Apple Appeals Epic Games Ruling
Isadora Teich wrote this article
This is truly a never-ending saga. Apple and Epic Games have been at war for months. The results will have profound effects on the entire mobile app industry.
After a ruling that was more of a complicated compromise than a smashing win for either side, it appears that Apple has decided that it wants to take it all.
Let’s take a look.
Apple vs Epic in 60 Seconds
If you want all of the details we have several posts exploring this complicated case in the Chop Dawg library. They will be linked below.
In short, Epic Games broke App Store rules by trying to get around Apple’s in-app purchase system in their hit game Fortnite. Due to this, Apple removed Fortnite.
Apple claimed that this was justified because Epic Games broke its rules. Epic claimed that breaking this rule was justifiable because Apple operates an anti-competitive monopoly with high fees that crush the industry.
The main takeaways of the trial were these, more or less.
– Apple is breaking the law by forcing users to pay for apps, subscriptions, and in-app items through the App Store. They’ve been asked to ease up within 90 days, or face further rulings.
– The App Store’s general business model was deemed legal.
– Apple can’t ban developers from guiding users to outside payment options anymore.
– Apple has to change its rules, but Epic still broke them. As a result, Epic has to pay Apple 30% of the revenue it earned after implementing its own payment system “illegally.” This comes to more than $3.5 Million.
The Good and Bad News For Apple
On one hand, after years of being accused of being a monopoly by detractors internationally, it was a big win for Apple.
Their business model was deemed legal in court. However, on the other hand, a federal judge demanded that they make a lot of changes to how this business operates.
According to this ruling, they have 90 days to stop prohibiting developers from pointing users to outside payment systems. Apple is now appealing this decision and asking for a stay on the injunction that the judge had put into place.
While it is impossible to say what the long-term results of this will be, one thing is certain. This could put a big delay in Apple having to make any changes. Initially, they had 90 days to implement changes as of September 10, 2021.
If they win the stay, they may successfully delay all changes until a final decision is made after the appeals case has concluded. This will likely be many months from now.
.@Apple’s App Store policies have stifled competition and innovation for app developers for too long. The #OpenAppMarketsAct would hold companies like Apple accountable for their anti-competitive practices which hinder innovation. #OpentheAppStore
— Coalition for App Fairness (@appfairness) September 30, 2021
The United States is not the only place where regulators are working to limit the power of Apple. In Japan, a regulator recently pushed against them by allowing “reader apps” to add a link to their own website in their apps.
South Korea also just passed a bill that will stop Apple from forcing developers to utilize their in-app billing systems. On top of the issues with Epic Games in California, there was also a recent class-action lawsuit against Apple by US developers.
And, considering that neither Apple nor Epic was satisfied with the results of the latest ruling, this case is also far from over.
Why Both Apple and Epic Games Remain Unsatisfied
If we had to pick a victor in this complicated case thus far, it would have to be Apple.
They won on nearly every point, except for being forced to allow developers to direct users to outside payment methods. In September, Apple seemed quite pleased with the results as well.
Kate Adams, Apple’s lawyer, initially said:
“We are very pleased with the Court’s ruling and we consider this a huge win for Apple.”
However, both Apple and Epic were unsatisfied with the results, and both filed appeals. Epic’s goal is to prove that Apple is in fact a monopolist entity. They filed an appeal almost a month ago.
Protecting The App Store Model
Apple, on the other hand, likely makes a lot of money off of its app store. They have strategically tried to obscure how much, and even declared in court that they do not consider it a business.
However, experts have estimated that in 2019 the app store had a profit margin of 78% and also generated $64 billion in gross sales in 2020.
Remember that App Store fees are the largest yearly expense of Match Group, the company behind Tinder. Of course, any company would want to keep making that money.
Apple is also famous for protecting its control over the App Store with numerous rules for developers, but doing its best to reject outside influence from governments.
About a decade ago, they lost their fight against the FCC largely over Google Voice. The FCC declared that Apple could not reject any app or app category that they wanted, as they insisted.
Recently, for example, Apple announced that developers will have to include an easy way for users to delete apps, as well as download them. Some feel that this is an effort to address the global issue with scam apps. Others feel that it might be a somewhat retaliatory dig at developers for their many complaints.
While Apple may not be able to avoid legal consequences forever, it is in their best interest to delay the case ruling and hold onto as much app store revenue as they can for as long as possible.
What Happens Next?
As you probably already guessed, it’s complicated.
Both Apple and Epic are appealing, and Epic on all nine counts that it lost. This could lead to years in court before the case is resolved. The judge is expected to rule on Apple’s request for a stay this fall.
However, outside of this case, there is a lot going on with Apple. Currently, a bipartisan bill is also working its way through congress to force Apple to allow alternative in-app payments.
Even if Epic Games never proves Apple a monopoly and “wins”, governments around the world are working to check Apple’s power regardless.
This case has certainly been an interesting one. In this whole situation, there is both good and bad news for developers who want to pay less to the App Store or use their own payment systems.
It is unlikely that those changes will come quickly as a result of this case. The two companies may remain in a complicated court battle for years.
However, we are seeing that world governments have already begun to chip away at Apple’s complete control in this arena.
It is unlikely that they will be able to maintain it forever, even if they get to keep it in the US for the next few months or years.
What do you think about this case? Talk to me.
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