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Here’s how a U.S. court ruling on alternative in-app purchases will impact Apple

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With Apple’s gross revenue of $ 70 billion in the App Store last year alone, the new US ruling in the Epic vs Apple case was widely seen as a possibility that could potentially disrupt Apple’s revenue. Apple charges between 15% and 30% on in-app purchases, and the ruling prohibits Apple from forcing developers to use its in-app payment system.

“This verdict, while not entirely in favor of Epic, its importance should not be underestimated. It can have a huge impact on Apple’s App Store revenue in the United States and provide a good starting point and impetus for other countries to look into antitrust cases against Google and Apple’s app stores, ”says IDC research director Navkendar Singh.

However, even before Judge Yvonne Gonzalez Rogers decided in a permanent injunction in the Epic v Apple case, Apple had introduced changes to its App Store, in agreement with the American developers, towards the end of August. The new changes allow developers to share purchasing options outside of their iOS app, allowing users to choose between developer-provided or Apple-provided options for in-app purchases.

While app developers pay a commission of up to 30% for app-related transactions on iOS, Apple had cut the commission for companies earning less than $ 1 million per year to half (15%) in November of last year.

Judge Rogers’ ruling is seen as a big win for app developers. Echoing this sentiment, CEO and Co-Founder of Indus App Bazaar, Rakesh Deshmukh, said, “We have always maintained that choice is crucial. But the industry needs to understand and now focus on providing developers with more “app delivery” channels on mobile platforms. “

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However, most iOS users wouldn’t mind and likely wouldn’t opt ​​for payment options outside of the Apple ecosystem. Unlike Android, iOS is a closed platform and iPhone users have no other option to download apps other than the App Store. This has helped Apple deliver a smooth experience and has been successful in keeping malicious apps and malware out of the App Store. Additionally, given the increase in phishing and cyber attacks, most iOS users would continue to use the secure iOS platform rather than visiting a not-so-secure hyperlink.

“Security concerns cannot be completely ruled out because it allows a hyperlink to the developer’s payment link, which bypasses Apple’s payment system and the famous security umbrella,” said Singh of IDC. Even if iOS users were to pay Apple a premium, they are likely to stick with the Apple App Store primarily due to data security and hold someone accountable for any breach. .

Apple did not respond to Business Today’s question about the impact of the verdict on App Store revenue. Instead, Apple SVP and General Counsel Kate Adams said, “We are very happy with the court’s decision and consider it a huge victory for Apple. This decision confirms that the” success Apple is not illegal, “as the judge said. As the court found that” Apple developers and third parties like Epic Games have benefited in symbiosis from the ever-increasing innovation and growth of the world. ‘iOS ecosystem’.

Apple is still analyzing the decision (180 pages) but says the title is – Apple’s App Store business model has been validated. “The Court rightly rejected Epic’s ‘artificial’ view of the competitive environment in which Apple operates and determined that” developers like Epic Games have benefited from Apple’s development and cultivation of the iOS ecosystem , including its underlying devices and software, ”Adams said.

Recently, app store operators have made the headlines in antitrust cases around the world regarding in-app payment methods. Seen as a verdict that will also be used as a benchmark for lawsuits brought in other countries, Singh adds: “It will surely be used by other developers and countries like India, EU, Australia to open antitrust cases, etc. precedent set by this decision and Korea’s decision on app stores a few days ago. “

While Apple is likely to be the victim of an antitrust case in India, South Korea also passed a bill that bans Google and Apple from forcing app developers to use their in-app payments and pay a fee. commission.

(CORRECTION: The story incorrectly mentioned “$ 70 million” instead of “$ 70 billion.” The error has been corrected.)

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