Apple Wins Ability to Charge Fees on External Payment Links as Appeals Court Modifies Epic Injunction

[MacRumors]

Apple should be able to collect a reasonable commission on purchases made using external links included in iOS apps, the U.S. Court of Appeals ruled today (via Reuters). The U.S. Court of Appeals partially reversed sanctions imposed on Apple after Apple was found to have willfully violated an injunction in the ongoing Epic Games vs. Apple legal battle.

Since April, Apple has been forced to let developers offer links to non-App Store purchase options in their apps, with no control over the design of those links. Apps like Spotify can advertise deals and direct customers to their websites, something that was not previously allowed.

Apple has not been able to charge any commission at all for purchases made using these in-app links, but that's going to change in the future. The appeals court says that Apple should be able to charge a fee that covers its necessary costs and intellectual property.

Apple is not going to be able to start charging a commission immediately, though. The case has been sent back to the district court so that a reasonable fee can be determined.

In our view, as the April 30 Order is written, it is more like a punitive criminal contempt sanction than a civil contempt sanction or modification of the Injunction. The biggest problem with the commission prohibition is that it permanently prohibits the compensation that Apple can receive for linked-out purchases of digital products, regardless of whether the commission is itself prohibitive.

Rather than coercing Apple to comply with the spirit of the Injunction with a reasonable, non-prohibitive commission, the district court used blunt force to ban all commissions, abusing its discretion.

Some other aspects of the initial ruling were also found to be too broad, so there are other updates in store. Here's an overview of what's changing:

• Fees on links - Apple will be able to charge a reasonable commission
• Link design - Apple can restrict developers from making external links more prominent than in-app purchase options. Specifically, Apple can restrict a developer from putting buttons, links, or other calls to action in more prominent fonts, larger sizes, larger quantities, and more prominent places than buttons for in-app purchases. Apple has to allow developers to place buttons in "at least" the same fonts, sizes, and places as Apple's own.
• Link language - Apple may restrict developers from using language that violates its general content standards, if such standards exist.
• Link access restrictions - The original court ruling prevents Apple from restricting certain categories and developers from using links, such as subscriptions provided using the News Partner Program. The appeals court says Apple is not specifically enjoined from excluding developers participating in the VPP and NPP programs.

Apple created a situation requiring court oversight because after the original ruling ordered it to allow in-app links, Apple didn't charge a reasonable fee for purchases made using those links. Apple charged developers 27 percent instead of 30 percent, knowing that developers would also need to pay a fee for payment services. Almost no developers opted in to Apple's link program because it ended up being more expensive than the in-app purchase fees.

The appeals court agreed that there was clear and convincing evidence of civil contempt, and it declined to vacate the injunction. With the exception of changes to fees and link design, the rest of the injunction will remain in place because Apple made external links "as hard to use as possible," which "flies in the face of the Injunction's spirit."

The appeals court recommends that the district court calculate a commission that is based on the costs that are necessary for its coordination of external links for linked-out purchases, along with "some compensation" for the use of its intellectual property. Costs should not include commission for security and privacy.

While Apple is not able to charge any commission until the district court approves an appropriate fee, the appeals court suggests that both Apple and the district court should work to settle on a fee "expeditiously." The full text of the ruling is available here.

Article Link: Apple Wins Ability to Charge Fees on External Payment Links as Appeals Court Modifies Epic Injunction

 

[germanbeer007]

let's not forget Tim Sweeney's praise of the App Store.

I wonder what happened between then and when Tim Sweeney began attacking Apple...oh right! Epic Games started building their own game distribution.

 

[MacUserFella]

Greed, pure greed

 

[DelayedGratificationGene]

Sweeney the guy who manipulated kids to emptying their wallets just got slapped. Thankful that reasonable heads prevailed. Big win for Apple

 

[IceCool]

I'm against most (if not all) of the changes being forced upon Apple.

However, I think the ruling today is a huge win and the most fair solution - outside of none of this happening in the first place.

Tim Sweeney blocked me on X, so I can't congratulate him on this failed attempt again.

 

[Kidseeghost]

Tim Cook might not be a product person/genius but he is a hell of a business man and knows who to hire and how to win.

 

[Skyscraperfan]

It still does not make sense that Apple can charge a few for its "intellectual property". That's like IKEA getting a few if an IKEA table is used in a restaurant and arguing, without the table the customer would have to eat food from the floor.

 

[cjsuk]

let's not forget Tim Sweeney's praise of the App Store.View attachment 2586925

I wonder what happened between then and when Tim Sweeney began attacking Apple...oh right! Epic Games started building their own game distribution.

Small fry walked into big dealer territory and tried to bust a cap in their ass so they get the cut the big dealer has.

We're all victims of corporate gang warfare, nothing more.

 

[mattopotamus]

It still does not make sense that Apple can charge a few for its "intellectual property". That's like IKEA getting a few if an IKEA table is used in a restaurant and arguing, without the table the customer would have to eat food from the floor.

It still doesn't make sense that companies can use iOS and bypass their payment method. Design your own damn OS if you want to use their device as the driving force for free.

 

[turbineseaplane]

Apple will be able to charge a reasonable commission

I wonder what "reasonable" will end up meaning here?

