Apple Appeals Epic Anti-Steering Injunction
Under the Radar (David Smith):
I maintain a sense of optimism that this situation could ultimately lead to a meaningful reset in the developer relationship. Maybe that is naive optimism but I think it is the best chance we’ve had in a while.
This situation could ultimately lead to a meaningful reset. But reading the Apple lawyers’ latest arguments is infuriating.
Apple has filed an emergency motion asking the Ninth Circuit Court of Appeals to pause key parts of a recent ruling that dramatically changes how the App Store operates, following a contempt finding in its long-running legal battle with Fortnite maker Epic Games.
In court documents filed Wednesday, Apple called the district court’s order “extraordinary” and argued it unlawfully forces the company to permanently give up control over “core aspects of its business operations.”
[…]
Apple is specifically seeking to halt two major provisions while its appeal moves forward: a ban on charging any commissions for purchases made through external links, and restrictions on Apple’s ability to set conditions for how those links appear in iOS apps.
A certificate (PDF) accompanying the emergency filing states that the order “fundamentally changes Apple’s business and creates destabilizing effects” for App Store customers.
The restrictions, “which will cost Apple substantial sums annually,” are not based on the company’s conduct, Apple claims, but “were imposed to punish Apple for purported non-compliance” with the 2021 injunction. In her ruling (PDF), Gonzalez Rogers described Apple as conducting an “obvious cover-up” and said that Apple “at every turn chose the most anticompetitive option.”
[…]
Apple argued in its emergency motion last night that its appeal would show that it complied with the 2021 injunction “by allowing iOS app developers to convey information to users about alternative purchase options.” Apple argues that the original injunction “says nothing about commissions or pricing,” nor about conditions for link placement and language.
So 34 was the number in May last year. But did the number go up in any significant way since then? I was thinking about it this week, and I’ve not only never seen an app that used these link-outs, I’d never even heard about one that did.
[…]
But it really makes you wonder how anyone at Apple thought the court would see this plan as compliant.
In its appeal of the ruling, Apple says that allowing developers to label their own buttons on the App Store is a violation of Apple’s First Amendment rights.
The firm’s estimates indicate that U.S. App Store revenue from commissions more than doubled between 2020 and 2024. In 2020, Apple’s share of App Store commissions was approximately $4.76 billion, growing to over $10.1 billion by 2024.
[…]
In the report, Apple calculated the portion of an app’s total revenue that is facilitated by the App Store, even if the purchase was made elsewhere. For instance, if a user buys a subscription to Hulu on the web, but then spends 60% of their time streaming Hulu on Apple devices, Apple credits itself with facilitating 60% of that user’s spend.
John Gruber (Mastodon, Dithering):
Apple’s argument here might go along the lines of Ben Thompson’s theory (in a subscriber-only post last Friday) on the “Takings Clause” of the 5th Amendment.
Mr. Cook sided with Mr. Maestri, and Apple set out to justify that choice. It “manufactured” an independent economic study to legitimize its decision, a federal judge said in an angry ruling last week. It withheld thousands of documents under attorney-client privilege claims. And at least one of its executives lied on the witness stand.
The judge’s ruling, as well as witness testimony this year and company documents released on Thursday, shows the extraordinary measures that Apple took to keep every penny it collected in the App Store. The decision by Judge Yvonne Gonzalez Rogers, who heard the initial lawsuit brought by the video game company Epic Games in 2020, could cast a shadow over Apple’s business for years, weakening its credibility as legal scrutiny of its operations intensifies.
It is really hard to see how Tim Cook can remain as CEO of Apple on the back of this mess. Even if he hadn’t been directly involved with some of these decisions, the right call would be to resign. That he was the one taking them makes it even worse.
One of the most shocking things is that the estimated loss from implementing a link with no revenue was only about a billion dollars - a lot of money, but pocket change to a company the size of Apple.
