Attorneys at the law firm Hagens Berman announced details of a class-action settlement reached with Apple Inc. on behalf of small U.S. iOS app developers. The settlement will result in the creation of a $100 million Small Developer Assistance Fund and important changes to App Store policies and practices.
The developers’ lawsuit was brought against Apple in 2019 in the U.S. District Court for the Northern District of California by Hagens Berman, Sperling & Slater, Saveri & Saveri, and Freed Kanner law firms.
According to the lawsuit, Apple monopolized U.S. distribution services for iOS apps and in-app digital products, which resulted in commission overcharges to U.S. iOS developers.
The Small Developer Assistance Fund created as part of the settlement will benefit over 99% of U.S. iOS developers, whose proceeds from app and in-app digital product sales through all associated accounts were less than $1 million per calendar year during the period from June 4, 2015 to Apr. 26, 2021. 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.
Further, small and other U.S. iOS developers will benefit from changes to App Store policies and practices as they relate to App Store search results, app and in-app product price points, appeals from rejections of apps and transparency. Small U.S. iOS developers also will benefit from a pledge that for at least three years following court approval of the settlement, Apple will not raise the 15% commission rate that applies for those participating in its Small Business Program.
Additionally, all U.S. iOS developers will benefit from a major change to the App Store Review Guidelines, which will remain in place for at least the same three-year period. As part of the settlement, Apple will permit all U.S. iOS developers to communicate with their customers outside their apps about purchasing methods other than Apple’s in-app purchase (IAP) system. Apple also will remove the prohibition against U.S. developers using information obtained within their apps to communicate with their customers outside their apps about the use of purchasing methods other than IAP, subject to consumer consent and opt-out safeguards.
“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,” said Steve Berman, managing partner of Hagens Berman and an attorney representing iOS app developers in the class action. “Plus, the creation of the Small Developer Assistance Program, like the Small Business Program – both of which our clients’ suit helped to bring about – could not come at a better time, given the pandemic.”
Donald R. Cameron, developer of an iOS baby-naming app and one of the named plaintiffs in the suit, cites the Small Developer Assistance Fund as good for developers in the class, especially given business disruptions caused by COVID-19.
He added, “I’m also very pleased with Apple’s commitments regarding App Store search, so that good apps have a better chance of being discovered. The transparency report that Apple will publish annually is a good thing, too, to allow everyone to review objective data regarding search queries and results.”
“More pricing tiers will become available to developers by the end of next year, which is also great,” he said.
Richard Czeslawski, president of Pure Sweat Basketball, Inc. (PSB), the second of the suit’s named plaintiffs, called out three parts of the settlement.
“First, we have guaranteed three more years of the 50% commission drop for developers like PSB. We feel great about the fact that our lawsuit helped bring about such a large price cut,” he said. “Second, we’ve gained the ability to use contact information obtained from signups in our app to communicate with our users outside the app about purchasing alternatives to IAP. That’s a big deal.”
“And third, we appreciate all the new pricing tiers that are on the way, which will give us greater flexibility in how we market and sell our workout subscriptions.” Czeslawski added that he’s also pleased with the creation of the Small Developer Assistance Fund, which will bring “some welcome financial aid” to small developers in this time of economic insecurity.
Berman summed up, “We truly are proud that a case brought by two developers, standing in the shoes of tens of thousands of U.S. iOS developers, could help to bring about so much important change.”
What Can Small U.S. iOS Developers Expect from the Settlement?
Small U.S. iOS developers – those with less than $1 million in App Store proceeds through all associated developer accounts per calendar year from June 4, 2015 to Apr. 26, 2021 (with the 2015 calendar year consisting of June 4, 2015 through Dec. 31, 2015 and the 2021 calendar year consisting of Jan. 1, 2021 through Apr. 26, 2021) – can receive the following:
- A payment from the Small Developer Assistance Fund ranging from minimums of $250 to $30,000, based on their historic participation in the iOS App Store ecosystem. Contingencies described in documents at the settlement website, www.SmallAppDeveloperAssistance.com, may result in higher minimum awards.
Additionally, all U.S. iOS developers, including small U.S. iOS developers, will benefit for a period of at least three years from the date of final approval of the settlement from changes to Apple’s policies and practices relating to the App Store, including as to: (a) the 15% commission rate for participants in Apple’s Small Business Program, (b) out-of-app communications with developer customers regarding purchasing methods other than Apple’s in-app purchase (IAP) system, (c) App Store search results, (d) the addition of hundreds more app and in-app digital product price points, bringing the number from fewer than 100 to more than 500 by Dec. 31, 2022, (e) appeals from rejections of apps, and (f) transparency.
More information can be found at the settlement website, www.SmallAppDeveloperAssistance.com.
Hagens Berman Sobol Shapiro LLP is a class-action law firm operating in 10 cities worldwide. The firm’s tenacious drive for plaintiffs’ rights has earned it numerous national accolades, awards, and titles of “Most Feared Plaintiff’s Firm,” MVPs and Trailblazers of class-action law, as well as recognition for Outstanding Antitrust Litigation by the American Antitrust Institute. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.