Apple has appealed one of its disputes against Epic Games, despite largely winning the case.
The legacy of the iGiant with Epic concerned the game developer’s decision to sell virtual goods directly from its hit game Fortnite, and at a discount compared to prices offered on Apple’s App Store. Epic did so, in part, to point out that Apple’s 30 percent cut in in-app purchases is driving up the prices of apps and digital goods.
Apple responded by launching Fortnite from the App Store and canceling Epic’s developer account.
The dispute went to court and Apple largely won – US District Judge Yvonne Gonzalez Rogers found Apple is not a monopoly and voted nine out of ten for the fruity company.
But Epic Games won on one point that concerns California’s “anti-steering” laws – laws that limit service provider choices.
To understand the controls, consider the rules for making a car insurance claim in California. Insurance companies like to “direct” policyholders to repair shops that they know can do the job for a low price, saving insurers money. California law presumes that “control” robs consumers of choice, thus allowing policyholders to choose their preferred repair shop regardless of the insurer’s preference.
Judge Rogers found that Apple is on the wrong side of California’s control laws by insisting on only allowing purchases from the App Store, and issued an injunction denying Apple the right to prohibit developers from allowing third-party payment options use or even suggest.
And as the US law firm Sullivan and Cromwell in a memo: “The court’s injunction paves the way for app developers to bypass Apple’s 30 percent in-app purchase commission by giving them the ability to refer their customers to less expensive alternatives.”
As a result, Apple continues to run the risk of losing the sweet, strong, and steady flow of revenue that it believes is essential to funding the ongoing secure operations of the App Store.
Hence this appeal.
Apple has also filed for a stay of Judge Rodgers’ injunction submission [PDF] that is, it is necessary because compliance with its requirements “would upset the careful balance between developers and customers provided by the App Store, and cause irreparable harm to both Apple and consumers.
“The requested suspension will allow Apple to keep consumers safe and secure its platform as the company addresses the complex and rapidly evolving legal, technological and economic issues that any revision of this policy would create.”
The filing also argues that Apple will win on appeal and that Epic will not be harmed if the injunction is suspended as there are no products on the App Store.
Another line of reasoning from Apple is that the injunction might have been applicable at the time the first case was decided, but as the app market and app store evolve, this could be a blunt tool preventing the company from getting on to respond to a changing market.
“Apple is working hard to address these difficult problems in a changing world and improve the flow of information without compromising the consumer experience,” the filing stated. “A suspension of the restraining order would allow Apple to do this in a way that would maintain the integrity of the ecosystem and could eliminate the need for a restraining order in terms of control.”
That hint that Apple might be open to agreements that are not seen as steering is a clear admission, but also an allusion to the reality the company is facing after allowing some third party payments in Japan and the guidelines in the US has changed to reduce the commissions paid to small developers and the introduction of South Korean law requiring access to third-party payment systems. ®