Apple can’t delay App Store payment changes, judge rules in Epic Games case
Tim Cook, chief executive officer of Apple Inc., center, arrives at U.S. district court in Oakland, California, on Friday, May 21, 2021.
Nina Riggio | Bloomberg | Getty Images
Apple will be forced to allow app developers to link out to alternative payment websites, potentially enabling software companies to reduce the 15% to 30% fee that Apple charges for digital transactions through its App Store.
On Tuesday, a federal judge in Oakland, Yvonne Gonzalez Rogers, rejected Apple’s appeal for a stay that would delay the court-ordered change, meaning that it will go into effect in December.
“In short, Apple’s motion is based on a selective reading of this Court’s findings and ignores all of the findings which supported the injunction, namely incipient antitrust conduct including supercompetitive commission rates resulting in extraordinarily high operating margins and which have not been correlated to the value of its intellectual property,” Rogers wrote in the order, calling Apple’s motion “fundamentally flawed.”
In September, Rogers ruled in favor of Apple for nine of 10 counts in an antitrust trial brought by Epic Games. Epic was seeking the ability to install its own app store on iPhones. Both sides are now appealing the decision.
In a short hearing on Tuesday, Apple attorney Mark Perry said it would be a difficult process to allow links to outside payments on the App Store, and said Apple needed more time.
“It is exceedingly complicated,” Perry said. “There have to be guard rails and guidelines to protect children, to protect developers, to protect consumers, to protect Apple.”
Rogers expressed skepticism and said that Apple was asking to delay the changes for as long as five years.
“Other than, perhaps, needing time to establish guidelines, Apple has provided no credible reason for the Court to believe that the injunction would cause the professed devastation,” Rogers wrote in Tuesday’s order.
The injunction doesn’t necessarily mean app developers won’t have to pay App Store fees, even if they provide their own credit card processing.
Apple hasn’t publicly explained how its App Store policies would change under the order, but it has signaled it may find a way to charge fees even on off-platform purchases. Apple said in arguments on Tuesday that it would need more time to build new software and policies to replace its in-app payments.
In South Korea, Google’s Android app store was forced to offer off-platform payments due to a new government regulation. Developers, even if they handle their own billing, pay Google 11% of gross transactions, when the policy goes into effect in 2022.
Apple said in a statement that it “believes no additional business changes should be required to take effect until all appeals in this case are resolved. We intend to ask the Ninth Circuit for a stay based on these circumstances.”