Apple will have to allow alternative payment methods in its App Store. As we’ve seen in Korea and Japan, this is now an international trend
A partial victory for Apple: The Apple vs Epic trial came to an end last Friday, with a federal judge handing a mixed verdict leaving room for interpretation as to who really won. On the one hand, Apple can claim victory. The judge did not uphold the argument that Apple is a monopoly and rejected the idea that the App Store is a market on its own. She was also unconvinced that users are locked into the Apple ecosystem by policies that make it too burdensome to switch to alternatives such as Android, and noted that “success is not illegal”. On the other hand, the judge recognised that Apple’s ‘anti-steering’ restrictions on how developers can obtain payment for services within their apps are anticompetitive and need to be removed. This part of the ruling is problematic for Apple, especially in the long run.
Regulators around the world are reaching the same conclusion: Apple has faced scrutiny in several jurisdictions due to this alleged anticompetitive conduct around payments, and recently made concessions which looked like admission of a problem. In Japan, the company committed to allowing alternative payment systems for music streaming services and digital magazines in order to avoid penalties from the competition authority, the JFTC. In late 2020, Apple reduced its app store commission from 30% to 15% for smaller developers – but that was not enough to avoid a new law in South Korea that will allow developers to use alternative payment systems. US lawmakers recently introduced similar bills which are expected to find bipartisan support. And in the EU, the antitrust case raised by Spotify is still pending, with the EC inclined to decide in Spotify’s favour.
Is it any sort of victory for consumers? All this could be good news for developers looking to avoid Apple’s commission fees – but in practice things could play out differently. Much will depend on how Apple will implement last week’s ruling, and on how practical it will be for consumers to interface with different payment systems for each app. Consumers may or may not see lower prices when purchasing in-app content, but they are likely to be inconvenienced by having to provide their payment details for new purchases via an external page. Not to mention the security and privacy risks that could come from using more payment systems, some of which may not meet the highest of standards. Developers may have to convince consumers that competition in this market is as good as it is for them.
