U.S. High Court rules that Apple’s out-of-app payment ban is illegal

small wins and big steps

The U.S. Federal Court of Appeals (High Court) ruled on the 24th that Apple’s act of restricting the guidance of users to external payment systems on the “App Store” violates California’s Unfair Competition Prevention Act (UCL). dropped.

The U.S. Court of Appeals is the court in charge of appellate proceedings above the district courts. The highest appellate court in the United States is the US Supreme Court.

This decision is based on the ruling that Epic Games, the developer of the popular game “Fort Knight”, sued Apple for violating antitrust laws (antitrust laws) over the charging method of smartphone apps. Part of it. The Court of Appeals accepted most of Apple’s arguments on all other issues and upheld the district court’s ruling that it did not constitute a monopoly.

Epic Games founder and CEO Tim Sweeney said that while recognizing Apple’s victory in the lawsuit, the court’s denial of a clause restricting the App Store’s guidance to external payments will lead to a major improvement in the development environment. showed an idea.

Fortunately, the court’s positive decision rejecting Apple’s anti-steering provisions frees iOS developers to send consumers to the web to do business with them directly there.

— Tim Sweeney (@TimSweeneyEpic) April 24, 2023

The App Store’s anti-steering clause prohibits app developers from providing external links to third-party payment methods outside the App Store. The court ruled that if users knew that Epic Games’ fees (12%) were much lower than Apple’s (30%), they would have flocked directly to Epic Games and Epic Games would have made higher profits. It concluded that the anti-steering clause was “unfair.”

Apple said in a statement it was unhappy with the decision and was considering a potential appeal.

Apple VS Epic Games

The legal battle between Apple and Epic Games began in 2020.

Epic Games put a link in its app to a proprietary payment system to circumvent the App Store’s “exorbitant fees,” and Apple said it violated the terms of service and banned the popular game Fortnite.

In response to this measure, Epic Games sued Apple, arguing that Apple’s refusal to recognize other payment systems and charging fees of up to 30% is monopoly and hinders competition. Not long after, Apple also filed a countersuit against Epic Games.

In 2021, a U.S. district court ruled against Epic Games’ allegation of Apple’s antitrust violations, while ordering Apple to repeal anti-steering regulations.

Apple and Epic Games appealed against this ruling, and this time, the same judgment was made again by the appeals court.

in Japan and Europe

The App Store has been under review by the Japan Fair Trade Commission under the Antimonopoly Act for many years, but in September 2021, Apple revised some of its terms following a settlement with the Commission. .

The JFTC has seen Apple’s regulations limiting content sales methods for app providers such as music distribution and video distribution as problems. Paid content sales within the app were limited to the App Store, and the app provider was charged 30% of the sales amount as a commission. Outlinks for selling content on their own sites were also prohibited.

Under the revised terms, it is now permissible to post a link to an external payment site when paying for paid content or usage fees on the “Reader App”. However, external guidance in the game app was still prohibited.

Since the revised regulations will be applied worldwide from 2022, it has attracted attention as an example of how the Japanese Fair Trade Commission has influenced a giant IT company.

Apple is also reportedly preparing to implement “sideloading,” which allows external apps to be downloaded from outside the App Store, in order to comply with the European Union’s Digital Market Act (DMA).

Although the response is limited to the EU, if similar legislation is enacted, it may apply to other countries, which could be a tailwind for the Web3 and NFT (non-fungible token) industries.

connection:Apple’s 30% ‘Apple tax’ will be lifted as it plans to allow third-party app stores in Europe = report

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