Epic Games takes Apple to court
Apple is under scrutiny for its regulations,
particularly after capitulating to abandon its monopoly in Europe
Epic Games, the creator of Fortnite, has been in ongoing legal and conflictual situations with Apple over the iPhone’s payment system, among other issues. Epic Games has voiced criticism, including accusations that Apple is not complying with court orders.
On April 14th, Epic Games submitted a request to the court urging Apple to comply with a previous order mandating the allowing of payments from external sources besides in-app purchases. Apple has until April 3rd to respond.
Epic Games initially sued Apple in 2020, alleging that the App Store’s in-app payment system violated antitrust laws.
In 2021, the court ruled that Apple’s policy does not violate antitrust laws. However, it ordered Apple to allow external payment systems. The court ruled in Apple’s favor on nine out of ten issues.
However, the court accepted Epic Games’ argument on one issue, ruling that Apple’s refusal to allow payment systems outside the App Store restricts competition. Apple appealed this decision, but in January 2024, the Supreme Court rejected the appeal and ordered Apple to allow other external payment systems.
Following the court’s decision, Apple submitted a compliance notice in January 2024, claiming to regulate external links to protect user privacy and security while maintaining the integrity of its ecosystem.
Epic Games has strongly criticized Apple’s notion of ‘compliance,’ arguing that Apple’s ultimate goal is to prevent any reduction in the exorbitant fees it earns from digital goods and services purchases through alternative payment methods. Despite claiming to follow the court’s orders, Epic Games alleges that Apple is not complying.
Meanwhile, Apple has conceded in Europe and given up its App Store monopoly. European users can now download apps from external sites without going through the dedicated platform, the App Store. This decision, made 16 years after Apple launched the App Store in 2008, has drawn much attention. The electronics industry is on high alert to see if this trend will spread beyond Europe.
On March 12, Apple announced these changes on its blog, highlighting that European individual or corporate app developers can now offer iPhone apps via their websites. Apple also informed that it would allow developers to distribute their apps through third-party app markets and announced plans to lower fees to a maximum of 17% to encourage continued use of the App Store.
So far, Apple has regulated that applications used on mobile devices can only be downloaded from the App Store. This is in stark contrast to Google, which quickly allowed the use of third-party app markets. Currently, Apple is earning fees of up to 30% on digital content sold through the App Store.
At the time of the App Store’s launch, it was praised as innovative for allowing small businesses and individual developers to offer their services to the world through the App Store. However, as time has passed and the landscape has changed, the monopolistic systems of Apple and Google have become entrenched, and the voices criticizing the excessive fees have grown louder.
Following Epic Games and the European Union, checks on big tech are intensifying worldwide.
The South Korean government has also taken action against Apple and Google’s payment methods, imposing fines as part of its response. In 2021, South Korea became the first country in the world to enact the In-app Payment Restriction Act (an amendment to the Telecommunications Business Act), prohibiting app market operators from mandating a specific payment method, thereby protecting consumers.
Following the enactment of this law, Apple and Google appeared to allow third-party payments besides their own payment systems. Still, they targeted loopholes by applying high fees to these alternatives, nullifying the law’s intent. In response to these actions by Apple and Google, in October 2023, the Korea Communications Commission imposed hefty fines of 47.5 billion won on Google and 20.5 billion won on Apple. However, Apple is currently delaying the process by contesting the legal sanctions, leading to a delay in the imposition of fines.
Furthermore, the Fair Trade Commission accelerated the establishment of ‘The Platform Fair Competition Act,’ similar to European policies. Still, the process was halted due to growing concerns over reverse discrimination against domestic platform companies like Naver and Kakao and small startups. This move by the Fair Trade Commission has also drawn expressions of concern from big tech companies and the U.S. government.
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