Tech

Apple shares tumble after judge issues ruling in company's fight with Epic Games

Apple won most of its arguments, but it can no longer force others to use in-app purchasing

by Charlie Smith on September 10th, 2021 at 4:25 PM
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      The mobile gaming market is a US$100-billion industry, according to U.S. District Court Judge Yvonne Gonzalez Rogers. Moreover, most of Apple's revenue through its App Store is derived from mobile gaming apps.

      In a closely watched ruling today, Rogers explained that this is what motivated Epic Games to sue Apple over the way it operated its App Store.

      Epic Games alleged violations of federal and state antitrust laws, as well as California's unfair competition law.

      In U.S. District Court in the Northern District of California, Rogers issued an injunction against Apple. It means that Apple can no longer prohibit developers from providing links or other means to direct users away from making purchases through Apple's App Store.

      But the judge ruled against nine of Epic's 10 other claims. The maker of Fortnite wanted the judge to require Apple to let app makers use their own in-app payment systems.

      "Thus, and in summary, the Court does not find that Apple is an antitrust monopolist in the submarket for mobile gaming transactions," Rogers wrote in her ruling. "However, it does find that Apple’s conduct in enforcing anti-steering restrictions is anticompetitive. A remedy to eliminate those provisions is appropriate.

      "This measured remedy will increase competition, increase transparency, increase consumer choice and information while preserving Apple’s iOS ecosystem which has procompetitive justifications," she added. "Moreover, it does not require the Court to micromanage business operations which courts are not well-suited to do as the Supreme Court has appropriately recognized."

      Apple normally takes a cut of 15 to 30 percent on in-app purchases.

      The company's shares fell 3.31 percent today to close at US$148.97.

      Gene Munster, the managing partner of Loup Ventures, tweeted that the worst-case scenario for Apple was a two percent reduction in revenue and a four percent reduction in earnings.

      In 2020, Apple reported net income of US$57.4 billion on revenues of US$274.5 billion.

      Epic Games CEO Tim Sweeney tweeted that the 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," he declared.

      Moreover, he said that "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, passing along the savings to consumers".

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