Epic must pay Apple $3+ million for side-stepping App Store rules, but it's still an Epic...

Daniel Sims

Posts: 174   +10
Staff
Why it matters: This week's ruling in the court case between Epic Games and Apple resulted in wins and losses on both sides. Apple can't block links to outside payment systems on its platform, but the judge still ruled that it lawfully banned Fortnite from iOS and is entitled to damages from Epic's breach of contract.

The biggest decision in the new ruling was the injunction that says Apple can't stop developers on its iOS platform from linking to payment options outside iOS. This could cost Apple billions in long-term profits, but the judge ruled that Epic still broke Apple's rules when it linked to its own payment option at the time the case began last year.

Epic sued Apple last year for banning Fortnite from iOS. Apple did that because Epic started directing Fortnite customers on iOS to pay for in-game items through Epic direct pay, cutting Apple out of the 30 percent commission it collects on transactions in most apps.

According to the 185-page ruling, Epic collected $12,167,719 in revenue from Fortnite through Epic direct pay between August and October last year. It now has to give Apple its 30 percent cut of that money, along with "30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment." That comes out to at least $3.6 million.

The ruling also says Apple was fully within its right to kick Epic off iOS, even though it can now no longer stop developers from doing what Epic did. Since South Korea passed a law late last month prohibiting app store operators from forcing their own payment systems onto developers, Epic has tried to get back on iOS, at least in South Korea. So far Apple has refused, and the ruling may indicate Apple will never be under any obligation to let Epic back in.

Both companies are expected to appeal parts of the ruling.

Permalink to story.

 

Sausagemeat

Posts: 1,054   +873
Im glad the judge has decided to protect Apples operating system and its users from corporations who only seek to bypass the protections for profits.
 

Sausagemeat

Posts: 1,054   +873
Yes, we should all bow down to Apple and pay them 30% on everything. After all, Apple is here to "protect" us from these greedy corporations who are only interested in profits... oh wait.
There is no gain for the user if corporations make them circumvent the App Store. Only the corporation selling their services gain. The user loses out on quality assurance offered by the app store. And sure, Apple profit from keeping things in their store.

And 30%, well that’s industry standard. Steam, Google, Windows, Sony, almost everyone takes a 30% cut. I do think it’s quite high but we can’t force Apple to take a smaller cut whilst everyone else is charging 30%.
 

hahahanoobs

Posts: 3,868   +1,918
There is no gain for the user if corporations make them circumvent the App Store. Only the corporation selling their services gain. The user loses out on quality assurance offered by the app store. And sure, Apple profit from keeping things in their store.

And 30%, well that’s industry standard. Steam, Google, Windows, Sony, almost everyone takes a 30% cut. I do think it’s quite high but we can’t force Apple to take a smaller cut whilst everyone else is charging 30%.
QA from virus' maybe.

Other than that Apple is just sitting back collecting money for just having the app in their store. Customer benefit comes quicker when the company is bringing in more revenue.
 

Kotters

Posts: 355   +255
I'm not sure how you can construe this as an Epic win; Apple is still allowed to claim its cut of App Store revenue, regardless of payment processor used. The only thing they lost is the ability to force developers to pretend they don't exist outside of the App Store, which is tangible, but not crazy.
 

kapital98

Posts: 384   +339
I'm not sure how you can construe this as an Epic win; Apple is still allowed to claim its cut of App Store revenue, regardless of payment processor used. The only thing they lost is the ability to force developers to pretend they don't exist outside of the App Store, which is tangible, but not crazy.

News sites have been schizophrenic on these headlines (with no apparent political reason). Some say Apple won. Some say Epic.

Epic won a specific part of a specific complaint. It lost all other issues.

This matter will be appealed and tied up in litigation for years. These cases (unlike most areas) also often get overturned on appeal and/or new trials. So... we'll see.

This lawsuit is a major win for regulators (think, FTC, SEC, etc) that got a lot of discovery for nothing out of Epic's lawsuit. Epic my wind up a loser but Apple will likely lose a lot more than what happened in this case.
 

Irata

Posts: 1,811   +3,050
So as far as Apple is concerned, this is a poster case for a Pyrrhic victory.

Even if they appeal the case in the US, they are already being forced to allow third party payment options in other counties and I hope the EU and India follow South Korea‘s example.
 

kapital98

Posts: 384   +339
So as far as Apple is concerned, this is a poster case for a Pyrrhic victory.

Even if they appeal the case in the US, they are already being forced to allow third party payment options in other counties and I hope the EU and India follow South Korea‘s example.

Don't mean to be rude but the exact opposite: Apple would have been liable for an extreme amount of money if they had been found to have committed antitrust behavior.

They are more than happy to make this minor change in order to avoid having any company (or goverment) get them for antitrust. Then they'd be paying **massive** payouts to various agencies.

