A breakdown of the shared decision: NPR
Patrick Semansky / AP
A federal judge on Friday delivered a much-anticipated ruling in Fortnite-maker Epic Games’ legal battle with Apple over its policies on the App Store.
Both sides are using the 185-page decision to double their own positions, which is possible because the details are complicated.
If anything, however, Apple and Google had small victories, but neither got what they wanted.
U.S. District Judge Yvonne Gonzalez Rogers said Apple is breaking the law by forcing people to pay for apps and in-app items through the App Store, where it typically takes 30% of the payment. as a commission. Gonzalez Rogers told Apple to relax and allow other payment options, within 90 days. Apple will like it, but it’s nowhere near what Epic was looking for.
For Apple, Gonzalez Rogers kept the overall structure of the App Store as legal, a major victory for the tech giant. She also said that Apple does not have an illegal monopoly on how developers can process payments for mobile games, which Apple applauded.
“It’s a split decision,” said Mark Lemley, a professor at Stanford Law School who studies antitrust issues and technology. “It will improve competition around the edges, but it’s not the fundamental change that Epic and the antitrust advocates would have hoped for.”
OKAY. But what does this mean for people who buy apps for their iPhones and iPads?
This means that when you pay for, for example, a Spotify subscription on your iPhone, or a cool new outfit for your avatar in the mobile version of Roblox, you may have the option to pay through Spotify or Roblox’s own systems.
Apple has long banned app developers from offering these alternative payment methods. Gonzalez Rogers ruled that Apple was hiding information from consumers and limiting choice. It is prohibited by California competition laws.
So will this make apps and built-in items cheaper?
It could. When Epic broke Apple’s rules and allowed people to buy credits for Fortnite through his own system, he offered a 30% discount, as there was no Apple tax involved.
If developers are no longer forced to use Apple’s payment system – and can avoid the 30% commission – they could lower their prices. Or, they could just pocket the savings.
Will there be any visible changes in apps downloaded from the App Store?
May be. You might see a new button in some of your favorite apps that lets you buy things through the developer’s own payment system, for example. Or, there could be a link inside the app asking customers to make a payment on a browser. Either way, Apple will only control what critics call a “toll booth” in the App Store.
The appeals process will likely cause delays, so don’t expect changes anytime soon.
Apple’s 30% commission going to disappear?
No, but Apple can choose to lower the rate, and for some developers it has.
Epic Games considered Apple’s take on most purchases to be “exorbitant” and an abuse of its market power. The judge did not completely buy this.
Yvonne-Gonzalez was skeptical of the 30% fee during the trial, and in the ruling, she was suspicious of Apple’s justification for the commission, writing that “the 30% is not tied to anything in particular and can be changed” , but did not order Apple to do so.
She noted that even though Epic had chosen to target Apple (and Google) rather than fees, it seemed odd given that Nintendo’s Switch, Microsoft’s Xbox, and Sony’s PlayStation all charge a similar discount on sales of. games.
“Antitrust law doesn’t allow you to complain that the prices are too high,” said Lemley of Stanford. “You have to show that some kind of conduct prevents competition.”
A separate case that Epic has filed against Google is expected to go to trial this year.
So why is this such a big blow for Apple?
Apple’s App Store and the commission critics call the “Apple Tax” are just one aspect of the tech giant’s empire. But complaints from developers about feeling mistreated and getting a rough deal on the App Store have escalated in recent years. South Korea recently banned Apple and Google from forcing developers to use its payment system. Congress has introduced legislation to curb the tech giants‘ strict App Store policies.
U.S. District Judge Yvonne Gonzalez Rogers’ ruling on Friday could trigger the most significant changes to date in the multibillion-dollar mobile economy. While it didn’t go as far as Epic Games had hoped, it still made a dent in the all-powerful fortress that Apple has built and maintained on the way apps are distributed on iPhones and iPads.
“Apple has so far been granted a pass in the Big Tech antitrust review for the past few years, but that says it’s not going to continue,” Lemley said. “Apple’s control over what goes on the phone and at what cost can become difficult for Apple to maintain.”
Apple and Epic Games both won the decision and both are likely to appeal the decision. Eh?
Apple is expected to fight Gonzalez Rogers’ determination that it is breaking the law by blocking other means of making payments, known as the “anti-management clause.” Have you ever noticed why Netflix makes you visit their website to purchase a subscription on iPhone and iPad? That is why. He wanted to avoid the Apple commission.
Epic was unhappy with the judge’s ruling that Apple is not an illegal monopoly because it has competitors in its definition of the “relevant market” – the $ 100 billion world of digital game transactions.
In antitrust cases, the term “relevant market” is important. That’s legal jargon for: what exact part of the economy are we talking about?
Gonzalez Rogers said this fight is not about how digital video games are distributed, as Epic has argued, but how payments for digital video games are handled. And in that market, which includes games outside of iPhones and iPads, the judge said there is a lot of competition, so Apple is not a monopoly. Epic should try to convince an appeals court that the judge was wrong.
“An appeals court can look at the definition of the market and say ‘wait a minute,'” Lemley said. “And if that coin were toppled, Apple could turn out to be a monopolist.”
The price to pay to challenge control of the App Store
When Epic introduced its own payment system for Fortnite, breaking App Store rules and effectively sidelining Apple, the judge ruled that he had broken his contract with Apple.
During that time, Epic made over $ 12 million in revenue. None of this went to Apple. So now the judge has said that Epic owes Apple 30% of that amount, according to the terms of its contract.
Epic turned Apple’s decision to start it from the App Store not just into a lawsuit, but into a publicity stunt dubbed “Project Liberty” with the hashtag #FreeFortnite and a video poking fun at a famous Apple ad from 1984 .
Barring review by an appeals court, Friday’s ruling means the cost of its public relations crusade against Apple has just risen to an additional $ 3.6 million.
Editor’s Note: Apple is one of the financial backers of NPR.