US federal district court orders injunction against Apple commission on in-app payments
geralt / Pixabay
US federal district court orders injunction against Apple commission on in-app payments

A federal judge on Friday ordered a permanent injunction against Apple’s app store requiring them to cease their policy of charging 30% commission on in-app payments. Epic Games challenged this practice, claiming that it constituted a monopoly over its own system of distributing apps and its own system of collecting payments.

Judge Yvonne Gonzalez Rogers of the Northern District Court of California found that while Apple’s conduct did not violate traditional anti-trust laws, its policy did fall within the purview of an incipient antitrust violation due to particular unjustified anti-competitive practices such as preventing companies from steering customers to websites outside the app in order to avoid Apple’s commission on the transactions. Further, anti-steering provisions hide critical information from consumers and illegally stifle consumer choice.

The court thus ordered equitable relief under which Apple is:

permanently restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.

Despite the injunction, Judge Rogers did rule in favour of Apple on significant issues such as defining the relevant market for the antitrust litigation. She held that the relevant market is “digital mobile gaming transactions, not gaming generally and not Apple’s own internal operating systems related to the App Store.” Under this definition of the relevant market, she held that Apple could not be a monopolist under federal or state antitrust laws.

She noted that while Apple enjoys a significant market share of over 55% and extraordinarily high-profit margins, these factors alone do not show antitrust conduct since the final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. Thus, Epic Games failed to discharge its burden of demonstrating that Apple is an illegal monopolist.

In a separate judgement, Judge Rogers  ruled against Epic Games for violation of its contract with Apple, as a consequence of which the latter is entitled to permanently remove Epic Games from the app store and damages of  $3.6 million calculated from the loss in revenue.