This is barely a slap on the wrist for them, and, oddly enough, Epic pays them.
 

negroplasty

Posts: 547   +36
I'm coming to expect this sort of analysis from sites like Ars, Neowin, Techspot, etc... writers who don't have the slightest clue what they're talking about, clickbait headlines, with more continuity coming from user comments of their articles. I'll say the same thing I said over there:

Apple makes zero changes except to allow developers to inform users they can pay outside the store (was already the case, by the way). Apple was found to be justified in removing Fortnite from the store and was not in breach of contract as charged by Epic. Fortnite has to change its app, remove their in-app payment system and rely solely on Apple for in-app transactions if they want their apps on iOS. Apple is not required to allow Epic back on the App Store, and could decide not to permanently if so inclined. Epic has to pay $3M damages plus interest because their claim was found to be incorrect. HUGE win for Epic, LMAO. I'd go as far as to say it was an Epic win for Apple.

You know you royally jacked the interpretation of what happened here when Apple's official statement claims the ruling a "resounding victory", and Epic plans to appeal... all the usual things that happen when you majorly win a lawsuit. /s

https://9to5mac.com/2021/09/10/apple-epic-games-ruling-statement/

https://9to5mac.com/2021/09/10/epic...n-apple-lawsuit-as-apple-calls-it-a-huge-win/

 
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m4a4

Posts: 2,615   +3,224
TechSpot Elite
Apple makes zero changes except to allow developers to inform users they can pay outside the store (was already the case, by the way).[/MEDIA]
No. It was 100% against Apple's terms to inform users about payment options outside of the app. To the point where Netflix couldn't even say anything to new users on their iOS login screen.

So, no matter how you spin it, that part was a win.
 

Rayneofpayne

Posts: 483   +412
Epic broke Apples ToS. The question has, and will continue to be, is Apples ToS legal?
Terms of service are only legal in most countries in a similar manner as a EULA in alot of countries a EULA is not legally binding. In the US some states have already tackled these as illegal contracts that are not legally binding. Keep in mind handshake deals are not legally binding unless in writing as the law cannot determine a she said he said argument.
To have a contract Civilly there has to ba a contact with signature, blood print of the finger. This goes all the way back to pre medieval times where laws of such were founded.
 

Puiu

Posts: 5,062   +3,923
TechSpot Elite
There is no gain for the user if corporations make them circumvent the App Store. Only the corporation selling their services gain. The user loses out on quality assurance offered by the app store. And sure, Apple profit from keeping things in their store.

And 30%, well that’s industry standard. Steam, Google, Windows, Sony, almost everyone takes a 30% cut. I do think it’s quite high but we can’t force Apple to take a smaller cut whilst everyone else is charging 30%.
Please don't BS us, people aren't as stupid as you think. The "quality assurance" excuse is just a big fat lie when it comes to blocking alternative payment methods for subscriptions and other transactions.
 

Irata

Posts: 1,811   +3,050
Don't mean to be rude but the exact opposite: Apple would have been liable for an extreme amount of money if they had been found to have committed antitrust behavior.

They are more than happy to make this minor change in order to avoid having any company (or goverment) get them for antitrust. Then they'd be paying **massive** payouts to various agencies.

This is barely a slap on the wrist for them, and, oddly enough, Epic pays them.
Yes, Epic pays them a couple of million $, but having to allow all apps to use a third party payment provider means bye bye 30%, so a lit more. And as far as fines from anti trust govt agencies are concerned - Intel is a good example how laughable these fines are.
 

kapital98

Posts: 384   +339
Yes, Epic pays them a couple of million $, but having to allow all apps to use a third party payment provider means bye bye 30%, so a lit more. And as far as fines from anti trust govt agencies are concerned - Intel is a good example how laughable these fines are.
Just to be clear: Apple keeps the 30%. Spotify & Epic have both been on record that allowing 3rd party payments is not at all the same thing as having 'in-app' purchasing options to avoid Apple's 30% cut.

This the point of "nudges" in behavioral econ. People don't like to do more work. So you make it as easy as possible for them to buy things without doing work. Apple's 'in-app' purchases do just that. Forcing people to go to Epic's website to buy monthly payments, even if available, won't do much to change customer behavior. Allowing people to "in-app" avoid the payments **would**.
 

pelopidas

Posts: 35   +59
I’m surprised that so many commenting here are supporting this terrible decision.
So this means you think Amazon should let third party sellers sell their products on Amazon and bypass Amazon payments thus saving the 15-30 percent that Amazon gets. But you would demand their customer service, their refunds and guarantees.
I am sure you think that. You would like to avoid paying the platform creators, those who make the very existence of apps possible, those who have to design the hardware and OS. Those whom you hold responsible when things break.
How about you walk into Walmart and take some items and bypass Walmart checkout. Your just gonna pay the manufacturers directly. But Walmart still has to put it on shelves, pay for the store and store employees etc… seriously, WTF?
 

