Apple’s control over app store payments is increasingly challenged

Meghan McCarty Carino Sep 3, 2021
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Josh Edelson/AFP via Getty Images

Apple’s control over app store payments is increasingly challenged

Meghan McCarty Carino Sep 3, 2021
Josh Edelson/AFP via Getty Images
HTML EMBED:
COPY

Apple is loosening some of its app store rules, allowing media apps like Spotify and Netflix to direct consumers to their own websites to sign up and pay. In the process, the content companies can get around the 30% cut of payments Apple usually takes.

The move comes in response to an investigation by Japan’s Fair Trade Commission, which is just the latest regulatory or legal effort to scrutinize how tightly Apple controls payments in the apps in its marketplace.

Apple’s control over app-store payments was at the heart of a settlement with small developers last week. It’s also grappling with the ongoing antitrust case brought by Epic Games over in-app purchases in the wildly popular video game Fortnite, a new law passed in South Korea this week and antitrust charges in the European Union and India.

“I think the concern is in part: We’ve locked people down, they have no choice, and they have to pay a lot of money. And people call those ‘walled gardens,'” said Mark Lemley, a law professor at Stanford. He said governments and apps are increasingly making the case that Apple’s vertically integrated ecosystem is anti-competitive.

Even though, at first, it was beneficial for many app developers, said Forrester analyst Julie Ask. 

“Without Apple, they don’t have a ready customer base of, you know, 1 to 2 billion iOS devices worldwide,” she said, referring to Apple’s iPhone operating system.

Yet now, many developers have grown big enough to have their own relationships with consumers and are chafing at Apple’s price to do business on its platform. That price could be passed on to consumers, though it brings them value, said Ashkan Soltani, a former chief technologist for the Federal Trade Commission.

“When you use Apple Pay or Apple payments, you get … consumer protections around, for example, Apple doesn’t send your actual credit card details to the developer,” Soltani said.

Apple says greater control over the app store enables it to improve the user experience and security. But apps and the companies behind them wonder whether consumers really have a choice if they’re tied to one operating system.

Which argument officials buy, Soltani said, could decide whether the wall around Apple’s app store garden will remain standing.

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