Apple Slides As Judge Rules App Store Must Allow Third-Party Payments
Update (1210ET): Apple released a statement to the press a few minutes after the decision was released claiming it remains “committed to ensuring the App Store is a safe and trusted marketplace that supports a thriving developer community.”
“Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law. As the Court recognized ‘success is not illegal.’ Apple faces the Court recognized ‘success is not illegal.’ Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. We remain committed to ensuring the App Store is a safe and trusted marketplace that supports a thriving developer community and more than 2.1 million U.S. jobs, and where the rules apply equally to everyone.”
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It’s been more than a year since Fortnite creator Epic Games first sued Apple claiming the App Store, with its high fees and rules against payment workarounds, was tantamount to an illegal monopoly.
Well, on Friday, Judge Yvonne Gonzalez-Rogers issued a new permanent injunction against Apple, ruling that Apple’s anti-steering payment requirements for its app store are indeed anti-competitive, and that third-party payment systems must be allowed going forward.
Under the new order, Apple is “permanently restrained and enjoined from prohibiting developers from 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 and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.”
That’s a clear victory for Epic, which has sought to portray Apple’s App Store fees as a monopolistic tax, while Apple has in turn argued that it’s a necessary operating fee.
Epic famously sued Apple after its popular Fortnite game was removed from the App Store after Epic refused to remove in-game payments that cut Apple out of the deal.
It wasn’t a complete loss for Apple, which won in some other areas of the judge’s decision. The court didn’t ultimately conclude that Apple is a monopolist under state or federal law. Apple actually won on 9 of the 10 counts, with the only adverse decision being that apps must be allowed to link to external payments. Preventing that actually did violate state anticompetitive laws, the judge determined. The trial took place in Oakland, Calif. back in May, and featured testimony from Apple CEO Tim Cook.
In addition to the judge’s app-store injunction, they also decided Epic owes Apple millions in back payments.
- Pay Apple 30% of $12,167,619 collected via the Fortnite workaround between Aug. and Oct. 2020
- Pay Apple 30% of any revenue collected between Nov. 1, 2020 through the date of judgement
- Make a Statement that Apple’s termination of the agreements between Epic was lawful & enforceable
As the Verge points out, the ruling is likely to have significant impact outside of Apple, since Google is already facing a similar lawsuit from Epic Games over its own efforts to maintain the Google Play Store as the central source of software on Android.
Stil, the injunction allowing developers to direct customers to third-party payments for in-app subscriptions and/or materials is a major win for Epic and other developers. Epic CEO Tim Sweeney has been complaining about Apple’s fees, which often amounted to as much as 30% of gross sales, since at least 2015.
The App store represents more than $25 billion in annual revenue for Apple nowadays. Meanwhile, the court declared that the market for gaming payments represents a $100 billion space.
Apple had already started making concessions to the policy since the end of the trial. Last week, Apple said it would start allowing media apps, including Netflix and Spotify, to have an in-app link to their websites.
Most recently, South Korea issued a law banning app store monopolies. Lawmakers in the US and the EU are considering more antitrust action against Apple.
Apple, of course, can still appeal this decision – and it almost certainly will.
The trial concluded months ago. Apple shares tumbled to their lowest level of the session, down around 2%.
Read the entire ruling below:
Apple Epic Judgement on Scribd
Fri, 09/10/2021 – 11:46
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