Apple files appeal in Epic Games case, potentially delaying App Store changes for years

Tim Cook, chief executive officer of Apple Inc., center, arrives at U.S. district court in Oakland, California, on Friday, May 21, 2021.
Nina Riggio | Bloomberg | Getty Images

Apple filed a notice of appeal in the Epic Games case and is asking for a stay on the injunction that lets developers add in-app links to payment websites, according to company representatives and documents filed on Friday.

If Apple wins the stay, which will be decided by a judge in November, a rule change potentially allowing developers to circumvent App Store fees of 15% to 30% may not take effect until appeals in the case have finished, a process that could take years.

Federal judge Yvonne Gonzalez Rogers ruled in September in favor of Apple for nine of 10 counts in an antitrust trial brought by Epic, the maker of Fortnite. Epic was seeking the ability to install its own app store on iPhones. Kate Adams, Apple’s general counsel, said at the time the ruling was a “huge win.”

But Apple was also ordered to make a major change to its store and allow mobile apps to steer consumers to outside payment methods, providing a way to potentially evade Apple’s App Store fees.

That injunction is currently scheduled to go into effect on Dec. 9.

Apple hasn’t publicly explained how its App Store policies would change under the order, but some developers have already started to build software based on their interpretation of the ruling.

“At a high level, it is my judgment that, without thoughtful restrictions in place to protect consumers, developers, and the iOS platform, this change will harm users, developers, and the iOS platform more generally,” Trystan Kosmynka, Apple’s senior director of App Review, said in a filing on Friday.

Apple may be able to change its App Store policy and engage in discussions with the judge, eliminating the need for an injunction, Apple representatives said.

In the past year, Apple has made several small concessions to critics of its app distribution rules in response to lawsuits and regulatory attention as part of a strategy to limit more major changes to its App Store. Apple has argued that it should be able to decide what software is allowed to operate on iPhones in order to deliver what the company says is a better user experience.

In a filing describing its reasoning for the stay, Apple cites some concessions it made as part of a separate settlement with small developers in August. That settlement is still pending Judge Rogers’ approval.

“The requested stay will allow Apple to protect consumers and safeguard its platform while the company works through the complex and rapidly evolving legal, technological, economic issues that any revisions to this Guideline would implicate,” Apple lawyers said in a court filing.

The judge also ordered Epic to pay damages to Apple. Epic Games filed a notice of appeal in September. An Epic Games representative wasn’t immediately available for comment.

If app makers are ultimately able to bill their own customers directly, without using Apple’s in-app purchase system, it would threaten a profit engine for the company. The App Store is part of the company’s services business, which reported $53.8 billion in sales during fiscal 2020 at a 66% gross margin, accounting for about 20% of Apple’s revenue.

This story is developing. Please check back for updates.

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