Apple loses the battle against Epic and must allow alternate in-app purchase methods

On the eve of the iPhone 13 launch, Apple has suffered a major loss in the lawsuit filed by Epic Games last year. Epic Games, the developer of Fortnite, sued Apple last year over claims the company was violating U.S. antitrust law by prohibiting developers from implementing alternative in-app purchase methods. Today, Judge Yvonne Gonzalez-Rogers issued her ruling in the Epic Games v. Apple lawsuit, handing Epic and other app developers a major win.

As part of her ruling, Judge Gonzalez-Rogers issued a permanent injunction against Apple that orders the company to lift its restrictions on the forms of in-app purchase methods allowed on the App Store. The injunction also orders Apple to abandon its anti-steering policy, which prohibited app developers from informing or directing users to alternative purchasing methods. Likely in anticipation of a ruling against them, Apple recently partially lifted its anti-steering policy on its own, though they stopped short of allowing developers to inform users of alternative purchasing methods from within their iOS app.

This injunction will take effect in 90 days, meaning Apple has 3 months to adjust its App Store policy to comply. Apple is expected to appeal this ruling to the U.S. Court of Appeals for the Ninth Circuit and finally the U.S. Supreme Court if necessary.

Apple wins on all but the most important claim

Last year, Epic Games intentionally circumvented Apple’s App Store policy by introducing direct payments for in-app purchases in Fortnite. Immediately after, Apple pulled Fortnite from the App Store and suspended Epic’s developer account, citing a violation of the App Store guidelines regarding in-app payments. When Epic sued Apple in response, they sought to have the latter reinstate their developer account so they could re-release Fortnite on iOS. Apple argued that Fortnite and Epic’s developer account should not be restored as Epic intentionally breached the contract between the two companies (a contract that, of course, Epic argues is illegal.)

However, Judge Gonzalez-Rogers today ruled in favor of Apple on its counterclaim of breach of contract. The judge ordered Epic to pay 30% of the $12,167,719 (or $3,650,315.70) in revenue the company collected from Fortnite on iOS through Epic Direct Payment between August and October of 2020, as well as 30% of any such revenue the company collected from November 1, 2020, to today, on top of interest. Because of this, it’s unlikely Apple will ever reinstate Fortnite or Epic’s developer account.

The Court also ruled that Epic Games “failed in its burden to demonstrate Apple is an illegal monopolist” in the narrowly-defined “digital mobile gaming transactions” market rather than both parties’ definition of the relevant market. The market in question is a $100 billion industry, and while Apple “enjoys considerable market share of over 55% and extraordinarily high profit margins,” Epic failed to prove to the Court that Apple’s behavior violated antitrust law. “Success is not illegal,” said Judge Gonzalez-Rogers in her ruling.

In response to this ruling, Apple issued the following statement to reporters: “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.”

Tim Sweeney, the CEO of Epic Games, took to Twitter to express his disappointment with the ruling. While the outcome of Epic’s lawsuit will help other developers, Epic itself won’t reap the benefits of a more permissive App Store.

Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers. https://t.co/cGTBxThnsP

— Tim Sweeney (@TimSweeneyEpic) September 10, 2021

This story is developing. Check back for more updates.

The post Apple loses the battle against Epic and must allow alternate in-app purchase methods appeared first on xda-developers.

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