Friday, September 10, 2021 [Tweets] [Favorites]

Anti-Steering Ruling in Epic v. Apple

Russell Brandom (via Nilay Patel, Hacker News, 9to5Mac, MacRumors, Slashdot):

Judge Yvonne Gonzalez Rogers issued a permanent injunction in the Epic v. Apple case on Friday morning, putting new restrictions on Apple’s App Store rules and bringing months of bitter legal jousting to a conclusion.

Under the new order, 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.

In short, iOS apps must be allowed to direct users to payment options beyond those offered by Apple. The injunction is scheduled to take effect in 90 days — on December 9th — unless it is enjoined by a higher court.

In a separate judgment, the court affirmed that Epic Games was in breach of its contract with Apple when it implemented the alternative payment system in the Fortnite app. As a result, Epic must pay Apple 30 percent of all revenue collected through the system since it was implemented — a sum of more than $3.5 million.

Juli Clover:

In a statement on Twitter, Epic Games CEO Tim Sweeney said that the company was not happy with the verdict, and at the current time, there are no immediate plans for Fortnite to return to the App Store. Sweeney said that today’s ruling “isn’t a win” for developers or consumers.

[…]

Though Apple did not score a total win, Apple lawyer Kate Adams told members of the media that the ruling was a “resounding victory” that validates the App Store business model. Apple’s official statement highlights the anti-trust portion of the ruling, which went in Apple’s favor. Apple has yet to comment on the outside payment requirement.

[…]

Epic Games plans to appeal the parts of the ruling that it does not agree with, and Apple too will likely submit an appeal to push back on the anti-steering requirements the judge has enacted.

Ben Thompson:

Epic lost on everything else, and has to pay Apple 30% of the money it earned from its own in-app purchase flow. And Apple can still kick them out of the store. Truly a self-sacrifice for developers generally 🤷‍♂️

[…]

One final note: neither this ruling nor the JFTC settlement say that Apple can’t require IAP. In fact this injunction specifically says developers can link out “in addition to” IAP. No mention about offering different prices.

Steve Troughton-Smith:

Apple just lost a huge part of the Epic vs Apple case, breaking open the App Store to alternate payment systems — Apple will almost certainly appeal the ruling, but with the pressure mounting globally over this very issue, I think the writing is on the wall

This also means that Epic was completely justified in the stunt they pulled, adding alternate payments to Fortnite, as Apple’s rules on this, & enforcement thereof, are illegal.

Matthew Panzarino:

This is really a big likely loss for consumer protections. Have fun chasing down all of the fraudulent scammy junk cash grabs that will result. Big win for game/IAP-focused publishers and for Stripe though.

[…]

Imagine a world where Apple had introduced a Stripe partnership a year ago and offered two clear options for developers, web via Stripe or streamlined IAP inside apps.

M.G. Siegler:

Apple needed to tear down the wall proactively and win by competing. And the wild is, they easily could have! (And now will.) In-App/Apple Pay is a great product and has inherent advantages thanks to the iPhone. Just a dumb misread and self-own.

Craig Hockenberry:

Apple is competing against Stripe now.

In my mind, that’s a good thing because Stripe is really fucking great.

If Apple can match their pricing & functionality, they’ll get my business both as a developer and a consumer because I know where they stand on privacy.

Also, when I say “Stripe”, I really mean “Apple Pay”.

Joe Fabisevich:

Stripe is gonna make one hell of an IAP SDK. People keep talking about how Apple has to allow developers to link to the web for payments, but there’s no reason someone like Stripe can’t make a top notch easy to setup native experience.

In my view this is probably one of the best outcomes. Alternative App Stores would be an absolute mess, and while I hope Apple provides some sort of payment plugin to ensure the best experiences, companies that already provide good competitive experiences is a great outcome.

Perhaps it’s the best that could be expected from this case, but there are so many problems that alternate app stores or sideloading would address that this ruling doesn’t.

Steve Troughton-Smith:

Seeing a few people interpret the ruling as devs are now allowed ‘to link out’ to 3rd-party purchasing. To me, this specifically prohibits Apple from stopping devs having buttons or other calls to action to use a different payment provider, in-app or ex-app. No link-out necessary

John Gruber:

That’s not how Apple sees it. It is an ambiguously worded injunction, though. Apple’s take, as I understand it, as well as my take, is that it means apps can steer users to the web in addition to IAP.

Michael Love:

Apple seems to be discreetly leaking that interpretation to a bunch of people, but since the language is lifted directly from the App Review Guidelines it’s very hard to argue that it’s doing anything short of totally blocking the anti-steering portion of 3.1.1.

Whatever version of “buttons” Apple says we’re not allowed to use to direct users to outside purchasing mechanisms, that’s the version of “buttons” that they’re no longer allowed to ban.

See also: Nilay Patel (tweet).

Curtis Herbert:

My guess, new IAP rules will follow Sign in with Apple:

  • Can offer alternate payments, but Apple IAP has to be top billing.
  • Can’t show others without also showing Apple’s.

