Legendary strategies to object to Apple’s ‘bad-faith’ compliance with court judgment over App Shop

Fortnite maker Legendary Games is not pleased about how Apple plans to abide by a district court’s injunction that allowed app designers to direct users to their own sites and payment platforms– a court order that entered into result following the Supreme Court’s choice to not hear the Apple antitrust case, leaving the existing judgment to stand Though Apple had actually mainly won the case, as the court chose it was not a monopolist, a judge ruled that app makers must have the ability to guide their clients to the web from links or buttons inside their apps, something that required Apple to alter its App Shop guidelines

However Apple’s compliance does not provide app makers the success they had actually hoped, as the tech huge objectives to still charge commissions on purchases made beyond apps– a choice Legendary intends to challenge in court.

According to declarations made by Legendary Games CEO Tim Sweeney, shared on X, Apple’s “bad-faith” compliance weakens the judge’s order that would have enabled buttons or external links “in addition to [in-app purchases.”

The Ninth Circuit District Court had ruled on one count of out ten in favor of Epic in its decision, finding that Apple violated California’s Unfair Competition law. The decision meant Apple had to remove the “anti-steering” clause from its agreement with App Store developers. This clause for years had prevented app developers from directing their customers to other ways to pay for in-app purchases or subscriptions from inside their apps, leading to confusing screens or broken features, where customers would have to figure out on their own how to make the necessary purchases from the developer’s website.

Apple updated its App Store Guidelines following the Supreme Court’s decision but with a lot of caveats. It said that developers would still have to pay a 27% cut on purchases, instead of 30%, and developers in Apple’s Small Business Program or auto-renewing subscriptions in their second year would be reduced to 12%, instead of 15%. This 3 percentage point discount is similar to what Google is offering through its User Choice billing pilot program, which counts Spotify and Bumble among its early adopters. In Google’s case, it reduced the required commissions by 4%. But these small discounts aren’t enough to make alternative payment processing worthwhile for most developers who have to pay at least that much in payment processing fees, many have argued.

Sweeney agrees, noting in his post today, shared on X, that developers aren’t able to offer their digital items “more cheaply on the web after paying a third-party payment processor 3-6% and paying this new 27% Apple Tax.”

Apple filed a bad-faith “compliance” plan for the District Court’s injunction. It totally undermines the order allowing “buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to IAP”.https://t.co/ofbuMwe7SH

— Tim Sweeney (@TimSweeneyEpic) January 16, 2024

In addition, he points out that Apple is strictly controlling how the new links and buttons must appear. In addition to forcing developers to apply for permission, the links can’t be in the app’s ordinary payment flow but must be in a separate section of the app, Sweeney explains. The links also open to a generic web browser session, forcing users to log in again to the developer’s website — an additional point of friction in making a non-App Store purchase. And then customers will have to initiate a search to find the item they wanted to buy, after logging in.

Apple will also “front-run competing payment processors with their own ‘scare screen’ to disadvantage them,” Sweeney says, meaning that Apple will warn users about the issues that may arise when transacting with a developer outside its App Store. For instance, users won’t be able to cancel their subscriptions within Apple’s App Store or request refunds  — they’ll have to do this through the developer’s website.

Sweeney says Epic will contest Apple’s compliance in District Court.

The developer lobbying group, Coalition for App Fairness, which also includes Epic, issued its own statement on Apple’s new App Store rules.

“Apple’s approach to ‘compliance’ with the District Court’s decision will not benefit developers and consumers. The new 27 percent commission on payments it does not process defies the intention of the District Court’s injunction and undermines competition,” said Rick VanMeter, Executive Director of the Coalition for App Fairness. “These changes do nothing to enhance consumer choice, lower prices for in-app purchases or inject competition into Apple’s walled garden. It is precisely this type of abusive, monopolistic behavior that makes it imperative for Congress to pass the Open App Markets Act,” he added.