The Apple share price fell to a 3.3% loss on Friday for a bad end to the week after a judge in the U.S. ruled in favour of Fortnite maker Epic Games, which is suing Apple over what it says is abuse of the practical monopoly its App Store enjoys. Apple removed Fortnite from the App Store after Epic offered its users a way to pay for in-app purchases that bypassed the iPhone maker’s payment system.
App Store rules say that all payments made to the owners of apps downloaded from it, which is the only official way for iOS devices like iPhones and iPads to access and install new apps, must be made through its payments system. It then takes a cut of up to 15%. App owners have not been able to offer alternative payment routes directly, cutting Apple out. At least, not if they want their app to continue to be available via the App Store, as Epic discovered.
Apple will no longer be able to block app owners from providing in-app buttons or links offering users alternative ways to make payments other than through the App Store. App owners will also now be able to contact users directly, offering them other ways to pay, if the contact is made using information provided after they signed up to use the app through the App Store.
Enticing users to leave the App Store’s payment system could save app owners up to 30% of the revenues they generate. That’s what the tech giant can take in commissions and other charges through what Epic has branded the “Apple Tax”.
The ruling delivered on Friday comes almost 4 months after a 3-week May trial presided over by Judge Yvonne Gonzalez Rogers, of the U.S. District Court for the Northern District of California. The judge ultimately came down somewhere in the middle by ruling Epic had not proven Apple’s control of the App Store amounted to an illegal monopoly. That would have forced the company to open its mobile devices up to third-party app stores.
But the ruling did show agreement that Apple is engaged in anti-competitive behaviour in its role as gate-keeper to the users of the roughly 1.65 billion active devices it has in operation. Apple argues it earns the commissions it charges by ensuring a safe and secure marketplace users of its mobile devices can download apps from.
The judgement will be pored over by regulators, many of whom have the power wielded by Apple and the other Silicon Valley tech giants over the digital economy in their sites and would like to see them broken up or otherwise reigned in.
In the hours before the Friday ruling, Epic reportedly requested Apple restore Fortnite to the App Store. Apple responded it would only consider reinstating Epic’s account with the App Store if it signs a new developers agreement. That agreement will now have to be updated.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.