Sean Heber:

If this is how it goes, it’s not that big a win since supporting 2 payment systems is going to be twice the work and twice the support burden for anyone that isn’t huge. Apple has no incentive to make this situation easier on the developer, either.

Ryan Jones:

We knew the App Store is really a Game Store, but…98% of all IAP revenue comes from games.

[…]

10% of iOS users generate 70% of App Store revenue via games

David Barnard:

Kinda gross TBH that this all really boils down to Apple making billions off free-to-play games selling gems and digital trinkets. The rest of us are just a rounding error — collateral damage in Apple’s ability to keep that income stream and prop up the stock price.

Nilay Patel:

Apple’s anti-steering rules are “an incipient violation of antitrust law” regardless of Epic failing to prove its case, says judge.

Ruffin Bailey:

Apple has to take 3rd party payments.

We can judge Apple by seeing if they...

  1. Do this quickly (they anticipated the possibility & have prepared best case implementations) or
  2. Drag their feet (they’re a poorly run company scrambling to adapt; sell).

See also:

Previously:

Update (2021-09-14): John Gruber:

Judge Yvonne Gonzalez Rogers ruled today on the Epic v. Apple case. It seems pretty clear to me that Apple got a huge victory, and Epic was served an even huger loss.

Thomas Claburn:

Amusingly, the judge trashed Apple SVP of software Craig Federighi’s argument that opening up iOS to all apps, as it does for macOS, would open the floodgates for malware. “While Mr. Federighi’s Mac malware opinions may appear plausible, they appear to have emerged for the first time at trial which suggests he is stretching the truth for the sake of the argument,” the judge noted.

Mitchell Clark:

After discussing notarization and App Review a bit more, she concludes that Apple could implement a system similar to the Mac’s without giving up much of the security iOS already enjoys[…]

Sean Hollister:

Epic will appeal the court’s ruling in Epic v. Apple, a spokesperson confirmed to The Verge.

Sami Fathi:

Epic Games has filed an appeal against the ruling in its case against Apple, further prolonging the already year-long legal battle between the two companies.

Dieter Bohn:

Apple won the vast, vast majority of issues Epic tried to bring up, but also I feel like all of those were long shots. But there is an actual win in all those losses (anti-steering), so I’m fascinating by Epic’s rhetoric here.

Update (2021-09-16): Florian Mueller:

What the court got absolutely right is that the 30% cut is not a market rate for the intellectual property in question. The court even takes note of “Apple’s low apparent investment in App Store-specific intellectual property.” The commission is practically imposed and enforced because of Apple’s app distribution monopoly. The term “gatekeeper” (which is very popular in EU tech policy and law) doesn’t appear in that ruling, but that’s what it’s all about.

9 Comments

Beatrix Willius

Interesting times we live in. Why would the ruling be a big win for Stripe? They tried to terminate the account of a developer. On Friday without warning.

Will be interesting to see how developers will deal with taxes if selling direct. One big thing Apple does with the App Store is take care of worldwide taxes (and business registration) by being the merchant of record, not that that is worth handing over 30% (or 15%), it does simplify and Stripe doesn't (yet) offer anything built in to help.

I am curious how much something like this is:

https://paddle.com/solutions/saas-sales-tax/

Again, it’s interesting that the focus never seems to be on what I think is the #1 issue here: Apple’s justifications for their 30% cut just don’t hold up when considering that free apps pay nothing. They’ve never once claimed (AFAIK), nor do I think they could rationally claim, that the cost of running the *payments* infrastructure side of the App Store costs 30%.

It’s also bizarre how they can argue for a huge percentage beyond the actual dollar-amount processing fees (2.5%?) because the behind the scenes costs are flat and fixed — so why do they get to steal more money from higher priced apps? Why does a $20 app pay $6 in fees, by a $3 app pays less than $1? It makes no sense.

>We knew the App Store is really a Game Store, but…98% of all IAP revenue comes from games.

Wrong, as usual. It is not even 80%. But 80% tends to be a good proxy and rounded up numbers.

"Wrong, as usual"

Unlike you, Jones actually provides a source for the 98% number. It also seems much more plausible than your 80% number. Roblox alone surely generates more IAP revenue than all non-gaming apps combined.

"Truly a self-sacrifice for developers generally"

Can't tell if Thompson is sarcastic, but it actually turned out to be a huge self-sacrifice.

What I don't get is the gloating from Apple fans about this, though. Apple mostly won, but that's not just a loss for Epic. It's primarily a loss for Apple's customers, and it shows that current antitrust laws are inadequate.

Are Ads for checkout processors not far away?
"Click here, save 10% on your purchase"
"No, click here to save 11%"
"Click this and save 15%"
Ugh

@Plume: agree

This sentence is absolutely key:

IAP is the method by which Apple collects its licensing fee from developers for the use of Apple's intellectual property.

@OUG It’s unfortunate that the judge bought that line.

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