Apple must ease App Store rules, U.S. judge orders

APPLE - WASHINGTON. A U.S. federal judge struck down some of Apple Inc's App Store rules on Friday, forcing the company to allow developers to send their users to other payment systems in a partial win for "Fortnite" creator Epic Games and other app makers.

But the judge did not require Apple to let app makers use their own in-app payment systems, one of Epic's top requests, and allowed Apple to continue to charge commissions of 15% to 30% for its own in-app payment system.

Epic said it would appeal the ruling, with CEO Tim Sweeney tweeting that the ruling "isn't a win for developers or for consumers."

The outcome left Apple's critics and rivals saying they are more likely to turn to legislators, rather than courts, to pursue the changes they seek.

U.S. District Judge Yvonne Gonzalez Rogers described her ruling as requiring a "measured" change to Apple's rules. Analysts said the impact may depend heavily on how the iPhone maker chooses to implement the decision.

Apple shares were down 3.2% late on Friday afternoon, but many Wall Street analysts maintained their long-term favorable outlooks on the iPhone maker.

"We suspect the eventual impact from this will be manageable," Evercore ISI analyst Amit Daryanani wrote in a note to investors.

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The ruling vastly expands a concession made to streaming video companies last week allowing them to direct users to outside payment methods. The decision expands that exemption to all developers, including the game developers who are the biggest cash generators for Apple's App Store, which itself is the foundation of its $53.8 billion services segment.

The judge ruled that Apple can no longer bar developers from providing buttons or links in their apps that direct customers to other ways to pay outside of Apple's own in-app purchase system. The ruling also said Apple cannot ban developers from communicating with customers via contact information obtained by the developers when customers signed up within the app.

The ruling comes after a three-week trial in May before Gonzalez Rogers of the U.S. District Court for the Northern District of California.

Gonzalez Rogers stopped short of granting Epic some of its other wishes, such as forcing Apple to open the iPhone up to third-party app stores.

Apple said in a statement: "As the Court recognized ‘success is not illegal. Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world."

In a media briefing, Apple's legal team said it does not believe the ruling forces it to allow developers to implement their own in-app purchase systems. Apple officials said the company is still debating how it will implement the requirements of the ruling and whether it will appeal.

The judge sided with Apple on key questions such as defining the relevant antitrust market as gaming transactions, rejecting Epic's argument that the iPhone is its own app market over which Apple is a monopolist.

"Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers," Epic's CEO, Sweeney, said on Twitter. "We will fight on."

The Epic lawsuit began after the game maker inserted its own in-app payments system in "Fortnite."