In August of 2020, Epic Games updated their hit game 'Fortnite' across the iPhone app, offering players to pay Epic directly, instead of through Apple's payment processing system. Apple takes 30 percent of all sales. In response, Apple removed the game from its App store. Epic filed a lawsuit soon after.
The Epic Games v. Apple trial delivered its verdict on Monday 9/13, and was considered a partial victory for both sides. Epic could not convince U.S. District Judge Yvonne Gonzalez Rogers that Apple was running an illegal monopoly. However, she also ruled that Apple cannot prevent developers from directing customers to alternative payment methods outside its App Store.
The only way to install software on iOS is through Apple’s App Store. Developers must follow Apple’s rules and use its payment system. Dan Burkhart, CEO of Recurly said, "This verdict opens a path for tremendous profit margin expansion for developers."
App developers can now funnel iOS users to other payment methods. This includes external links within their apps, buttons , or other calls to action that direct people to payment options outside of Apple’s proprietary payment system. The court's order focused on a single sentence in Apple’s App Store guidelines: "Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase."
Although, Apple could still impose some sort of fee on whatever new payment system is allowed. And Apple still has broad legal authority to write its own rules for the App Store. They could also discourage outside payments without banning them entirely.
Associate professor of economics at the Yale School of Management, Florian Ederer said, "I expect all the developers to include links to their own purchasing mechanisms. Obviously, not all gamers are going to click on that link, but we will finally have some meaningful competition in digital mobile gaming transactions. I also expect it to have big incentives for innovation in mobile gaming because game developers will get to keep some of the 30 percent of revenue that they had to hand over to Apple."
In a win for Apple, Judge Gonzalez ruled that Epic owes Apple revenue commissions as back payment. Epic must pay Apple approximately $3.6 million. 30 percent of the sales from 'Fortnite' between August and October 2020, and an additional 30 percent of sales while the trial was taking place. Players who had already downloaded the game can still access it, make transactions and pay Epic through the app.
Epic Games CEO Tim Sweeney said, "Fortnite will return to the iOS App Store when and where Epic can offer in-app payment in fair competition with Apple in-app payment." Sweeney later tweeted, "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 consumers."
Apple told Epic numerous times that it could bring the game back to the iOS platform so long as Epic abides by its rules. Epic has declined these offers. The case will be taken to the U.S. Court of Appeals for the Ninth Circuit.