Apple is not obligated to allow apps to offer alternative payment methods despite Epic Games case

Following its landmark affair with Epic Games, Apple has been ordered to open its payment platform to allow developers to offer alternate payment methods in the app, but now it appears that is not. not happen anytime soon.

This is the singular point that Apple lost in its legal battle with Epic, where Judge Yvonne Gonzalez-Rogers further decided that Apple was not a monopoly simply because of its considerable market share. “Success is not illegal,” the judge said.

However, Judge Rogers took offense to one aspect of the case, namely Apple’s long-criticized “anti-leadership” rule, which prevents even app developers from being able to use it. mentioning that there might be other ways to pay for the services offered by their apps.

It’s the same rule that has long prevented apps like Netflix from presenting anything other than a login page when opening their apps for the first time. Simply put, Apple’s rule was that you either charge your users for things using the App Store’s in-app purchase system – giving Apple the required 30% commission – or you couldn’t. at all collect money from your users.

While Apple has relaxed this rule for apps like Netflix and Spotify, it has always limited it to so-called “Reader” apps – those which, by law, “allow a user to access content or subscriptions to previously purchased content ”such as magazines, newspapers. , books, audio, music and video.

Judge Rogers, however, ruled that Apple couldn’t make such mind-boggling distinctions. In September, it issued a permanent injunction prohibiting Apple from blocking links to other payment methods. The problem, the ruling said, was that such behavior was anti-competitive under California law because it “to hide[s] critical consumer information ”, who“ illegally suffocate[s] Consumer choice. ”

The injunction was due to go into effect today – December 9 – but Apple naturally appealed the ruling right away while also seeking a stay of the order until the appeals court issues a ruling. .

The suspension request was originally made to Judge Rogers, who dismissed it last month, saying Apple was seeking “indefinite stay with no obligation to make an effort to comply.” Judge Rogers’ new order also added that Apple was spurious in saying it needed more time to implement the changes, while seeking “an injunction that would effectively take years.”

Of course, Apple has appealed that decision as well, arguing in the Ninth Circuit Court of Appeals that these changes not only require more time, but also complicate matters financially.

The initial decision never prohibited Apple from continuing to collect its 15-30% commission on transactions made on the App Store. In fact, Judge Rogers specifically said that Apple would still “be entitled to a commission or license fee, even if the IPA was optional.”

In his motion to stay the injunction, Apple argued that it would be very expensive to create a system to collect a commission on purchases outside the App Store, and these are costs that Apple would not recover if the appeals court decided more. late that she never had to in the first place.

Apple had previously charged no commission on digital content purchases through buttons and links because such purchases were not permitted. If the injunction were to take effect, Apple could charge a commission on purchases made through such mechanisms. Apple should create a system and a process to do it; but because Apple could not recoup these expenses (of time and resources) from Epic even after winning the appeal, the injunction would impose irreparable harm.

Apple’s response in support of the administrative stay motion

The Ninth Circuit appeals court clearly agreed with this point, especially since it believes Apple has a reasonable chance of seeing the original ruling overturned once all is said and done.

Apple has shown, at a minimum, that its appeal raises serious questions about the merits of the district court’s ruling that Epic Games, Inc. failed to demonstrate that Apple’s behavior violated antitrust laws, but showed that the same behavior violated California Unfair Competition Law.

United States Court of Appeals for the Ninth Circuit

In its decision, the higher court cited an earlier case that if the conduct does not violate antitrust laws in the first place, then it cannot be considered unfair under state competition laws.

However, this is only a preliminary finding, and the final decision will have to wait until the appeal ends in the courts. For now, the Ninth Circuit court has simply said that these questions, combined with Apple’s “sufficient demonstration of irreparable harm” are enough for them to suspend this part of the injunction and “maintain the status quo. quo while waiting for the call ”.

What does that mean

For the most part, that means Apple won’t have to make any drastic changes to the App Store anytime soon. So it’s business as usual for the moment.

This does not mean that it is all over, however. While the appeal could take a few more years before a final decision is made, Apple will still have to prove its case if it is to avoid finding itself later staring at the barrel of this particular injunction.

During this time, however, Apple won’t be forced to relax its anti-management rules any more than it has already. A few other recent changes will still come into effect, but none of them are as significant as what Judge Rogers ordered the company to do.

On the one hand, Apple’s decision to relax the rules for “Reader” applications like Netflix and Spotify still stands. This is the result of the preliminary findings of the Japan Fair Trade Commission (JFTC), to which Apple voluntarily proposed to remove these anti-leadership provisions, which resulted in the JFTC investigation being closed without any official censorship against Apple.

The suspension also does not apply to the second part of the injunction, which orders Apple to allow developers to communicate alternative payment options directly to customers, using any information voluntarily provided through account information, such as an email address or phone number.

However, Apple was also set to do so ahead of Judge Rogers’ ruling, as it agreed to similar terms in August for settle a class action in 2019. Apple formalized these changes in October, with an update to the App Store review guidelines that removed the section that prohibited “target[ing] individual users outside of the app to use purchasing methods other than in-app purchase. An additional clause was added that prevented developers from forcing their users to provide a name and email address to use their apps, but did not place any serious restrictions on how that information can be used, on the exception to standard limitations on collecting information from children.

However, the main part of the initial injunction would have been considerably more onerous as it would have required Apple to let the developers place buttons and links to completely separate purchasing systems.

It wouldn’t just have made it harder for Apple to collect its commission, but it would also have opened up a much bigger worm box when it comes to features like parental controls, screen time, refunds, and payment. subscription management. These are things that are handled automatically when using Apple’s in-app purchasing system, but would be much more complicated to solve in a scenario where hundreds of developers were all logging into different systems of the app. payment.


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