A federal judge on Wednesday determined that Apple must loosen its grip on the App Store and stop collecting fees for app sales. This concludes the five-year antitrust case brought about by an epic game aimed at changing the power Apple makes with the massive slices of the digital economy.
Judge Yvonne Gonzalez Rogers said Rogers, of the U.S. District Court for the Northern District of California, rebuked Apple for blocking the previous ruling in the lawsuit, and that the company should stop relying on the court further. She criticized Apple's CEO Tim Cook and denounced other executives who lied.
In her previous ruling, Judge Gonzales Rogers ordered Apple to allow the app to pay directly to the service to provide external links to users. The app can avoid the 30% fees Apple charges in the App Store, which could result in less billing for the service.
Instead, Judge Gonzalez Rogers said Wednesday that Apple created a new system that would force external sales apps to pay a 27% commission on the company. Apple also created a pop-up screen to prevent customers from paying elsewhere, informing them that payments outside the App Store may not be secure.
“Apple has tried to maintain a billions of revenue streams by directly opposing this court's injunction,” wrote Judge Gonzalez Rogers.
In response, she said Apple will no longer be able to commission from sales outside the App Store. She also said she could restrict writing rules to prevent developers from creating buttons and links outside the store for payments, and could not create messages to prevent users from making purchases. Additionally, Judge Gonzalez Rogers asked U.S. lawyers to investigate for criminal contense in the Northern District of California.
This ruling – an epic victory and an exciting defeat for Apple – could change the app economy by reducing the costs flowing to Apple while increasing the money developers have raised. Hit by one of Apple's major businesses, the App Store is the most prominent destination for downloading mobile games, productivity tools and other programs.
“There will be a lot of latitude for developers to get better deals and consumers to get better deals,” said Epic CEO Tim Sweeney. “This is a great day for everyone.”
In a statement, Apple spokesperson Olivia Dalton said: “We strongly oppose this decision. We will comply with the court's order and appeal.”
Apple's shares sank 1.5% in trading outside of business hours.
Epic, the maker of the game Fortnite, brought an antitrust law against Apple in 2020. Apple accused Apple of forcing App Makers to use a payment system in exchange for access to the App Store. This is the only way to distribute apps on your iPhone. This rule allowed Apple to collect as much as 30% of its fees on many transactions.
The App Store accounts for the majority of almost $100 billion in annual service revenue collected by Apple.
In a ruling two years later, Judge Gonzalez Rogers stopped declaring Apple as he claimed to have a monopoly in the mobile gaming market. This meant that Apple avoided the worst outcome of the incident. However, she found that the company violated California law against unfair competition by preventing developers from offering users alternative ways to pay for the app.
Last year, Epic complained to the court that Apple had not followed the ruling because Apple created new fees and rules for developers. The judge ordered Apple to provide documents explaining how it came up with a new system.
Apple documents showed that they tried to block alternative payments and maintain as many traditional 30% fees as possible. At a July 2023 meeting, Phil Schiller, who oversaw the App Store, insisted that Apple would not be commissioned, but then Apple's finance chief Luca Maestri defended the 27% rate. According to the documents, Cook was on Maestri's side.
Cook also asked people to display a “fear” screen where “Apple privacy and security standards do not apply to purchases made over the web” when they clicked on the link to pay for an app outside the app store.
“Apple knew exactly what it was doing and chose the most anti-competitive option every turn,” said Judge Gonzalez Rogers.
She said Apple executives “lied under oath,” adding that “Cook had poorly chosen.”
