Apple To Forego App Store Cut, Letting Many Like Netflix, Spotify Process Payments Outside Of Its Systems

Apple Inc AAPL said Wednesday it would allow the likes of Spotify Technology S.A. SPOT, and Netflix Inc NFLX to process payments outside its App Store, in effect, foregoing its cut.

What Happened: The Tim Cook-led company will now allow music, video, and other media apps to offer an in-app link so that subscribers can use external websites for signing up.

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Apple’s move is a part of the changes it is making to close an investigation by the Japan Fair Trade Commission, but the company said the change will apply globally to all “reader” apps on the App Store.

Reader apps give access to previously purchased content subscriptions for digital magazines, newspapers, books, audio, music, and video.

The changes don't apply to in-app purchases related to gaming, which will continue needing to use Apple's payment system.

Why It Matters: Apple said the change will go into effect in early 2022 but before that the company will update its guidelines and review process to “make sure users of reader apps continue to have a safe experience on the App Store.”

Apple's in-app payment policies have evoked interest from regulators from around the world.

European Union antitrust regulators began looking into the App Store this year after Spotify complained about the 30% charges that Apple levies for the use of its in-app payments system.

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Last year, Apple and Alphabet Inc GOOGL GOOG unit Google were taken to court by ‘Fortnite’ maker Epic Games over their in-app payments policies.

On Tuesday, lawmakers in South Korea passed a bill that effectively barred Apple and Google from charging their in-app cut on purchases made on their respective app stores in the country.

Failure to comply with the law would incur a fine of up to 3% of their South Korean revenue.

Price Action: On Wednesday, Apple shares closed 0.45% higher at $152.51 in the regular session and rose 0.43% in the after-hours trading.

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