Apple App Store Policy Change Lets US Developers Link to Outside Payments

There has been a fight between Apple and developers years in the making revolving around Apple App Store policies.

These include things like what exactly allows and doesn’t allow, the cut they take from app creators for using their platform, as well as not allowing creators to take payments externally.

Fortnite creator Epic Games has been leading the fight against Apple, accusing them of being a monopoly and intentionally employing what is more or less malicious compliance and anti-competitive practices.

In this post, we will take a look at the history of controversy, as well as Apple’s recent policy changes.

Let’s take a look!

Apple Vs Epic Games: A Summary and the Recent Supreme Court Ruling

This week, the US Supreme Court denied a request to hear an antitrust dispute between Apple and Epic Games. The court rejected a petition from Apple and also one from Epic Games.

Their rejection results in what is mostly a win for Apple. The legal case of Epic v. Apple began in 2020. Epic Games implemented its own payment system for Fortnite’s virtual currency. This allowed them to bypass Apple’s cut of in-app purchases.

As a result, Apple banned Epic Games from their store. Epic Games retaliated with a lawsuit, claiming that Apple’s walled-garden approach to iOS violates US antitrust laws.

Judge Yvonne Gonzalez Rogers ruled in the Ninth Circuit Court of Appeals that Apple was acting anti-competitively by not allowing developers to link to other payment options. Apple had to change what was deemed its ‘anti-steering’ policies.

However, Apple was able to spend the past four years delaying this change with a series of appeals. The Supreme Court’s denial may be proof that time has run out for the company and they can no longer stall making changes.

At the same time, these proceedings have not been a complete win for Epic Games. To this day, they are still not allowed in the Apple App Store. Also, they have been unsuccessful in their quest to force Apple to allow developers to distribute their apps via sideloading or third-party stores.

According to Epic Games CEO Tim Sweeney:

The Supreme Court denied both sides’ appeals of the Epic v. Apple antitrust case. The court battle to open iOS to competing stores and payments is lost in the United States. A sad outcome for all developers.

— Tim Sweeney (@TimSweeneyEpic) January 16, 2024

Epic Games Will Continue to Pursue Legal Action

Sweeney has vocally criticized Apple’s updates to its policies. In a Twitter thread, he goes over some of the alleged issues. These include:

• Calling Apple’s 27% fee anti-competitive
• The link flows creating unnecessary friction to discourage users
• Apple intentionally implementing a “scare screen” which will discourage users from choosing to use external payment gateways, even if they are linked

Here is a link to the thread, as well as what this “scare screen” looks like.

A quick summary of glaring problems we've found so far:

1) Apple has introduced an anticompetitive new 27% tax on web purchases. Apple has never done this before, and it kills price competition. Developers can't offer digital items more cheaply on the web after paying a… pic.twitter.com/YkHuapG7xa

— Tim Sweeney (@TimSweeneyEpic) January 16, 2024

Epic alleges that this is tantamount to malicious compliance and Sweeney says in his Tweet:

The Long History of Complaints Against the Apple App Store

While Epic Games has been leading the legal battle against Apple, various entities and developers have had issues with them for years, which is a part of why the Apple v. Epic Games court cases are so important.

They are already impacting how Apple has to do business, as we have seen.

For years, there have also been widespread complaints that Apple leverages a lack of competition that they create. The EU even filed an antitrust case against Apple.

Representative David Cicilline (D-RI), who chaired Congress’s hearing with CEOs of four Big Tech companies, said on an appearance on The Vergecast around the time the legal battle with Epic Games began:

While this might sound dramatic, it is important to keep in mind that, comparatively, Apple does charge developers an incredibly high price.

Developers have been distributing, and currently distribute, software online at rates much lower than 30%— we are talking more like 3% to 8%.

Meanwhile, early on at trial, Apple CEO Tim Cook claimed that the Apple App Store is not a business, and no one knows how much it makes.

The Specifics of the Supreme Court’s Decision

So, why exactly has the court made this decision and what is their reasoning?

According to the Supreme Court decision, Apple’s business model didn’t violate antitrust laws. This means that it cannot legally be considered a monopoly in the United States at this time.

The company did, however, go against California’s Unfair Competition Law. It did this by limiting developers’ ability to reference and signpost to outside payment systems.

Even though Apple has updated its rules, it has also been sure to state that the outside payment links that they will allow are subpar in those guidelines:

They also make it very clear that if users opt to make payments outside of the store, they will not be protected by Apple if they need a refund or to manage their subscriptions.

Google Also Under Fire

While it was unheard of before the legal battle between Epic Games and Apple to allow third-party payment options in major app stores, it is likely going to become more normalized with time.

Will consumers opt for these third-party payment options? Only time will tell.

In December of 2023, Google was said to have “willfully acquired or maintained monopoly power by engaging in anticompetitive conduct” against Epic Games. The company was then found guilty by U.S. District Judge James Donato.

In addition, Google paid $700 million in a settlement with the US attorney general. This was the result of another case claiming that Google uses the Play Store to monopolize.

This led to the company making changes to its app store model, similar to what Apple has done. This includes the option for developers to use alternative billing methods.

Final Thoughts on the Apple App Store Policy Change

While it remains to be seen what, if anything, will come of the further legal action that Epic Games has said it will take, at least we know where things stand as of now.

Even though both Epic Games and Apple did not get exactly what they wanted, we are already starting to see broad changes in the industry as a result of the legal battles over the past few years.

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