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Apple Takes App Payment Hit In Epic Court Fight But Hails Antitrust ‘Win’

The tech giant will no longer be allowed to force developers to use its tightly-controlled sales tool – however the judge dismissed a claim it was an ‘illegal monopoly’

Apple booted Fortnite from its online mobile marketplace after Epic released an update that dodged revenue sharing with the iPhone maker. Photo: Reuters

 

A US judge has ordered Apple to loosen its grip on 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’s a change that has been loudly demanded by app producers because of the up to 30% commission on purchases, however, the judge on Friday also ruled that Epic had not proved its claim of illegal monopoly – a relief for Apple.

 

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Lawsuits, rules and probes have piled up for the iPhone maker, but it was noncommittal about challenging the ruling and instead lauded the antitrust ruling by saying: “We consider this a huge win for Apple.”

Epic branded the judgement as, essentially, a loss for app developers who rely on the App Store in the multi-billion-dollar mobile gaming industry, and for consumers.

“We will fight on,” Epic CEO Tim Sweeney tweeted, and a company spokesperson later confirmed they would appeal.

Friday’s order says 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 considerable market share of over 55% and extraordinarily high profit margins… [but] Success is not illegal,” California federal Judge Yvonne Gonzalez Rogers wrote.

 

PAYMENT SYSTEMS

“Epic Games failed in its burden to demonstrate Apple is an illegal monopolist,” she added. The decision noted that Apple violated California’s laws against unfair competition, however.

The two firms clashed in a lawsuit 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 was 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 iPhone maker.

However, even before Friday’s decision Apple had started to cede ground on its App Store dominance, including in an agreement with Japanese regulators.

 

SOUTH KOREA CASE

It also faces the legislation adopted by South Korean lawmakers, which banned Apple and Google from forcing app developers to use the tech giants’ payment systems.

Analyst Carolina Milanesi noted the antitrust aspect of the case was what really had Apple’s attention, with a ruling against it potentially opening the doors 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.”

Apple opened its App Store in July 2008, a year after the release of the first iPhone. The shop, stocked with mobile apps tailored for devices powered by 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 or social networking to summoning car rides or ordering food.

The App Store – the lone gateway onto the more than one billion iPhones in use around the world – has grown to include more than 1.8 million apps.

 

  • AFP and Sean O’Meara

 

Read more:

Apple Rebuffs Epic Bid To Restore Fortnite Developer Account in South Korea

Apple Faces India Antitrust Probe Over In-App Payments Row

 

Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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