The Apple vs Epic antitrust suit is back in court again this week, a year after a US District Court judge had ruled largely in favor of Apple. The case originally started after Epic Games was forced to remove their iOS version of Fortnite from the Apple App Store over a breach of the Apple terms of service regarding how payments are made on the platform.
Specifically, Epic had bypassed Apple’s in-app payment framework by offering their own in-game payment method for the Fortnite store, which cut Apple out of a percentage of the payments made over iOS. In return, Epic sued Apple for supposedly abusing its market share to create a monopoly on digital payment systems.
Epic fight for mobile game profit sharing
After a three-week trial, Judge Gonzalez Rogers of the U.S. District Court for the Northern District of California originally ruled largely in favor of Apple, turning down Epic’s demands for a guarantee that third parties would be able to build their own in-app payment platforms on iOS. However, a concession was made in Epic’s favor that third parties could redirect users to external payment processors by communication, such as emailing customers about a payment processor hosted on the developer’s own site.
Apple can no longer ban third parties from advertising other payment methods
Neither party was happy with the conclusion of this case, and now after a lengthy round of appeals, the case has been escalated to the U.S. Court of Appeal for the Ninth Circuit. The implications for Apple’s current payment model are huge, as the U.S Department of Justice and the State of California are presenting additional arguments based on their findings that the original rulings did not adequately reflect the level of monopoly power Apple actually has.
Apple hits back with security concerns
Apple currently takes between 15 to 30% of every payment made using the Apple payment framework. Although Apple’s share price dropped 3.2% the Friday afternoon after the ruling that Epic could advertise an outside payment processor, confidence has returned to Apple investors in the coming months. An unfavorable ruling in the U.S. District Court could hugely impact the growing sentiment in Apple’s value if their current iOS payment model is altered to include a profit-sharing deal with developers on the platform.
Epic’s case against Apple concerns the whole mobile game industry
The potential fallout from this case doesn’t just stop at Apple’s doorstep, either. Google maintains a similar position on in-game payment options for games distributed through the Google Play store, and any decision made by the court could affect the mobile gaming industry as a whole.
Is it time to sell Apple and Google stock? Maybe not. Apple’s key argument is that allowing alternate payment processors would violate the ground-up safety design of the iPhone, giving hackers and thieves a vital hole into Apple’s otherwise well-guarded app store. Apple’s security hasn’t always been bulletproof, however, and given that Apple doesn’t support device-wide traffic encryption, it might be worth investing in an iPhone VPN to close the security gap.
Either way, this case isn’t likely to wrap up any time soon. Even after a ruling has been made at the District Court level, the stakes are so high that both parties are likely to appeal to the Supreme Court if the ruling isn’t comprehensively in their favor. Given that this case has far-reaching implications for the whole of the mobile gaming market, both parties will go the whole way through this case to its conclusion.
