Six things you should know about the Epic v. Apple ruling

A note about the Fortnite maker’s case against the iPhone maker

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Six things you should know about the Epic v. Apple ruling

When Epic Games sued Apple in August 2020 over iPhone maker’s 30% cut of in-app payments, it did so with a splashy media blitz that included a readymade parody of Apple’s famous 1984 ad.

The rollout seemed to indicate that Epic’s lawsuit was more of a public relations play than a serious legal challenge. And statements supporting Epic’s cause from companies like Spotify and Facebook felt like further evidence that Epic believed public pressure — not the Sherman Antitrust Act — would get Apple to act.

Then, today, Judge Yvonne Gonzalez Rogers handed down a ruling, one that actually gave Epic some of what it was hoping for — but not all. As we all digest the ruling, here are six things you need to know about it, brought to you in this special edition of Big Technology:

A logical ruling When you spend money inside iPhone apps, Apple takes up to 30% of that cash simply for allowing apps the privilege to work on its phones. Not only that, Apple doesn’t let apps say that you can buy the same stuff for less money elsewhere (read: on a website). The court’s ruling stopped the latter practice, saying such policies "hide critical information from consumers and illegally stifle consumer choice.” Within 90 days, Apple must allow developers to “steer” their users to outside payment options.

Expect appeal(s) Both companies could have easily declared victory here. In the ruling, Apple got plenty of concessions, including an order for Epic to pay it millions of dollars for skirting its rules. That said, Apple isn’t happy about losing its lock on in-app payments. Epic, for its part, should be thrilled it got a ruling against Apple’s “anti-steering” policies. But Epic is angry that it lost everything else. Epic said it would appeal the ruling. “We will fight on,” said Epic CEO Tim Sweeney. Asked whether it would appeal, Apple did not respond.

A win for subscription-based app developers Netflix, Spotify, Match Group, and other companies that offer subscriptions on iOS devices are thrilled. These companies’ share prices all rose today as Apple dropped 3%. Should the ruling stand, the subscription apps are in position to circumvent Apple’s in-app payment system and keep all the money, not just 70%. It’s a big win. Even if the ruling is overturned. Because…

Apple is now vulnerable Though the court ruled that Apple cannot be considered a monopoly, the overall decision showed that Apple can be beat. For years, it seemed like the tech giants could do whatever they desired with little recourse for those they hurt. But now it’s clear these companies’ power has limits, and their competitors are salivating. "This and other developments around the world,” a Spotify spokesperson told me, “show that there is strong need and momentum for legislation to address these and many other unfair practices, which are designed to hurt competition and consumers. This task has never been more urgent."

Lookout Google Alphabet’s stock dropped nearly 2% on the day. Any guesses why? Oh yeah, it runs a similar in-app payment business. And Epic is suing it too. Yikes!

Good news for our wallets By circumventing a 30% tax, app developers can pass some of that savings to us. We likely won’t see all 30% — and this number is likely most relevant in gaming, which makes up 70% of all App Store revenue — but some of it will come our way. “The Apple decision,” said Ezra Klein, “seems very good for anyone who uses Apple products. An example of courts making it harder for a company to mistreat its own customers.”

Thanks again for reading. What do you think of special editions like this one. Want more? I’d like to hear from you. Meanwhile, have a great weekend, and I’ll see you next Thursday.

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