Epic leaves a big crack in Apple’s walled garden

“I don’t know how you frame all this analysis and all of Apple’s pro-competitive justifications for its closed ecosystem, with the judge then saying, ‘But I’m going to force Apple to allow competitors to set up a signpost in the ecosystem of ‘Apple,’ says Paul Swanson, an antitrust lawyer in Denver. “I don’t see how these two things go together.”

Epic Games CEO Tim Sweeney might agree. In a pugnacious tweet Friday, Sweeney said, “Today’s decision is not a victory for developers or for consumers. Epic is fighting for fair competition between in-app payment methods and app stores for a billion consumers. ” The edge reports that Epic is considering appealing the verdict. (Epic Games did not respond to a request for comment.) Fortnite won’t be back on iOS until “Epic can offer in-app payment in fair competition with Apple’s in-app payment, passing the savings on to consumers,” Sweeney tweeted.

Gaming industry and competition experts say the move is impactful, but not surprising. “It was an uphill battle for Epic to win the case,” said Florian Ederer, associate professor of economics at the Yale School of Management. At the same time, he says, the move was foreshadowed by growing international scrutiny of Apple’s anti-leadership provisions. In August, South Korean regulators approved a bill forcing Apple and Google, defendants in another Epic-led case, to authorize payment systems other than their own. A few days later, the Japanese Fair Trade Commission closed his investigation in Apple’s App Store, determining that Apple should let so-called reading apps, including Netflix, Spotify, and Amazon Kindle, encourage users to sign up and possibly make payments through those websites. companies. Rogers’ move could have a much bigger financial impact, however, as, as his opinion notes, the vast majority of App Store payments come from gaming apps.

Within 90 days, App Store developers will be able to bypass the 30% commission by adding buttons or embedded links to their own websites with their own payment systems. “Developers will not get all of that, they’re not going to bypass that 30 percent entirely, ”says Ederer. “But it’s a big win for the developers.” He theorizes that any additional excess cash could cause developers to ship more products or hold them longer, even if some users choose to take the easy route and go through the in-app payment system. ‘Apple.

More payment systems can be confusing, the stated enemy of the company obsessed with downsizing Apple. “In the long run, in the absence of a vertically integrated platform, you’re going to have a lot of different payment providers trying to push your business through,” says Joost van Dreunen, lecturer at the Stern School of Business. ” New York University and author of A square, a book on the global game trade. “They’re all going to fight on the margins. There will be an increasing number of payment transaction processors and processors attempting to obtain a coin. This can confuse users accustomed to “click and go” or “swipe here, done” systems. And with new payment processing systems, users may feel like there is less transparency and trust in an already opaque and complicated digital marketplace.

While Epic Games won a major battle on the ground, Apple may have won its moral battle: Apple can claim that users aren’t so trapped in its iOS ecosystem as they inhabit it. “Today, the court confirmed what we have known from the start: the App Store does not violate antitrust law,” an Apple spokesperson said in a statement. “Apple faces stiff competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. “

The decision is another crack in Apple’s walled garden. “It’s starting to show some wear,” says van Dreunen. “This is not the immaculate, impervious organization she thought she was.” And while today’s decision is indeed appealed, its fight is not over yet.

Additional reporting by Gilad Edelman.

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