Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Worldwide Developers Conference (WWDC) in San Jose, California, U.S., on Monday, June 4, 2018.
David Paul Morris | Bloomberg | Getty Images
Apple changed the rules of its U.S. App Store on Tuesday in what appears to be the final result from the long-running Epic Games antitrust challenge against Apple.
On Tuesday, the U.S. Supreme Court declined to take up appeals on the case, bringing an end to the legal saga, and allowing changes stemming from earlier decisions to come into effect.
Apple will allow app makers selling to U.S. customers to add links and buttons inside their apps that bring users out to a website where they can input their credit card information. This was previously banned. In the past, Apple developers had to use Apple’s billing system for digital goods like game coins — which takes a 15% to 30% cut — and couldn’t tell users that prices can be cheaper on the web.
However, Apple now requires that companies that use their own billing system have to offer Apple’s as well — it can’t be a replacement.
Apple said that iPhone and iPad developers have to apply for a software tool, called an entitlement, in order to offer the link or button. Apple will also collect a commission, as much as 27%, from apps that handle their own billing, according to court filings on Tuesday and updated App Store guidelines.
The shift is the most tangible result from Epic Games’ legal challenge to the App Store. However, it doesn’t go far enough for Epic Games CEO Tim Sweeney, he said in a statement on Tuesday.
“The court battle to open iOS to competing stores and payments is lost in the United States,” Epic Games CEO Tim Sweeney said. “A sad outcome for all developers.”
Apple’s policies over U.S. billing resemble how the company has handled regulations in the Netherlands and South Korea. Apple’s policy to continue to collect commissions could be a significant barrier that eliminates cost savings for developers and pushes users to prefer Apple’s in-app purchases.
Apple will also tell users through a pop-up screen — about the “risks they are assuming when they leave the Apple ecosystem,” referring to the company’s claims that software downloaded from the web can lead to fraud and scams.
“You’re about to go to an external website. Apple is not responsible for the privacy and security of purchases made on the web,” the pop-up window will say, according to a screenshot that Apple included in court filings.
In an email to developers sent on Tuesday, Apple warned app makers that implementing their own billing system could create logistical issues.
“Apple also won’t be able to assist customers with refunds, purchase history, subscription management, and other issues encountered when purchasing digital goods and services. You will be responsible for addressing such issues with customers,” Apple said in the email.
Apple also implemented a rule stemming from a separate class action lawsuit that allows iPhone app developers to email their customers with offers and alternative purchasing methods, it said in a court filing.
Sweeney said that the company will challenge Apple’s compliance plan in district court.
“Apple has introduced an anticompetitive new 27% tax on web purchases. Apple has never done this before, and it kills price competition,” Sweeney tweeted.
Changes stemming from a 2021 trial
“Fortnite” creator Epic Games’ Chief Executive Tim Sweeney leaves after a weeks-long antitrust trial at federal court in Oakland, California, U.S. May 21, 2021. REUTERS/Brittany Hosea-Small
Brittany Hosea-small | Reuters
Epic Games sued Apple after it introduced a direct billing mechanism to its video game, Fortnite, on iPhone and Android. Apple promptly booted the game from their storefronts and Epic subsequently sued Apple, alleging that it monopolized the market for software on iPhones.
Epic Games was seeking the ability to introduce its own app store on iPhones, as well as to lift other restrictions on how apps can bill their users.
After a weeklong trial in 2021 that included Apple CEO Tim Cook testifying, Apple ended up winning nine out of 10 counts, except for one count based on California law that led to an injunction prohibiting Apple from preventing app developers from linking out in their apps. Apple saw the decision as a victory.
However, the 2021 injunction, now in effect, is what led to Apple’s rule changes.
The rule changes could affect sales in Apple’s services business, which generated $85 billion in sales in fiscal 2023, which ended in September. App Store commissions are a large portion of that business.
Epic Games also sued Google over similar control over its Android app store, called Google Play. Epic Games won that case in December after a jury found that Google used anti-competitive processes. That decision will be appealed, Google said.
