Judge takes a bite out of Apple

A US judge has dealt a blow to one of Apple’s “most lucrative businesses”, says Simon Duke in The Times. Epic, the developer of the hit videogame Fornite, had accused Apple of “acting as a monopoly” by “forcing users to pay for in-app purchases [in the Epic app] through the iPhone maker’s payment system” and levying a fee of up to 30% of the sale.

Google and Apple dominate the smartphone-app market, and their insistence that in-app purchases be paid for through their own billing systems, rather than alternatives such as PayPal, has long irritated other companies. The court agreed that Apple had engaged in anticompetitive conduct.

This implies that in future Apple “cannot prevent developers from providing buttons or links in their apps that direct customers to pay in other ways for apps and subscriptions”. Commissions on in-app purchases “are a major source of high-margin revenue for Apple”, says Dan Gallagher in The Wall Street Journal. What’s more, services like the App Store have been a “major draw” for investors as they play a “major role” in the company’s effort to “diversify from... cyclical hardware”.

Apple’s days of “silencing developers who want to tell customers they can download games and make purchases outside the App Store” are clearly “numbered”, says Lex in the Financial Times. Still, defections will be limited by the fact that “user apathy” may mean that customers, faced with a link to an external payments site, will simply cancel their purchase. Note too that Apple’s $2.5trn equity value is “still pinned to smartphones”, which made up half of all sales last year.