For that, they have burned a huge amount of credibility with judges in the future, as well as taking a massive hit to their brand credibility – and losing control over how the App Store works in a pretty fundamental way.
And that, of course, leaves aside the lying under oath and creating fake reports to justify its prices! This is a company that feels out of control.
Despite making my living by criticizing Apple, I tend not to get caught up in the controversy of the moment. When Apple ruined its laptop keyboards, I wasn’t calling for Tim Cook’s head. I just wanted them to fix the keyboards. And they did (eventually).
But success hides problems, and even the best company can lose its way. To everything, there is a season.
As far as I’m concerned, the only truly mortal sin for Apple’s leadership is losing sight of the proper relationship between product virtue and financial success—and not just momentarily, but constitutionally, intransigently, for years. Sadly, I believe this has happened.
The preponderance of the evidence is undeniable. Too many times, in too many ways, over too many years, Apple has made decisions that do not make its products better, all in service of control, leverage, protection, profits—all in service of money.
[…]
Every new thing we learn about Apple’s internal deliberations surrounding these decisions only lends more weight to the conclusion that Apple has lost its north star. Or, rather, it has replaced it with a new, dark star. And time and again, we’ve learned that these decisions go all the way to the top.
Like I said in that piece last year, I still think Apple makes a lot of great products that are best-in-class and I’ll continue enjoying for years to come, but the vibe has definitely shifted. I’ve been using Apple products since 1995, and Siracusa has been here at least a decade longer than me. Neither of us are prone to hyperbole “for the clicks”, so I think it’s notable when people like us are like, “hmm, things haven’t been like this before.” But like John, I don’t think all is lost.
It’s not the mistakes that matter. Apple has made them before. The Newton, MobileMe, the butterfly keyboard. What matters is the posture. A company once defined by joyful provocation—by thinking different—is now defined by its defensiveness. Its leadership acts not like inventors but like stewards of a status quo. They protect margins like relics. They fear dilution. They optimize at the expense of surprise.
Charles V believed the Church could not err. Apple believes its operating procedures cannot be wrong. Both relied on closed systems enforced by powerful institutions—canon law or App Store guidelines, pick your poison. Both found themselves increasingly out of step with the forces swirling around them.
More so than any other tech giant (Google’s fading “Don’t be evil” slogan notwithstanding), Apple has built its brand over the years around being a good corporate citizen. Apple has long espoused a commitment to user experience, privacy, environmental stewardship, and social responsibility, touting its attention to detail in product design, its sustainability efforts, and its focus on accessibility.
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The problem here isn’t just recalcitrant legal compliance. It’s one thing for Apple to exert tight control over the App Store ecosystem in ways that legitimately serve users, such as by detecting and rejecting malicious apps. However, it’s difficult to see how users benefit when Apple charges high fees and restricts how developers can communicate. Those are just a few of the complaints developers have with the App Store, many of whom feel trapped in a system that prioritizes Apple’s profits over collaborative partnership.
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I’m disappointed in Apple’s behavior throughout the Epic case. Rather than come off as truculent and money-grubbing, Apple could have—and still can—extend the culture of excellence and care that’s so evident in its hardware and interface design to the people who make the apps that power its devices.
I think this is also why Phil Schiller has a different perspective on the App Store than Tim Cook or Luca Maestri. Schiller has been involved with developer relations at Apple for decades, since long before the iPhone even existed. In the mid-1990s, Schiller left Apple for a few years and was a senior executive at Macromedia, maker of then-essential design tools for the Mac. He knows that developers need to be treated as partners by Apple, that that’s the only way a platform can thrive. Games are different, but for all other apps, Apple should view developers as a precious resource to be cultivated, encouraged, and protected — not as a profit center to be squeezed. The only benefit from developers to Apple that Apple should be concerned with are the first-class apps those developers are creating to enrich and broaden Apple’s platforms. Especially apps that are exclusive to Apple’s platforms. (Why doesn’t Apple offer a lower App Store commission for platform-exclusive apps? What if the split were 70/30 for cross-platform apps but 90/10 for iOS/Mac-exclusive apps?)
