Epic v. Apple: Court Says Apple’s 30% Sales Cut Is Unjustified

By | September 10, 2021

Even though a US Court today ruled that Apple was not a monopoly and did not violate antitrust laws in the Epic v. Apple suit, it didn’t have kind things to say about Apple’s 30% take rate on in-app purchases.

In its final order, the court goes over the numerous arguments from the case, at one point addressing the fact that Apple takes a 30% cut of all purchases occurring in apps published on its store. Though the 30% rate has been common in the game and app industries for years, in recent times platforms such as Steam, Microsoft, and Epic itself have opted to take less, while Apple has dug in its heels.

This was brought as evidence against Apple, with Epic suggesting that its hold on the market and insistence on 30% ultimately drove prices up for consumers. Apple argued that not only was 30% was an industry standard, but that developers get a commensurate value from the App Store to make up for the cut.

But the judge disagreed, calling the take “unjustified.”

“One…developers could decide to stay on the App Store to benefit from the services that Apple provides,” the ruling reads. “Absent competition, however, it is impossible to say that Apple’s 30% commission reflects the fair market value of its services. Indeed, at least a few developers testified that they considered Apple’s rate to be too high for the services provided. Two, Apple has provided no evidence that the rate it charges bears any quantifiable relation to the services provided. To the contrary, Apple started with a proposition, that proposition revealed itself to be incredibly profitable and there appears to be no market forces to test the proposition or motivate a change.”

Basically, the judge is saying that the 30% rate Apple takes is impossible to determine the value of, because there isn’t enough competition to suggest otherwise. Furthermore, it doesn’t seem like anything Apple does for developers has any relation to the money they take from in-app purchases.

The court went further, pointing out that the justification for a 30% rate could be determined if a third-party store put pressure on the company to innovate and provide features to developers it had previously neglected. But with competition currently held back, there’s just no way to tell.

But, again, the ruling doesn’t call Apple a monopoly — just “anticompetitive.” It has a share of the mobile gaming market between 52% and 57% that it battles with Google for, making for a “mostly duopolistic” ecosystem that Apple has “considerable market power” within.

And that, the court concludes, may soon turn into a monopoly if its market share keeps going up, competition doesn’t step up its game, or Epic or someone else brings a better antitrust case to court next time.

“The evidence does suggest that Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share. Apple is only saved by the fact that its share is not higher, that competitors from related submarkets are making inroads into the mobile gaming submarket [Nintendo Switch], and, perhaps, because plaintiff did not focus on this topic.”

Overall, most of the ruling was in favor of Apple, though Epic won a specific battle with an injunction forcing Apple to allow developers to link to outside payment options within their apps (though this still doesn’t let them add direct payment that bypasses the App Store’s systems). Tim Sweeney has said that as a result of this, he will not be bringing Fortnite back to to the App Store until direct payment is permitted.

Epic first brought this suit to Apple following Apple’s removal of Fortnite from its App Store last year after Epic incorporated the ability to skirt Apple’s payment system, thus avoiding Apple’s 30% platform fee. We’ve since seen plenty of similar challenges to Apple’s walled garden, including proposed legislation that would solidify the ability for developers to use their own payment systems, as well as continued pushback on Apple from other developers frustrated by its policies. We’ve also learned a lot from the suit, including the ways in which Epic weaponized its fans against Apple and the general confusion the court system experienced when faced with, well, video game nonsense.

Sadly, we’re still not sure (legally, anyway) exactly what a video game is.

Rebekah Valentine is a news reporter for IGN. You can find her on Twitter @duckvalentine.