On Friday, the ruling in the lawsuit that Epic Games filed against Apple was delivered. This is important enough that I think it warrants its own focus. This is not the end of the legal battle, In many ways, it is just the beginning. Both sides will likely appeal, and this case seems destined for the United States Supreme Court. But it has to start with the first court case, which is what we have. Who won? Neither party. Who lost? Also neither party? It’s complicated. Let’s dive in.
I’m not going to pretend to be an expert, though I do play one on the internet sometimes. I can only go with what I read on the internet, from people much smarter than I am. So by all means do not take what I say here as expert commentary. I’m just a guy. It should also be noted that Google is facing a similar lawsuit, and that case has yet to go to trial. The arguments are similar, but Google has a different model for devices running Android, so not everything would apply. Regardless, the lawsuit with Apple was heard first, and we will focus solely on that here.
First off, a reminder of how we got here. Apple requires all developers with apps in the app store to use Apple for payment in the app, be it to pay for the app at the beginning, or in app purchases. Apple does not allow alternative payment methods, nor does it allow developers to tell users that there may be alternate payment methods outside of the app. This leads to apps like Netflix letting users log in to Netflix, but not subscribe, or even tell users how to subscribe. Apple takes a 30% cut of every transaction completed in an iOS app, and the business model is extremely lucrative for the company, especially in games. Developers for years have ben pushing back against Apple’s 30% policy, and the company has relented to a certain extent. Some recurring subscriptions can have Apple’s share cut to 15% after one year, and smaller developers can get some relief from the program. But this is largely token changes, and not substantial.
Epic Games makes Fortnite, which is one of the biggest games in the world, and is available on virtually every platform. On iOS, in app transactions were subject to that 30% cut, and Epic Games has been one of the biggest complainants. Last year, the company updated the game and allowed users to make in app purchases without Apple’s payment system, and those purchases cost 30% less than purchases made through Apple. Since that violated Apple’s terms of service, Apple removed Fortnite from the App Store, and Epic Games sued Apple.
The primary things Epic was suing over were that Apple held, and abused a monopoly position on the App Store for iOS devices, and that Apple not allowing developers to even tell users that there are other ways to pay for services is a further abuse of that monopoly position. There is much more to it than that, but that’s the crux of the arguments.
Those two pieces are important, because those are the large pieces that the judge in the case ruled on. The Judge ruled mostly in favor of Apple in this case. Firstly, while Apple and Epic spent most of the trial trying to define the App Store market, and what is a video game on the App Store, the judge in the case threw out all of their arguments and made her own decision that this lawsuit would be about mobile game payments, not about the wider App Store in general. That’s a significant narrowing of the scope of this trial, and could have implications further down the line. The judge did not deem Apple to be a monopoly abusing their position, but did rule against Apple on the matter of telling users about payment options. The judge issued a ruling that Apple must allow developers of apps to provide the users information on ways to purchase products and services outside of App Store ecosystem. What that process looks like is up for debate based on the ruling, which did not appear to be clear if Apple has to allow alternative payment methods in the app, or just allow apps to actually tell users other payment methods exist outside of the app. In fact, one of the biggest questions of the whole case will be parsing the part of the ruling the Epic did win, since the jugde ruled Apple must allow a “button or external link” to alternative payment options, which is very ambiguous.
While that is a big victory for Epic Games, and the rest of the developer ecosystem on the whole, Apple likely came away mostly happy with the ruling, since the judge did not rule for Epic in any other way. Should this ruling come into effect, it appears that Apple may only be required to let game developers tell users that they can purchase virtual goods in mobile games outside of the app store. However, that point is moot as the ruling is not set to come into effect until December, and appeals of the ruling likely mean that it won’t come into effect at all pending further court challenges.
Epic Games has already appealed the ruling, since they lost on most of their arguments. As of this writing, Apple has not yet decided whether to appeal the portion of the case that it lost. There is a good chance the company will, as in app purchases in mobile games represents the majority of App Store revenue.
The Epic Games appeal means that the ruling will likely not come into effect, and as has been the case since the lawsuit was first filed, it will literally be years before this is finally resolved. As I said, this is destined for the United States Supreme Court. Eventually. Until then, don’t count on being able to play Fortnite on your iPhone or iPad.
https://www.theverge.com/2021/9/12/22667694/epic-v-apple-trial-fortnite-judge-yvonne-gonzalez-rogers-final-ruling-injunction-breakdown