Judge loosens Apple's grip on app store

·2-min read

A US federal judge has ordered Apple to dismantle a lucrative part of its iPhone app store but rejected allegations the company runs an illegal monopoly.

The ruling on Friday continues to chip away at the "walled garden" around Apple's crown jewel, the iPhone, and its app store, without toppling it completely.

The decision from US District Judge Yvonne Gonzalez Rogers also provided Apple with some vindication: it does not brand Apple a monopolist or require it to allow competing stores to offer apps for iPhones, iPads and iPods.

That was sought by Epic Games, the maker of the popular Fortnite video game, when it filed an antitrust case last year after defying an exclusive payment system that funnels up to 30 per cent of all in-app transactions on iPhones to Apple.

Epic cast that lucrative fee as price-gouging that would not be possible if competing stores were allowed to offer iPhone apps.

Gonzalez Rogers raised questions about whether Apple's fees raised prices for consumers but she left the fee structure intact and upheld the company's right to stop other stores offering apps for its iPhone.

But the judge did conclude Apple has been engaging in unfair competition under California law, prompting her to order the company to allow developers in the US to insert links to other payment options besides its own within iPhone apps.

That change would make it easier for developers to avoid paying Apple's commissions, potentially costing the company billions a year.

Apple's shares fell by more than three per cent after Friday's decision.

Yet Apple tried to frame the decision as a complete victory, even though it may appeal making it easier for app developers sidestep Apple's commissions.

"This decision validates that Apple's 'success is not illegal', as the judge said," Apple general counsel Kate Adams said.

Gonzalez Rogers also ruled Epic breached its contract with Apple when Fortnite added a non-Apple payment system to its app. That defiance prompted Apple to oust Fortnite from its app store 13 months ago, triggering Epic's lawsuit.

She ordered Epic to pay Apple nearly $US3.7 million, or 30 per cent of the revenue it collected while violating Apple's commissions.

Epic chief executive Tim Sweeney denounced the ruling, tweeting it "isn't a win for developers or for consumers". "We will fight on," he said.

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