Supreme Court Rejects Apple’s Bid for Epic App Store Review (1)

The US Supreme Court refused to consider Apple Inc.’s appeal in an antitrust suit challenging its lucrative App Store, a decision that will likely affect billions of dollars in revenue for the iPhone maker.

Both Apple and Fortnite maker Epic Games Inc. had asked the court to hear an appeal related to the case. The justices turned down both appeals without explanation.

Apple fell 2.6% to $181.09 at 9:51 a.m. in New York.

The high court’s decision will allow an appeals court ruling go into effect, letting developers direct iPhone users to cheaper purchasing options outside of Apple’s system. The company charges developers a commission of as much as 30% for digital goods and services sold through its App Store.

The 9th US Circuit Court of Appeals found last year that Apple violated California’s Unfair Competition Law by limiting the ability of developers to communicate about alternative payment systems. The decision, which had been on hold while the Supreme Court appeals were pending, will let developers circumvent those commissions by including links to process payments on the web instead of within the Apple system.

The Epic case was the first to challenge Apple’s lucrative App Store system, which rakes in billions of dollars each year. The company has come under serious pressure around the world, including in Europe where competition enforcers have two antitrust cases pending against the tech giant.

In a separate Epic suit in December, a jury found that Alphabet Inc.’s Google unfairly wields monopoly power in its Android app store. Google has said it plans to appeal, but key legislation in Europe, investigations in the US and UK and an expected wave of follow-on lawsuits will keep pressure on the tech giants’ app store duopoly.

Billions of dollars are at stake: in-app spending is forecast to reach $182 billion this year and $207 billion in 2025, according to research firm Sensor Tower. And competitors are ready to steal a piece of it: Microsoft Corp. has said that it’s already in talks to launch a mobile app store focused on gaming.

Epic’s case against Apple’s App Store policies was mostly unsuccessful, with a federal judge ruling the iPhone maker’s practices don’t violate federal antitrust law. She did determine that under California law, Apple can’t restrict app owners from telling consumers that other payment systems exist and inviting them to access the apps outside of Apple’s system. Both parts of the trial judge’s decision were upheld on appeal.

The cases are Apple v. Epic, 23-244, and Epic v. Apple, 23-337.

(Updates with shares in third paragraph.)

To contact the reporters on this story:
Leah Nylen in Washington at lnylen2@bloomberg.net;
Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editors responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Sara Forden

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