Apple actually does the opposite: multi-platform apps get special treatment for payments.
That’s the context for the other major theme here that you’ll pick up on in this conversation: Apple’s major shift toward digital services and whether that’s fundamentally changed the company’s culture. You see, as Apple kept selling newer and better iPhones, it simply ran out of people to sell them to. So, in order to keep growing revenue and keep Wall Street happy, it started squeezing more money from its existing customer base, including the very developers that put apps on the App Store.
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All of that combined with Apple’s scale created a kind of hubris and, as you’ll hear Gruber say, a major blind spot for Apple that has pushed it toward these high-profile and public legal defeats that could reshape its business.
Previously:
- Fortnite Coming Back to the App Store?
- External Payments From the Patreon App
- External Purchasing From the Kindle App
- App Review Guidelines Updated for Epic Anti-Steering
- Court Orders Apple to Comply With Anti-Steering Injunction
- I’m an Apple Fan in 2025
- Our Changing Relationship With Apple
- Apple-Funded Study on Success of Third-Party Apps
8 Comments RSS · Twitter · Mastodon
So they are arguing monopolistic assholery is protected by the first amendment. Tall order, even in current Trump’s republican America where Tim Cook can donate bribes. What a deplorable, shithole company. Truly.
> Nilay Patel: “So, in order to keep growing revenue and keep Wall Street happy, it started squeezing more money from its existing customer base, including the very developers that put apps on the App Store.” (emphasis mine)
This is new to me — did Apple start charging more for the app store stuff than when it first came out? How? I thought it went from a flat 30% to a stepped 15% and 30%… that seems like a good thing? Is this referring to making decisions on edge cases that appeared as the world evolved?
Just a big observation here:
We seem to be expecting a step improvement in our lives as users and developers, continually, forever. That’s what people loved about the Apple II, the Mac, the iPhone.. big step improvements in everyone’s lives (including devs) from an underdog.
And we’re trained to expect the world to get better, cheaper, faster, forever. Like dropping prices on flat-screen TVs, faster chips, better games — of course the world should get better for everyone over time, right? Inevitable!
- Underdogs often give great deals because they want to get eyeballs, users, and customers. That’s why T-Mobile ‘uncarrier’ gave great deals (no longer), that’s why VC-backed startups give out subsidized goods and services. Why Apple went with Cingular — Cingular was willing to take a risk because it was an underdog. It’s advertising, differentiation, trying to pull people in.
- And part of that is being willing to take a smaller profit margin (or for VC-backed stuff, a net loss until and after IPO).
- Recall that Apple has always been in a tough spot, price-wise — derided as costing too much by the nerds, as luxury goods, etc… one could argue that’s still the case. Jobs was always strict about not giving things away of value for free. Remember the $1 upgrade fee for some firmware update in the 2000s?
And so now Apple is the overdog — its products were so good that everyone — users and devs — flocked to them and now it doesn’t need to sell at a discount. In fact, it doesn’t really need to attract devs as the iPhone is the first platform for any VC-backed startup.
So what’s happening is that Apple’s market (and the iPhone) has matured… of course Apple’s profit centers have changed.
And one could argue that since it’s no longer the startup, the underdog, it’d typically be the time to rake in the money with higher profit margins and less innovation — but we developers expect it to continue to behave as an underdog, to compete for its life. It has fat cash reserves to do weird things like self-driving cars and VisionOS (I actually hope this goes somewhere but don’t expect it to).
While things may feel boring in dev land, let’s not forget that Apple’s done some interesting things lately… on the consumer side. Apple Watches, HomePods, AirPods (These are young platforms but devs don’t get that usual high they expect from Apple because there’s not much to develop (or profit) for them). Apple Music, TV, etc.
