Appeals court affirms lower court rulings in favor of Apple's App Store against Epic Games

Monday saw Apple chalk up a big legal victory against Fortnite developer Epic Games. As you probably recall, back in 2020 Apple removed Fortnite from the App Store after Epic Games included a link to its own in-app payment platform in the game. The link bypassed Apple's in-app payment platform which takes up to 30% of in-app purchases. Epic took Apple to court seeking to force Apple to allow Epic's app store to be available on the iPhone and to force Apple to make changes to its in-app payment platform policies.

The 2021 ruling by Judge Yvonne Gonzalez Rogers said that the App Store was not a monopoly and that Apple did not have to allow Epic's app store to run on iOS. The judge said that Apple must allow app developers to offer third-party payment methods that would allow users to make payments outside of Apple's in-app payment platform. The judge also decided that Apple did not have to change the fees it charged app developers.

Bloomberg reported on Monday that the U.S. Ninth Circuit Court of Appeals affirmed most of the rulings made by Judge Yvonne Gonzalez Rogers thus rejecting the majority of Epic's claims. The appeals court upheld Judge Rogers' rulings in favor of Epic regarding claims made regarding California state law.

While one judge felt that the case should have been sent back to Judge Rogers with some new guidance, the majority opinion agreed with the argument made by Apple that it needs to closely watch the apps that are installed on its devices like the iPhone and iPad to prevent users from downloading malware, spyware, adware, and other potentially dangerous software. The panel wrote, "Apple makes clear that by improving security and privacy features, it is tapping into consumer demand and differentiating its products from those of its competitors — goals that are plainly procompetitive rationales."

The panel did agree with the lower court ruling that Epic was "injured" by Apple's resistance to have developers lead users to third-party payment platforms. It also told Judge Rogers to reexamine her ruling that Epic didn't owe Apple for attorney fees.

Apple has already made a big change to App Store policies by allowing "Reader apps," which include apps and subscription services such as digital newspapers and magazines, books, and audio and video streaming, to direct users to third-party payment platforms. Games are not covered by this policy. While Fortnite remains out of the App Store, Epic CEO Tim Sweeney has suggested that the title could return to iOS this year.

Apple issued a statement via email that said, "The App Store continues to promote competition, drive innovation, and expand opportunity, and we’re proud of its profound contributions to both users and developers around the world. We respectfully disagree with the court’s ruling on the one remaining claim under state law and are considering further review." The company also characterized the ruling as a "resounding victory" noting that it had nine out of 10 claims decided in its favor.

Epic's Sweeney tweeted, "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. We’re working on next steps."

Apple is being forced to make changes to its "walled garden" policies in Europe where the EU has passed the Digital Markets Act (DMA). The DMA is forcing Apple to allow third-party apps to be installed on the iPhone via sideloading with the release of iOS 17. This past week, Bloomberg's Mark Gurman said that Apple will only allow sideloading in the 27 member countries that make up the EU. In the U.S., sideloading will remain blocked by Apple.