Apple beat Epic Games 9-1 in court. Now it's appealed the one point it lost
- Reference: 1633928559
- News link: https://www.theregister.co.uk/2021/10/11/apple_appeals_epic_steering_case/
- Source link:
The iGiant's legal stoush with Epic concerned the games developer's decision to sell virtual goods directly from within its smash hit game Fortnite, and to do so at a discount compared to prices offered in Apple's App Store. Epic did so, in part, to point out that Apple's 30 per cent cut of in-app purchases inflates the prices of apps and digital goods.
Apple responded by booting Fortnite from the App Store and cancelling Epic's developer account.
[1]
The dispute went to court and Apple [2]mostly won – US District Judge Yvonne Gonzalez Rogers found Apple is not a monopolist and found in favour of the fruity company on nine of ten counts.
[3]
[4]
But Epic Games won on one count that concerns California's "anti-steering" laws – statutes that bar limiting choice of service providers.
To understand steering, consider the rules around making a car insurance claim in California. Insurance companies like to "steer" policy holders to repairers they know can do the job at a low price, which saves insurers money. California law believes that "steering" robs consumers of choice, therefore it allows policy holders to pick their preferred repairer regardless of an insurer's preference.
[5]
Judge Rogers found that by insisting on allowing only the App Store for purchases, Apple is on the wrong side of California steering laws and made an injunction that denies Apple the right to prohibit developers from using – or even suggesting – third-party payment options.
And as US law firm Sullivan and Cromwell wrote in a [6]Memo : "The court's injunction opens the way for app developers to avoid Apple's 30 per cent in-app-purchase commission by giving them the ability to direct their customers to less-expensive alternatives".
Apple, therefore, remains at risk of losing the sweet, strong, and steady flow of revenue it says is essential to fund the App Store's ongoing secure operations.
[7]
Hence this appeal.
Apple's also asked for a stay of Judge Rodgers' injunction, in a [8]filing [PDF] that says it's needed because following its requirements "would upset the careful balance between developers and customers provided by the App Store, and would irreparably harm both Apple and consumers.
"The requested stay will allow Apple to protect consumers and safeguard its platform while the company works through the complex and rapidly evolving legal, technological, and economic issues that any revisions to this Guideline would implicate."
[9]Epic trolling: Microsoft allows third-party storefronts into its app store
[10]EU readies 'antitrust charges' against Apple Pay for locking rivals out of iPhone NFC chip
[11]Revealed: How to steal money from victims' contactless Apple Pay wallets
The filing also argues that Apple will win on appeal, and that Epic won't be harmed if the injunction is stayed because it has no products in the App Store.
Another thread of Apple's argument asserts that the injunction may have been applicable at the time the first case was decided, but as the app market and App Store evolves, it could be a blunt instrument that stops the company from responding to a changing market.
"Apple is working hard to address these difficult issues in a changing world, enhancing information flow without compromising the consumer experience," the filing states. "A stay of the injunction would permit Apple to do so in a way that maintains the integrity of the ecosystem, and that could obviate the need for any injunction regarding steering."
That hint that Apple could be open to arrangements that aren't considered steering is quite an admission, but also a nod to the realities the company faces after [12]allowing some third-party payments in Japan, [13]changing policies in the USA to reduce commissions paid by small developers, and the introduction of [14]South Korea's law requiring access to third-party payment systems. ®
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[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YWQLan-wqiLep7slwEDZVwAAAMY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://www.theregister.com/2021/09/10/apple_epic_judgement/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YWQLan-wqiLep7slwEDZVwAAAMY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YWQLan-wqiLep7slwEDZVwAAAMY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YWQLan-wqiLep7slwEDZVwAAAMY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.sullcrom.com/files/upload/sc-publication-takeaways-from-trial-court-decision-epic-apple.pdf
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YWQLan-wqiLep7slwEDZVwAAAMY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://regmedia.co.uk/2021/10/11/pacer_apple_epic_stay_application.pdf
[9] https://www.theregister.com/2021/09/29/microsoft_store_allows_third_party_storefronts/
[10] https://www.theregister.com/2021/10/06/eu_apple_nfc/
[11] https://www.theregister.com/2021/09/30/apple_pay_contactless_visa_fraud/
[12] https://www.theregister.com/2021/09/02/apple_japan_reader_app_settlement/
[13] https://www.theregister.com/2021/08/27/apple_vs_cameron_et_al_settlement/
[14] https://www.theregister.com/2021/09/01/south_korea_anti_google_bill_passed/
[15] https://whitepapers.theregister.com/
Re: Dear Apple...
