Judge rules against Apple app store policy that forces app developers to use Apple payment
A federal judge ordered Apple to dismantle part of the competitive barricade guarding its closely run app store, threatening one of the iPhone maker’s. It could potentially also save app developers billions of dollars that could encourage them to lower the prices paid by consumers.
The legal challenge to Apple’s dominance in the app-sales business was mounted by Epic Games, best known as the maker of Fortnite, the popular video game played by 400 million people worldwide.
Apple shares fell sharply immediately upon the issuance of the ruling and its stock price was down 3% Friday. Epic, based in Cary, North Carolina, is a private company.
During the trial, Apple maintained there’s plenty of competition in the gaming market, citing the Nintendo Switch, Sony’s Playstation and Microsoft’s Xbox. The company made the case for itself as an innovator that has invested billions in technology and intellectual property for the benefit of consumers and app developers. Opening up its system to third-party app stores, as Epic has asked, also would harm users’ privacy and security, Apple argued.
The trialwhen Judge Gonzalez Rogers peppered Apple CEO Tim Cook with a series of questions about how the App Store makes money, noting that the majority of the market’s revenue comes from in-app purchases of video games.
A number of revelations emerged during the three-week trial, shedding light on Apple’s relationship with developers — and just how profitable the App Store is for its owner.
Apple invested $1 million in 11 months to market Fortnite, but made more than $100 million from in-app purchases from the game, the company’s gaming chief, Michael Schmid, testified.
The company insisted on Friday the judge’s ruling vindicated its app-sales practices: “Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law. As the Court recognized ‘success is not illegal,'” Apple said in a statement.
CBS News’ Dan Patterson contributed reporting.