SAN FRANCISCO – A United States judge yesterday ordered Apple to loosen control over its App Store payment system, a blow to the global tech giant sparked by its antitrust battle with Fortnite maker Epic Games.
In a ruling with significant potential to alter the digital economy, Apple will no longer be allowed to force developers to use its tightly controlled sales tool.
It is a change loudly demanded by app producers because of the up to 30% commission on purchases. However, the judge also ruled that Epic has not proven its claim of illegal monopoly – which prompted a sigh of relief from Apple.
Suits, rules and probes have piled up for the iPhone maker, but it is noncommittal about challenging the ruling, and instead, lauded the antitrust portion by saying: “We consider this a huge win for Apple.”
Epic for its part branded the judgment as essentially a loss for app developers who rely on the App Store in the multibillion-dollar mobile gaming industry, as well as for consumers.
“We will fight on,” tweeted Epic CEO Tim Sweeney, and a company spokesman later confirmed that it will appeal.
Yesterday’s order states that Apple is permanently barred from prohibiting developers from including in their apps “external links or other calls to action that direct customers to purchasing mechanisms”.
“Apple enjoys a considerable market share of over 55% and extraordinarily high profit margins... (but) success is not illegal,” said California federal judge Yvonne Gonzalez Rogers.
“Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.”
The decision notes that Apple violated California’s laws against unfair competition, however.
The two firms clashed in a suit over whether Apple has the right to set ground rules, control payment systems, and kick out apps from its marketplace that fail to comply.
Also at stake is Apple’s slice of revenue from iPhone apps of as much as 30%.
Apple booted Fortnite from its online mobile marketplace after Epic released an update that dodged revenue sharing with the former.
A win for Apple?
However, even before yesterday’s decision, Apple had started to cede ground on its App Store dominance, including in an agreement with Japanese regulators.
It also faces legislation adopted by South Korean lawmakers that bans Apple and Google from forcing app developers to use the tech giants’ payment systems.
Analyst Carolina Milanesi said the antitrust aspect of the case is what really had Apple’s attention, with a ruling against it potentially opening the door for challenges from lawmakers and prosecutors.
“For me, it is a win for Apple in that the judge clearly said they are not engaging in monopolistic behaviour,” she told AFP.
“I don’t think it is a problem for Apple from a revenue perspective.”
Some US lawmakers said the antitrust aspect of the case cannot be ignored, and noted that the courts have not tackled the issue.
“Congress must enact rules of the road to ensure free and fair competition online,” said a joint statement from representatives Jerrold Nadler and David Cicilline.
“It is clear that the courts continue to narrowly interpret antitrust laws in favour of monopolies, and against consumers, workers and small businesses.”
Apple opened its App Store in July 2008, a year after the release of the first iPhone.
The shop, stocked with apps tailored to devices powered by the iOS mobile software, was quickly imitated by rival smartphone makers.
It ignited an entire economy where developers big or small could make money with “an app for that”, from games and social networking to summoning car rides and ordering food.
The App Store – the lone gateway to the more than one billion iPhones in use around the world – has grown to include more than 1.8 million apps. – AFP, September 11, 2021
