US judges this week declined to pause a court order that has forced Apple to allow app developers to sign-post external payment options within their iOS apps. The decision came after Spotify submitted court papers explaining how that court order is already having a positive impact for developers and consumers.
Or at least, a positive impact for Spotify. The streaming service told the court that changes it made to its iOS app on the back of that court order “have already resulted in a significant increase in iOS users upgrading to a premium subscription”. Which is good news for Spotify. But also for the music industry, given it shares in Spotify’s revenue, and premium users generate a lot more revenue than those using the ad-funded free tier.
The court order, issued last month, came as part of the legal battle between Apple and Fortnite maker Epic Games. Apple is appealing the order to the Ninth Circuit Appeals Court. Judges there have agreed to fast-track the appeal, but declined to immediately pause the order while the appeal goes through the motions, something Apple was pushing for.
Both Spotify and Epic have long criticised Apple’s App Store rules which say in-app payments on iOS devices must be taken via Apple’s commission charging transactions system. An ‘anti-steering provision’ also meant that developers could not advertise or link to other payment options, for example on the developer’s website.
That meant that when Spotify decided to not allow users to sign up for a premium account within its iOS app, to avoid having to pay any commission to Apple, it couldn’t include any information on how users could instead upgrade to premium on its website. Which in turn made it harder to sell premium subscriptions.
Both Spotify and Epic have pursued regulatory and legal action in various countries seeking to force Apple to change its rules around in-app payments on the grounds they are anticompetitive. Both have had some success, each benefiting from the other’s actions.
That included Epic’s legal battle with Apple in California, where a judge decided that the anti-steering provision was unlawful. Apple changed its rules on the back of that judgment, but put in place restrictions on how alternative payment options were communicated and insisted that it still be paid a commission if purchases began in an iOS app.
Epic went back to court where the judge was scathing about those new restrictions and commissions, and ordered Apple to allow app developers to start sign-posting alternative payment options in the US without restricting what they say or forcing the payment of any additional fees. Which it is now doing, very reluctantly, albeit while challenging that latest ruling via the Ninth Circuit.
It was also hoping that the appeals court might put the forced change of rules on hold for the time being, allowing it to put the restrictions and commissions back on to app developers.
Unsurprisingly Spotify urged the Ninth Circuit to reject that bid. Apple’s motion to get last month’s court order paused “requires this court to weigh the benefits and harms to the parties and to the public interest that would flow from a stay”, Spotify stated in its own filing with the court.
“Apple claims that only it is harmed by the [latest] order without any corresponding benefit to the public”, it went on, before adding “this is wrong”.
“By forcing Apple's long-overdue compliance” with the court’s original ruling in its Epic legal battle, it argued, the new order “has created substantial benefits for developers and - more importantly - consumers”.