Fortnite maker Epic Games is preparing to fight Apple in court over how Apple has chosen to comply with a court order that required the tech giant to change its App Store rules. In the antitrust case filed by Epic Games, a district court judge in Northern California ruled that app developers should be able to point their users to links or buttons that connected to their websites, where their customers could learn about other ways to pay for apps beyond Apple’s in-app purchase. Apple agreed to allow such links, but said it would still take a 27% commission on those sales — a decision that Epic dubbed a case of “malicious compliance.”
The injunction on Apple’s “anti-steering rule,” as it’s called, came about after both parties appealed the district court’s ruling. The San Francisco-based 9th Circuit Court of Appeals upheld the original ruling, which Apple had largely won, as the court ruled it was not a monopolist engaging in anticompetitive behavior. However, it did say that Apple would have to update its App Store Guidelines’ anti-steering clause.
After the Supreme Court in January declined to hear the antitrust case, the lower court’s ruling stood.
Epic Games CEO Tim Sweeney had blasted Apple over its compliance, calling it written in “bad faith” and saying it “totally undermines the order.” He said Epic planned to challenge Apple in court over the matter.
Now Epic has filed a notice of non-compliance with the District Court of Northern California which advises the court that Epic “disputes Apple’s purported compliance” with the injunction. It also noted that Epic plans to file a motion to demonstrate the issues with Apple’s new terms and ask for relief.
Apple filed its “Notice of Compliance” with the court on January 16, 2024, where it described how its new App Store Review Guidelines would work. In it, the company explained that it would allow app developers to promote their subscriptions on the web, but with a 27% commission rate instead of 30%. For developers who are part of Apple’s Small Business Program or who offer auto-renewing subscriptions in year two, the fee is reduced to 12% instead of 15%. That 3% discount in many cases wouldn’t even cover the developer’s payment processing fees. In other words, they wouldn’t save money by switching to their own payment systems. In fact, they might even end up paying more than through Apple’s in-app purchases.
However, Apple believes it’s owed a commission because of the investment it makes in its iOS platform, developer tools and App Store, which go beyond the payment processing fee. This view of its value was also visible in its response to the EU’s Digital Markets Act (DMA), a new regulation that forces it to allow alternative app stores and third-party payments, among other things. Apple unveiled a complex system that involves reduced commissions, but tacks on a new “core technology fee” to make up for its losses, arguably because of said investments.
In addition to the 3% discount Apple agreed to, following the Epic case, Apple said it would also require developers to apply to get permission to include links in their apps, maintaining control over the process. After implementation, developers have to submit transaction reports within 15 days of a calendar month’s end to document their sales. Apple takes its 27% commission on transactions for digital goods and services that took place in a 7-day period after a user taps a link.
Plus, when clicking the links, Apple will pop up new “scare screens” that warn customers they’re about to go to an external website and that Apple is not responsible for the privacy or security of those external purchases.
It’s unclear how Epic will craft its argument that Apple’s compliance is unfair or unjust as the court earlier said it wouldn’t micro-manage Apple’s creation of a new policy. While it’s clear that Apple is following the letter of the law, but not the spirit, that may not be enough for Epic to prevail.
Reached for comment, Epic says it doesn’t have anything further to share at this time about the nature of its coming complaint.
Notice of Non-compliance and Intent to Move to Enforce Ucl Injunction by TechCrunch on Scribd