Apple Turned Its Epic Defeat Into Another App Store Victory

Apple Turned Its Epic Defeat Into Another App Store Victory

  18 Jan 2024

The revisions provide developers “a meaningful opportunity” to do business outside of Apple’s billing system “while also enabling users to make an informed choice” about where to transact, attorneys for the company say in a court filing. The arrangement is similar to how Apple began allowing alternative purchase options—with a fee—in the Netherlands and South Korea to address government pushback. Google is testing a similar scheme in dozens of countries in response to developer complaints and regulators’ scrutiny.

Last-Ditch Effort

Epic and other developers critical of Apple, including Spotify and privacy-focused email provider Proton, are calling on Apple to make a stronger concession. They say that the costs of using their own billing tools and handling customer service would offset the slight reduction in the revenue share paid to Apple to complete sales outside of its system.

“Imposing a 27 percent fee for transactions made outside of an app on a developer’s website is outrageous and flies in the face of the court’s efforts to enable greater competition and user choice,” Spotify spokesperson Jeanne Moran says. “Once again, Apple has demonstrated that they will stop at nothing to protect the profits they exact on the backs of developers and consumers under their app store monopoly.”

Epic CEO Tim Sweeney says the company plans to contest Apple’s new rule in the court whose ruling the Supreme Court declined to review this week. Whether US district judge Yvonne Gonzalez Rogers will be receptive is uncertain. She sided with Apple on nine out of 10 charges in her original ruling and said she wanted to avoid micromanaging its business. Epic would have to prove Apple’s revised rules fail to increase competition, transparency, and consumer choice.

Rebecca Haw Allensworth, a Vanderbilt Law School professor who’s followed Epic’s case, says it would be fair to call Apple’s new linking rule “bad faith” because it “basically recreates the system the courts found anticompetitive.” But though the judge wouldn’t want a remedy that undermines her ruling, it’s difficult to predict how she would rule on a challenge from Epic.

A new set of appeals all the way to the US Supreme Court is possible. But the case turned on California’s unfair competition law, and the Supreme Court generally tries to stay out of state issues. Its taking up Epic’s appeal had been a long shot, says Herbert Hovenkamp, a University of Pennsylvania law professor with antitrust expertise.

Further litigation also could be doubly expensive for Epic. Apple says in court papers that because it won 90 percent of the case, Epic should pay the same proportion of its $83 million and mounting in legal bills. Apple argues that’s required under the App Store developer agreement Epic signed when it began offering apps for Apple devices, and then later breached by trying to circumvent Apple’s payments rules. “Epic has no legitimate grounds to dispute the amount,” attorneys for Apple write.

Developers including Spotify and Epic are holding out hope that Apple will have to cede more substantial ground by early March to comply with the EU’s Digital Markets Act, a new law requiring online gatekeepers to open their systems such as app stores to more competition. It’s unlikely any changes in response to the DMA would apply outside of the EU, though. After years of political, public, and legal pressure on Apple’s and Google’s app stores, they are looking as immovable and lucrative as ever.

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