Apple’s 30% tax on in-app purchases judged unlawful by court

In a ruling made on Monday, a United States federal appeals court has ruled that Apple violated state competition laws by prohibiting app developers from using alternative in-app payment methods other than its own, which includes a 30 percent fee on most transactions.

The said ruling was made by the United States Court of Appeals for the Ninth Circuit in the case of Apple vs Epic Game, the creator of the Fortnite video game. The lawsuit was filed by Fortnite creator against the tech giant in 2020, over the latter’s alleged monopoly in the mobile games market. The court said that Apple does not have a monopoly over gaming apps and that its anti-steering provision harmed Epic.

Epic Games founder and chief executive, Tim Sweeney, posted a tweet in this regard.

Fortunately, the court's positive decision rejecting Apple's anti-steering provisions frees iOS developers to send consumers to the web to do business with them directly there. We're working on next steps.

— Tim Sweeney (@TimSweeneyEpic) April 24, 2023

Companies oppose Apple’s anti-steering norms

Here, it must be mentioned that Apple's anti-steering provision is a policy that states that iOS developers cannot communicate out-of-app payment methods through certain mechanisms such as in-app links. As a result, the policy escalated the costs of Epic’s subsidiaries’ apps that are still on Apple’s App Store and prevented other app users from becoming would-be Epic Games consumers. By doing so, Apple was charging a hefty 30 percent commission from the developers, and no one had any option. The court wrote that Apple has violated the Unfair Competition Law.

It must be noted that last year, in December, Coinbase entered into a feud with the tech giant as the latter had forced it to remove NFT transfers from its iOS wallet. In fact, the iPhone maker allegedly wanted to take a 30 percent cut of the gas fee through in-app purchases.

You might have noticed you can't send NFTs on Coinbase Wallet iOS anymore. This is because Apple blocked our last app release until we disabled the feature. 🧵

— Coinbase Wallet (@CoinbaseWallet) December 1, 2022

Also, Uniswap Labs faced issues with Apple’s App Store regarding its mobile wallet. Interestingly, inspite of having its first build approved in October, Uniswap’s final build of its mobile wallet was disapproved by the tech behemoth just a few days before its planned December 2022 launch. However, it finally got Apple's approval to launch its wallet in the iOS App Store.

Further, Meta, the parent company of both Facebook and Instagram, was also hit by Apple’s updated App Store policy wherein it had asked developers for a 30 percent cut. Even Spotify, the music streaming app, has spoken against Apple’s App Store rules.