Apple appeals to Epic again, App Store allows third-party payment stranded

Author | Li Yangxia

Leifeng.com News: On Friday night, U.S. time, Apple announced that it would request a stay of execution of the judge's September ruling. This announcement sparked a lot of discussion.

Just last month, in mid-September, the antitrust lawsuit between Epic and Apple came to a preliminary verdict. The court dismissed 9 of the 10 charges filed by Epic, including "security issues in the Mac operating system," and required the plaintiff Epic to pay Apple at least $4 million in damages. However, according to California law, Apple did engage in anti-competitive behavior and will not be allowed to prohibit app developers from explicitly mentioning other payment methods and providing corresponding links in the future.

Apple clearly won the judgment, but for Epic, as long as it can support third-party payment systems and bypass Apple's in-app purchase payment system, it will be a victory.

The court believes that Apple's terms of mandatory use of the in-app purchase payment system are anti-competitive behavior. Therefore, the court requires Apple to make "restrained" modifications to its terms and regulations to allow APP developers to direct users to third-party payment systems. The decree will take effect in December this year.

Therefore, for developers, if users make purchases through third-party payment channels, they do not have to pay 15% to 30% of the corresponding revenue to Apple.

Another appeal, according to Apple, changes to the App Store rules may cause irreparable harm to Apple and consumers.

Any changes to the guidelines are likely to raise complex and evolving legal, technical, and economic issues, so Apple is requesting a delay in the injunction to allow time to fully study and address these issues to protect consumers and its platform. "Apple's lawyers said in a legal document.

For its part, Epic Games is also appealing the nine lawsuits it lost last month, so the case could take years to resolve, Apple would be forced to make changes to its iPhone operating system iOS, and the two companies will appeal in court.

The judge is expected to rule on Apple's request for a stay next month.

Apple had previously expressed satisfaction with the September ruling, describing the judge's decision as a major legal victory for its App Store business model. Apple's move now is indeed surprising. "We are very pleased with the court's decision, and we think it is a huge victory for Apple," said Kate Adams, Apple's lawyer, after the September ruling.

Apple said it filed the appeal because it faced a legal deadline this month. If Apple does not appeal now, it will lose this option forever. If it appeals now, it can change its mind and withdraw the appeal at any time. Apple also said that the appeal is to avoid making hasty business decisions before the case is completely concluded.

While Apple has kept open the possibility of an appeal, its App Store in-app payment model has been under fire from tech rivals, international regulators and U.S. lawmakers.

Apple's appeal has drawn the ire of many critics, who point out that the move will prevent apps from using alternative payment systems, thereby protecting Apple's App Store profits. One company announced last week that they are already developing a cheaper, web-based payment alternative to Apple's app payments.

Perhaps supporting third-party payment channels for apps has harmed Apple's interests. Although Apple does not disclose the profit margin of the App Store, its total sales in 2020 were approximately $64 billion.

If a judge grants Apple a stay of the order next month, the status quo would remain until Epic Games and Apple resolve their dispute, which could take years and help Apple resist more forced changes to its App Store model.

Meanwhile, Apple's App Store faces many other external legal threats. For example, a bipartisan bill in the Senate would force Apple to accept alternative in-app payments. In addition, Apple has been forced to comply with a regulatory decision in Japan to allow some apps to link to websites.

Apple may have initially viewed the Epic Games ruling as a victory, but its appeal suggests it will continue to protect its lucrative App Store model until the case is finally resolved.