Epic Games vs. Apple Judgment Allows App Store Developers to Link to Alternative Payment Methods

Today's decision in Epic Games v. Apple was made. U.S. District Judge Yvonne Gonzalez Rogers ruled that Apple's antisteering conduct was anti-competitive and ruled in favor of Apple on the other counts.

Judge Rogers ruled that the Court could not conclude that Apple is a federal or state monopolist. However, she stated that the trial did show that Apple was engaging in anticompetitive conduct as required by California's competition laws. Rogers stated that Apple's anti-steering clauses "hide critical information from consumers" and "illegally stifle choice for consumers."

The Court then evaluated Apple's conduct within that market, having defined it as digital mobile gaming transactions. The trial record does not support the conclusion that Apple is a monopolist in accordance with antitrust laws either state or federal. The Court does not find antitrust conduct in Apple's market share exceeding 55% and its profit margins to be extraordinary. It is legal to succeed. Other critical factors such as increased barriers to entry or decreased output or innovation in the market were not included in the final trial record. It is not impossible, but Epic Games failed to prove Apple is a monopolist. The trial showed that Apple engaged in anticompetitive conduct as required by California's competition laws. The Court finds that Apple's anti-steering provisions conceal critical information from consumers, and illegally restrict consumer choice. These anti-steering clauses, when combined with Apple's upcoming antitrust violations are anticompetitive. A nationwide remedy is needed to remove them.

Judge Rogers issued a permanent injunction requiring Apple to allow U.S. developers to direct customers to other payment options than Apple's in app purchase system.

Apple Inc., its officers, agents and servants, employees and anyone in active concert with them ("Apple") are permanently restrained from allowing developers to (i) include in their apps and their metadata buttons or other calls to actions that direct customers to purchasing mechanism, In-App Purchasing, and (ii), communicate with customers using points of contact obtained from customers via account registration within the App.

Apple announced that it will allow developers of "reader apps" like Netflix, Spotify and Amazon Kindle to provide an in-app link from their website to allow users to create or manage accounts. This was already done last week. Apple will have to expand this allowance to all apps if the ruling is upheld. Developers will be allowed to mention alternate payment options in the ruling.

After Epic Games had introduced a direct payment option for Fortnite in violation of App Store rules, Apple pulled Fortnite from its App Store in August 2020. Epic Games filed a lawsuit against Apple in an orchestrated move. They claimed Apple had a monopoly on the sale of apps through the App Store and the in-app purchase of the app. For more information, see our timeline of events.

Judge Rogers ruled Epic Games must pay damages equal 30% to the $12,167 719 in revenue Epic Games received from Fortnite users through the direct payment option in August 2020 and October 2020. Epic Games also has to pay 30% of any revenue Epic Games received from November 1, 2020 until the date of judgment plus interest.

Apple will likely appeal the decision. We have reached out to Apple for comment. If we receive a response, we will update the story.

Update: Apple issued the following statement as shared by Nick Statt