On Monday, a U.S. appeals court upheld a federal court's order that may require Apple Inc (AAPL.O) to change its payment practices in the App Store, following an antitrust case brought by "Fortnite" creator Epic Games. The order could force Apple to allow developers to provide links and buttons for third-party in-app payment options and avoid paying sales commissions to the company. Apple said it might appeal the decision and is considering a further review. The trial court's orders will remain paused while any appeals unfold. While most of Epic's allegations were dismissed, the trial judge did find that Apple violated California's unfair competition laws. Apple's shares were slightly up at $165.25. Epic still needs to comment on the ruling.
On Monday, the appeals court upheld the trial judge's orders to Apple, requiring the company to change its practices. The 9th Circuit stated that the district court did not make any mistakes in finding Epic suffered an injury that could not be sufficiently compensated with monetary damages. Other countries, such as South Korea, the Netherlands, and Japan, have also compelled Apple to open its in-app payment systems under competition regulations.
The case began in August 2020, when Epic Games introduced a direct payment system in its popular game "Fortnite." Apple promptly removed the game from the App Store, citing a violation of its guidelines. Epic responded with a lawsuit, alleging that Apple was engaging in anticompetitive behavior.
Apple has faced similar challenges in other jurisdictions. In August 2021, South Korea passed a law requiring Apple and Google to allow alternative payment options in their app stores. The following month, the Netherlands became the first European Union country to order Apple to allow third-party payment systems. In October 2021, Japan's Fair Trade Commission ordered Apple to allow developers to offer alternative payment options.
Despite these setbacks, Apple has continued to defend its App Store business model. The company argues that its platform provides a safe and secure environment for developers and consumers and that its commission is reasonable, given its value. Apple also points out that developers can freely distribute their apps through other channels.
The outcome of this case could have significant implications for the broader tech industry as regulators worldwide scrutinize big tech companies' market power. It remains to be seen whether Apple will appeal the ruling and how the case will ultimately be resolved.
