The US District Court Judge Yvonne Gonzalez Rogers ruled on Epic Games’ antitrust lawsuit against Apple on Friday, which dealt a major blow to the latter’s lucrative App Store business. Rogers issued a ban, stating that Apple will no longer be allowed to prohibit developers from providing links or other methods that guide users to bypass in-app payments.
The ban resolves long-standing complaints from app developers and increases the possibility that developers may redirect their users to their third-party websites to subscribe or purchase digital content, thus detrimental to Apple’s App Store sales. The judge said that Apple’s enforcement of the restrictive guidance clause was anti-competitive. After the news was announced, Apple’s stock price fell more than 3% intraday.
The above decision ends the first part of the battle between the two companies regarding App Store policy and whether it will stifle competition. Apple won 9 out of 10 charges, but was found to be engaged in anti-competitive behavior under California law and will be forced to change its App Store policy and relax its control over in-app purchases. The above-mentioned ban will take effect in December.
Rogers wrote: “The court concluded that Apple’s anti-guidance clauses hide key information from consumers and illegally stifle consumers’ choices. Coupled with Apple’s initial antitrust violations, these anti-guidance clauses are Anti-competitive, it is necessary to take remedial measures nationwide to eliminate these clauses.” However, Rogers said that Apple is not a monopolist and success is not illegal.
Rogers wrote: “Given the trial record, the court cannot conclusively determine that Apple is a monopolist under federal or state antitrust laws.” The trial took place in Oakland, California in May, and the CEOs of both companies testified in a public court. Those familiar with the trial had previously reported to the media that both parties expected to appeal regardless of the verdict. This lawsuit may continue for at least a year, and may eventually reach the Supreme Court of the United States.
Since the trial ended but before the ruling was issued, Apple has made some concessions, some of which are part of a settlement with other app developers, including relaxing some rules about sending emails to customers to encourage them to make out-of-app purchases and allowing Links are provided in some apps. Rogers also ruled that Epic Games must also pay compensation to Apple because the former breached the contract.
Epic Games will pay Apple 30% of all revenue from its iOS Fortnite games through direct payment. Epic Games also sued Google for controlling the Google Play Store for Android phones. The case has not yet been heard in court.
