Supreme Court rejects Epic Games vs. Apple antitrust case. CEO Tim Sweeney responds.

The long-running antitrust battle between Apple and Cary-based Epic Games seemingly concluded Tuesday as the U.S. Supreme Court declined to hear either party’s appeals in a case that addressed how (and how much) iPhone users pay for apps.

The Supreme Court will leave in place lower-court rulings that allowed Apple to continue prohibiting iPhone users from downloading apps outside the App Store and from making in-app purchases outside Apple’s payment system.

Epic Games CEO Tim Sweeney criticized the Supreme Court’s denial on X, formerly Twitter, calling it “a sad outcome for all developers.” Yet Sweeney’s fight against Apple, which began more than three years ago, has resulted in one lasting change: Apple can no longer prevent app developers from mentioning or linking to alternative payment options outside the App Store.

“As of today, developers can begin exercising their court-established right to tell US customers about better prices on the web,” Sweeney wrote.

Upending this “anti-steering rule” was Epic’s sole win when the Triangle company squared off against Apple in a 2021 U.S. District Court trial. Then last April, the U.S. 9th Circuit Court of Appeals upheld the district court’s decision, which determined Apple does not maintain an unlawful monopoly via its App Store. Both sides appealed the ruling, with Apple contending the San Francisco-based appellate court overreached when it ordered a nationwide injunction on the anti-steering practice it found violated California law.

At the core of the Apple vs. Epic case is Fortnite, Epic’s widely popular video game, which the company said had 100 million players in November.

https://twitter.com/TimSweeneyEpic/status/1747280528745624000

In August 2020, Epic introduced an alternative way for iPhone and Android users to buy “v-bucks,” Fortnite’s in-game currency. To that point, iPhone and Android users had to purchase v-bucks through Apple’s and Google’s respective payment systems, both of which took 30% of the revenue generated by major app developers. Apple argued this closed “walled garden” approach was required to properly safeguard its iOS operating system.

Sweeney rejected this argument, believing Apple levied excessive fees. His decision to circumvent Apple’s payment system was intended to draw the tech giant into a legal tussle, which it did. The same day Epic offered v-bucks to customers directly, Apple booted Fortnite from the App Store. Epic sued Apple, and Apple countersued.

Apple has not responded to a request for comment on today’s Supreme Court decision. On Tuesday, the company introduced a policy that says it will take a 27% commission on proceeds developers earn from selling digital goods purchased through external payment platforms. Sweeney called this compliance plan “bad-faith.”

“Apple has introduced an anticompetitive new 27% tax on web purchases,” he wrote on X. “Apple has never done this before, and it kills price competition. Developers can’t offer digital items more cheaply on the web after paying a third-party payment processor 3-6% and paying this new 27% Apple Tax.”

Sweeney said Epic “will contest” Apple’s compliance plan in district court.

Among North Carolina’s wealthiest residents, the billionaire Sweeney has not shied away from engaging two of the world’s richest companies in lengthy proceedings, even as other companies and state governments have settled in their own antitrust cases.

Epic also sued Google in the summer of 2020 after Fortnite was removed from the Google Play Store. In December, a federal jury unanimously ruled that Google’s Android app store has been supported by anticompetitive measures which harm both consumers and developers.

A judge will determine how to enforce this verdict, which Google says it plans to appeal.

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