to external websites for payments by users, the second change it has announced to its system in a week.

The change, which will apply to so-called “reader” apps, addresses a long-standing App Store complaint and settles an investigation by Japan’s Fair Trade Commission. It will be applied globally and is expected to come into force in early 2022.

But the move will not affect games or in-app purchases, which will still need to use Apple’s in-app purchase system, paying the company a commission to do so.

Reader apps include magazines, newspapers, books, audio, music and video. These apps currently use Apple’s in-app purchase system. From next year, apps will be able to direct users to an external website to take out subscriptions or buy digital content.

A representative for Apple said it would take time to work through the details on how to implement the system in a way that would ensure security for users and safeguard their privacy.

Companies such as Netflix and Spotify have long complained that Apple doesn’t allow them to link to their web portals for users to sign up for their services. Apple has previously rejected or removed third-party applications that attempted to steer users to web-based alternative payment methods, and Netflix has simply declined to offer an in-app sign-up option as a result.

The latest news helps the company achieve a settlement with Japan’s regulator, which is now closing its investigation into the App Store.

“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,” Phil Schiller, who oversees Apple’s App Store, said in a statement.

Policy changes

In-game spending accounts for more than half of App Store sales – $26 billion of $41.5 billion of consumer spending in the first half of this year, according to Sensor Tower – but is not affected by the latest policy changes. Subscription apps, which are most likely to benefit from Apple’s relaxing of rules for reader apps, accounted for less than 13 per cent of user spending over that period across the iOS App Store and Android Play Store.

The announcement comes at a time of rising regulatory scrutiny and criticism of the market dominance of Apple and Alphabet’s Google on mobile platforms. On Tuesday, a new Bill passed in South Korea that is set to force the two leading app store operators to allow users a choice of online payment methods. The first legislation of its kind, the Bill will become law when signed by president Moon Jae-in, and similar measures are under consideration by US politicians.

Last week, Apple said it would allow app developers tell customers about alternate payment methods through email and other channels, potentially avoiding the commission charged by the tech giant.

The change was part of a legal settlement with a group of app developers. The deal also saw Apple commit to keeping its commission rate for small developers at 15 per cent for at least three years, and expand the number of prices open to developers from the current 100 to 500 by the end of next year.

Apple’s change won’t resolve its legal dispute with Epic Games over in-app purchases in global hit Fortnite, which alone generated more than $1 billion of sales through Apple’s platform in its 30 months on the App Store. Epic wants to be able to handle in-app purchases directly, and the judge overseeing the legal case between the two companies has suggested that Apple compromise by making a change similar to the one announced for reader apps.

Improvement measures

A spokesman for Japan Fair Trade Commission (JFTC) said Apple’s voluntary improvement measures were sufficient to close its investigation. In Japan and South Korea, where companies such as Naver operate large businesses around web comics apps and payment services, the particular allowance from Apple may prove more impactful than in other global markets.

“Because developers of reader apps do not offer in-app digital goods and services for purchase, Apple agreed with the JFTC to let developers of these apps share a single link to their website to help users set up and manage their account,” Apple said in its statement. Apple is not allowing alternative payment systems within apps themselves, saying it will “help developers of reader apps protect users when they link them to an external website to make purchases.”

– Additional reporting: Bloomberg