Apple just suffered an important setback in court. Or did it?
What the judge decided in Epic v Apple, and what it could mean for App Store users and developers.
For the last year or so, Apple and Epic Games, maker of the popular online game Fortnite, have been battling in court over Apple’s App Store business model. Epic claimed Apple was being anti-competitive by limiting App Store and in-app purchases to Apple’s own payment system, and by making the App Store the sole gatekeeper to developers getting their apps onto the literally billions of iPhones in the world.
Today the judge in the case made several key rulings. First of all, the court exonerated Apple against claims that it has a monopoly:
Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal.
This is obviously the correct ruling. Apple doesn’t have a monopoly in any one of the many markets it competes in. This may also help Apple more broadly as the U.S. government has been mulling bringing antitrust legislation to bear against Apple.
Secondly, the court ruled in favor of Apple’s claims that Epic was in breach of contract when it added its own payment system to Fortnite last year, the action which prompted Apple to remove the app from the App Store. The court also ordered Epic Games to pay damages to Apple over this issue.
That all sounds pretty good for Apple so far, but here’s where it gets interesting. First what the court said:
Apple Inc. and its officers, agents, servants, employees, and any person in active concert or participation with them (“Apple”), are hereby permanently restrained and enjoined from prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.
In doing this, the court essentially struck a clause from the App Store terms and conditions that forbids app developers from being able to use in-app messaging to alert users to the fact that they can purchase content from that app-maker via a means outside of Apple’s payment system. I take this to mean that Apple can’t prohibit a company like Netflix from advertising within its app that customers can purchase a Netflix subscription on Netflix’s homepage, or a game developer from letting players know that they can buy loot boxes and such on the game developer’s website.
Apple is calling this a win. Now that’s partially PR spin to direct investors and all the rest of us away from the bad news in this ruling. But Apple’s also probably genuinely pleased that this ruling could help it avoid some of the other antitrust pressure it’s been under for the last year.
Meanwhile, Epic Games isn’t celebrating this decision at all. They’re unhappy that the stunt they pulled last year in forcing Apple to remove their app so that they’d have grounds to bring this suit in the first place didn’t pay off any bigger for them than it. did. The court didn’t force Apple to return Fortnite to the App Store, and it didn’t force Apple to allow competing app stores on iOS. The latter is what Epic Games is really angling for. Don’t fall into the trap of thinking that Epic Games is the little guy fighting on behalf of the users. They’re a self-interested multi-billion dollar company fighting a self-interested multi-trillion dollar company.
I’m not a lawyer, and journalists and developers on Twitter have been arguing on Twitter since the ruling came down about what this will mean in the long run. The court’s ruling doesn’t go into effect for 90 days, and it’s possible that Apple could get another court to overrule it. Meanwhile we can all be sure that neither Apple nor Epic Games are done with this quite yet.