A federal judge ruled on Friday that Apple can no longer compel developers to use its payment system in their apps, allowing businesses to avoid Apple’s up to 30% commission on some app sales.
The order has the potential to upend the economics of a $100 billion online market and is a major setback for Apple, which relies on App Store revenue to fuel its massive profits.
The order was issued as part of a decision in a high-profile legal dispute between Apple and Epic Games, the creators of the popular game Fortnite, who sued Apple last year over App Store policies.
Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California ruled in the ruling that Apple violated California’s anti-unfair competition laws. However, she ruled in favour of Apple on other grounds, including that Epic breached its contract with Apple by allowing Fortnite users to pay it directly, rather than through Apple, within its iPhone app last year.
The decision could have a significant impact on the digital economy. If Epic wins after the expected appeals, businesses will have a new way to avoid the App Store commission, which can be as high as 30%. The change would benefit businesses that claim they are forced to share too much of their sales with Apple.
Epic has filed a lawsuit against Google for the same issues with app-store commissions on its Android operating system, and the case is set to go to trial this year. In addition, 36 states and the District of Columbia sued Google last month for requiring businesses to use its payment system in exchange for access to its app store. Google’s public response implied that Apple had done the same thing.
The judge’s order will go into effect in 90 days. Apple may seek to halt the order before that time.
Requests for comment from Apple and Epic were not immediately returned.
This is an ongoing storey. Keep checking back for updates.