Apple Caves To Regulatory Pressure Allowing Netflix And Spotify To Link Out With A Caveat

Apple App Store
Apple has made a concession that effectively ends a five-year investigation by the Japan Fair Trade Commission (JFTC) into anti-monopoly behavior. Beginning early next year, Apple will allow so-called "reader" apps to include a single external link to their website, where users can sign up for subscription services and manage their accounts. It's technically a win for services like Netflix and Spotify.

How so? Apple charges a 30 percent commission on apps sold through its App Store, and the same goes for in-app purchases made from within an app on iOS. This is at the heart of the ongoing dispute between Apple and Epic Games, the latter of which spurred a legal battle after bypassing Apple's commission in Fortnite by updating the iOS app to make in-app purchases outside the App Store's purview.

Apple subsequently banished Fortnite from the App Store, a move Epic Games knew would be coming, and the two have now pitted their attorneys against each other in a high profile dispute.

The concession with the JFTC is a different matter, and quite frankly, it doesn't really move the needle for developers. Take Netflix, for example To avoid paying a 30 percent commission on its subscription tiers, it doesn't offer the ability to sign up through the app. Sure, Netflix could if it wanted to, but it would then have to pay Apple, and it has no interest in that.

"Trying to join Netflix? You can't sign up for Netflix in the app. We know it's a hassle. After you're a member, you can start watching in the app," the Netflix app states in iOS.

As it stands, there's only a sign-in button available. When Apple's new rules go into effect early next year, Netflix will be allowed to link users to its website, if it chooses, so they can slightly-more-conveniently sign up. In doing so, Netflix skirts around Apple's 30 percent commission. Sort of.

The thing is, this is pretty much how it already works, save for the external link. Netflix still can't offer a subscription option in the app without paying a hefty commission to Apple. Same goes for apps like Spotify and Amazon's Kindle reader. And therein lies the caveat with this concession.

"Because developers of reader apps do not offer in-app digital goods and services for purchase, Apple agreed with the JFTC to let developers of these apps share a single link to their website to help users set up and manage their account," Apple stated in a press release.

In other words, should Netflix, Spotify, or others decide to offer in-app purchases, they would no longer be allowed to link out, because that would effectively bypass the 30 percent commission that Apple would otherwise collect. So this doesn't really move the needle for developers, it just closes a long investigation in Japan.

It's not an entirely worthless move, though. This will make it easier for new users to at least get up and running with services like Netflix. And Netflix can direct users to its subscription page, presumably (maybe?), to hook iOS users without being on the hook themselves for a big fee.

This also raises some questions, like what criteria Apple is using to determine what qualifies as a "reader" application, and what restrictions it will place on the solitary link those apps will be allowed to place. For example, will Netflix be allowed to link directly to its subscription page, or just to its homepage? That is not clear.

All we know for sure is that if an app isn't already handing over a 30% fee to Apple, then it has Apple's blessing to include an external link of some sort. But just one. Oh, and these rules, however they shake out, are being applied globally, not just in Japan. So there's that. We'll still have to wait and see what the final details are, and how they affect the current makeup of certain apps.