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App developers prevail again in class-action against Apple

The federal judge ordered Apple to loosen policies that restricted small app makers, better explain its reasons for deactivating apps and set aside money for small businesses making apps for its store.

OAKLAND, Calif. (CN) — A judge granted a request to finalize Apple’s class action settlement with a large group of U.S. web developers for the second time Friday.

The settlement signed by U.S. District Judge Yvonne Gonzalez Rogers requires Apple to take several actions aimed to empower app makers: The company must allow developers to share purchase options with users outside the iOS, expand price tiers developers can offer, release transparency reports each year on apps and accounts deactivated and reasons why and establish a fund of $100 million for qualified developers with at least $250 million to qualifying class members and a 15% commission for at least another three years.

The case began with an antitrust class action brought in June 2019 by iOS developers who alleged App Store fees and practices disadvantaged them while continuing Apple’s monopoly on app and in-app-product distribution services.

The plaintiffs requested a final approval for the $100 million small developer assistance fund settlement with Apple “because it secures an outstanding recovery” that will “enable developers to better create, distribute and monetize their apps.” As part of the relief, Apple agrees to relax anti-steering rules, which make it difficult for developers to communicate directly with users within apps, and to maintain a commission rate of no greater than 15% for U.S. developers who are enrolled participants in the Small Business Program.

The court previously granted this agreement on Nov. 16 last year, with Rogers calling it “a fair and good settlement.” After plaintiffs filed for attorney’s fees in February, Apple objected to the allegedly too-high costs.

The new order was granted in federal court after a hearing Tuesday. The fees will total $26 million alongside $3.5 million in other litigation costs, and plaintiffs Donald Cameron and Pure Sweat Basketball Inc. will each receive a $5,000 incentive award.

On Friday, Rogers deemed the agreement “fair, adequate, and reasonable.” It only applies to U.S. developers and does not address the ongoing case with Epic Games, which Rogers also ruled on, that addresses the issue of developers’ rights to accept payments from users in other app stores.

Apple’s announcement of the settlement in August last year framed the coming agreement as “an even better business opportunity for developers” which took place using “developer feedback and ideas.”

The law firm Hagens Berman, one of four firms representing plaintiffs in the case, posted an analysis in the same month finding that the Small Developer Assistance Fund created in the settlement will benefit over 99% of American iOS developers.

“These developers can claim sums from the fund ranging between minimums of $250 to $30,000, based on their historic participation in the App Store ecosystem,” the report noted. The statement also quoted Steve Berman, the firm’s managing partner and an attorney representing the iOS developers. 

“This hard-won settlement will bring meaningful improvements to U.S. iOS developers who distribute their digital wares through the App Store, especially for those small developers who bring so much creativity and energy to their work.”

The case settlement order released Friday also noted that the plaintiffs’ expert, Nicholas Economides, calculated that the developers group will save approximately $177.2 million in commissions through Apple maintaining its Small Business Program for the next three years. He also said other aspects of the structural relief, like allowing developers to communicate with customers outside the app store, will lead to those developers paying less in commission fees. 

Apple disputed his figures, but did not deny that structural relief offers substantial benefits to the developers, according to the settlement order Friday.

Follow @nhanson_reports
Categories / Business, Courts, Technology

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