Apple must change its tightly controlled App Store, judge rules in epic lawsuit: NPR

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Apple CEO Tim Cook at the World Economic Forum in Davos, Switzerland in 2020.

Markus Schreiber/AP


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Markus Schreiber/AP


Apple CEO Tim Cook at the World Economic Forum in Davos, Switzerland in 2020.

Markus Schreiber/AP

A federal judge on Friday ordered Apple to open up the tightly controlled App Store and allow people to use payment methods other than Apple’s own processor, which typically takes a 30% commission on app purchases. ‘apps.

U.S. District Judge Yvonne Gonzalez Rogers’ ruling is the most significant strike yet against the system that includes Apple’s commission, what critics call “the Apple tax.” This could force the tech giant to revamp its entire business model for apps on iPhone and iPad.

That said, the judge did not force Apple to lower its 30% commission on its own payment processor, as Epic had hoped. Instead, the judge said customers should just have more app payment options.

Gonzalez Rogers said Apple was breaking the law by blocking consumers from accessing alternative payment methods. She wrote that Apple’s policies “hide critical information from consumers and unlawfully stifle consumer choice.” Along with what she called the tech giant’s “nascent antitrust violations,” she ordered Apple to make changes within 90 days.

But it didn’t go as far as Fortnite maker Epic Games, which sued Apple, had hoped to loosen Apple’s grip on much of the $100 billion mobile gaming economy.

Additionally, Gonzalez Rogers ordered Epic to pay Apple $3.6 million for violating App Store policies last year. Epic had introduced its own payment method within Fortnite. Apple kicked it out of the App Store, sparking the legal battle.

“Today’s decision is not a victory for developers or for consumers,” said Tim Sweeney, CEO of Epic Games. tweeted, adding that his company fights for “fair competition between in-app payment methods and app stores.”

Apple said the decision largely favors the company.

In a statement, Apple took away part of Gonzalez Rogers’ 185-page decision. She said the “relevant market” in the case was for digital mobile game transactions. And in that market, she concluded, Apple has no monopoly power, given the many other competitors, noting that “success is not illegal.”

“Apple faces stiff competition in every segment in which we operate, and we believe customers and developers choose us because our products and services are the best in the world,” a spokesperson said. ‘Apple.

An Epic spokesperson said the company is appealing the decision. Apple said it was “considering all legal options”.

Apple made concessions to app developers ahead of the ruling

Apple recently extended an olive branch to certain developers, including Netflix and Spotify, by allowing them to send messages to customers directing them to payment processors outside the App Store. Apple did not apply the new rule to mobile games, the company’s most lucrative app segment.

Gonzalez Rogers’ decision forces Apple to go much further by allowing developers, directly within their apps, to direct customers to alternative payment methods. She said Apple needed to make this change to all of the millions of apps available on the App Store.

The decision comes after a three-week trial that resulted in the appearance of Apple CEO Tim Cook. Cook defended the 30% commission that Apple usually charges app makers whenever someone buys an app through Apple’s App Store or when someone buys something in an app downloaded on an iPhone .

At the most dramatic moment in the trial, Gonzales Rogers asked Cook about Apple’s commission rate, opening a line of questioning that seemed to follow Epic’s view that Apple’s closed system for downloading and processing payments ‘Apple in the App Store has cut off competition and led to higher prices and fewer choices for consumers.

“If there was real competition, that number would move. And it doesn’t,” Gonzales Rogers said of Apple’s 30% cut.

Apple said the revenue from these fees is used to protect the privacy and security of the apps. Google charges developers the same fee rate for app purchases on the company’s Android devices. In response to the pressure, Apple and Google have lowered the commission to 15% for some small developers, although most of the money generated for the tech giants comes from fees levied on large app developers.

Big tech companies face multiple antitrust lawsuits

The courts have become a key battleground between tech giants and their critics, as lawmakers and regulators in Washington debate ways to control the industry. The Justice Department and state attorneys general are reportedly investigating whether Apple’s App Store commission violates US competition laws. And in Europe, regulators have launched an investigation into whether the iPhone’s ironclad grip on the mobile economy violates EU law.

Sweeney, the maverick CEO of Epic Games, had launched an all-out campaign against Apple after provoking the tech giant by offering Fortnite players a way to purchase in-game items outside of the App Store .

In response to its rules violation, Apple kicked Fortnite out of the App Store. This led Epic to pursue and launch a PR campaign aimed at drumming up support for its crusade against Apple. Sweeney has long claimed he’s not just acting for the benefit of his nearly $30 billion video game empire, but for developers around the world who feel pressured by Apple.

“Not everyone has much of a vested interest in challenging Apple and Google’s 30% because they want to be the next bastard to charge 30%,” Sweeney told NPR last year.

Editor’s note: Apple is one of NPR’s financial backers.



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