A federal judge ruled Wednesday that Apple must relax its control over the app store and stop collecting commissions for certain app sales, limiting the five-year antitrust case brought by Epic Games, which aims to change Apple’s role in much of the digital economy.
Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California denounced Apple’s previous ruling in the lawsuit and said the company needs to stop further disobeying the court. She criticized Apple CEO Tim Cook and accused other executives of the company.
Gonzales Rogers ordered Apple in an earlier ruling to allow apps to provide users with external links to pay directly to developers. These apps can then avoid Apple’s 30% commission on its app store and may charge less for the service.
Instead, Justice Gonzalez Rogers said Wednesday that Apple created a new system that forced externally sold apps to pay a 27% commission to the company. Apple also created a pop-up screen that prevents customers from making payments elsewhere and tells them that payments outside the App Store may be unsafe.
“Apple attempts to maintain a multibillion-dollar revenue stream, directly violating the court’s injunction,” Judge Gonzalez Rogers wrote.
In response, she said Apple can no longer charge commissions from sales outside the app store. She also restricted the company’s writing rules that would prevent developers from creating buttons or links to pay outside the store and said messages could not be created to prevent users from making purchases. Additionally, Judge Gonzalez Rogers asked U.S. prosecutors in the northern U.S. region to investigate the company’s crimes.
The ruling is a major victory for Epic and Apple’s stinging failure – potentially changing the application economy by increasing the funds collected by developers and reducing the costs to Apple. This hits on one of Apple’s main businesses, whose App Store has long been the most prominent destination for people to download mobile games, productivity tools and other programs.
“There will be a lot of latitudes for developers to get better deals and get better deals for consumers,” said Tim Sweeney, CEO of Epic. “It’s a great day for everyone.”
Apple can appeal the decision. The company did not respond to a request for comment. Its shares account for 1.5% of after-hours transactions.
Epic, the maker of game Fortnite, filed an antitrust lawsuit against Apple in 2020. These rules allow Apple to charge up to 30% commissions on many transactions.
The App Store accounts for a large portion of the nearly $100 billion in annual service revenue collected by Apple.
As Epic said, in a ruling two years later, Judge Gonzalez Rogers stopped declaring Apple’s monopoly in the mobile gaming market. This means Apple avoids the worst outcome of the case. But she found that the company violated California law by preventing developers from offering users other ways to pay for their applications.
Last year, Epic complained to the court that Apple did not comply with the ruling because it created a new set of fees and rules for developers. The judge ordered Apple to provide documents explaining how it proposed its new system.
Apple’s documents show that it tries to block alternative payments and keep as much of its 30% commission as possible. At a meeting in July 2023, Phil Schiller, who heads the App Store, advocated that Apple would not take any commissions, but at the time, Apple’s financial director Luca Maestri advocated 27% of the fees. According to the document, Mr. Cook stood with Mr. Maestrey.
Mr. Cook also asked when people click on links to pay for apps outside the app store, they display a “panic” screen saying “Apple’s privacy and security standards don’t apply to purchases on the web.”
“Apple knows exactly what it is doing and everywhere has chosen the most anti-competitive option.”
She said Apple executives “absolutely lied”, adding: “Cook’s choice was not good.”