Even for devs, some major changes with Swift, a ton of new ‘*Kits’, maybe someday Xcode vibe coding. But perhaps those aren’t exciting for us — perhaps we too have matured, and we want that profit margin?
Anyway, just another way to think about it.
Devs are seeking that ‘hey, that’s a good deal’, or ‘hey, this excites me’, or some other exciting thing… and I guess we’re feeling let down? (Are we really? Yes, vocal commenters here and in the press, but how about the rest?)
Do we / should we expect a constantly decreasing price/dev-license-fee or better SDK or whatever? (Also, what’s the competition doing? Often copying Apple, no?)
This line goes up forever-type stuff —
1) unsustainable in reality, though Apple’s done pretty well on that front,
2) mature markets level off, and
3) sounds like MBAs talking… that the best way to make more money in a mature market is cutting your costs (i.e. Apple’s licensing fees).
Asked an AI: What are the similarities between Apple's App Store 30% commission and racketeering ?
Both involve a mandatory fee or cut imposed on transactions within a controlled environment
Both require parties (app developers or businesses) to pay a significant percentage of their revenue to the controlling entity in order to access a market or customer base
Both can restrict alternative methods of conducting business or payment, thereby limiting the options available to participants
Both use the leverage of exclusive access (Apple’s control of iOS distribution; criminal organizations’ control of territory or business operations) to enforce compliance
Both can result in higher prices or reduced margins for those subject to the fee, with the cost often passed on to end consumers
Both may use rules or threats of exclusion to ensure ongoing payment and discourage circumvention
@Someone.... whoa. Let's get absolutely real, like 100%.
Look, I can agree with some of what you say, but still? You totally skipped over a few things --
(1) Apple totally controls their silo. Well, they did until...
(2) The EU, Japan, the US, and others called them on it. Tao say nothing about...
(3) How Apple pays almost no taxes on sales (think Ireland).
How about deprecated "*Kits'? How about becoming one of THE top profit makers in the entire history of... well, human existence? How about WHY I now only have 15% of my apps sales taken out? (That last one is a very good thing until you actually consider that it took the EU to force things.)
To quote you: "Anyway, just another way to think about it."
@ someone else
> This is new to me — did Apple start charging more for the app store stuff than when it first came out?
Absolutely. Just look at how they have tightened the screws on apps/services that allow subscriptions to creators, Patreon being a prime example. Or services that offer online classes, etc. all of those have just been roped into the Apple tax in just the last few years.
Heck, when the iPhone was new, you used to be able to buy books in the Kindle app directly using the payment information that Amazon already has associated with your account (the same way that the current Amazon app works). Apple later on decided that they were owed a massive cut of that and forced Amazon to either give up all margin on the product or make the experience worse for users.
The percentage hasn’t changed, but the apps/services that are covered has absolutely expanded.
@Nat if I wanted to ask an AI and get back incorrect or misleading slop, I would do it myself. I don't need others doing it for me.
This whole thing is clearly Apple customers vs Apple revenue. That's it. There is no good argument for what they are doing other than making more money. The experience is worse for customers.
I have never thought until now that Tim needs to retire. He has ruined so much of Apple's good will over this and has harmed so much of Apples Customers.
"It’s not the mistakes that matter. Apple has made them before. The Newton, MobileMe, the butterfly keyboard."
And now stealing money from their developers and lying in court? One of these mistakes is not like the others. There's a vast difference between being overly ambitious and being evil.
Lets also not forget that while their piece of the pie remains the same, the service towards developers and users decreases or becomes downright hostile in some areas.
I understand the concept of not being able to perpetually increase quality and capabilities of products (the MBA hardware has been an absolute beast in terms of quality and value for money for a long, long time now). But then also consider that if quality and functionality don't increase then the development of these not existing improvements also don't need to be financed, and fees can decrease as the market matures and settles into a stable pattern.
But it doesn't, because there's only one player.
