Judge sanctions Apple for blatantly violating 'Fortnite' App Store order
The battle between Apple and Epic Games goes on as Judge Gonzalez Rogers finds Apple in violation of an injunction, which may result in Apple being charged with contempt by federal prosecutors.
Apple vs Epic continues. Image source: Epic Games
The Epic vs Apple trial began as a result of Epic Games deliberately violating App Store rules in order to create a marketing campaign against Apple. The results had Apple win on every aspect except one -- anti-steering.
Apple was ordered via a 2021 injunction to remove anti-steering barriers for third-party businesses, but Apple's App Store changes didn't satisfy Epic Games. A complaint was filed in March, which resulted in a very critical ruling on April 30 from Judge Yvonne Gonzalez Rogers.
According to a report from Bloomberg, Apple has been found in willful violation of the injunction and must cease charging a commission on all purchases made outside of the App Store. The company may also face criminal contempt charges as the Judge referred the case to federal prosecutors.
Judge Yvonne Gonzalez Rogers explained Apple's violation in detail.
"It did so with the express intent to create new anticompetitive barriers which would, by design and in effect, maintain a valued revenue stream; a revenue stream previously found to be anticompetitive," the Judge wrote in her ruling. "That it thought this court would tolerate such insubordination was a gross miscalculation."
Apple's response to the injunction was two-pronged -- offer a complicated external linking solution and still charge a 27% commission. These requirements made the injunction virtually useless as no major businesses took advantage of the seemingly obtuse system.
Epic Games CEO Tim Sweeney is taking victory laps on social media, stating that Fortnite will return to the iOS App Store "next week" if Apple responds to a peace proposal. All Apple would seemingly have to do is eliminate commissions on external purchases worldwide, not just in the United States.
If Apple does this, iOS gets Fortnite and Epic will drop litigation on the topic. Sweeney obviously sees this as a win-win.
It isn't clear how Apple will respond. The issues with Apple's compliance with the injunction arose in the first place due to a fear of lost revenue.
Apple CEO Tim Cook and former CFO Luca Maestri agreed that they should pursue commissions on external purchases. That decision was made in spite of App Store head Phil Schiller's concerns about it being a violation of the injunction.
If Tim Sweeney follows through on the peace offering, it would mean an end to the years of litigation. However, there doesn't seem to be any real benefit for Apple to do so, and the company isn't afraid to return to court.
Apple hasn't made a public response as of this publication.
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Comments
I have followed apple for 25 years now, and I still believe that they have proved their ability to act in a way which generally is pro-consumer by their philosophy. To me, Apple being forced to licence their software to other hardware companies, to allow unauthorised (as in part pairing) repairs, allowing side-loading and allowing companies to use and install software developed for their platforms without paying apple anything are not net benefits to the consumer.
if people want phones like that - go and buy an android.
This was suppose to be Apple’s golden age and now things just seam to be going sideways
Good that Luca left the company. Maybe, the perfect timing. He is an idiot.
Tim needs to go. His prime times are overdue.
For the reasons set forth herein, the Court FINDS Apple in willful violation of this Court’s 2021 Injunction which issued to restrain and prohibit Apple’s anticompetitive conduct and anticompetitive pricing. Apple’s continued attempts to interfere with competition will not be tolerated...
Apple’s response to the Injunction strains credulity. After two sets of evidentiary hearings, the truth emerged. Apple, despite knowing its obligations thereunder, thwarted the Injunction’s goals, and continued its anticompetitive conduct solely to maintain its revenue stream.
Remarkably, Apple believed that this Court would not see through its obvious cover-up (the 2024 evidentiary hearing). To unveil Apple’s actual decision-making process, not the one tailor-made for litigation, the Court ordered production of real-time documents and ultimately held a second set of hearings in 2025.
To summarize: One, after trial, the Court found that Apple’s 30 percent commission “allowed it to reap supracompetitive operating margins” and was not tied to the value of its intellectual property, and thus, was anticompetitive. Apple’s response: charge a 27 percent commission (again tied to nothing) on off-app purchases, where it had previously charged nothing, and extend the commission for a period of seven days after the consumer linked-out of the app.
Apple’s goal: maintain its anticompetitive revenue stream.
Two, the Court had prohibited Apple from denying developers the ability to communicate with, and direct consumers to, other purchasing mechanisms. Apple’s response: impose new barriers and new requirements to increase friction and increase breakage rates with full page “scare” screens, static URLs, and generic statements.
Apple’s goal: to dissuade customer usage of alternative purchase opportunities and maintain its anticompetitive revenue stream.
In the end, Apple sought to maintain a revenue stream worth billions in direct defiance of this Court’s Injunction.
In stark contrast to Apple’s initial in-court testimony, contemporaneous business documents reveal that Apple knew exactly what it was doing and at every turn chose the most anticompetitive option. To hide the truth, Vice-President of Finance, Alex Roman, outright lied under oath. Internally, Phillip Schiller had advocated that Apple comply with the Injunction, but Tim Cook ignored Schiller and instead allowed Chief Financial Officer Luca Maestri and his finance team to convince him otherwise. Cook chose poorly.
The real evidence, detailed herein, more than meets the clear and convincing standard to find a violation. The Court refers the matter to the United States Attorney for the Northern District of California to investigate whether criminal contempt proceedings are appropriate.
This is an injunction, not a negotiation. There are no do-overs once a party willfully disregards a court order. Time is of the essence. The Court will not tolerate further delays. As previously ordered, Apple will not impede competition. The Court enjoins Apple from implementing its new anticompetitive acts to avoid compliance with the Injunction. Effective immediately Apple will no longer impede developers’ ability to communicate with users nor will they levy or impose a new commission on off-app purchases.
The TLDR version?
"This is an injunction, not a negotiation. There are no do-overs once a party willfully disregards a court order."
Listen to Phil and make Phil the leader.
If this is true, and there is no reason to believe otherwise - Cook is entirely complicit, and the board should seriously consider the next steps. Cook himself decided that being in contempt of court was a better option than losing some profit. That is not okay.
If Apple has the best product, they won't need to worry about developers using outside payment providers. I would certainly rather use Apple Pay than put my card details into some unknown third party vendor's site. I don't see a problem with Apple requiring Apple Pay to be listed alongside other methods, but to only allow Apple Pay (and overly discourage other methods) is clearly anticompetitive.