Apple’s App Store dealt major blow by judge in Epic antitrust case

Apple Inc. was ordered by a court to allow developers to steer consumers to outside payment methods for mobile apps, in a ruling that is a severe blow to the iPhone maker. 

A federal judge granted an injunction sought by Epic Games on Friday while also ordering the game maker to pay damages to Apple for breach of contract. The order could take a big bite out of the profitability of the App Store: according to analysts the App Store takes in more than US$20 billion a year with a profit margin above 75 per cent.

The decision is a significant setback for the world’s most valuable company as it faces growing antitrust scrutiny from lawmakers and global regulators. Apple is expected to appeal, setting the stage for the fight to carry on for at least another year and possibly make its way to the US Supreme Court.

Apple recently has made some modest concessions amid criticism of its market dominance, including allowing developers of media apps like Netflix to link from its App Store to external websites for payments by users and making it easier for developers to promote alternative pricing plans and ways to pay – without Apple taking a cut. 

Still, the ruling by US District Judge Yvonne Gonzalez Rogers is a warning shot across the bow for the Cupertino, California-based company as legislators and regulators examine the role Apple and other big tech companies have as gatekeepers to the digital economy. It could also open the floodgates to follow-on lawsuits seeking millions of dollars in damages.

The evidence outlined in the three-week Epic trial in Oakland, California, cast a harsh light on tech’s power and will help build the larger case against Apple and other technology giants including Alphabet Inc., Amazon.com Inc. and Facebook Inc.