On Friday, September 10th, California Judge Yvonne Gonzalez Rogers issued a ruling in the lawsuit between Fortnite maker Epic Games and Apple ordering Apple to ease their anti-steering restrictions on in-app payments. Here’s what we think the decision means for Apple and in-app payments as well as two ways to prepare your subscription app for these changes: analyzing your in-app purchase flow and the costs of building a subscription service.
On the morning of Friday, September 10th 2021, Judge Yvonne Gonzalez Rogers issued a ruling in this closely watched case.
Epic has been butting heads with Apple since last August, when Epic introduced their own direct payment system inside the Fortnite app as a way of getting around App Store fees. Purchases made through the Epic system were discounted, purportedly since Apple wasn’t taking their 30% cut of the purchase price. Apple responded by pulling the app from the App Store. Epic filed their antitrust lawsuit the same day.
Fast forward to this month’s ruling, and Epic lost on 9 out of 10 counts, including lowering the 30% App Store fee, claiming the Apple App Store as a monopoly, and accepting other app stores on Apple devices. The ruling Gonzalez Rogers handed down in Epic’s favor regarding Apple’s anti-steering policy is small, and likely to have no long term impact on Apple’s finances.
The relevant text from Judge Gonzalez Rogers’ ruling says that Apple is “permanently restrained and enjoined from prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing”. Essentially, iOS apps must be allowed to direct users to payment options other than Apple’s IAP, overturning Apple’s anti-steering policy that had been in place for years. This is set to go into effect 90 days from the ruling, or December 9th.
Epic has filed an appeal and Apple can still do the same. These appeals could postpone the December 9th deadline for the change.
What does this mean for in-app payments? A lot depends on how Gonzalez Rogers’ ruling is interpreted and we can only speculate how this will play out. But regardless of how Apple implements the change, we are more interested in how users will adopt it, and how it will affect app subscription adoption.
At WWDC 2019, Apple announced ‘Sign in with Apple’, a privacy tool that allows users to sign into any app with their Apple ID. In 2020 App Store Review started requiring the ‘Sign In with Apple’ option if the app also allows login via Google, Facebook, or other 3rd party systems. The result: login pages with stacks of buttons to choose from, and multiple accounts to manage if the user had already authenticated.
Apple users have the choice to use a 3rd party, but do they? Given the simplicity, built-in privacy, and ubiquity (the option is now in 39% of iOS apps) of ‘Sign in with Apple’, iOS users often opt to use Apple’s technology. We speculate that, if given the choice between Apple Pay and 3rd party options, many users will still choose Apple unless there are substantial benefits to a 3rd party payment solution.
While Apple prepares for this change, here are 2 actionable steps to take today to get your subscription app ready:
Whether a one-time purchase or a yearly subscription, the payment flow is an extremely important part of your app. Other payment providers might offer you lower fees than Apple, but there is extra friction introduced by requiring users to manage multiple accounts. You don’t want users to get into a situation where they have purchased a subscription twice and you can’t combine records.
While a free app may focus more on new downloads and sessions, a subscription-based app needs to be laser focused on customer loyalty and happiness. A subscriber is a loyal customer, and you don’t want to lose them to a complicated purchase process.
The Apple App Store is a fully developed technology stack that provides you with all the tooling you need for your app monetization, without needing to do the hard work of writing code for involuntary churn mitigation, intro offers, and more. While being able to introduce another payment provider may cut fees, consider carefully the development time required to match all the features you are already getting (and users are expecting) from the App Store. Could you be better using that time to introduce more features or delight your customers in other ways?
If your app offers account creation, look to these metrics as a leading indicator of whether users will adopt a non-native solution or continue falling back on Apple.
This story is still unfolding and there is a lot we don’t know:
We’re watching this story closely and the Nami product will be ready with any changes needed to help expand your subscription app business. Join the newsletter to get the latest updates.
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