Judge orders huge App Store change in Epic v. Apple ruling

Judge orders huge App Store change in Epic v. Apple ruling

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Read Epic Games' reasonable idea for opening up the App Store
How you buy iPhone in-app purchases will never be the same after Friday’s ruling from a federal judge.
Photo: Ed Hardy/Cult of Mac

Apple has been ordered by a federal judge to allow iPhone software developers to point customers to their own websites to make in-app purchases. Previously, Apple required all these transactions to happen through its payment system. The change will prevent the iPhone-maker from collecting 15% to 30% of the revenue from transactions that go through developers’ direct payment systems.

This is the primary result of the Epic Games v. Apple lawsuit. And it’s exactly what Epic asked for in the first place.

Epic Games v. Apple is a big loss for Apple

Judge Yvonne Gonzalez Rogers handed down her ruling in the lawsuit on Friday. It wasn’t a total loss for Apple — she ruled that Apple did not violate antitrust law, and said specifically “success is not illegal.”

But she also ordered the huge change to the way iPhone apps handle in-app purchases. The judge wrote (in the stilted language of court rulings):

“Apple Inc. and its officers, agents, servants, employees, and any person in active concert or participation with them (“Apple”), are hereby permanently restrained and enjoined from prohibiting developers from (i) 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 (il) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.”

Rogers signaled that she might make this exact ruling back in may.

Just what Epic Games originally asked for

The Epic Games v. Apple lawsuit was the result of Apple kicking the developer out of the App Store in 2020. Epic had added a direct payments system for in-app purchases to Fortnite, which was against App Store rules. This restriction was how Apple prevented all applications from using their own in-app payment systems, not just games.

Now that Judge Rogers ordered Apple to allow direct payment systems, it seems likely Epic Games and Fortnite will return to the App Store. The game developer wants back in — this week it asked to be let in after a Korean court made a similar ruling about in-app purchases. But the court injunction doesn’t go into effect until December 2021.

Apple responds

An Apple spokesperson gave Cult of Mac the company’s official response to the 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.”

Despite Apple’s upbeat reaction, the change is likely to affect Apple’s bottom line. That’s why Apple shares have dropped over 2% in value since the ruling was announced. Previously, the iPhone-maker collected between 15% and 30% of the revenue from all in-app purchases. Now, developers will have the option to handle these transactions directly and pay Apple nothing.

It’s not known how many companies that create iPhone software will choose to set up their own payment systems. Certainly many large one will — many have them already for web sales. But smaller developers might stick with Apple’s system for in-app purchases, as it’s simpler for them.

While Apple didn’t say so in its official reaction, it’s almost certain to appeal this ruling.

Some devs want more

Not everyone agrees with Judge Rogers’ ruling that the App Store doesn’t violate antitrust law. There are still accusations that Apple’s rule that all iPhone software must to be sold through the App Store makes it a monopolist.

“Unfortunately, this court decision does nothing to address the real harm of Apple’s restrictive and monopolistic app store policies,” the organization Fight for the Future wrote in a statement. “As long as Apple maintains an authoritarian stranglehold over what software millions of people can and can’t run on their phones, the company will be actively helping repressive governments undermine human rights and censor apps used by journalists, dissidents, and vulnerable communities.”

This group was hoping the court ruling would force Apple to allow iPhone applications to be installed from any source, like Mac apps can. It didn’t happen, and Apple maintains that “sideloading” iOS software would lead to unacceptable levels of malware on iPhones.

Via: Marc Gurman