Court: Epic Games breached contract but Apple must allow external payment methods

Apple and Epic have been locking horns in court ever since the latter tried to bypass the Cupertino tech giant’s payment systems in order to avoid paying a 30% fee. The tussle started almost a year ago when Apple kicked out Fortnite from the App Store due to attempts to bypass it commercial systems. In return, Epic sued Apple, and was then countersued for breach of contract. It’s been a mess, seriously. Today, the court has finally ruled on the case and awarded victories – or losses, depending upon how you look at it – to both parties, kind of.

Apple and Epic Games logos on a red background

Judge Yvonne Gonzalez-Rogers has essentially issued two rulings. The first (via The Verge) clearly states that Apple cannot restrict developers from guiding users to alternative external payment methods. The injunction will take effect in 90 days. The wording of the ruling is as follows:

[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.

Meanwhile, the second ruling favors Apple and says that Epic Games was indeed in breach of contract when it offered direct payments to customers on iOS between August and October 2020. As such, Epic Games now has to pay Apple 30% of all the associated revenue it earned in this time period. Since the revenue was around $12.17 million, this means that Epic now has to pay $3.6 million to Apple. An excerpt (thanks, 9to5Mac) from the ruling also reads:

Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. 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. Success is not illegal. 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. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.

Interestingly, in a statement to The Verge, Apple claimed the rulings to be a victory for itself, stating that:

Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law. 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. We remain committed to ensuring the App Store is a safe and trusted marketplace.

In a similar vein, Epic Games CEO Tim Sweeney expressed disappointment in the ruling on Twitter:

In subsequent tweets, the executive went on to say 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.

Thanks to everyone who put so much time and effort into the battle over fair competition on digital platforms, and thanks especially to the court for managing a very complex case on a speedy timeline. We will fight on.

Epic Games has confirmed to CNBC that it will appeal the court’s decision. You can view the court’s 185-page ruling here.

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