The Supreme Court’s recent refusal to hear an appeal from both Apple and Epic Games on different aspects of a lower court’s ruling means consumers won’t see many changes to their app downloading and purchasing experience. But the high court’s silence is a blow to some software developers who were hoping to shift more revenue from Apple’s coffers to their own pockets.
Epic’s yearslong case against Apple charged that its app store was an illegal monopoly. It asked a federal district court in California to force Apple to allow “sideloading,” the downloading of an app directly from a developer’s website or a competing app store. And to allow developers to communicate with end-users about options for in-app purchases, effectively cutting Apple out of the revenue from those fees.
When smartphone users download or make subsequent purchases in an app, the app store they use often collects a 15%-30% fee on that purchase from the app’s developer. On Apple devices, apps are heavily vetted before being offered and are only available through the Apple App Store. No downloading from other sources, known as sideloading, is permitted on devices running the Apple operating system. Apple also forbids competitor app stores on its platforms. On Android devices, sideloading is permitted, in addition to using the Google Play Store app marketplace, which has a similar feed structure to the Apple App Store.
In the district court, Apple successfully defended its “walled garden” approach as facilitating trust with end-users by assuring increased privacy and security. The court agreed that there was consumer benefit to the approach and refused to mandate sideloading. However, Apple was unable to preserve its ban on developers steering users to alternative payment systems for in-app purchases. The district court ruled that the company’s ban on app developers communicating other options for payment was in violation of California’s Unfair Competition Law and issued a permanent injunction on the practice nationwide.
The 9th Circuit Court of Appeals upheld the district court’s findings, and then both parties appealed to the Supreme Court. Apple sought to overturn the nationwide nature of the prohibition on anti-steering, arguing it was an unconstitutional overreach for a state to, in effect, set national policy. Epic’s appeal aimed to overturn the fundamental preservation of Apple’s closed digital ecosystem.
Upon the Jan. 16 news of the high court declining to review the case, Epic Games founder and CEO Tim Sweeney posted on X, “The court battle to open iOS to competing stores and payments is lost in the United States. A sad outcome for all developers.”
Scholars from the International Center for Law and Economics disagree, writing in the amicus brief they filed for the 9th Circuit that “ultimately, this case boils down to Epic wanting a free ride for its own Epic Games store and its own [in-app purchase] on [Apple’s operating system].”
ICLE senior scholar for competition policy Lazar Radic told the Washington Examiner that the injunction may expose consumers to “increased security and privacy threats posed by third-party in-app payment systems.” His colleague, Daniel Gilman, agreed and added that consumers are not likely to see lower prices or a greater selection of apps. He points to Epic’s own $245 million fine by the Federal Trade Commission in 2023 for “deceiving consumers and tricking them into making unauthorized purchases” as an example of the security risks posed by the injunction.
Brian Bieron, executive editor of Platform Economy Insights newsletter, reacted to the Supreme Court’s decision by writing, “The justices were never likely to wade into a wholesale review of digital antitrust.” He added, “We are reminded that most cert petitions are long shots.” Bieron also noted that Apple’s response in complying with the U.S. injunction against anti-steering mimics how the company has reacted in other countries where the practice is banned.
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Similar to its policy changes in South Korea and the Netherlands, Apple has instituted a 27% commission in the U.S. if developers choose a payment method other than Apple’s. This puts Apple in compliance with the injunction but also allows it to continue to fund the maintenance and improvement of its app store. This means the total amount developers share with Apple won’t change significantly. Some developers have expressed outrage and accused Apple of not complying with the spirit of the ruling.
Epic says it will challenge Apple’s new policy in court.
