Judge rules iPhone devs can route in-app transactions away from App Store, but Apple declares a win
Apple probably knew what was coming down the pike when it decided last week to allow app developers to communicate to customers ways to conduct in-app transactions that circumvent the App Store and its 30% commission fee. But it looks like the skids are coming on anyway as the most prominent lawsuit over the iPhone maker’s alleged monopoly on iOS app sales takes a final, major turn.
Epic Games, which owns Fortnite among other MMOs and entities, has been granted a permanent injunction against Apple (via The Verge) which restrains the company from enforcing rules preventing developers from linking to outside payment platforms directly from the app. The restriction goes into effect December 9.
Apple did enforce such a rule against Fortnite last year when Epic moved its transaction payments away from its apps. Google has reportedly been looking to more aggressively enforce a similar policy for Android apps on its Play Store. We’ve reached out to Google for comment.
District Judge Yvonne Gonzalez Rogers’s ruling is based on violations of Californian anti-competition law:
The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice. When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted.
The verdict also steers away from the question of whether Apple has a monopolistic hold on iOS app sales through the App Store by rejecting both parties’ definitions of the relevant market in the litigation and giving its own: digital mobile gaming transactions. Gonzalez Rogers cites Epic’s success in penetrating consoles and PCs and its desire to crack the mobile sector.
[…] the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct.
[…] The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.
In a press statement, Apple trumpeted the verdict’s narrow scope.
Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law. 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.
Epic Games CEO Tim Sweeney responded to Apple’s statement on Twitter by saying it is not enough and that alternative payment methods should be allowed directly in apps.
Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers.
Fortnite will return to the iOS App Store when and where Epic can offer in-app payment in fair competition with Apple in-app payment, passing along the savings to consumers.
Thanks to everyone who put so much time and effort into the battle over fair competition on digital platforms, and thanks especially to the court for managing a very complex case on a speedy timeline. We will fight on.
The company plans on appealing.
In 2019, the Supreme Court upheld the right for App Store customers to sue Apple for monopolistic practices over iOS app distribution.
Separately, other governments have sought to open up how apps can be distributed. Epic has announced it plans to take advantage of South Korea’s new law which mandates parity for payment platforms within apps by requesting that Apple reinstate its right to publish Fortnite on iOS in the country and offer payment methods from Epic and the App Store side by side.
Epic has asked Apple to restore our Fortnite developer account. Epic intends to re-release Fortnite on iOS in Korea offering both Epic payment and Apple payment side-by-side in compliance with the new Korean law.
— Fortnite (@FortniteGame) September 9, 2021
As of press time, Apple share prices (NASDAQ:AAPL) are trending down 2.5% while gaming companies Zynga (NASDAQ:ZNGA) and Playtika are both up around 9%.