Tim Cook at WWDC21 June 7, 2021.
Developers are developing new software for apps that allow companies to pay customers without paying Apple, which accounts for up to 0% of app sales.
They are preparing for a new change after a federal judge ruled in September that Apple should allow app developers to link to alternative payment systems. The verdict comes as a result of a legal battle between Fortnite maker Apple and Epic Games.
The new software, if widely accepted by developers and users, could threaten Apple’s profit engine. The App Store is part of the company’s services business, which sold% 53.5 billion in gross margin of 53% in FY20, about 20% of Apple’s revenue.
The developers are creating several options because it is not clear what they will have to do to comply with Apple’s new rules. Apple has not shared details of plans to comply with the judge’s order, which will take effect from December
Paddle chief executive Christian Owens said the ruling gives Apple’s iPhone App Store the opportunity to expand its company’s Mac and Windows customer billing business. Paddle has created three different implementations of an iPhone payment product in the hope that anyone will follow the rules.
“We want to hear from Apple, and get details on exactly what’s going to be approved on-the-record,” Owens said.
A version of Paddle’s Software Development Kit (SDK) allows app developers to make monthly or annual subscriptions with the “Upgrade Now” button. Links the paddle-hosted webpage button to a Safari browser with various payment options, including Apple Pay and PayPal. After processing the payment, the user is returned to the app.
Paddle will give developers the ability to link to the payment screen from their app.
RevenueUcat, a company that makes tools for iOS developers to manage customers’ subscriptions, is also developing a browser-based payment system that allows developers to add apps without having to create their own.
“The real magic is that developers will get a portable link that they can include in external marketing or now in the app, which will unlock instant access using our SDK,” Eating said in an email.
“We’re working on the idea that developers still need to use Apple’s IAP inside their app, but you’ll now be allowed to reference and link to external payloads,” Eating said.
RevenueCat plans to offer a product that allows app developers to sign up new customers through a link to their app.
Paddle’s CEO thinks this will happen.
“I think it’s going to be a situation where if you want to provide an off-platform, in-app purchase process, you have to pay for the Apple-in-app purchase process as well,” Owens said.
Apple has not updated its App Store guidelines, a document that sets out what developers can and cannot do on iPhone apps, since last month’s ruling. All iPhone apps and updates go through a process called App Review, where Apple employees reject apps that do not comply with Apple’s rules.
The judge ruled that Apple must allow consumers to leave its ecosystem to buy virtual products on the web. But that doesn’t stop Apple from changing other policies in its stores, such as creating a new way to charge fees for iPhone app transactions that occur outside the platform. This is a possibility that Apple CEO Tim Cook testified during the trial.
“If not [in-app purchasing], We need to come up with another system for developers to ship, which I think will be noisy, ”Cook said in May.
Apple declined to comment but argued during the trial that the App Store ensures user privacy and security. Apple’s General Counsel Kate Adams said in September that the Epic Games ruling was a “huge victory” and the company praised the court’s discovery that Apple was not exclusive.
What this means for Apple and consumers
Apple has announced the new iPhone 11 Pro at a launch event on September 10th.
Some Wall Street analysts believe the impact on Apple will be limited but real, To potentially reduce Apple’s revenue by up to 4%, off-platform billing is often used for expensive software subscriptions.
Eating says Apple’s changes may not have a huge financial impact on developers. He argued that users would be less likely to complete a purchase if they had to go to an external webpage, even if the apps could link to it. This can annoy users who have to manage subscriptions individually instead of iPhone settings.
“I think it’s good to have systems competing, but I’m not sure it will be a storm for anyone.”
Alternative payment systems will charge developers a lower advantage than Apple, such as canceling subscriptions and providing insights into sales trends.
Owens said the Paddle will reduce 5% to 10% of total purchases, Apple will reduce it by 15% to 30%, while still managing behind-the-scenes headaches such as international taxes and customer support. Those savings can be given to consumers.
Developers will be encouraged to lower prices if Apple offers in-app purchases with direct billing links. For example, a music service can charge users ড 9.99 per month if they subscribe to an app, since Apple deducts those purchases, but only $ 6.99 if they click on a link to subscribe directly to the service’s website.
“What we’re trying to do with a competitive solution for in-app purchases is that, even for small transactions, we can do it for 10% of the value of that transaction, and then lower the price from there,” Owens said. Said.
Epic Games CEO Tim Sweeney, whose case led to the change, Congratulations Paddle a tweet on Thursday.