Apple's App Store: The Battle for Fair Play

In 2021, a judge ordered Apple to ease its control over the App Store. Nearly four years later, the same judge found that Apple had deliberately ignored this order and tried to hide its noncompliance. The judge was furious and demanded specific changes to the App Store, stripping Apple of its tight control after years of minor adjustments. The judge's ruling revealed that Apple had carefully considered how to comply with the court's order but chose the most anti-competitive option at every step. This all started with a legal battle between Apple and Epic Games in 2021. Apple won most of the case but had to allow developers to include links and buttons in their apps that direct users to purchase methods outside the App Store. This was known as the “anti-steering injunction. ” However, the injunction was vague, leaving a loophole for Apple to continue charging developers a fee on sales made over the web. After the injunction, Apple began looking for ways to limit its impact. The company had several options: it could take no cut but restrict where links were placed, charge developers based on app downloads, or determine a new commission for web purchases and audit developers based on their sales. Apple knew that dropping all fees would be attractive to developers, but it would also mean losing hundreds of millions to billions in revenue. So, Apple chose the option it believed would be least attractive to developers: a commission and audit approach. This approach would only be appealing to the largest developers and would result in losing tens of millions in revenue if half of the 50 largest developers made the switch.

Apple's CEO, Tim Cook, ultimately decided on a 27 percent commission. The company knew this fee would be so high that external credit card processing fees would make the option unworkable for developers. The court found that the fee was based on nothing but Apple's desire for profit. Apple didn't provide a reasonable explanation for why its services were so valuable as to merit the fee. Apple then focused on the specifics of how outgoing links and buttons would work. The company wanted to limit the placement of these links to make them less appealing to users. It considered different designs for the links and ultimately decided to restrict them to plain text only. Apple also wanted to dissuade users from continuing to the web. It created a full-screen warning with big text reading, “Are you sure you want to continue? ” and included a paragraph of text. Employees discussed using “scary” language to warn people off. One employee even suggested making the screen “even worse” by using the developer’s name instead of the app name. The judge looked at Apple's continued choice of the worst options for developers and decided the company simply hadn't cared about complying with the order. “In other words, Apple sought to secure its illegal revenue stream from every angle, ” she wrote. The new ruling requires Apple to give developers unrestricted use of links and buttons for sales purposes. The company is no longer allowed to charge a commission on purchases made over the web. Apple's spokesperson said the company disagreed with the court’s decision and would appeal. This is not the end of the story, but it's a significant step towards fairer competition in the App Store.

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