In recent days, iPhone apps have been changing. The Kindle app now lets people buy books directly from its site. Spotify is offering users free trials. And Patreon, a subscription service, is letting people pay creators more money.
The changes are an early look at how a recent court ruling could transform the shopping experience on an iPhone. Last week, a federal judge ordered Apple to start allowing apps to offer promotions and collect payments directly from users. The decision makes it possible for apps to offer people new conveniences, like buying books directly from their website. The ruling also lets apps bypass a 30 percent commission that Apple collects on every app sale, which could lead to lower prices for consumers.
For more than a decade, Apple required that apps use its payment system for purchases and collected commission on the sales.
Now, all of that is open to change. Here’s what could be different in the future and why.
What did the judge rule?
Judge Yvonne Gonzalez Rogers, who began working on this case after Epic Games sued Apple in 2020, ruled that Apple could no longer take commissions from sales that link out from the app. She also restricted the company from writing rules that would prevent developers from creating buttons or links allowing people to pay apps directly for their goods and services, and said it could not create messages — known as warning screens — that discourage users from leaving the App Store.
How will iPhone apps change?
For years, Kindle has not sold books on its app to avoid Apple’s 30 percent commission. Now, it has added a “Get Book” button that directs users to its website to buy books. Similarly, Apple prevented Spotify from offering free trials to new customers, but now Spotify has a button on its app for a three-month trial.
Other apps could begin offering links for buying directly from stores online, which would allow the business to avoid having to pay Apple’s 30 percent commission. Without having to pay those fees, apps could offer users lower prices, reducing a $10 monthly subscription to $7.
What will this cost Apple?
Apple makes $11 billion a year from app sales in the United States, according to estimates by Morgan Stanley. It won’t lose all of that, but the bank estimates that $2 billion of that is now at risk.
How much Apple loses will come down to how willing people are to change their behavior. The decade-old process for buying software and services on apps is not only familiar but also quick. People trust Apple with their credit card information. And the company makes it easy for people to cancel their subscriptions — keeping them all in one place. Many people may be reluctant to leave the App Store to make their purchases, and apps may prefer to maintain the current system.
What does this mean for the rest of the world?
Now that Apple is required to allow apps to collect payment directly, without paying the company a commission, in the United States, other countries are going to press for similar concessions. Regulators in Europe, Japan and South Korea, which have been asking Apple to loosen its grip on the App Store, would not want their own citizens or developers to have to pay more than Americans did.
Could Apple roll back the changes?
Apple said it planned to appeal the ruling, but it would be challenging for the company to have the decision overturned. In 2021, the judge wrote a less prescriptive ruling. Apple skirted the rule by introducing a 27 percent commission for app sales. The U.S. Court of Appeals for the Ninth Circuit sided with the judge’s initial ruling from 2021 and is unlikely to change its position, said Mark A. Lemley, a professor of antitrust and technology law at Stanford. “They should take their licks and let it be,” he said.
