Epic Games prevails again as federal judge denies Apple’s latest attempt to force developers to use its App Store
In early September, a federal judge ruled that Apple must allow third-party payments in its App Store and not force developers to in-app purchasing. Judge Yvonne Gonzalez Rogers said in a verdict of a closely-watched trial between Apple and Epic Games. But Apple wanted another go in its legal battle against Fortnite maker Epic Games.
On October 11, Apple appealed the judge’s order forcing it to allow apps to link to alternative digital payment systems on the web. The tech giant also filed a motion to delay an injunction that would have permitted developers to immediately direct their customers away from the iOS ecosystem to pay for whatever services their apps provide. But Epic Games prevails again.
In his ruling today, Judge Yvonne Gonzalez Rogers dealt another legal blow to the tech giant saying that Apple must comply with an earlier order that permits developers to direct their users away from iOS apps to pay for services. Many analysts said the ruling may affect Apple’s bottom line. Denying stay, Judge further orders Apple to allow external payment options for App Store by December 9th.
“Apple’s motion is based on a selective reading of this Court’s findings and ignores all of the findings which supported the injunction,” Judge Yvonne said in her ruling.
During the court hearing, Apple said it needed more time to rewrite its anti-steering policies — a set of rules that prevents app developers from linking to payment methods besides the iOS App Store. Apple attorney Mark Perry further explained, “This will be the first time Apple has ever allowed live links in an app for digital content. It’s going to take months to figure out the engineering, economic, business, and other issues.”
Perry added, “It is exceedingly complicated. There have to be guardrails and guidelines to protect children, to protect developers, to protect consumers, to protect Apple. And they have to be written into guidelines that can be explained and enforced and applied.”
As we reported back in September, the ruling lets app businesses bypass Apple’s requirement to facilitate payments only inside of apps, where Apple takes up to a 30% cut.
It all started in August 2020 when Apple removed Fortnite from the App Store after the game’s developer announced new payment options that allow players to buy in-game credits direct from Epic Games. In response, Epic took legal action and filed a lawsuit in the District Court of Northern California to end Apple’s anti-competitive restrictions on mobile device marketplaces. The new payment option appeared to skirt Apple’s App Store and Google’s Play Store rules, which require Epic to give up a 30% cut of the revenue made through the app.
A little over a year later, Federal Judge Yvonne Gonzalez Rogers ruled that Apple must allow third-party payments in its App Store and not force developers to use Apple in-app purchasing.
“The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice,” Rogers wrote. “When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted.”
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. Apple shares tumbled to their lowest level of the session, down around 2%.