The US Northern District of California ruled that Apple violated its 2021 injunction targeting anti-steering App Store rules in the Epic Games lawsuit. Judge Yvonne Gonzalez-Rogers said that Cupertino is in “willful violation” of her order. “Apple’s continued attempts to interfere with competition will not be tolerated,” the ruling states.
As a result, Apple can’t charge a 27% commission on off-app purchases. The company must also let developers inform their customers about other purchasing mechanisms. The ruling reveals:
To summarize: One, after trial, the Court found that Apple’s 30 percent commission “allowed it to reap supracompetitive operating margins” and was not tied to the value of its intellectual property, and thus, was anticompetitive. Apple’s response: charge a 27 percent commission (again tied to nothing) on off-app purchases, where it had previously charged nothing, and extend the commission for a period of seven days after the consumer linked out of the app. Apple’s goal: maintain its anticompetitive revenue stream.
Two, the Court had prohibited Apple from denying developers the ability to communicate with, and direct consumers to, other purchasing mechanisms. Apple’s response: impose new barriers and new requirements to increase friction and increase breakage rates with full-page “scare” screens, static URLs, and generic statements. Apple’s goal: to dissuade customer usage of alternative purchase opportunities and maintain its anticompetitive revenue stream.
In the end, Apple sought to maintain a revenue stream worth billions in direct defiance of this Court’s Injunction.
The judge provided instructions on the changes Apple is required to make:
- Apple can’t prevent developers from adding links or buttons to direct customers to make purchases outside the App Store.
- The company can’t collect a fee or commission for purchases outside an app; it also can’t track, audit, or monitor consumer activity.
- Apple can’t control how developers communicate inside their apps.
- The company can’t add “scare screens” when users decide to leave an app for a website. In fact, Apple must offer a neutral message when consumers are directed to a site.
Apple said in a statement, “We strongly disagree with the decision. We will comply with the court’s order and appeal.”
This ruling in the Epic Games vs. Apple case could prompt the European Union to rethink how the company handles third-party marketplaces. Currently, Apple can collect a fee from these stores, as well as monitor and decide which apps are available on them.
We’ll keep you posted as we learn more about how the case unfolds.
