Technology

Apple Engaged In ‘Anticompetitive Conduct,’ Court Rules In Antitrust Lawsuit

A judge ruled Friday that Apple engaged in anticompetitive conduct in its App Store, concluding a lawsuit filed by game developers alleging the tech giant was an illegal monopolist.

Judge Yvonne Gonzalez Rogers ruled Friday that Apple’s policy of preventing app developers from linking to third-party payment systems within their apps was anticompetitive, forcing the iPhone maker to change its app store guidelines. However, Rogers ruled in favor of Apple on several other allegations, finding the tech giant did not illegally maintain a monopoly.

“While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct,” Rogers wrote. “Success is not illegal.”

Apple’s policy is to require app developers to use the tech giant’s billing system for all in-app purchases and subscriptions, on which Apple collects a commission of up to a 30%. The company also prevents developers from linking to external payment methods in a policy known as “anti-steering.”

Epic Games, developer of popular video game Fortnite, sued Apple in August 2020, alleging the company illegally maintained a monopoly in the iOS app distribution and payment markets. The developer filed the complaint following Apple banning Fortnite from its app store after the game implemented its own payment system.

The court found that Apple’s anti-steering policy was anticompetitive, and issued an injunction prohibiting Apple from preventing app developers from linking to external payment methods.

“The trial did show that Apple is engaging in anticompetitive conduct under California’s competition laws,” Rogers wrote. “The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice.”

However, the court did not prevent Apple from requiring developers to use its payment system for in-app purchases, a chief point of contention for Epic Games. The company’s chief executive Tim Sweeney tweeted his disappointment with the decision.

“Today’s ruling isn’t a win for developers or for consumers,” Sweeney said. “Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers.”

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.

— Tim Sweeney (@TimSweeneyEpic) September 10, 2021

When reached for comment, Apple applauded the ruling.

“Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law,” a company spokesperson told the Daily Caller News Foundation. “Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world.”

Apple’s payment policies were the target of bipartisan legislation introduced in August by Sens. Marsha Blackburn, Richard Blumenthal, and Amy Klobuchar. The legislation sought to prevent Apple from requiring apps to use the tech giant’s billing system as a condition of distribution within its app store.

Apple made a number of changes to its App Store over the past few weeks, allowing apps that provide content through subscriptions like Netflix and Spotify to link to third-party payment systems, as well as permitting apps to contact users about outside payment options in a settlement with small app developers.