Apple ordered to comply with court’s decision over in-app payments in Epic Games case

A federal judge has determined that Apple cannot postpone the deadline for updating App Store policies, as previously imposed in the Epic Games v. Apple dispute in California. Although Apple won the lawsuit in part when the judge determined that Apple did not operate as a monopoly as Epic Games claimed, the court upheld Apple’s decision to ban in-app transactions.

In terms of anti-steering policies, Fortnite sided with the manufacturer. The court’s original ruling stated that Apple could no longer prevent developers from pointing to payment methods other than Apple’s own payment systems, but Apple requested that the decision has stayed until his appeal case is resolved – a delay that will effectively turn the App Store on its head in a few years.

In particular, US District Judge Yvonne Gonzalez Rogers issued an order on Epic Games’ antitrust action on September 10, 2021, instructing Apple not to prevent developers from:

“…including apps, metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, as well as in-app purchases.”

The court also stated that Apple cannot ban developers from engaging with users via touchpoints collected freely from customers when they register for an account in the app.

Apple officially revised its App Store regulations in October to reflect developers’ capacity to communicate with their users, as part of a settlement with a group of US developers in a class-action lawsuit over the same issue. During its appeal of the Epic Games litigation, Apple asked for a stay of the injunction that Judge Gonzalez Rogers had imposed, which would allow non-Apple payment systems to be accepted in the App Store.

The judge ordered the injunction to be enforced within 90 days of the September 10 ruling, giving the essential revisions to the App Store policy a deadline of early December. That means that if Apple does not grant the injunction to be postponed, it will have to allow developers to include other payment methods in their iOS apps.

Apple’s lawyer stated during a hearing on November 9 to hear arguments for and against the suspension that the changes Apple was obliged to make would “disrupt the platform.”

“They will harm consumers. They will harm developers. That’s the fact. It’s going to happen,” said Gibson, Dunn & Crutcher partner Mark Perry, Apple’s lead attorney in the Epic Games case. He restated Apple’s position that permitting links in apps might compromise the iOS ecosystem’s security and privacy.

During the trial, Epic Games lawyer Gary Bornstein informed Apple that his company’s first-party payments infrastructure competes with web payments. It believes it can’t go back and that spreading public awareness of this competitive option will inflict “irreparable harm.”

He went on to say that Apple shouldn’t be left to deal with the changes on its own, considering that the moves made thus far to expand the App Store were in reaction to class action lawsuits or legislative and regulatory filings. development. Apple, on the other hand, disagrees, citing other pro-consumer measures such as the App Store privacy notice.

Finally, the judge concluded today that Apple had failed to make a compelling case and that the motion should be dismissed.

In short, Apple’s decision is based on a selective reading of the court’s findings and dismisses all factors that supported the injunction, such as initial antitrust activity such as highly competitive commission rates that result in extraordinarily high operating margins that are unrelated to value. “This first antitrust activity is due, in part, to Apple’s anti-directive measures, which have harmed competition.”

When contacted for comment, Apple stated that it intended to try again.

“Apple feels that no further adjustments to the business are necessary until all of the appeals in this matter are resolved.” According to an Apple representative, “we intend to approach the Ninth Circuit for accommodation based on these circumstances.”

Epic Games did not respond to a request for comment right away.

If the court’s ruling is confirmed, it might have a big influence on the App Store’s business model, because developers who want to avoid Apple’s commissions will be able to point their consumers to other payment methods once the policy is amended. The decision’s ramifications could cost the corporation billions of dollars. Depending on how many developers take advantage of the possibility and how many users opt to pay for apps outside of the App Store.

Some in the market were already moving forward to take advantage of this potential shift before the policy was publicly evaluated.

For example, Paddle, a subscription business solution provider, declared relatively prematurely that it will create a new in-app purchase system for iOS developers as soon as the injunction took effect, allowing a drop-in alternative for Apple’s own payment system.

Meanwhile, Facebook has now launched a system that allows developers to receive direct payments without having to go via the App Store. Because Facebook’s creator revenue is not being slashed, for the time being, this approach was technically permissible. However, if a decision is made to accept other payment methods, this structure may change in the future, providing the social network with a new source of revenue.

If Apple is unable to persuade the court to accept its request, it is unclear how it will alter its guidelines to comply with the court’s decision. Google agreed while modifying costs when South Korea passed a new law requiring app shops to accept other payment methods as well, but Apple claimed that its current procedures were compliant owing to the way the law was framed.

According to the initial order, Apple has 90 days to comply with the injunction, and there are around 30 days remaining until it takes effect.

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