Epic v/s Apple: Apple wins, must allow in-app payment alternatives
Epic Games and Apple have been embroiled in a legal battle since August 2020 when the former sued the latter alleging anti-competitive and monopolistic practices. Apple has, however, triumphed over the game developer after US District Judge Yvonne Gonzalez Rogers issued a 185-page ruling on the matter alongside a small win for Epic in the form of a permanent injunction against Apple. Here's more.
The legal battle ensued when Apple booted Epic Games' Fortnite off the App Store citing violation of the agreement to use Apple's own payments platform for in-app purchases (IAPs). Epic flouted this rule to avoid paying Apple a 30% commission on earnings through IAPs. The judge found Epic guilty of this and directed it to pay Apple over $3.5 million as compensation.
Epic dragged Apple to court over its actions and alleged that Apple was monopolistic and violated US antitrust law. In the judgment, judge Gonzalez Rogers said, "The Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws." Apple made sure to highlight this, claiming the court reaffirmed what it knew all along—the App Store isn't violating antitrust laws.
Dejected, Epic Games founder and CEO said on Twitter that the ruling "isn't a win for developers or for consumers." However, not all was lost. The judge noted that Apple was still in violation of California competition laws. Issuing a permanent injunction, the judge ruled that iOS app developers must be allowed to direct users to payment options other than Apple's proprietary IAP system.
This injunction is set to take effect in 90 days (i.e., on December 9) unless it is overturned by a higher court. According to the judge's ruling, the decision to boot Fortnite from the App Store was "valid, lawful, and enforceable," and it is Apple's prerogative whether to reinstate Epic Games' developer account on the App Store or not.
In the context of the aforementioned injunction, the judge noted Apple's "anti-steering restrictions artificially increase Apple's market power by preventing developers from communicating...lower prices on other platforms." These "illegally stifle consumer choice," are "anti-competitive," and a "nationwide remedy to eliminate those provisions is warranted," the judge opined. The ruling appears to benefit both parties, although we suspect Epic Games founder-CEO Sweeney isn't content yet.
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.— Tim Sweeney (@TimSweeneyEpic) September 10, 2021