# Apple must ease App Store rules, U.S. judge orders, in a blow to iPhone maker Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-09-10 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Apple App Store Rule Struck Down Meta Description: A federal judge rules against Apple, allowing developers to use other payment systems. Epic Games wins in a battle against App Store commissions. URL: https://financedigest.com/apple-must-ease-app-store-rules-u-s-judge-orders-in-a-blow-to-iphone-makerhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-09-10t175414z4lynxmpeh890prrtroptp4apple-epic-games-1736837904942-compressed.jpg) By Stephen Nellis (Reuters) -A U.S. federal judge struck down a core part of Apple Inc’s App Store rules on Friday, forcing the company to allow [developers to send their users to other payment systems in a win for “Fortnite” creator Epic Games](https://www.financedigest.com/mobile-games-developer-huuuge-says-has-24-2-million-at-svb.html "Mobile games developer Huuuge says has .2 million at SVB") and other app makers. The ruling vastly [expands a concession that Apple](https://www.financedigest.com/apple-expands-self-repair-support-to-macbooks.html "Apple expands self-repair support to MacBooks") made with Japanese regulators last week to encompass game developers, who are the biggest cash generators for Apple’s App Store, which itself is the foundation of its $53.8 billion services segment. However, the judge did allow Apple to continue to charge commissions of 15% to 30% for in-app payments, which is the simplest way for [customers to pay](https://www.financedigest.com/shell-energy-to-pay-for-overcharging-price-cap-customers-ofgem.html "Shell Energy to pay for overcharging price cap customers -Ofgem"). Relative to the sweeping shakeup that Epic was seeking, the ruling amounts to what the judge herself called a “measured” [change](https://www.financedigest.com/uk-watchdog-warns-crypto-firms-to-prepare-for-advertising-rule-change.html "UK watchdog warns crypto firms to prepare for advertising rule change") to Apple’s rules. Analysts said the impact may depend heavily on how the iPhone maker chooses to implement the decision. Epic plans to appeal, a spokesperson told Reuters. The Epic lawsuit suit began after the game maker inserted its own in-app [payments system](https://www.financedigest.com/main-uk-payment-systems-effectively-privatised-to-one-person.html "Main UK payment systems effectively privatised to one person") in “Fortnite. The decision orders Apple to stop barring developers from providing buttons or links in their [apps that direct customers to other ways](https://www.financedigest.com/make-way-for-the-rise-of-the-finance-super-apps-consolidation-of-financial-digitisation-tools-platforms.html "Make way for the rise of the Finance Super Apps – Consolidation of Financial Digitisation Tools & Platforms") to pay outside of Apple’s own in-app purchase system, which charges developers commissions of up to 30%. The [ruling also said Apple cannot ban developers](https://www.financedigest.com/crypto-firms-will-develop-offshore-without-clear-us-rules-coinbase-chief-says.html "Crypto firms will develop ‘offshore’ without clear US rules, Coinbase chief says") from communicating with customers via contact information obtained by the developers when customers signed up within the app. The ruling comes after a three-week trial in May before Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California. Apple shares were down 2.5% on Friday afternoon, shaving $63 [billion off the company’s market](https://www.financedigest.com/b2b-telecommunication-market-to-more-than-us-27-billion.html "B2B Telecommunication Market to more than US$ 27 billion") value. The decision strikes down a core part of Apple’s App Store rules, which prohibit developers from telling [users about other places they can go to pay the developer directly rather than using Apple’s](https://www.financedigest.com/an-apple-a-year-half-of-iphone-users-will-upgrade-to-the-iphone-7.html "AN APPLE A YEAR: HALF OF IPHONE USERS WILL UPGRADE TO THE IPHONE 7") payment mechanisms. Gonzalez Rogers issued a nationwide order that allows developers to put into their apps “buttons, external links, or other calls to action that direct [customers to purchasing](https://www.financedigest.com/britains-nationwide-curbs-cryptocurrency-purchases-by-customers.html "Britain’s Nationwide curbs cryptocurrency purchases by customers") mechanisms. But Gonzalez Rogers stopped short of granting Epic some of its other wishes, such as forcing [Apple to open the iPhone up to third-party app stores](https://www.financedigest.com/apple-given-fourth-dutch-fine-in-app-store-dispute.html "Apple given fourth Dutch fine in App Store dispute"). Apple said in a statement: “As the Court recognized ‘success is not illegal. Apple faces rigorous 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.”](https://www.financedigest.com/the-digital-first-world-financial-services-predictions-for-2022.html "The digital-first world: financial services predictions for 2022") In a media briefing, Apple’s legal team said it does not believe the [ruling requires it to allow developers to implement their own in-app purchase systems](https://www.financedigest.com/why-a-rules-management-system-can-untie-financial-services-hands.html "Why a rules management system can untie financial services’ hands"). Apple [officials said the company is still debating](https://www.financedigest.com/key-fed-official-sees-rates-liftoff-in-2023-as-policy-debate-heats-up.html "Key Fed official sees rates liftoff in 2023 as policy debate heats up") how it will implement the requirements of the ruling. The judge sided with [Apple on key questions such as defining the relevant antitrust](https://www.financedigest.com/exclusive-tinder-owner-match-ups-antitrust-pressure-on-apple-in-india-with-new-case.html "Exclusive-Tinder-owner Match ups antitrust pressure on Apple in India with new case") market as gaming transactions, rejecting Epic’s argument that the iPhone is its own app market over which Apple is a monopolist. “Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app [stores for a