A federal judge just slapped Apple around: Yvonne Gonzalez Rogers said Apple was in “willful violation” of a 2021 ruling she had made, and that she would refer the company for a possible criminal prosecution.
That’s pretty newsworthy. But what about the rest of Rogers’ ruling?
Well, that could be pretty newsworthy, too.
It’s possible that this could finally be the thing that fundamentally changes the way Apple operates its App Store — an increasingly key source of the company’s revenues.
Or, it might not.
Let’s review.
This week’s ruling comes out of a court battle between Apple and Epic Games, the company that operates Fortnite, that started back in nearly five years ago.
In a nutshell: Epic doesn’t like that Apple requires Fortnite players and anyone else using iOS devices to make in-app purchases via Apple’s homegrown App Store — and that Apple can pocket up to 30% of each transaction. In the summer of 2020, Epic deliberately violated Apple’s App Store rules, which led to Apple essentially kicking Fortnite off of its iPhones and iPads, which led to the civil suit.
Epic appeared to have lost its fight in 2021, when Rogers ruled against it on almost all counts. But Epic did salvage one win: Rogers said Apple had to let developers like Epic tell customers that they could leave the app and head to another website, where they could make transactions without Apple’s involvement.
This week’s ruling holds that Apple violated both the letter and spirit of the original ruling and says Apple has to comply with it immediately. Meaning, in theory, that companies like Epic will be able to tell their customers using iPhones that they can get a better deal somewhere else, and that Apple won’t be able to charge developers an onerous fee if that happens.
An Apple rep says it will comply with the ruling, but will also appeal it.
So on the one hand: This could be an enormous issue for Apple. If big players like Epic routinely convince customers to do transactions with them outside of Apple’s app, it could cut into Apple’s growing “services” business — an increasingly important part of Apple’s income statement, as its core iPhone revenues flatten out. And it comes as Apple is facing similar battles around the world — the European Union just fined Apple hundreds of millions of dollars because of the way it operates the App Store in that territory.
On the other hand: As noted above, Apple will appeal Rogers’ ruling. So it’s possible that the buy-outside-the-App-Store option won’t be an option in the US for long.
Just as important: What percentage of Apple users actually want to leave Apple’s App Store to buy stuff for the games they’re playing? We have no idea.
Perhaps a lot of them will be motivated to do it, since they can theoretically get more for their money if Apple isn’t taking a cut for itself. Or maybe most of them won’t want to deal with the headaches of jumping out of an app, pulling out a credit card (or asking their parents for their credit card), and making purchases on a different platform.
In theory, we’re going to find out soon. Epic CEO Tim Sweeney says he will bring Fortnite back to Apple’s App Store next week. It’s not clear, however, if Apple has agreed to that. I’ve asked both companies for comment.
