Apple Slides As Judge Rules App Store Must Allow Third-Party Payments

Apple Slides As Judge Rules App Store Must Allow Third-Party Payments

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.

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.

Apple had already started making concessions to the policy since the end of the trial. Most recently, South Korea issued a law banning app store monopolies.

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%.

Tyler Durden
Fri, 09/10/2021 – 11:46

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