Kotters

Posts: 355   +255
I’m surprised that so many commenting here are supporting this terrible decision.
So this means you think Amazon should let third party sellers sell their products on Amazon and bypass Amazon payments thus saving the 15-30 percent that Amazon gets. But you would demand their customer service, their refunds and guarantees.
I am sure you think that. You would like to avoid paying the platform creators, those who make the very existence of apps possible, those who have to design the hardware and OS. Those whom you hold responsible when things break.
How about you walk into Walmart and take some items and bypass Walmart checkout. Your just gonna pay the manufacturers directly. But Walmart still has to put it on shelves, pay for the store and store employees etc… seriously, WTF?
You're misinformed.
 

Norsiiii

Posts: 87   +111
I’m surprised that so many commenting here are supporting this terrible decision.
So this means you think Amazon should let third party sellers sell their products on Amazon and bypass Amazon payments thus saving the 15-30 percent that Amazon gets. But you would demand their customer service, their refunds and guarantees.
I am sure you think that. You would like to avoid paying the platform creators, those who make the very existence of apps possible, those who have to design the hardware and OS. Those whom you hold responsible when things break.
How about you walk into Walmart and take some items and bypass Walmart checkout. Your just gonna pay the manufacturers directly. But Walmart still has to put it on shelves, pay for the store and store employees etc… seriously, WTF?
You have completely misunderstood what this is all about.

Your analogy of the Amazon marketplace is equivalent to the App Store. The analogy of products being sold on Amazon is equivalent to apps sold on the App Store. When someone buys an app on the App Store, Apple still gets their cut. This judgement has absolutely nothing whatsoever to do with Apple's cut from sales ON the App Store. Your analogy there is completely wrong.

To use your analogy properly, the circumstances you're talking about are more accurately described as something like the following scenario:

A company, lets call them 'Koba' sells an e-book reader/tablet/thing on Amazon. Amazon get their % cut of the initial sale price when every customer buys the tablet. We're all in agreement at this point, no arguments so far. BUT Amazon's terms go further, and demand that when the customer uses that e-book reader to go onto the Koba e-book marketplace to buy an e-book, Amazon demands a FURTHER 30% cut of THAT sale as well, and also demands that the sale has to take place via Amazon's payment platform. If Koba doesnt capitulate, Amazon will remove their e-book readers from the marketplace.

There is no logical or moral argument that you can possibly conceive to defend that kind of monopolistic bullying
 

jpuroila

Posts: 389   +236
I’m surprised that so many commenting here are supporting this terrible decision.
So this means you think Amazon should let third party sellers sell their products on Amazon and bypass Amazon payments thus saving the 15-30 percent that Amazon gets. But you would demand their customer service, their refunds and guarantees.
I am sure you think that. You would like to avoid paying the platform creators, those who make the very existence of apps possible, those who have to design the hardware and OS. Those whom you hold responsible when things break.
How about you walk into Walmart and take some items and bypass Walmart checkout. Your just gonna pay the manufacturers directly. But Walmart still has to put it on shelves, pay for the store and store employees etc… seriously, WTF?
0.05$ has been deposited to your account.
 

Puiu

Posts: 5,062   +3,923
TechSpot Elite
I’m surprised that so many commenting here are supporting this terrible decision.
So this means you think Amazon should let third party sellers sell their products on Amazon and bypass Amazon payments thus saving the 15-30 percent that Amazon gets. But you would demand their customer service, their refunds and guarantees.
I am sure you think that. You would like to avoid paying the platform creators, those who make the very existence of apps possible, those who have to design the hardware and OS. Those whom you hold responsible when things break.
How about you walk into Walmart and take some items and bypass Walmart checkout. Your just gonna pay the manufacturers directly. But Walmart still has to put it on shelves, pay for the store and store employees etc… seriously, WTF?
You are completely wrong and your Amazon comparison just shows that you don't understand what just happened.

Let me give you a real comparison:
1. You buy an Oculus Quest 2
2. Instead of using the Oculus store, or any third party store to buy games, you are forced by Amazon to buy the games on their store for a completely different platform that has nothing to do with Amazon anymore.
3. Oculus is forbidden to ever mention that you can buy the games outside of Amazon's store (no emails, no messages, no links, no nothing).

Yes, this is what Apple was doing. The in-app purchases have absolutely nothing to do with the store anymore, but Apple still forced you to use their payment system.

How about you actually make a good argument instead of whatever you just wrote above?
 

pelopidas

Posts: 35   +59
You are completely wrong and your Amazon comparison just shows that you don't understand what just happened.

Let me give you a real comparison:
1. You buy an Oculus Quest 2
2. Instead of using the Oculus store, or any third party store to buy games, you are forced by Amazon to buy the games on their store for a completely different platform that has nothing to do with Amazon anymore.
3. Oculus is forbidden to ever mention that you can buy the games outside of Amazon's store (no emails, no messages, no links, no nothing).

Yes, this is what Apple was doing. The in-app purchases have absolutely nothing to do with the store anymore, but Apple still forced you to use their payment system.

How about you actually make a good argument instead of whatever you just wrote above?
So basically you just made the argument that you also don’t understand Amazon which means that there is no real world analogy I could use, be it cruise ships or amusement parks, etc. So, since you are unfamiliar with how anything works in reality, enjoy your oculus but stay out of debates, please, for the rest of us.