A Judge Blocked Apple From Collecting These Commissions
"It's hard to see how completely ripping [the system] apart will be helpful to consumers," warns one economist.
Apple recently lost a major antitrust case to Epic Games that has forced the tech giant to substantially change its iOS, Apple's operating system used by millions of Americans.
In April, Judge Yvonne Gonzalez Rogers of the U.S. District Court of the Northern District of California ruled that Apple may not charge developers any commission for sales made outside of the App Store. While this move will make developers more profitable and save consumers money in the short term, it could have lasting and devastating effects on Apple users; forcing Apple to give developers free access to its network discourages the company from investing in its App Store.
Epic Games, the producer of the popular Fortnite video game, first sued Apple in August 2020, alleging that Apple had violated the federal Sherman Antitrust Act as well as California's Cartwright Act and Unfair Competition Law by monopolizing the iOS app distribution and in-app payment processing markets via anticompetitive conduct. This conduct includes, namely, Apple's exclusion of third-party app stores and apps from its iOS devices and requiring developers to distribute apps exclusively via the App Store and use Apple's in-app payment processing (from which Apple collects a 30 percent commission on every sale). Epic's suit was prompted when Apple removed Fortnite from the App Store after discovering that Epic added an external payment service.
In September 2021, the court dismissed the nine counts Epic made under the Sherman Antitrust Act and the Cartwright Act but held that Apple's antisteering provisions—contractual stipulations designed to prevent developers from directing iOS users to external payment options—violated the Unfair Competition Law. Brian Albrecht, chief economist at the International Center for Law and Economics, tells Reason that Apple's in-app fees can be justified by platform investment incentives and security concerns, which shield Apple from liability under federal antitrust laws.
Judge Rogers said herself in 2021 that exclusive distribution via the App Store and commissions on in-app purchases "have procompetitive effects that offset their anticompetitive effects" and, for this reason, dismissed Epic's Sherman and Cartwright claims. Rogers also found that "Apple does not have substantial market power equating to monopoly power." However, California's Unfair Competition Law "condemns any business practice that is 'unfair' to consumers or competitors, even if it doesn't rise to the level of monopolistic conduct," explains Albrecht. Rogers ruled that Apple's antisteering provisions were unfair on the basis that they produced "anticompetitive effects and excessive operating margins under any normative measure."
Rogers reiterated in her recent ruling that the September 2021 injunction "permanently restrained and enjoined [Apple] from prohibiting developers" to include "their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms" in their apps. The injunction also barred the tech giant from prohibiting developers from "communicating with customers through points of contact obtained voluntarily from customers through account registration within the app."
The 9th Circuit Court of Appeals affirmed the lower court's ruling in April 2023, finding that Apple was not in violation of federal antitrust laws but that its antisteering provisions were illegal under the Unfair Competition Law.
Apple appealed to the Supreme Court to overturn the 9th Circuit's nationwide injunction in September 2023. Epic also appealed to the Supreme Court to end the 90-day pause the 9th Circuit granted Apple to appeal its injunction. The Supreme Court declined to review the case in January 2024.
Apple filed its notice of compliance with the 9th Circuit's injunction following the Supreme Court's refusal to hear the case. The company stated it would allow developers to communicate out-of-app purchases to users and collect a 27 percent commission on these purchases instead of the 30 percent on in-app purchases. Rogers said Apple imposed "various restrictions on the manner and mode of communicating with customers which were distinctly less user-friendly than those otherwise allowed."
Epic alleged that Apple was "in blatant violation" of the injunction by charging developers only three percentage points less of a commission on sales made outside the App Store. Accordingly, Epic filed a motion to the district court in March 2024 to hold Apple in civil contempt and enforce the injunction. In April 2025, Rogers ruled in Epic's favor, saying that Apple "chose to defy this Court's order and manufacture post hoc justifications for maintaining an anticompetitive revenue stream" despite being "afforded ample opportunity to respond to the Injunction."
Rogers reaffirmed the original injunction, permanently enjoining Apple from restricting the language of links for purchases outside an app, requiring "a neutral message apprising users that they are going to a third-party site," and prohibiting the company from "imposing any commission or any fee on purchases that consumers make outside an app."
Joseph Coniglio, director of antitrust and innovation policy at the Information Technology and Innovation Foundation, tells Reason that preventing Apple from charging a commission on linked transactions not only chills Apple's ability to innovate by preventing it from monetizing its iOS investments but also puts users' privacy and security at risk by allowing developers to steer them to out-of-app payments.
Albrecht explains that the ruling will increase competition payments, which will help consumers, but reduce Apple's investments in the App Store, which will harm them. "It's hard to see how completely ripping [the system] apart will be helpful to consumers," says Albrecht.
