Federal judge orders Apple to change App Store policies following Epic Games lawsuit

National

FILE – This March 19, 2018, file photo shows Apple’s App Store app in Baltimore. Apple has agreed to let developers of iPhone apps email their users about cheaper ways to pay for digital subscriptions and media by circumventing a commission system that generates billions of dollars annually for the iPhone maker. The concession announced late Thursday, Aug. 26, 2021 is part of a preliminary settlement of a nearly 2-year-old lawsuit filed on behalf of iPhone app developers in the U.S. (AP Photo/Patrick Semansky, File)

TAMPA, Fla. (WFLA) — In the Epic Games, Inc. vs. Apple, Inc. antitrust lawsuit, the company known for its popular iPhones and MacBooks will be forced to make changes to its app store, but the victory for Epic comes at a cost.

In a U.S. District Court in Northern California, Epic Games, known for the cross-platform game Fortnite, sued Apple, alleging that the technology giant had violated federal and state antitrust and unfair competition laws, based on how the company runs the App Store.

Specifically, the lawsuit was prompted after Apple and Epic entered a dispute over how Epic was handling Fortnite’s in-game purchases. Unable to agree, Apple removed Fortnite from the App Store, and Epic sued in response.

Issues in play

According to court documents, published by the USDC for the Northern District of California, Epic claimed that Apple’s online store was an antitrust monopoly that had too much control over its systems and harmed its consumers as a result. Apple disputed Epic’s claims.

At issue for the case is the percentage of sales that Apple takes from app developers and partners with content on its digital marketplace. Previously, Apple took 30% of proceeds from developers who make more than $1 million per year on the App Store.

In court filings, Epic Games laid out issues with Apple’s company policies for participating in the App Store as:

  • Developers had to have apps reviewed and approved by Apple before they could be on the App Store
  • Apple could delist developers’ apps at any time
  • Developers cannot offer their own app store on iOS devices
  • With few exceptions, developers were unable to let users access content, subscriptions or features purchased through other channels without also selling it through the App Store

Epic also claimed Apple prevented companies from directing users to other channels for their content, where they could pay the developer outside the store in other stores, or directly.

Apple’s own court filings dispute Epic’s claims, arguing for their right to manage their platform how they wish, and to protect intellectual property through copyrights and trademarks for iOS and the App Store, along with other tools that app developers can use. They counter-sued Epic for breach of contract, the reason they removed Fortnite from the App Store.

Judge’s decisions

The final judgment issued Friday by Judge Yvonne Gonzalez Rogers, ruled in favor of Epic Games on a single count, while ruling in Apple’s favor on the remaining counts.

Specifically, Epic’s tenth count, which claimed that Apple had violated California’s Unfair Competition Law, alleged that Apple’s business practices and conduct had amounted to unfair competition and harmed Epic Games by limiting competition through their App Store and preventing Epic from using its own in-game purchase options.

Apple disputed those claims.

Despite their objections, Rogers ruled against the company, ordering them to make changes to the App Store to allow developers to include external links, calls to action to direct customers to alternative “purchasing mechanisms,” and to allow developers to communicate with customers through voluntarily obtained points of contact.

Still, Epic will face the brunt of the judge’s decisions, having all other counts settled on Apple’s behalf.

Specifically, Rogers ordered:

On the counterclaim, in favor of Apple on the counterclaim for breach of contract. Epic Games shall pay (1) damages in an amount equal to (i) 30% of the $12,167,719 in revenue Epic Games collected from users in the Fortnite app on iOS through Epic Direct Payment between August and October 2020, plus (ii) 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment, and interest according to law. The second and third counts are denied as moot. The claim for declaratory judgment is granted in part as set forth therein.

The order from US District Judge Yvonne Gonzalez Rogers

Epic Games CEO Tim Sweeney said the ruling today was not a win for developers, and tweeted that “Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers.”

In contrast, Apple took its victory lap, issuing a statement saying that the court had affirmed what “we’ve known all along: the App Store is not in violation of antitrust law.”

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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