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By MICHAEL LIEDTKE
SAN RAMON, Calif .– A federal judge has ordered Apple to dismantle part of the competitive barricade that kept its tightly-run app store, threatening one of the iPhone maker’s biggest money-makers. Such a change could potentially also save application developers billions of dollars which could prompt them to lower the prices paid by consumers.
The ruling on Friday adjudicates a rust-proofing case brought by Epic Games, better known as the creators of Fortnite, the popular video game played by around 400 million people around the world. Apple shares fell on news of the move and fell more than 2% in trading on Friday afternoon, reflecting investor fears the move would siphon billions of dollars in annual revenue from the company.
The legal battle was aimed at commissions of up to 30% that Apple charges on digital transactions within apps. These transactions can include everything from Netflix or Spotify subscriptions to the sale of digital items such as songs, movies, or virtual tchotchkes for video games.
Epic touted the lucrative fee as a price-hike tactic that wouldn’t be possible if competing stores were allowed to carry iPhone apps.
While U.S. District Judge Yvonne Gonzalez Rogers’ ruling requires Apple to make some changes to its app store, she also upheld the company’s right to block other stores from offering apps for its iPhone. . She sided with Apple on all other key points in the case and, in particular, did not find out that the company was operating an illegal monopoly as Epic had accused it.
“As the court recognized ‘success is not illegal’,” Apple said in a statement. “Apple faces stiff competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. “
The Cupertino, Calif., Company did not say whether it would appeal the injunction demanding that iPhone app developers be allowed to offer other payment options.
Gonzalez Rogers also dealt Epic a blow by ruling that the game maker had broken its contract with Apple when Fortnite added a non-Apple payment system to its app. This challenge prompted Apple to oust Fortnite from its app store 13 months ago, triggering Epic’s trial. She ordered Epic to pay Apple nearly $ 3.7 million, or 30% of the revenue it collected while violating Apple’s commissions.
Epic, a private company based in Cary, North Carolina, did not immediately respond to a request for comment. But Epic CEO Tim Sweeney denounced the move in a tweet, writing that it “is not a win for developers or for consumers.”
He said Fortnite will return to Apple’s App Store once it can offer competitive in-app payments. “We will fight,” he added in a later tweet.
185-page ruling crowns lawsuit focused on one of the pillars of Apple’s $ 2 trillion empire – one that late Apple co-founder Steve Jobs began to shape 20 years ago .
Since that lawsuit ended three months ago, Apple has taken two steps to relax some of its app store rules – one to settle a lawsuit and another to appease Japanese regulators without changing its commissions. These concessions make it easier for many apps to trick their users into paying for digital transactions so that they don’t trigger Apple’s fees.
Now Gonzalez Rogers is ordering Apple to take it a step further by allowing links and buttons for non-Apple payment options directly in apps, which Apple has firmly resisted. Apple also maintains that blocking other payment links in apps helps protect the security and privacy of people using its iPhones, iPads and iPods.
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