What you need to know
- Epic Games has won a partial victory against Apple.
- A judge has ruled Apple cannot stop developers from directing users to other methods of payment in their apps.
- The court ruled in favor of Apple on all but one count.
Update, September 10 (5:30 pm ET): Epic CEO Tim Sweeney and Apple have issued statements in response to the decision.
A judge has ruled in the Epic Games vs Apple case that whilst the company is not a monopolist, it cannot stop developers from linking to other payment mechanisms in their apps, in a setback for the Cupertino company.
A court ruling states
[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.
Despite the fact that Apple has beaten Epic in all but one count of the lawsuit, the ruling is a blow to Apple's App Store policies and defenses lodged over the last year.. The injunction as it stands will take effect in 90 days. It means that developers will be able to give customers the chance to go outside of Apple's App Store to make payments for digital goods and services.
In a statement to iMore Apple welcomed the court's ruling:
"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 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."
In a clearly calculated move, Apple didn't even acknowledge the concessions the court is asking it to make, nor did it make reference to any future plans to appeal the resolution.
Apple has already made a concession similar to this regarding reader apps like Netflix and Spotify, but that didn't apply to all apps, especially not games like Fortnite.
Not all bad news, Judge Gonzalez Rogers ruled in favor of Apple regarding Epic Games' breach of App Store contract, ordering the company to pay Apple 30% of $12.1 million for money earned between August and October 2020, and 30% of any revenue earning from November 2020 until today. The Judge also reiterated the court's ruling that Apple's decision to terminate the Epic Games developer account was lawful:
(2) a declaration that (i) Apple's termination of the DPLA and the related agreements between Epic Games and Apple was valid, lawful, and enforceable, and (ii) Apple has the contractual right to terminate its DPLA with any or all of Epic Games' wholly owned subsidiaries, affiliates, and/or other entities under Epic Games' control at any time and at Apple's sole discretion.
This is a huge aspect of the case, as it means Apple will not be required (at least by law) to reinstate Epic Games' developer account, meaning Fortnite might never return to Apple devices. Indeed, Epic Games CEO Tim Sweeney lamented the decision, stating the ruling wasn't "a win for developers or for consumers", stating the company was "fighting for fair competition among in-app payment methods and app stores for a billion consumers." Sweeney went on to says Fortnite would only return to the iOS App Store when it could offer in-app payments and pass along savings to consumers, vowing to fight on in the case.
In an explanation of the ruling, YGR stated:
Ultimately, after evaluating the trial evidence, the Court finds that the relevant market here is digital mobile gaming transactions, not gaming generally and not Apple's own internal operating systems related to the App Store. The mobile gaming market itself is a $100 billion industry. The size of this market explains Epic Games' motive in bringing this action. Having penetrated all other video game markets, the mobile gaming market was Epic Games' next target and it views Apple as an impediment.
The Judge concluded that Apple is not a monopolist under federal or state laws, noting a high market share and big profits but stating that "success is not illegal." Rogers concludes:
Thus, and in summary, the Court does not find that Apple is an antitrust monopolist in the submarket for mobile gaming transactions. However, it does find that Apple's conduct in enforcing anti-steering restrictions is anticompetitive. A remedy to eliminate those provisions is appropriate. This measured remedy will increase competition, increase transparency, increase consumer choice and information while preserving Apple's iOS ecosystem which has procompetitive justifications. Moreover, it does not require the Court to micromanage business operations which courts are not well-suited to do as the Supreme Court has appropriately recognized.
In response to the ruling the Apple-backed Chamber of Commerce issues a statement from its CEO Adam Kovacevich. stating:
"Antitrust law should focus on protecting consumers, but this case has always been about Epic Games trying to save a few million dollars. The judge's rejection of most of Epic's arguments should give policymakers pause in legislating to help some companies' bottom line. So many tech policy and legal disputes revolve around whether a platform can set their own rules to serve consumers, even when that upsets suppliers. The judge clearly backed platforms, and that will impact the other big pending lawsuits against major tech platforms."
Update, September 10 (5:30 pm ET) — Epic and Apple have issued statements in response to the decision.
Epic says that it plans to appeal today's decision. Epic CEO Tim Sweeney released a statement saying that today's decision is not a win for developers or customers.
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. https://t.co/cGTBxThnsPToday'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. https://t.co/cGTBxThnsP— Tim Sweeney (@TimSweeneyEpic) September 10, 2021September 10, 2021
Apple seems to believe that, while it is not a win for Epic, it is a decision that has validated the business model of the App Store.
"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 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."
