Apple Loses Appeal in iOS Payments Contempt Case
▼ Summary
– A U.S. appeals court upheld a ruling that Apple was in “willful violation” of a 2021 injunction designed to open up iOS App Store payments to outside options.
– The court found Apple’s initial 27% fee on outside payments was prohibitive and that its design restrictions for payment links were overly broad.
– The appeals court also agreed Apple acted in “bad faith” by refusing to comply with the injunction and rejected its attorney-client privilege arguments.
– While barred from charging any fee, the court now suggests Apple can charge a future “reasonable fee” based on its actual security and privacy costs.
– Epic Games’ CEO argues such fees should be minor, like small charges per app review, to compensate for ensuring payment links are not scams.
A major legal challenge to Apple’s control over iOS app payments has been largely upheld by a federal appeals court. The Ninth Circuit Court of Appeals affirmed a lower court’s finding that Apple was in “willful violation” of a 2021 injunction designed to open up payment options for developers. This decision represents a significant setback for the tech giant and a potential turning point for the global app economy, a point underscored by Epic Games CEO Tim Sweeney, who expressed hope that the ruling will “do a lot of good for developers.”
The appellate panel agreed with the district court’s earlier assessment that Apple’s initial attempts to impose a 27 percent fee on developers using external payment links had a “prohibitive effect,” directly violating the court order. The judges also found that Apple’s rules governing the design and presentation of these outside links were overly restrictive. The court clarified that Apple’s authority should be limited to ensuring that internal and external payment options are presented to users in a similar manner, preventing the company from using design mandates to discourage the use of alternative systems.
Critically, the appeals court supported the finding that Apple acted in “bad faith” by refusing to comply with the injunction, noting that the company internally dismissed viable and compliant alternatives. The court was also unpersuaded by Apple’s procedural arguments, including claims that certain materials were protected by attorney-client privilege, stating the district court properly evaluated that evidence.
While the lower court had prohibited Apple from charging any fees for payments processed outside its ecosystem, the Ninth Circuit introduced a potential modification. The appellate judges suggested that Apple should be permitted to charge a “reasonable fee” tied to its “actual costs” for maintaining user security and privacy. The task of defining what constitutes a reasonable fee now returns to the district court and Apple for further deliberation.
In response to this aspect of the ruling, Epic’s Tim Sweeney offered his perspective on what “reasonable” should mean. He argued that fees should be minimal, perhaps on the order of “tens or hundreds of dollars” per app update review, sufficient to cover the cost of Apple employees ensuring that external payment links are not fraudulent. Sweeney framed this as a move toward “normal fees for normal businesses that sell normal things to normal customers,” contrasting it with Apple’s current revenue-sharing model. The ongoing legal process will determine how this fee structure is ultimately implemented.
(Source: Ars Technica)
