(NewsNation Now) — A federal judge ruled Apple must allow app developers to "steer" their users away from App Store payments as part of a lawsuit from game maker Epic. The judge said Apple's behavior was anti-competitive, but not monopolistic.
The issue stems from Apple taking a 30% sales cut from developers making more than $1 million annually from the App Store. Apple also banned developers from letting users know they could pay the developer outside the store.
For example, if a subscription cost users $10 to buy on the App Store, the developer could not sell that subscription for less somewhere else and tell its customers they could save money by buying it there as opposed to the App Store. If that developer sold it through their own web site for $7, they could keep the same amount in profit without giving Apple a dime.
Epic, which makes the ultra-popular game Fortnite, sued Apple in 2020 after Fortnite was removed from the App Store. The game broke Apple's rule banning workarounds to its payment system. Epic knew what it was doing, and had a marketing plan ready to go along with the court challenge.
Epic argued the practice was monopolistic since there was no way around Apple's 30% fee. There is no way to download an app on an iPhone without it being in the App Store.
Apple could appeal the ruling. Epic may also appeal to see if a different judge may take an even stiffer stance against Apple.
Big tech companies have worked around Apple's rule silently for years. Netflix, for example, will not let users subscribe to their streaming service on an iPhone app. However, it is not violating Apple's rules because it does not tell customers where to go to sign up for an account.
Apple has taken two steps to loosen some of its App Store rules in recent weeks — one to settle a lawsuit and another to appease Japanese regulators without altering its commissions. Those concessions make it easier for many apps to prod their users to pay for digital transactions in ways that avoid triggering Apple’s fees.
Apple shares dipped sharply immediately upon the issuance of the ruling and were trading down 3% Friday.
This is a developing story. Check back for updates.
0 Comments