(Washington) The Supreme Court on Tuesday allowed a court order to take effect that could loosen Apple’s grip on its lucrative iPhone app store, potentially siphoning billions of dollars from one of the most profitable companies in the world.
The justices rejected Apple’s appeal of lower court rulings that some of Apple’s App Store rules for apps purchased on more than a billion iPhones constitute unfair competition within the meaning of the California law.
The call comes in the wake of an antitrust lawsuit filed in 2020 by Epic Games, the maker of the popular video game Fortnite. Epic was denied its broader claim that Apple, based in Cupertino, Calif., violated federal antitrust law, and judges also rejected Epic’s appeal on Tuesday.
However, in rejecting Apple’s efforts to maintain exclusive control over in-app payments, the court lifted the stay of an order allowing app developers across the United States to insert links to other options of payment than its own in iPhone applications. This change would make it easier for developers to avoid paying Apple’s commissions ranging from 15% to 30%.
Those fees have become a major part of Apple’s services division, which generated $85 billion in revenue during the company’s last fiscal year ending in September. The specter of consumers switching to other payment channels for in-app transactions is one of several factors weighing on Apple’s stock, which is down 5% so far This year.
The decline allowed Apple’s longtime rival, Microsoft, to eclipse it as the world’s most valuable company. Apple shares fell 2% early Tuesday afternoon, leaving the company with a market value of around $2.8 trillion. Microsoft, whose stock has increased slightly by 3% since the start of the year, is worth 2.9 trillion.
In addition to the possibility that the Supreme Court refuses to examine the payment issue in the Epic case, investors are also concerned about new European regulations which are expected to come into force in March and which could also force Apple to authorize payment methods. Alternative payment in iPhone apps. Apple has steadfastly resisted removing the barriers, citing security concerns that could harm iPhone owners.
Epic, based in Cary, North Carolina, had claimed that Apple’s app store – launched in 2008, a year after the first iPhone went on sale – had become an illegal monopoly that stifles innovation and competition while generating billions of dollars in profits for Apple. Although a federal judge rejected the claim that Apple has a monopoly on mobile apps, she concluded that consumers should have more discretion over how to pay in apps.
Apple did not immediately respond to a request for comment on the Supreme Court’s denial or how it would adopt the September 2021 ruling by U.S. District Judge Yvonne Gonzalez Rogers.
In a series of messages Tuesday, Epic Chairman and CEO Tim Sweeney called the Supreme Court’s refusal a “sad outcome for developers,” while also applauding the prospect of allowing consumers to see “more best prices on the web.
In August 2020, Epic attempted to offer an alternative way to obtain its mobile app, attempting to escape the commissions Apple charged when digital goods were purchased by players in Fortnite and other games.
Apple ousted Epic from its App Store after trying to circumvent Apple’s restrictions.
Although it lost most of its claims in the Apple case, Epic won a jury trial last month against Google and its Play Store for apps on Android phones in a lawsuit mirroring its action against Apple. A federal judge has yet to determine what changes Google will need to make to its Play Store.