How Apple’s epic legal battle will resonate with marketers in the coming years

Apple last week told the maker of popular video game Fortnite that it would not be allowed to return to the App Store until the legal dispute with the tech giant is resolved. The ruling was the latest sign that Epic Games’ lawsuits against the iPhone maker will continue to resonate among mobile marketers and app developers.

Epic CEO Tim Sweeney tweeted that he asked Apple to reinstate his company’s developer account, which had been suspended since last year. At the time, Epic was looking for its in-app payment system (IAP) for Fortnite, which would eliminate the need for Apple to pay any fees. The move violated Apple’s rules, prompting the company to remove the game from the App Store. Epic responded by suing Apple for violating antitrust laws and abusing its power in the app markets.

Fast-forward to September 2021, when a judge ruled that Apple had the right to remove Fortnite because Epic violated its contract with the App Store owner. Epic plans to appeal the decision, while other parts of US District Judge Yvonne Gonzalez Rogers’ decision will shape the app ecosystem.

“Much of the press coverage of the decision seems to be mostly a loss for Epic – I don’t agree with that,” said Mike Woosley, COO of data management firm Lotame. “The ruling says Apple must make a change to allow app developers to receive payments from customers without paying 30% to Apple.”

Epic’s lawsuit alleges that Apple falsely restricted the distribution of third-party iPhone apps through the App Store while requiring consumers to make in-app purchases through its payment system. The transaction allowed Apple to charge fees of up to 30% on these transactions. Apple says this is not a monopoly and that Epic has other distribution channels for its games, citing that Epic is trying to get around the 30% rate, which Apple says is an industry-standard.

“Epic has not won its argument that Apple is a monopoly, but it will be difficult for a judge to decide,” Woosley said. “These cases take years, sometimes decades. It’s hard to prove and requires tons of data – that’s why they’re usually filed by the US Federal Trade Commission or the Department of Justice.”

Increase antitrust investigations

Apple is a leading technology company facing numerous antitrust investigations around the world. Much of the iPhone manufacturers’ research has focused on App Store policies and in-app payment requirements. Meanwhile, South Korea this month passed the world’s first law requiring Apple and Google to open their app stores for other payment systems. The country asked companies to submit plans to comply with the law by mid-October.

Any attempt to reduce Apple’s control over application distribution in the United States may require a review of antitrust laws. The September ruling in Epic’s lawsuit against the tech giant highlighted weaknesses in US policy to prevent monopolies from abusing their market power, several lawmakers said.

“This statement confirms what we heard at our Senate hearing last spring: App stores raise serious competition issues,” Senator Amy Klobuchar, chair of the Senate Antitrust Subcommittee, said in a September 10 statement. “We need to pass a federal law on app store behavior to protect consumers, promote competition and promote innovation.”