Goliath v. other Goliath

But Sweeney warns iOS devs are still afraid of “totally illegal” retaliation by Apple.

A rare "total eclipse" of Apple by Epic Games, captured on camera. Credit: Getty Images

Back in April, District Court Judge Yvonne Gonzalez Rogers delivered a scathing judgment finding that Apple was in “willful violation” of her 2021 injunction intended to open up iOS App Store payments. That contempt of court finding has now been almost entirely upheld by the Ninth Circuit Court of Appeals, a development that Epic Games’ Tim Sweeney tells Ars he hopes will “do a lot of good for developers and start to really change the App Store situation worldwide, I think.”

The ruling, signed by a panel of three appellate court judges, affirmed that Apple’s initial attempts to charge a 27 percent fee to iOS developers using outside payment options “had a prohibitive effect, in violation of the injunction.” Similarly, Apple’s restrictions on how those outside links had to be designed were overly broad; the appeals court suggests that Apple can only ensure that internal and external payment options are presented in a similar fashion.

The appeals court also agreed that Apple acted in “bad faith” by refusing to comply with the injunction, rejecting viable, compliant alternatives in internal discussions. And the appeals court was also not convinced by Apple’s process-focused arguments, saying the district court properly evaluated materials Apple argued were protected by attorney-client privilege.

While the district court barred Apple from charging any fees for payments made outside of its App Store, the appeals court now suggests that Apple should still be able to charge a “reasonable fee” based on its “actual costs to ensure user security and privacy.” It will be up to Apple and the district court to determine what that kind of “reasonable fee” should look like going forward.

Speaking to reporters Thursday night, though, Epic founder and CEO Tim Sweeney said he believes those should be “super super minor fees,” on the order of “tens or hundreds of dollars” every time an iOS app update goes through Apple for review. That should be more than enough to compensate the employees reviewing the apps to make sure outside payment links are not scams and lead to a system of “normal fees for normal businesses that sell normal things to normal customers,” Sweeney said.

“The 9th Circuit Court has confirmed: The Apple Tax is dead in the USA,” Sweeney wrote on social media. “This is the beginning of true, untaxed competition in payments worldwide on iOS.”

An Apple spokesperson has not yet responded to a request for comment from Ars Technica.

“The sad truth is everybody’s afraid of Apple”

While some app developers have made the move to their own payment processors in the wake of April’s ruling, Sweeney said he thinks many were waiting to see if the decision would be overturned on appeal. With that fear now mooted, he said we’ll probably see “rapid adoption” of outside payment processors, including the Epic Web Shops that the company rolled out in October. Sweeney predicted that these kinds of web payments for iOS apps “will just become the norm” by the end of next year and that “after years of Apple obstruction, we’re finally going to see large-scale change happening.”

Sweeney also pointed to an alleged widespread “fear of retaliation” that has led many iOS developers to keep paying 30 percent fees to use Apple’s default in-app payments. Sweeney said that Apple has “infinite power to retaliate” against apps that add outside payment options by indefinitely delaying their app reviews or burying their products in App Store search results. Sweeney called this kind of “ghosting” a “totally illegal” exercise of “soft power” by Apple that regulators will need to look at if it keeps up.

When pitching Epic’s own outside payment options to major iOS developers, Sweeney said he frequently has to address fears that lower payment fees will be overwhelmed by the drop in users caused by this kind of Apple retaliation. “We’re just too afraid of Apple hurting our business,” Sweeney said in summary of the common response from other developers. “The sad truth is everybody’s afraid of Apple.”

Kyle Orland has been the Senior Gaming Editor at Ars Technica since 2012, writing primarily about the business, tech, and culture behind video games. He has journalism and computer science degrees from University of Maryland. He once wrote a whole book about Minesweeper.