13 October 2021

by Nooreen Ajmal

Epic Games vs Apple – What does the recent decision mean?

In September, the District Court of Northern California reached a decision in the Epic Games vs Apple case that many have said is a victory for neither party but nevertheless has some very interesting consequences.

In August 2020, Epic Games brought a lawsuit against Apple challenging some of its practices and policies relating to the iOS App Store. One of the things alleged against Apple was that its rules effectively mean it is operating an “illegal monopoly”. Epic argued that Apple’s requirement that all apps use the App Store purchase tool and its charging of 30% commission for app sales is monopolistic.

The dispute began when Epic issued an update to its Fortnite app on iOS and android that gave users an option to buy V-bucks (Fortnite’s virtual currency) directly from Epic, allowing customers to circumvent the App Store for iOS users and GooglePlay for Android users. Apple’s reaction was to delist Fortnite from the App Store and Google took similar action on the GooglePlay Store. Epic has filed a lawsuit against Google as well, but this case has not yet gone to trial.

Epic said it wanted to set up its own storefront but was prohibited by Apple’s rules. It further contended that it was obligated to charge its customers more for V-bucks because of Apple’s large transaction fees through the App Store. This has been a long-standing bugbear of developers against Apple, and Epic said its hope was that a decision in its favour would open the door for other developers to create their own storefronts.

On 10th September Judge Yvonne Gonzalez Rogers issued an injunction that effectively will now allow developers to provide links and information in their apps directing users to opt for alternative payment mechanisms to Apple in-app purchasing.  In the decision, the judge stated, “The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice”.

However, as part of the same decision, Judge Rogers concluded, “Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws” and “success is not illegal”. Epic also had to pay Apple its unpaid royalties amounting to $6 million USD. Apple has hailed the decision as a “resounding victory” vindicating it from being anti-competitive.

The decision is thought to be an important turning point in the future of the gaming industry. It essentially changes the landscape for app payments used on Apple devices. Apple maintains strict policies and rules for use of its platform. Part of its reasoning is the level of security it can afford and maintain through the App Store. With app developers able to offer other payment mechanisms going forward, it seems possible that level of security can no longer be guaranteed. Apple’s revenue from the App Store will also likely be impacted although it will be interesting to see if it implements other charges to compensate for this. The decision is also being deemed a potential catalyst for future antitrust claims against big tech companies who may in future face increased regulation. The Epic case against Google is clearly another one to watch.

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