Apple Can Keep App Store Rules for Now as Court Rejects Epic (2)

The US Supreme Court let Apple Inc. keep its App Store payment rules in place for the time being, rejecting an <-bsp-bb-link state="{"bbHref":"bbg://securities/748448Z%20US%20Equity","_id":"00000189-db95-d65e-a1eb-dbfdabaf0001","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">Epic Games Inc. request that would have let developers start directing iPhone users to other purchasing options.

Justice Elena Kagan said she wouldn’t let a federal appeals court decision take effect immediately, as Epic had sought. The 9th US Circuit Court of Appeals said earlier this year that Apple violated California’s Unfair Competition Law by limiting the ability of developers to communicate about alternative payment systems, including purchases through the Epic Games Store.

Kagan, who gave no explanation, is the justice assigned to handle emergency matters from the San Francisco-based 9th Circuit.

Kagan’s rejection of Epic means Apple will get a reprieve from the 9th Circuit ruling, though perhaps only a temporary one. The appeals court put its decision on hold to give Apple time to file a Supreme Court appeal later this year, but the ruling will kick in if the justices refuse to hear the case.

The dispute could affect billions of dollars in revenue for Apple, which charges developers a commission of as much as 30% for digital goods and services sold through its App Store. The 9th Circuit ruling potentially would let developers circumvent those commissions by including links to process payments on the web instead of within the Apple system.

Neither Apple nor Epic had any immediate comment.

Epic, which makes the popular Fortnite game, said in court papers that the 9th Circuit used the wrong legal standard in putting its ruling on hold.

“The result will be to injure not only Epic but innumerable consumers and other app developers for a significant period of time,” the company argued in its filing.

In urging the Supreme Court to keep the 9th Circuit ruling on pause, Apple said Epic isn’t being affected by the disputed policy. Apple expelled Fortnite from the App Store because Epic created a workaround to avoid paying a 30% fee on customers’ in-app purchases.

“Epic’s entire application asks for extraordinary relief that is available only to alleviate serious and irreparable harm, yet Epic has not even tried to establish that the stay is causing it such harm,” Apple argued.

Epic says its subsidiaries still have apps in the App Store.

The case is Epic Games v. Apple, 23A78.

(Adds comments from company court filings starting in eighth paragraph.)

--With assistance from <-bsp-person state="{"_id":"00000189-db95-d65e-a1eb-dbfdabb40000","_type":"00000160-6f41-dae1-adf0-6ff519590003"}">Mark Gurman.

To contact the reporter on this story:
Greg Stohr in Washington at gstohr@bloomberg.net

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<-bsp-person state="{"_id":"00000189-db95-d65e-a1eb-dbfdabba0000","_type":"00000160-6f41-dae1-adf0-6ff519590003"}">Elizabeth Wasserman at ewasserman2@bloomberg.net

Anthony Lin

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