Apple can no longer ban software developers from adding their own payment functions to iOS apps, according to a US judge.
The Friday ruling in the Apple vs. Epic Games case deals a blow to the iPhone maker. District Judge Yvonne Gonzalez Rogers ordered an injunction that “permanently” restrains Apple from blocking developers from using external links and buttons that can redirect app customers to other payment methods outside Apple’s in-app purchasing system.
The injunction, which takes effect in 90 days, threatens to upend Apple’s control over the iOS ecosystem. Under the current iOS App Store rules, purchases made inside any app developer must fork over 30% or 15% of their revenue to the company. App developers also have to use Apple’s own in-app payment system.
However, a year ago, Epic Games protested the requirements by adding its own direct payment option in the iOS version of the company’s hit game Fortnite. The game developer then kicked off an antitrust lawsuit against Apple on claims the company was enforcing a monopoly.
After months of deliberations, Judge Rogers ruled on Friday that Apple’s rules around the iOS App Store constituted a violation of California’s Unfair Competition Law. Hence, she ordered an injunction against Cupertino.
However, Rogers disagreed that Apple possessed a monopoly with its control over the iOS ecosystem, citing a lack of evidence. "Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct," she wrote. "Success is not illegal.
"Nonetheless, the trial did show that Apple is engaging in anticompetitive conduct under California’s competition laws," she added. "The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice. When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted."
Despite the injunction, Apple hailed the ruling as a win. “Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law," the company said in a statement.
"As the Court recognized ‘success is not illegal.’ Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. We remain committed to ensuring the App Store is a safe and trusted marketplace that supports a thriving developer community and more than 2.1 million US jobs, and where the rules apply equally to everyone," it added.
Apple can also petition Judge Rogers to modify the injunction “for good cause based on changed circumstances or otherwise.”
Judge Rogers also found fault in Epic Games’ conduct. In a related ruling, she ordered the company to pay Apple $12 million for “breach of contract” for including a direct payment option in Fortnite a year ago, which Apple argued broke iOS App Store rules.
On Twitter, Epic Games CEO and Founder Tim Sweeney said the ruling "isn't a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers."
The ruling comes shortly after South Korea passed a bill that will require Apple and Google to allow developers to use third-party payment solutions in apps distributed via the App Store and Play Store. As The Verge reports, however, Apple declined to allow Epic Games to return Fortnite to the App Store in the region. And today's ruling does not force Apple to return Fortnite to the iOS App Store, so it seems the popular game will remain excluded from iPhones.
"Fortnite will return to the iOS App Store when and where Epic can offer in-app payment in fair competition with Apple in-app payment, passing along the savings to consumers," Sweeney said today. "Thanks to everyone who put so much time and effort into the battle over fair competition on digital platforms, and thanks especially to the court for managing a very complex case on a speedy timeline. We will fight on."
Last week, in a separate case, Apple made a small concession that allows developers of so-called “reader” apps to include an in-app link to their websites. “Reader apps provide previously purchased content or content subscriptions for digital magazines, newspapers, books, audio, music, and video," Apple said, like Netflix, Spotify, and Amazon Kindle.