Epic Games v. Apple - Judgment Day
19 Sep 2021The recently issued decision in the Epic Games v Apple case has proven to be something of a Rorschach test, but it does prefigure a loosening of the company’s grip on the iOS App Store.
We previously reflected on the business/legal controversy surrounding Apple’s iOS App Store, in-store payments and subscriptions. After a “quiet period” over the summer, resolutions of three court cases have led to changes to Apple’s policies and further consideration of Apple’s position under antitrust regulations.
The majority of articles about the decision issued by Judge Yvonne Gonzalez Rogers in the Epic case have taken the position, “Apple Wins.” Others highlighted the injunctive relief that the judge ordered: Apple may no longer forbid developers from steering customers to non-Apple payment sites. And there were also some oddball reactions, like this one from a prominent investor in the blockchain world saying that the ruling opens the door for cryptocurrencies to play a bigger role in iOS app payments.
Judge Rogers agrees with Apple’s legal team on most points of US antitrust law concluding that “the Court does not find that Apple is an antitrust monopolist in the submarket for mobile gaming transactions.” She penalizes Epic for violating the Apple developer agreement (which will cost it $3.6 million). However, the judgment also observes:
Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share. Apple is only saved by the fact that its share is not higher, that competitors from related submarkets are making inroads into the mobile gaming submarket, and, perhaps, because plaintiff did not focus on this topic.
Relying on California law, she issues an injunction which would allow app developers to inform customers about other ways (besides Apple’s) to pay for their app subscriptions.
Combined with settlements that Apple announced recently with small US app developers and with regulators in Japan and South Korea, the net effect is a significant loosening up of Apple’s iOS commission structure. Courts and regulators in two countries (so far) have indicated that Apple is in their field of vision: something Apple will have to take into account as the App Store continues to evolve.
Epic has already appealed its case and a number of prominent iOS developers have indicated they are not satisfied with the measures announced by Apple. Nevertheless, these changes amount to the opening offer in a negotiation between the world’s most valuable company and the developer community.