billion](https://www.financedigest.com/ikea-plans-new-u-s-stores-in-2-2-billion-push-to-challenge-walmart-and-wayfair.html "IKEA plans new U.S. stores in .2 billion push to challenge Walmart and Wayfair") consumers,” Epic’s chief executive, Tim Sweeney, said on Twitter. “We will fight on.” MORE CHALLENGES LIKELY Challenges to Apple’s App Store rules are far from over. Lawmakers in the United States and [Europe are drafting bills](https://www.financedigest.com/explainer-why-europe-faces-climbing-energy-bills.html "Explainer-Why Europe faces climbing energy bills") that would change them, and while Gonzalez Rogers did not find that Apple is a monopolist, she did find that the trial showed Apple was violating California state competition laws with its “anti-steering” rules around payments. “When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted,” Gonzalez Rogers wrote. John Newman, a law professor at the University of Miami, said the ruling [leaves open](https://www.financedigest.com/more-than-half-of-workers-are-open-to-leaving-their-current-employers.html "MORE THAN HALF OF WORKERS ARE OPEN TO LEAVING THEIR CURRENT EMPLOYERS") avenues for U.S. regulators to challenge Apple in court. [Reuters has previously reported](https://www.financedigest.com/thomson-reuters-report-reveals-risk-compliance-staff-expect-to-see-significant-benefits-from-artificial-intelligence-ai-and-distributed-ledger-technologies.html "Thomson Reuters Report Reveals Risk & Compliance Staff Expect to See Significant Benefits from Artificial Intelligence (AI) and Distributed Ledger Technologies") that the U.S. Department of Justice is probing the iPhone maker. “You can violate the antitrust laws without being a monopolist,” Newman told Reuters. The orders are similar to a move that Apple made last week to conclude an investigation by the Japan Fair Trade Commission. Under that agreement, Apple [eased its rules](https://www.financedigest.com/britain-plans-new-data-rules-to-ease-compliance-burden.html "Britain plans new data rules to ease compliance burden") for “reader” apps like Netflix Inc to provide a link to customers to sign up for a paid account outside of the app. Last week, analysts estimated that the JFTC settlement would shave off only 1% to 2% of Apple’s profit because “reader” apps are a small part of the [company’s App Store revenue](https://www.financedigest.com/generic-oncology-drugs-market-2021-global-leading-companies-analysis-revenue-trends-and-forecasts-2027.html "Generic Oncology Drugs Market 2021 Global Leading Companies Analysis, Revenue, Trends and Forecasts 2027"). But games are a much larger portion. While reader apps collectively make up just 14% of (the past 12 months’) App [Store developer](https://www.financedigest.com/the-benefits-of-developing-online-stores-through-shopify.html "The Benefits of Developing Online Stores Through Shopify") revenue, Gaming apps are the App Store cash cow, accounting for 63% of developer revenue” over the past year, Morgan Stanley analyst Katy Huberty wrote in a note. But the precise [financial impact](https://www.financedigest.com/what-brexit-blues-new-research-reveals-over-half-of-businesses-in-the-financial-sector-believe-brexit-will-have-a-long-term-positive-impact.html "What Brexit blues? New research reveals over half of businesses in the financial sector believe Brexit will have a long-term positive impact") to Apple is difficult to gauge immediately. On the one hand, only game makers like Epic with a well-known [brand such as “Fortnite” can entice users to go through the extra steps](https://www.financedigest.com/from-static-office-to-dynamic-brand-hq-five-steps-to-reviewing-your-real-estate.html "From static office to dynamic brand HQ: Five steps to reviewing your real estate") of signing up to pay outside an app. At the same time, those large brands [bring in the majority](https://www.financedigest.com/major-fintech-trends-2020-which-will-bring-you-a-golden-ticket-2.html "Major FinTech Trends 2020: Which Will Bring You A Golden Ticket?") of Apple’s game-related revenue. There’s only a handful of games that can pull this off,” said Ben Bajarin, head of consumer [technologies at Creative Strategies](https://www.financedigest.com/amadeus-technologies-launches-investment-and-insights-tool-based-on-machine-learning-and-strategy-algorithms.html "Amadeus Technologies Launches Investment and Insights Tool Based on Machine Learning and Strategy Algorithms"). “To some degree, Apple could make it so that its in-app payments are still the easiest to use. It comes down to the implementation.” Shares of Alphabet Inc, whose Google unit [operates an app store](https://www.financedigest.com/kfc-franchisees-in-russia-ask-govt-to-halt-sale-of-stores-to-local-operator-ria.html "KFC franchisees in Russia ask govt to halt sale of stores to local operator – RIA") for Android smartphones, reversed an earlier gain and were down 1% on Friday. Epic also is suing Google over rules blocking alternative payment systems, and the Play Store’s restrictions against [apps promoting](https://www.financedigest.com/mindbody-uk-launches-new-consumer-app-to-help-promote-a-more-active-lifestyle-in-the-uk.html "Mindbody UK Launches New Consumer App To Help Promote A More Active Lifestyle In The UK") those other options are now under greater threat. Google declined to comment. [Shares of videogame makers that offer their games](https://www.financedigest.com/ubisoft-shares-slump-20-after-french-video-game-maker-warns-on-revenue.html "Ubisoft shares slump 20% after French video game maker warns on revenue") on Apple’s app store rallied. Zynga Inc surged 9.4%, while Electronic Arts Inc and [Activision Blizzard](https://www.financedigest.com/bobby-kotick-leads-activision-blizzard-through-economic-turmoil.html "Bobby Kotick Leads Activision Blizzard Through Economic Turmoil") both rose more than 3%. (Reporting by Nivedita Balu in Bengaluru, Stephen Nellis in San Francisco, Diane Bartz in Washington, Jan Wolfe in New York, Paresh Dave in Oakland, Calif., and Noel Randewich in San Francisco;Editing by Patrick Graham, Peter Henderson and Matthew Lewis) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---