Judge Yvonne Gonzalez Rogers handed down a decision Friday in a closely guarded trial between Apple and Epic Games.
Rogers ordered a court order stating that Apple will no longer be allowed to ban developers from providing links or other communications that take users away from purchases built into Apple’s app, of which 15% is needed at 30% of gross sales.
The instruction addresses a long-standing developer complaint and suggests the possibility that developers may direct their uses to their website to subscribe to or purchase digital content, hurting Apple’s App Store sales.
On Friday, Apple shares fell 2% in trading.
The decision concludes the first part of the battle between the two companies over Apple’s App Store policies and whether they stifle competition. Apple won by 9 out of ten points, but will be forced to change its App Store policies and loosen its in-app purchases.
Rogers said Apple was not a monopolist and that “success is not illegal.”
“Given the background to the lawsuit, the Court cannot ultimately conclude that Apple is a monopolist under federal or state antitrust laws,” Rogers wrote.
However, it found that Apple was engaged in anti-competitive conduct under California law and issued the court order, which will take effect in 90 days.
“The Court concludes that Apple’s anti-management provisions hide critical consumer information and illegally stifle consumer choice,” Rogers wrote. “Combined with Apple’s incipient antitrust violations, these anti-management provisions are anti-competitive and a national remedy is justified to remove these provisions.”
The trial took place in Oakland, California, in May, and included the company’s two CEOs testifying at a public hearing. People familiar with the trial had previously told CNBC that both parties expected the decision to be appealed regardless of what it was.
Since the trial ended, but before the decision was made, Apple has made several changes to dampen criticism, some as part of agreements with other application developers, including the relaxation of some rules on email to customers to encourage them to shop outside the app and allow in-app links.
Rogers wrote in the decision that he disagreed with both Apple and Epic Games over the market framing that Apple allegedly dominates. Rogers found that these were “digital mobile game transactions,” which did not control the App Store’s applications, as Epic Games had alleged, nor were they all video game, as Apple had claimed.
Battle for Fortnite
Epic Games is one of the most prominent companies to challenge Apple’s control of its iPhone App Store, which has strict rules about what is allowed and not allowed, and requires many software developers to use the integrated payment system in the application, which lasts between 15% and 30%. % of each transaction.
Epic’s most popular game is Fortnite, which makes money when players buy V-dollars or game currency to buy costumes and other cosmetic changes.
Epic was not looking for money from Apple, but wanted to be allowed to install its own app store on iPhones, which would allow it to avoid Apple’s cut and impose its own fees on the games it distributed. Epic Games CEO Tim Sweeney had criticized the purchase rules since Apple’s application as early as 2015, according to court records and exposures.
Apple CEO Tim Cook is being questioned by Gary Bornstein as he testifies at the booth during a week-long antitrust trial in federal court in Oakland, California, USA, on May 21, 2021 in this courtroom outline .
Vicki Behringer | Reuters
But the public clash between the two companies began in earnest in August 2020, when Epic implemented a plan to challenge Apple called “Project Liberty,” according to court statements.
Epic Games has upgraded Fortnite to its servers to reduce the price of the game currency by 20% if players buy directly from the company, bypassing Apple’s takeover and violating Apple’s rules to keep users away from their payments to the app.
Apple removed Fortnite from the App Store, meaning new users would not be able to download it and would eventually stop working on iPhones because the app could not be updated. As expected, Epic filed a lawsuit that culminated in the May trial.
Epic Games will also have to pay damages to Apple for breaching its contract, Rogers said. Epic will pay Apple 30% of all revenue it earned from iOS Fortnite through direct payments.
At trial, Apple CEO Tim Cook testified one of the last few days and faced a timely interrogation by Judge Rogers about his restrictions on directing users to shop outside of the app, which ended up being the subject of Friday’s ban.
“I don’t seem to feel any pressure or competition to really change the way we act to address developers’ concerns, ”Rogers said at the time.
Epic Games also sued Google for its Play Store control for Android phones. This case has not yet gone to trial.