Apple must relax App Store rules, orders US judge

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Sept. 10 (Reuters) – A U.S. federal judge on Friday overturned some of Apple Inc’s (AAPL.O) App Store rules, forcing the company to allow developers to send their users to other payment systems in a partial victory for the creator of “Fortnite” Epic Games and other app makers.

But the judge didn’t force Apple to let app makers use their own integrated payment systems, one of Epic’s main demands, and allowed Apple to continue charging 15-30% commissions. for its own integrated payment system.

Epic has said it will appeal the decision, with CEO Tim Sweeney tweeting that the decision “is not a victory for developers or for consumers.”

The result has left critics and Apple rivals saying they’re more likely to look to lawmakers, rather than the courts, to pursue the changes they seek.

US District Judge Yvonne Gonzalez Rogers described her decision as demanding a “measured” change in Apple’s rules. Analysts said the impact could depend heavily on how the iPhone maker chooses to implement the decision.

Apple shares were down 3.2% on Friday afternoon, but many Wall Street analysts maintained their favorable long-term outlook for the iPhone maker.

“We believe that the eventual impact of this will be manageable,” Amit Daryanani, analyst at Evercore ISI, wrote in a note to investors.

The move significantly expands a concession made to video streaming companies last week, allowing them to direct users to external payment methods. The ruling extends this exemption to all developers, including game developers who are the biggest cash generators for Apple’s App Store, which itself is the foundation of its $ 53.8 billion service segment. of dollars.

The judge ruled that Apple can no longer ban developers from providing buttons or links in their apps that direct customers to other means of paying outside of Apple’s in-app purchase system. The ruling also states that Apple cannot prohibit developers from communicating with customers through contact information obtained by developers when customers signed up in the app.

The decision comes after a three-week trial in May before Gonzalez Rogers of the U.S. District Court for the Northern District of California.

Gonzalez Rogers didn’t grant Epic some of his other wishes, like forcing Apple to open the iPhone to third-party app stores.

Apple said in a statement, “As the court recognized, success is not illegal. Apple faces stiff competition in every segment in which we operate, and we believe customers and developers alike choose us because our products and services are the best in the world. “

At a press conference, Apple’s legal team said they don’t believe the ruling requires them to allow developers to implement their own integrated purchasing systems. Apple officials said the company is still debating how it will implement the demands of the ruling and whether it will appeal.

The 3D printed Lady Justice figure is seen in front of the Apple and Epic Games logos shown in this illustration photo taken on February 17, 2021. REUTERS / Dado Ruvic / Illustration / File Photo

The judge sided with Apple on key issues such as defining the relevant antitrust market as gaming transactions, dismissing Epic’s argument that the iPhone is its own app market on which Apple is a monopoly.

“Epic is fighting for fair competition between integrated payment methods and app stores for a billion consumers,” Epic CEO Sweeney said on Twitter. “We will continue to fight.”

Epic’s lawsuit began after the game creator inserted his own integrated payment system into “Fortnite”.

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The challenges of Apple’s App Store rules are far from over. Friday’s ruling suggests they’re more likely to perform in state palaces and capitals than courtrooms.

Lawmakers in the United States and Europe are considering bills that would require Apple to allow integrated third-party payment systems, and the South Korean parliament has already passed such a law.

“What today’s ruling also makes clear is that outdated antitrust laws cannot be corrected just by the courts,” said Match Group (MTCH.O), which challenged the practices of Apple in Europe and owns the popular Tinder dating app, in a statement. “The monopoly practices of Apple and Google will only end when we bring our laws into the digital age, as South Korea did last week.”

Lawmakers in the US Congress said the ruling showed the courts alone would not address their concerns.

Although Gonzalez Rogers did not find that Apple was a monopoly, she did find that the lawsuit showed Apple violated the California state’s competition and showed certain “nascent antitrust violations” that required a wide appeal. national.

John Newman, a law professor at the University of Miami, said the ruling leaves room for US regulators to challenge Apple in court. Reuters previously reported that the US Department of Justice is probing the iPhone maker.

The orders follow Apple’s deal last week with the Japan Fair Trade Commission, under which it relaxes the rules for “player” apps like Netflix Inc (NFLX.O) to provide a link to customers to register for a paid account outside of the app. read more Games represent a larger share of Apple’s sales.

But whether the decision weighs on those revenues depends on how Apple implements the changes.

“To some extent, Apple could make its in-app payments still the easiest to use,” said Ben Bajarin, head of consumer technology at Creative Strategies.

Shares of Alphabet Inc (GOOGL.O), whose Google unit operates an app store for Android smartphones and which Epic is also suing over antitrust charges, fell 1.7% on Friday night.

Reporting by Nivedita Balu in Bengaluru, Stephen Nellis and Noel Randewich in San Francisco, Diane Bartz in Washington, Jan Wolfe and Jonathan Stempel in New York and Paresh Dave in Oakland, California. Editing by Patrick Graham, Peter Henderson and Matthew Lewis


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