Apple can’t block links to alternative payments, judge rules in Epic Games v. Apple
More than a year after Epic Games decided to circumvent Apple’s App Store rules by putting its own payment system within its popular game Fortnite, a judge has given Epic a partial victory in its lawsuit.
Judge Yvonne Gonzalez Rogers handed down a permanent injunction Friday morning blocking Apple from “prohibiting developers from including in their apps ... links or other calls to action” that tell customers about alternative payment options outside of the App Store — something that had been barred by Apple’s App Store rules.
The move will give developers more options for getting around Apple’s 30% fee on in-app purchases, a decision that will drastically change how the App Store makes money.
However, Gonzalez Rogers, of the U.S. District Court for the Northern District of California, stopped short of saying Apple operated an illegal monopoly.
“[The] court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws,” she wrote.
“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,” she wrote. “Success is not illegal.”
Gonzalez Rogers added that the court did not say “it is impossible” to determine whether Apple could be a monopolist, just that Cary-based Epic Games “failed in its burden to demonstrate Apple is an illegal monopolist.”
The judge’s injunction is set to take effect within 90 days, unless a higher court steps in.
A spokesperson for Epic Games told The News & Observer on Friday afternoon that it plans to appeal the decision.
How Epic, Apple responded to judge’s decision
Earlier Friday, Tim Sweeney, Epic Games’ founder and CEO, did not appear satisfied with the court’s decision. He took to Twitter, his preferred mode of communication, on Friday after the judge’s decision, saying it didn’t represent “a win for developers or for consumers.”
He added that Fortnite will not return to the App Store yet, despite Friday’s injunction that would allow it to link to its own payment system outside of the App Store. Epic has argued in court that developers should be able to put their own payment systems within the actual apps themselves rather than making customers go to outside websites.
“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,” Sweeney said on Twitter.
He vowed that Epic will continue to “fight on” in its legal battle against Apple.
In a statement, Apple focused on the judge’s opinion that Epic did not demonstrate Apple operated an illegal monopoly. The company didn’t comment on the judge’s injunction against blocking developers from communicating to customers about alternative payment systems.
“Today the Court has affirmed what we’ve known all along: The App Store is not in violation of antitrust law,” the company said in a statement. “... 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,” Apple added.
What Epic, Apple debated
In the lawsuit against Apple, the Goliath of the tech world, Epic Games played the role of David, pushing the judge to give developers more power against Apple’s App Store and its large share of purchases made within apps.
The lawsuit dates to August 2020, when Epic Games placed an alternative payment system within the iPhone and Android versions of Fortnite, a move that allowed the company to ignore the 30% in-app purchasing fee both Apple and Google levy.
Both Apple and Google then booted Fortnite from their respective app stores, leading to Epic’s antitrust lawsuits against the companies.
In another judgment issued on Friday, the court ruled that Epic Games breached its contract with Apple when it placed an alternative payment system within Fortnite in August 2020. The court demanded that Epic pay Apple 30% of the $12.2 million it made while it was in breach of contract.
The Apple lawsuit has proceeded more quickly than the one against Google, which hasn’t made it to trial yet.
Over three weeks in May, Epic and Apple’s lawyers argued in court in front of Gonzalez Rogers. The testimony featured both Sweeney and Apple CEO Tim Cook.
Epic argued that developers should have more than one way to get their apps onto iPhones and the ability to use any payment system they desired. Currently, the only way to download an app onto an iPhone is through the App Store, and developers must use Apple’s internal payment system.
The Epic Games Store, where individuals can download video games and apps, can be downloaded on a Mac computer, for example, but not on the iPhone.
Friday’s ruling did not, however, change App Store rules that would have allowed other app stores, like the Epic Games Store, to operate on iPhones.
Gonzalez Rogers, perhaps, had hinted at what her decision might land on the last day of in-court arguments.
Following up on her questioning of Cook, she seemed to indicate that she wasn’t convinced that Apple was facing much competitive pressure on pricing.
“The 30% (in-app purchasing fee) number has been there since the inception,” she said. “And if there was real competition, that number would move. And it hasn’t. ... So far there doesn’t seem to be anything that is in the market itself that is pressuring Apple to compete for developers.”
The ruling could now provide developers with more tools to lower those fees.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate.
This story was originally published September 10, 2021 at 12:16 PM.
