Last week was not a good day to be part of Apple's legal team. The company was found to violate a 2021 court injunction relating to apps directing users to off-app payment systems. In short, Apple has been told that a) it's not allowed to try and stop developers doing this and b) it can't claim any commission on off-app sales.
Apple said it would abide by the ruling for the immediate future, but would be filing an appeal. True to its word, that appeal has now been filed. However, that's not the only courtroom drama Apple is facing.
The company is now facing a class action lawsuit on the back of that ruling, with app developers claiming that Apple "penalized developers who sought to use linked payments with fees that rendered it economically non-viable."
Appealing the ruling...
How successful this appeal will be is another matter. Especially considering the judge behind the 2021 injunction and the recent ruling, Judge Yvonne Gonzalez-Rogers gave Apple a particularly stern reprimand.
“Apple willfully chose not to comply with this Court’s Injunction." Gonzales-Rogers said, "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. That it thought this Court would tolerate such insubordination was a gross miscalculation.”
The ruling also called out Apple Vice President of Finance Alex Roman, who "outright lied under oath." Roman claimed that Apple hadn't decided to charge a 27% commission on off-app purchases until January 16 2024. Business documents revealed it was, in fact, decided on in July 2023, and Gonzales-Rogers noted that "neither Apple, nor its counsel, corrected the, now obvious, lies.”
Needless to say the whole ruling was pretty damning for Apple, which may not put it in the best position to appeal. Whether the appeal has merit or not is for the courts to decide, not you or me. Considering Apple's spat with Epic Games over off-app payments has been going on for almost 5 years, this probably won't get resolved quickly.
In the meantime, Apple has changed the rules of the U.S. App Store, allowing developers to link to other payment options without paying Apple a commission. So even if this appealing process does take a long time, developers can reap the benefits of last week's ruling anyway.
...While also getting sued
Needless to say, app developers haven't been very happy that Apple was found in contempt over an injunction that would have given them more freedom from the App Store.
The class action suit is being handled by Hagens Berman, the same law firm that has tangled with Apple on a number of different issues. That included a $100 million settlement on behalf of iOS app developers over alleged anticompetitive practices back in 2021.
The new lawsuit is in direct response to last week's ruling by Judge Gonzales-Rogers. According to the Hagens Berman press release, the named plaintiff is "Pure Sweat Basketball Inc.," a corporation offering an app used by players across the country to train and improve their basketball skills."
The suit alleges that because Apple didn't comply with the injunction, Pure Sweat was prevented from selling subscriptions directly to users with external links. The law firm estimates that "potentially more than 100,000" app developers were in a similar situation — prevented from linking to off-payment services and forced to pay Apple's commission on in-app sales.
The suit also notes that "Apple has been able to identify only 34 developers who have even applied to offer linked-out payments through their apps." Apparently, this is just 0.025% of the 136,000 developers who have apps listed in the App Store.
Considering Apple's newly filed appeal, it's not clear how this class action suit will pay out. Needless to say, Apple's legal team is going to be quite busy for a while.
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