Monday, October 18, 2021

Apple has been forced to adjust the way it handles payments in the App Store

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Apple can no longer prohibit app developers from directing users to payment options outside its App Store, a judge ruled on Friday. The decision, which followed a contentious court battle with the maker of the hugely popular Fortnite video game, is a major blow to Apple — but the company also scored a partial victory as the judge stopped short of calling it a monopoly.

“Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws,” court documents read. “Success is not illegal. 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.” Apple’s stock was down nearly 3% in midday trading Friday following the decision. In a statement, and a followup press call, Apple framed the decision as a victory for the company and stressed that the court found it was not a monopolist.
“Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law,” Apple 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.”

Judge Yvonne Gonzalez Rogers of the US District Court in the Northern District of California ruled on Friday that Apple (AAPL) had violated California’s Unfair Competition Law by forcing Fortnite and its maker Epic Games to use Apple’s payment systems on the App Store, with the iPhone maker extracting a 30% commission on every in-app purchase in the process. She issued an injunction saying Apple can no longer prohibit developers from adding links within their apps to outside payment options; for example, alerting users to the option to pay for a subscription on a web browser, rather than through the app.

“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,” Sweeney tweeted, continuing: “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.” The fight began last August when Apple kicked Fortnite off the App Store for flouting its rules on in-app payments on the iPhone.

In a software update to Fortnite, Epic encouraged iOS players to buy the game’s digital currency, known as V-Bucks, directly from Epic, as opposed to through Apple’s in-app purchase system. To sweeten the deal, Epic offered a discount to those who bought V-Bucks directly.
While consumers may have viewed it as a loyalty bonus, Apple saw it as a gross violation of its contract with Epic and an attempt to undercut a key revenue stream. The iPhone maker booted Fortnite from the App store, and Epic immediately filed what appeared to be a largely premeditated lawsuit.

News Summary:

  • Apple has been forced to adjust the way it handles payments in the App Store
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