Judge Rules for Apple over Epic Games, Strikes Down App Store Anti-Steering Policies
Late last week, US District Judge Yvonne Gonzalez Rogers issued a 185-page ruling in the Epic Games antitrust suit against Apple, finding that Apple’s App Store policies are not evidence of monopolistic power. More broadly, her ruling doesn’t require that Apple allow third-party app stores, let users sideload apps, or reduce its App Store commission fees. Nor did she require Apple to restore Epic’s developer account or allow Epic’s popular game Fortnite back into the App Store. Plus, she ordered Epic to pay Apple 30% of what it collected from users of its iOS app outside of Apple’s in-app purchasing system after August 2020—a fine of at least $3.6 million. Epic has appealed, but most observers give the appeal little chance of overturning the judge’s decision.
However, the decision came with a likely significant blow to Apple as well. In a one-page injunction finding for Epic on a violation of California’s Unfair Competition Law, Judge Gonzalez Rogers dinged Apple for anticompetitive behavior:
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 (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.
In other words, the judge struck down Apple’s anti-steering policies that prevent developers from including or linking to their own purchasing systems within iOS apps. She also prohibited Apple from preventing developers from communicating with their customers through accounts set up through in-app registration. The injunction goes into effect in 90 days, although John Voorhees of MacStories suggests that Apple might be able to delay it by filing an appeal. Ben Thompson of Stratechery offers an extensive explanation of how the judge came to her decision.
If Apple doesn’t appeal, or if its appeal isn’t successful, the question becomes what Apple—and iOS developers—do next. The Verge’s Nilay Patel points out that the injunction’s inclusion of both buttons and external links would seem to suggest that Amazon could integrate its own payment processing system into the Kindle app. That goes well beyond Apple’s recent settlement with the Japan Fair Trade Commission to allow “reader” apps to include in-app links to external account management systems (see “Several Bricks Removed from Apple’s Garden Wall,” 3 September 2021).
But many questions remain to be answered, presumably in what will essentially be a three-way negotiation between Apple, developers, and Judge Gonzalez Rogers. Will reduced transaction fees outweigh the amount of work for developers involved in building and maintaining separate payment systems? Will payment processing firms like Stripe offer software development kits for plug-and-play purchasing within iOS apps? Will Apple’s App Store review process suddenly pay much closer attention to apps that implement third-party payment systems? Developer Marco Arment has some opinions about how it’s likely to work out.
First, I’d suggest reading the decision. It’s 180 pages, but most of it isn’t that hard to understand. Then read Florian Mueller’s (no friend of Apple) take: FOSS Patents: No, the Epic v. Apple injunction absolutely positively DOESN'T allow developers to incorporate 'buttons' for alternative IN-APP payment mechanisms That, along with the Thompson article, should give you a reasonable sense of the ruling. (Claimer: IANAL.)
It’ll be -very interesting- to see what Apple does going forward to conform to both this ruling (if it’s not overturned on appeal) AND the new Korean law. (Me, I think Apple should have a 2-tier pricing scheme for games, the traditional one for those without in-app purchases, and a different pricing scheme for those that do have in-app purchases. And I’m presuming a ‘no less than offered on the App Store system’ would also be part of that.)
If you’re a Fortnite/Epic fan, don’t hold your breath for a return to iOS. Sweeney’s underhanded scheme -and- the ruling in Epic v Apple will, I’m sure, keep Fortnite out of the App Store for quite a while longer.
Thanks for that link—Florian Mueller does make a compelling case, and we’ll see what happens. I do think that developers will try pretty much everything they can, and when they’re rejected by Apple, they’ll go to the court. Then it will be up to the court to evaluate each attempt at an end-run around Apple’s policies and see which meet its criteria.
Epic already filed an appeal. I wonder if Apple will do so as well? This could be the first skirmish in a long, drawn out war; the pressure is still on Apple. I think the chances are good that this case will end up in the US Supreme Court.
IANAL, but I think Epic filed only ‘notice of intent to appeal’. Until they file a brief that identifies exactly what they’re appealing, it’s just a “reservation on the docket.” That brief, when it comes out, will be interesting to read. Then Apple will respond, there’ll probably be some amici briefs on the points of law, etc, etc.
Epic has already filed an appeal. The judge ruled that they must pay damages, probably millions and millions of dollars, for withholding the 30% fee that they agreed to.
I haven’t read anything about Apple issuing an appeal.
If you actually read the referenced document, here’s what it says:
Notice is hereby given that Epic Games, Inc., Plaintiff and Counter-Defendant in the above-named case, appeals to the United States Court of Appeals for the Ninth Circuit from the final Judgement entered on September 10, 2021 (ECF No. 814), and all orders leading to or producing that judgement, including but not limited to the Rule 52 Order After Trail on the Merits (ECF No. 812) and the Permanent Injuction (ECF No .813), each entered on the same date.
That’s ALL it says. There’s no supporting brief on what or why Epic is appealing.
Epic very clearly states that they will “appeal the final judgment and all orders leading to or producing that judgment.”
This means they are objecting to just about everything in the entire judgement. They are appealing that Apple was judged not to be a monopolist. They are appealing that it did not require Apple to allow other app stores to sell apps that would run on Apple devices, or to allow third party in-app payments. It let the 15%/40% commission fees stand. But the ruling did not require Apple to restore Fortnight to the App Store, and it requires Epic to pay Apple at least $4 million in damages for violating the agreement it had signed with Apple.
The only charge that Epic raised that the judge agreed with was that Apple was violating the California law that allows developers to install links in apps that lead to other stores. That’s why they are appealing
“the final judgment and all orders leading to or producing that judgment.” This sounds very definitive to me.
OK. But I believe the Appeals Court needs something more than “we don’t like it” to actually rule on.
Epic has filed a notice to appeal, not the actual appeal itself. The actual appeal will make substantial and lengthy legal arguments about why Epic thinks the ruling is unfair. So, yes, Epic is appealing, but no, they haven’t filed the actual appeal yet.
And now Apple is appealing its injunction. Unsurprising.