Apple loosens App Store payment policy in Japan

It is the second concession to regulators and companies in less than a week as the iPhone maker faces legal, regulatory and legislative challenges to the App Store, which forms the core of its $53.8 billion services segment.

Apple Inc will loosen App Store rules that have banned companies like Netflix Inc from providing customers a link to create a paid account to bypass Apple’s in-app purchase commissions, the company said late on Wednesday.

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It is the second concession to regulators and companies in less than a week as the iPhone maker faces legal, regulatory and legislative challenges to the App Store, which forms the core of its $53.8 billion services segment.

Also Read | Apple reduces commission for publishers who provide it content

But Apple will still ban developers from taking other forms of payment inside apps on the iPhone, the key practise that “Fortnite” creator Epic Games, Spotify Technology and Match Group Inc have said they want to end.

“A limited anti-steering fix does not solve all our issues,” Spotify, which is pursuing an antitrust complaint against Apple with European Union competition authorities, said in a statement.

Apple collects commissions between 15% and 30% from in-app purchases and erects barriers to keep developers from steering users toward payment alternatives. One such rule had barred “reader apps” – where users consume content that they purchased elsewhere – from providing a link to sign up for a paid account.

Also Read | South Korea’s parliament passes bill to curb Google, Apple commission dominance

Apple said on Wednesday it would drop that rule starting early next year as part of the conclusion of an investigation by the Japan Fair Trade Commission (JFTC).

Apple said it agreed with the JFTC to let developers of those apps share a single link to their websites to help users set up and manage their accounts. Although the change is part of an agreement with the JFTC, Apple said it would be applied globally.

Previously, Apple had allowed a link for account creation but only if creating the account did not involve entering payment information. That meant companies like Netflix, which has no free tier of service and requires payment at sign-up, could not provide a link.

But the changes will not apply to gaming companies, which are the largest category of moneymakers for Apple on its App Store.

Also Read | Apple made more than $100 million in commissions from ‘Fortnite’

Apple said in a statement that reader apps can safely offer other ways to pay because the shows or songs they offer access to are not “in-app digital goods and services.” Apple has the ultimate say over whether an app qualifies as a “reader app” or a game.

Tim Sweeney, chief executive of Epic Games, which is pursuing an antitrust claim against Apple in U.S. courts, criticised Apple’s logic, saying on Twitter that “it’s hard to discern the rationale that this is safe while Fortnite accepting direct payments remains unsafe.”

Last week, Apple reached a deal with a group of developers in the United States in a class-action lawsuit as it awaits a ruling by the same U.S. judge in a separate App Store dispute brought by Epic Games. In that agreement, Apple ended a ban on developers’ telling users in email messages outside an app about payment alternatives.

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