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Epic v Apple ruling favours the tech giant, but forces big concession on the App Store’s payment rules

By | Published on Monday 13 September 2021

Epic Games logo

The LA judge overseeing the big Epic Games v Apple legal battle issued a ruling on Friday which mainly favoured the tech giant over the gaming firm, but which nevertheless included an injunction that forces further concessions from Apple in terms of its App Store rules. Though there is some debate over quite how big those further concessions will have to be.

Fortnite maker Epic has filed legal action against Apple in multiple countries, though the US case has got the most attention. Epic – like many app makers, including Spotify – doesn’t like Apple’s App Store rules, which – it argues – breach competition law. It has various grievances with said rules, and especially those rules that govern in-app payments.

Currently, in-app payments on iOS devices can only be taken via Apple’s own commission-charging transactions platform. And to date there have also been restrictions on app makers sign-posting alternative payment options elsewhere on the net.

It’s in the latter domain that Friday’s Epic v Apple ruling definitely favoured the gaming firm. Judge Yvonne Gonzalez Rogers decided that those rules over sign-posting – aka the “anti-steering provisions” – were in breach of California’s Unfair Competition Law. And to that end she ordered Apple to axe the rules that ban app-makers from promoting alternative payment options, including from directly within the app.

On one level that’s a major development in the big old App Store rules debate, although things were already moving in that direction before Friday’s judgement anyway. For example, Apple had previously agreed to amend its rules to clarify that app makers can email users about alternative payment options when settling another lawsuit in the US.

And, based on a settlement with Japan’s Fair Trade Commission, it had also already announced a global rule change that will allow the makers of so called ‘reader apps’ – which includes Spotify – to include links to other payment options within their apps. However, Friday’s ruling – any subsequent appeals pending – will force Apple to extend that rule change to all apps, including those made by Epic Games.

Though both Epic and Spotify would actually like to be able to take in-app payments via their own platforms from within the app, so that users don’t need to click a link and open a web page. And some are optimistic that Apple will ultimately be forced to allow that to happen too, particularly following the passing of a new law in South Korea that bans both Apple and Google from obliging app-makers to use their proprietary payment systems.

In fact, some are already arguing that the injunction issued by Gonzalez Rogers on Friday could even have that effect. That’s based on the injunction saying that Apple can’t prohibit the inclusion of both “buttons” and “external links” that direct customers to other payment options.

By “button”, does the injunction simply mean an external link jazzed up to look like a button – or a button that actually activates a payment process within the app? There are reasons why the latter interpretation might be optimistic, but there is probably enough ambiguity to justify further debate.

Whatever happens on that front, elsewhere in Friday’s ruling, things tended to swing in Apple’s direction. Epic hadn’t proven that Apple is a monopolist that routinely breaches US-wide competition laws, Gonzalez Rogers said.

And Epic was in breach of contract when it unilaterally inserted an alternative payment option into the Fortnite iOS app last year without Apple’s permission, knowing that doing so breached the App Store rules. With all that in mind, Epic has already given notice that it will now take Friday’s ruling to the Ninth Circuit appeals court.

Meanwhile, Epic, Spotify and others will continue to lobby lawmakers around the world to follow South Korea’s lead and formally regulate the Apple and Google app stores, so to avoid any ambiguities in court rulings and to deal with all their various grievances.

And Spotify’s Chief Legal Officer Horacio Gutierrez did just that when responding to Friday’s judgement. He said on Twitter: “We are pleased with Judge Yvonne Gonzalez Rogers’ finding that Apple engaged in anti-competitive conduct and has permanently prohibited their anti-steering provisions”.

But more needs to be done, he added: “This and other developments around the world show that there is strong need and momentum for legislation to address these and many other unfair practices, which are designed to hurt competition and consumers. This task has never been more urgent”.