Apple Claims Decisive Win as Epic Games Appeal Verdict is Reached
An appeals court has largely sided with Apple over its control of the App Store, signaling that its rules and fees are unlikely to change significantly. Apple’s strict policies include taking up to 30% of all digital sales inside iPhone apps and rejecting entire apps. Epic Games sued Apple, alleging antitrust violations after introducing its payment system into Fortnite and getting banned from the App Store. Apple hailed the ruling as a victory, with nine out of ten claims decided in its favor, and is considering further action, including an appeal to the Supreme Court.
Apple’s control over the App Store and the fees it charges will likely remain unchanged following an appeals court decision in its favor against Epic Games. The decision confirms that Apple’s control over the App Store’s functionality remains undisrupted. The company’s employees review every update before going live, rejecting entire apps and charging up to 30% of all digital sales inside iPhone apps. Developers, however, have long chafed under store rules and fees. Epic Games sued Apple after introducing its payment system into Fortnite, breaking Apple’s rules, and ultimately getting banned from the App Store. This action led to a weeks-long trial where Apple CEO Tim Cook and Epic Games CEO Tim Sweeney testified.
On Monday, the Ninth Circuit Court’s ruling largely affirmed that Apple did not violate antitrust law by banning competing app marketplaces on iPhones. Apple was pleased with the outcome, and a company spokesman told CNBC that “today’s decision reaffirms Apple’s resounding victory in this case, with nine of ten claims having been decided in Apple’s favor.” The spokesman added that “for the second time in two years, a federal court has ruled that Apple abides by antitrust laws at the state and federal levels.”
The App Store remains a crucial source of profit for Apple, contributing to its $78.1 billion in service revenue in fiscal 2022. The store’s control by Apple has raised concerns among app and game developers, who feel the rules and fees have been onerous. Epic Games claimed to represent not only itself but also the interests of the broader developer ecosystem by suing Apple, stating that it violated antitrust laws.
Although Apple mostly won the initial court battle, it lost one claim that required it to allow developers to place links inside their apps, so users could make purchases outside the App Store. The appeals court did not reverse this judgment, which has to do with California law. Whether the company will have to allow links to outside payments will be decided in future hearings. Apple, in its statement, said that it was considering further action, which could include an appeal to the Supreme Court.
Epic Games CEO Sweeney tweeted after the decision that “Apple prevailed at the 9th Circuit Court,” and although the court upheld the ruling that Apple’s restraints have “a substantial anticompetitive effect that harms consumers,” they found that Epic Games did not prove its Sherman Act case. Sweeney said that the court’s positive decision rejecting Apple’s anti-steering provisions frees iOS developers to send consumers to the web to do business with them directly there. The company is working on the next steps.