The appeals court recommends that the district court calculate a commission that is based on the costs that are necessary for its coordination of external links for linked-out purchases, along with "some compensation" for the use of its intellectual property. Costs should not include commission for security and privacy.

I am fascinated to see what they come up with, especially the "some" amount of compensation for IP usage alone.

 

[cjsuk]

It still does not make sense that Apple can charge a few for its "intellectual property". That's like IKEA getting a few if an IKEA table is used in a restaurant and arguing, without the table the customer would have to eat food from the floor.

It's not really like that at all. It's more like god charging a 30% cut because atoms work the way they do.

That is not to say that god isn't a bit of a wanker for producing a universe with a billing meta-ruleset.

 

[Kidseeghost]

It still does not make sense that Apple can charge a few for its "intellectual property". That's like IKEA getting a few if an IKEA table is used in a restaurant and arguing, without the table the customer would have to eat food from the floor.

Its more like a seller complaining why he doesn’t get shelf space in Ikea for free. But I want more open systems than closed because I am afraid Apple will try to close Mac OS too little by little if they win all their cases. We should be able at least to download things from companies like Epic directly otherwise costumers are going to lose in the long run. Look at Sony and Xbox. They are closed and charge for you to play online. They basically charge a second fee for you to use the internet.

 

[turbineseaplane]

We should be able at least to download things from companies like Epic directly.

At the minimum, I'd like to be able to download from the developers directly, as I do with nearly all of my Mac software.

 

[jz0309]

I wonder what "reasonable" will end up meaning here?



I am fascinated to see what they come up with, especially the "some" amount of compensation for IP usage alone.

this:

The appeals court recommends that the district court calculate a commission that is based on the costs that are necessary for its coordination of external links for linked-out purchases, along with "some compensation" for the use of its intellectual property. Costs should not include commission for security and privacy.

 

[turbineseaplane]

this:

Yes, I updated my post as you were posting it looks like
thx 🙏

The details of what "some compensation" for IP will amount to are very interesting to me.

Apple has traditionally not wanted to separate out the discrete elements of the value they are providing, so the exact amounts determined here will be interesting.

 

[GMShadow]

It still does not make sense that Apple can charge a few for its "intellectual property". That's like IKEA getting a few if an IKEA table is used in a restaurant and arguing, without the table the customer would have to eat food from the floor.

No, it's like if IKEA were forced to allow Walmart to sell products in their store without charging a commission.

 

[cateye]

It's pretty clear few here read the ruling: Apple was still found to be in civil contempt, which is a big deal. That means both the original judge and now the appeals court ruled they willfully disobeyed the original order, which is why the remediation listed here is limited in scope. It also limits their ability to seek additional redress beyond the appeals court ruling as judges take an extremely dim view of civil contempt. They won almost nothing that they originally wanted on appeal, and the amount they will be able to collect as commission on external purchases is limited and must be approved by the court.

Their only "wins," as such, were the ability to restrict limited classes of developers from outside links, and that links must be balanced in visual presentation with IAP links (can't have huge external links and tiny IAP links, or vice versa). That's it.

Put another way, play with the bull, get the horns. I have zero sympathy for Apple. They consistently bring these kinds of rulings down on themselves with their arrogance and predatory behavior.

 

[Kidseeghost]

At the minimum, I'd like to be able to download from the developers directly, as I do with nearly all of my Mac software.

Yes and I am more radical. We should be able to change software on the device we own after we bought it. This could really help for devices that are no longer supported which is good for the environment. I am still mad Apple took away the ability to install Windows on a Mac. That is why I am afraid they are going to lock in the Mac even more now especially with the A chip MacBooks. I bet there is already a plan internally how lock in the Mac more and how to market it.

 

[Love-hate 🍏 relationship]

SOOOO dirty. i'm surprised they won

 

[kk1ro]

Sanity prevails.

You're selling your products on my storefront, charging for them on the side, and I don't see a penny? Make it make sense.

 

[frenchcamp49er]

Great news!

 

[turbineseaplane]

Sanity prevails.

You're selling your products on my storefront, charging for them on the side, and I don't see a penny? Make it make sense.

Because they aren't allowed to do it on any other storefront (by Apple).

 

[CarAnalogy]

Well they did commit perjury and the case was referred for prosecution, so it's not unreasonable that it read like a punitive criminal contempt sanction. They purposely defied the ruling until they were actually punished for it.

It's basically the corporate equivalent of waiting for a parent to count to ten and then being surprised at the resulting spanking.

The purpose was to make them think twice about how completely unreasonable they were being, and it worked.

 

[WarmWinterHat]

It still doesn't make sense that companies can use iOS and bypass their payment method. Design your own damn OS if you want to use their device as the driving force for free.

It’s not their device, it’s MY device. I paid for it and I own it; not Apple.

 

[ratspg]

Because they aren't allowed to do it on any other storefront (by Apple).

They should go make their own devices and OS and not just make games and Unreal Engine. It'll take them plenty of R&D but I'm sure after they're around for another 20-30 years maybe they can do it. Til then, they should piggyback on Apple/Google and others that had the foresight.