A US appeals court recently denied Apple’s request to postpone mandated changes to its App Store practices, as demanded by Epic Games. The 9th US Circuit Court of Appeals dismissed Apple’s arguments, compelling the company to implement immediate changes to its lucrative digital marketplace while it continues to appeal the decision. This ruling indicates that Apple must open its App Store to increased competition, which could jeopardize billions in revenue and alter its longstanding “walled garden” approach to app distribution.
This ongoing legal struggle originated from the issues between Apple and Epic Games, the developer of Fortnite. In an April ruling, Judge Yvonne Gonzalez Rogers found Apple in contempt for failing to comply with an earlier injunction. The judge had ordered Apple to cease several evasive practices, including a new 27% fee imposed on developers for transactions made outside the App Store.
Critics labeled this tactic as an attempt to maintain revenue despite the ruling. Additionally, she prohibited Apple from determining how developers could link to alternative payment methods in their apps, which had previously limited users’ knowledge of potentially cheaper options. Apple expressed dissatisfaction with the court’s decision, indicating their intention to continue contesting its implications.
Conversely, Epic Games’ founder Tim Sweeney celebrated the ruling, emphasizing the end of what he termed the “Apple tax.” The lawsuit began in 2020 when Epic challenged Apple’s control over app transactions. While the original ruling favored Apple, subsequent decisions have indicated a shift toward greater developer freedom.
This has significant implications for the mobile app economy; developers might retain more earnings, potentially resulting in lower prices for consumers. The evolving regulatory landscape, including measures introduced in the EU and South Korea, suggests a growing challenge to Apple’s monopolistic practices within the app marketplace. For Apple, the stakes are high, as the Services segment, including the App Store, has become increasingly vital to its business model amidst stagnating hardware sales.