Gaming

Epic Claims Victory, Says Fortnite Will Return To The iOS App Store Next Week, Proposes Dropping All Litigation If Apple Accepts No-Tax Ruling On Web Transactions

Epic Claims Victory, Says Fortnite Will Return To The iOS App Store Next Week, Proposes Dropping All Litigation If Apple Accepts No-Tax Ruling On Web Transactions

Apple and Epic Games have had bad ties for the past few years, especially after the latter introduced an alternative payment method that got it banned from the App Store. After years of lawsuits and rulings, Apple was ruled to be in violation of a 2021 injunction that required developers to redirect users to third-party purchase options on the web through dedicated in-app links. In response, Epic Games CEO and founder stated on X that Fortnite will return to the iOS App Store next week while offering Apple a proposal that could go in its favor in the long run.

Epic proposes ending all legal disputes if Apple agrees to drop its 27 percent commission on external web transactions following the court ruling

Judge Yvonne Gonzalez-Rogers has been handling the Apple vs. Epic Games battle for the past five years, and the latest remarks suggest that Apple is in “willful violation” of the 2021 injunction, which was provisioned to prevent anticompetitive behavior in the market. The ruling reads: “Apple’s continued attempts to interfere with competition will not be tolerated.” While Apple did allow developers to put an in-app link that would direct users to the web for payment, it also took a 12 to 27 percent cut from the transaction.

Epic Games escalated the scene, stating that the iPhone maker should be held in contempt of court for falling behind in complying with the order regarding the fee structure. Apple claimed it was already completely compliant with the injunction, but the judge took Epic’s side. You can check out the 80-page order here.

To summarize: One, after trial, the Court found that Apple’s 30 percent commission “allowed it to reap supracompetitive operating margins” and was not tied to the value of its intellectual property, and thus, was anticompetitive. Apple’s response: charge a 27 percent commission (again tied to nothing) on off-app purchases, where it had previously charged nothing, and extend the commission for a period of seven days after the consumer linked-out of the app. Apple’s goal: maintain its anticompetitive revenue stream.

Two, the Court had prohibited Apple from denying developers the ability to communicate with, and direct consumers to, other purchasing mechanisms. Apple’s response: impose new barriers and new requirements to increase friction and increase breakage rates with full page “scare” screens, static URLs, and generic statements. Apple’s goal: to dissuade customer usage of alternative purchase opportunities and maintain its anticompetitive revenue stream.

In the end, Apple sought to maintain a revenue stream worth billions in direct defiance of this Court’s Injunction.

Judge Rogers also stated that the court “will not tolerate further delays” and that the company will not impede the competition. This means that the company should allow developers to communicate with the end-user, offering transactions outside of the app with an amended fee structure for transactions. You can check out the ruling below, which is effective immediately.

  • Imposing any commission or any fee on purchases that consumers make outside an app, and as a consequence thereof, no reason exists to audit, monitor, track or require developers to report purchases or any other activity that consumers make outside an app;
  • Restricting or conditioning developers’ style, language, formatting, quantity, flow or placement of links for purchases outside an app;
  • Prohibiting or limiting the use of buttons or other calls to action, or otherwise conditioning the content, style, language, formatting, flow or placement of these devices for purchases outside an app;
  • Excluding certain categories of apps and developers from obtaining link access;
  • Interfering with consumers’ choice to proceed in or out of an app by using anything other than a neutral message apprising users that they are going to a third-party site;
  • Restricting a developer’s use of dynamic links that bring consumers to a specific product page in a logged-in state rather than to a statically defined page, including restricting apps from passing on product details, user details or other information that refers to the user intending to make a purchase.

The court has referred the case to the United States Attorney for the North District of California, allowing it to “investigate whether criminal contempt proceedings are appropriate.” Tim Sweeney took to X to share his thoughts on the ruling, stating that Fortnite will return to the iOS App Store in the United States next week. However, he also proposed that Epic Games would “drop all current and future litigation” if Apple complies with the ruling.

At this stage, it remains to be seen if Apple will challenge the ruling and keep the case an ongoing fiasco or will finally succumb and introduce new policies and drop the off-app transaction fee for developers. The move could end Apple’s quarrel with Epic but also hurt its revenue from its services. As we speak, Apple’s Services revenue is a quarter of the total, and it could give all developers a nudge to shift their payment methods outside the app. We will keep you updated with the latest, so keep an eye out.

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