Apple was found to have broken California state competition laws by forbidding app developers from using any other in-app payment options save its own, which charge a 30% fee.
The ruling may open the door for projects working with cryptocurrencies and nonfungible tokens (NFTs) to expand the features of their iOS apps. The United States Court of Appeals for the Ninth Circuit issued its decision on April 24 in the dispute between Apple and Epic Games, the company behind the online game Fortnite. The court maintained a lower court’s ruling from 2021 that claimed Apple’s anti-steering clause was detrimental to Epic.
Apple’s anti-steering policy prohibits iOS developers from distributing information about outside-of-app purchase options through specific channels, like in-app links.According to the court, the policy increased the prices of the applications made by Epic’s subsidiaries that are still available on Apple’s App Store and discouraged other app users from purchasing Epic Games.
On April 24, Tim Sweeney, the creator and CEO of Epic Games, tweeted that the decision “frees iOS developers” by enabling them to point users to different payment options.
While the court sided with Apple on the majority of points, the tech giant was unsuccessful in its claim that Epic Games shouldn’t be subject to the anti-steering clauses because Apple cancelled Epic Games’ iOS developer account in August 2020.
By using the “tethering test” for rival lawsuits and the “balancing test” for consumer lawsuits, the court determined that Epic Games would have made more money since then if Apple’s policy hadn’t been in place and found the anti-steering provision to be “unfair” under both standards.
The court took a second look at Apple’s anti-steering breach and found that if customers had known that Epic Games had a far lower commission rate than Apple—12% as opposed to 30%—they would have gone directly to the company. “Consumers will switch to platforms with lower prices if they are aware of lower app prices, which are made possible by developers’ lower costs, and are able to do so, increasing the revenue that the Epic Games Store generates.”
The decision, if Apple does not appeal it, may establish a legal precedent that will be advantageous to developers of crypto and nonfungible token apps since they will not be subject to Apple’s 30% “tax.”
Uniswap, a decentralized exchange, is one of the most recent cryptocurrency initiatives to enter the App Store, despite Apple first delaying its release in March. New anti-monopolistic regulations adopted by the European Union over two months ago oblige Apple to allow third-party app stores on its devices, allowing users to avoid Apple’s 30% charges.
Although Apple claimed it was authorized to “collect 30% of the gas fee” through in-app purchases, it interfered with NFT transactions received on Coinbase’s self-custody wallet in December.
