Friday , April 19, 2024

As Apple Opens up to Outside Payments, Big Tech Protests the Cost

Apple Inc. early Thursday said it has “fully complied” with a federal court ruling requiring the technology giant to permit app developers to process payments outside of Apple’s own system. The response came after five major technology companies on Wednesday filed a petition with the court protesting that Apple’s compliance has fallen short.

Meta Platforms, Microsoft, Match Group, and X (formerly Twitter) filed the petition with the federal district court for the Northern District of California. Audio-streaming service Spotify joined the petitioners later in the day. The court in 2021 ruled that Apple must allow developers to use outside payments services in a verdict that followed a lawsuit brought against Apple by Epic Games Inc.

In January, the U.S. Supreme Court rejected a request to review the case. Apple in response said it would work to allow outside processing, but would levy a 27% commission on such transactions.

Contacted early Thursday by Digital Transactions News, an Apple spokesperson referred to a January “Statement of Compliance” in which the company says, “As of January 16, 2024, Apple has fully complied with the Injunction: It is striking the relevant parts of the App Store Review Guidelines applicable to apps on the U.S. storefronts of the iOS and iPadOS App Stores and implementing new rules.” The “new rules” permit links to “purchasing mechanisms” in addition to Apple and allow companies to communicate with customers through “points of contact obtained voluntarily.”

At bottom, the latest development in the dispute indicates Apple’s determination to maintain control over payments and tech companies’ determination to escape that control, say observers. “It’s a revenue play. Payments generate a lot of revenue, especially subscription-based payments, which much of this is,” says Stewart Watterson, a strategic advisor for retail banking and payments at Datos Insights.

Some of the companies facing the choice of using Apple’s payments platform or an outside service have the capability to process for themselves, Watterson points out. Others can find third-party processing. “Twenty-seven percent could be a lot more than the price these apps could get” from these third parties, he says.

Apple may now have other controversies to contend with beyond its payments practices. The company on Thursday was the target of an antitrust lawsuit brought by the U.S. Department of Justice and 16 state and district attorneys general alleging it maintains a monopoly in the smart-phone market, in part by interfering with apps that could ease the way for consumers to switch to competitive phones.

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