Really? Is that what the comments section has come down to?
"In court filings today, Apple... " F*CK YOU APPLE
Get a brain. Then come back and try again.
Is it going to matter ?
Apple is always going to want its 30%. At some point, Apple will need to get paid for the use of their infrastructure (read : the appstore). So they're going to look at the sales price of an app, and are simply going to charge the maker 30% for the service. For a given app that costs, say, 10 (choose currency of choice) they're not going to charge 30%, but charge 3 (chosen currency) for platform use ( I know it sounds the same, but there may be a difference in the way trade law defines it). Only now the payment provider is going to tack their charge onto that.
So offering 'payment platform' choices sounds great, but how is it going to make the software cheaper for the end user ? I'm pretty sure Apple is not going to take a smaller fee.
Re: Is it going to matter ?
If they don't take a smaller fee, they'll lose business to their cheaper competitors. If they had competitors, I bet they'd miraculously find their way to charging less.
Re: Is it going to matter ?
I may be very much mistaken, but if I read this correctly this is about how the Apple store gets paid, NOT about an alternative to the App store.
Re: Is it going to matter ?
I understand it's about how Epic gets paid for their in-game transactions. They are still compelled to go through the app-store, even though by then they could use something else.
Re: Is it going to matter ?
You are mistaken. This is about monopolistic behaviour by Apple and smaller wanna-be monopolists complaining about it.
Re: Is it going to matter ?
I can install software on my computer from any source I like without paying Apple for their infrastructure that I do not use. Epic would like Apple customers to have the same options I already have.
Re: Is it going to matter ?
Apple will always want its $
I suspect it will change the T&C somehow so that it is app-usage based
so not 30% of 10
but 10% of 10 every 'period'. Like SAAS but not.
More like
Apple App Store As a New Automated Simple Service Holistically Optimised Legally Enabled
(or "apple as an asshole" if you will.)
Re: Is it going to matter ?
"Apple is always going to want its 30%. At some point, Apple will need to get paid for the use of their infrastructure"
Apple still can and will charge the 30% for anything bought on the App store, what it can no longer do is force all 3rd party payments to go through Apple (and charge 30% on that too). Frankly speaking, I don't know how much it costs to run the app store - but no way that simply the running of infrastructure (hosting and upload/ downloads) justifies 30%, and my gut feeling (could of course be wrong) is that adding additional costs of verifying / checking apps still is far from justifying 30% cut. I have no problem with Apple charging for this service, but we have no way of knowing what a fair market price for that service is when there is no market.
On the other hand, when it comes to payment processing, there IS a market (well, an oligopoly), and we know that credit card companies charge 3% to process payments, so for Apple to block 3rd-party payment providers and charge 30% is clear monopolistic scalping.
Re: Is it going to matter ?
Until they get this ruling stayed, and then reversed. But Epic will still neve be back, not without writing a very large cheque.
Re: Is it going to matter ?
The visa/mastercard cartel is hardly a market...
Is 30% justified? I don't know, let's look at the competition - Alphabet charges... 30%
For subscription based services an ongoing 30% is patently absurd, for one off purchases it's not so clear.
Not sure what the Apple T&Cs say about sending people off to make an account on a website - not offering any way to pay for an account at all.
Re: Is it going to matter ?
It is to be seen if it is going to matter.
Apple chased away EPIC with a shotgun, while normally most owners of a platform are happy when creators make content for it.
Last week MS opened their appstore for EPIC, allowing in game payments.
On the short term it implies Apple products are not suitable for people who like the products of EPIC.
If they keep doing that, they slowly hollow out the value of their platform which is worth as much as the applications available for it.
I didn’t think Epic had a leg to stand on - they can have their store on the Mac (albeit not installed with Apples App Store), but iOS is closed. I’m fine with that - although I understand that a lot of people aren’t.
That said, for this last 10%, I hope Apple loses - even to the extent that I hope that some of the other rulings - even the ones that I agree with - get overturned. I like Apples products (well, some of them, anyway), but I don’t think that any business should have carte blanche to act in a rapacious manner, contrary to the public good. A nice big loss now might remind them of the penalty for hubris.
Dear Apple...
Fuck you.
That is all.