Media review epic v. Apple Case: Apple may lose billions of dollars every year, but it has little impact on its business


Tencent technology news on September 11, US local time on Friday, Yvonne Gonzalez Rogers, the judge in charge of the antitrust case of Epic Games v. apple, the developer of the video game fortress night, made a ruling on the case. Rogers issued an injunction against apple, requiring it not to prohibit application developers from providing links and other communication means to guide users to choose in app purchase methods other than apple, and requiring the plaintiff Epic Games to pay at least US $4 million in liquidated damages. After the release of judge Rogers’ ruling, it immediately attracted hot comments from major mainstream media all over the world:
Bloomberg: Apple will lose billions of dollars a year
Apple was ordered to make the most significant changes to its app store business model since the launch of the platform in 2008, which could cost the technology giant billions of dollars a year. The judge’s ruling is a major blow to apple, but as the world’s most valuable listed company, Apple should be able to easily withstand this impact. At the same time, Apple has avoided greater risks. Under federal or state law, the judge did not consider it a monopolist.
Apple said in a statement: “the court has confirmed what we always know, that is, the app store does not violate the antitrust law, and success is not illegal.” Kate Adams, the company’s general counsel, said the ruling was an “overwhelming victory” and “highlighted the value of Apple’s App Store business”. However, the plaintiff Epic Games argued that the ruling “is not a victory for developers or consumers”.
The Commission Apple App store received from the United States last year was estimated to be about $6.3 billion, most of which came from in app purchases and subscriptions. As games and other applications prepare to guide consumers away from Apple’s payment system, this revenue may be significantly reduced. Previously, Apple has allowed some so-called “reader application” developers to guide users to use external purchase methods, including media services such as Netflix and spotify, as well as news and Book applications. But the latest ruling means that the move will also apply to games and other categories of applications, which bring more revenue to apple.
According to the ruling, the Commission of game apps accounts for about 70% of the total revenue of the app store, while game apps account for only 10% of all apps on the platform. According to sensor tower, apple received about $3.8 billion in revenue from games in 2020, most of which came from in app purchases.
However, even if the ruling eventually causes apple to lose billions of dollars a year, this is still only a very small proportion of its total revenue. In fiscal year 2021 alone, Apple’s revenue is expected to exceed $360 billion, which means that changes in the app store will not affect or damage its overall financial performance. At the same time, many developers may choose to stick to Apple’s payment system, so they don’t have to establish their own online payment platform. The judge also did not force apple to change its fees or let a third-party app store use it on its platform, which would be a much bigger blow to Apple’s revenue.
Judge Rogers’s ruling may eventually mean that Epic Games’s popular video game fortress night will return to the Apple App store. The game was first taken off the shelves last year because it used its own payment options to bypass Apple’s commission. Now, Apple has said that if fortress night re complies with the rules of the app store, it will allow it to return.
WSJ: jobs vs Sweeney’s vision collision
On Friday, judge Rogers ruled that apple must relax the restrictions on developers seeking payment methods in their apps, but she retained the right of the app store as the only way to download apps to the iPhone and iPad. The judge said: “the court does not consider apple as an anti monopolist in the sub market of mobile game trading. However, the investigation did find that Apple’s behavior in implementing anti steering restrictions is anti competitive.”
The high-profile case highlights broader concerns about online platforms and digital commerce. Regulators and legislators in the United States, Europe and elsewhere are seeking to control large technology companies. The trial procedure has aroused repercussions in the technology community. Companies such as alphabet, Amazon, Facebook and Microsoft are paying attention to signs that their world may change.
Apple’s late co-founder Steve Jobs believes that the iPhone is a carefully planned device, and applications run in the “walled garden” of Apple’s hardware and software, while Tim Sweeney, CEO of Epic Games, hopes to build a more open ecosystem. Sweeney has always been promoting mobile phones like personal computers, so that users can download any software they like.
Paul Swanson, an antitrust lawyer of Hart law firm in Denver who followed the case, said: “The reason why large technology companies pay attention to this case is that it involves whether the antitrust law supports a successful walled garden. Although the answer we get is a little complex, I think the main conclusion is that ‘success is not illegal’, and a walled garden like apple that competes with other digital mobile game trading service providers is not illegal.”
Legal experts said that from the beginning, Epic Games faced a tough battle. As we all know, it is difficult for the plaintiff to win the lawsuit, because the court has begun to interpret the anti-monopoly law more narrowly than in the anti-monopoly era, which gives the technology giants greater freedom. Observers said that the key to this struggle is to define the controversial market.
Reuters: the fate of the app store does not depend on the court
Judge Rogers’ ruling has led many apple critics and competitors to say that they are more likely to turn to legislators rather than courts to seek the app store change they seek. Analysts say the final impact may depend largely on how Apple chooses to comply with the judge’s ruling.

Apple shares fell 3.2% after the ruling, but many Wall Street analysts are still optimistic about its long-term prospects. Amit daryanani, an analyst at evercore ISI, wrote in a research report to investors: “we believe that the final impact of this case is controllable for apple.”
The ruling greatly expanded the concessions made by Apple streaming video last week to allow them to direct users to external payment methods. This concession will extend to all developers, including game developers, who are the largest source of revenue for Apple’s app store.
Apple’s legal team said they did not think the ruling would force apple to allow developers to implement their own in app purchase systems. The company is still debating how to enforce the ruling and whether it will appeal.
However, the challenges facing Apple’s app store rules are far from over. Friday’s ruling shows that its fate is more likely to be decided by Congress than by the court. Lawmakers in the United States and Europe are considering introducing a bill to force apple to allow third-party in app payment systems. The South Korean parliament has passed such a law.
Match group has challenged Apple’s approach in Europe and has a popular dating app tinder. “The latest ruling shows that the outdated anti-monopoly law cannot be completely amended by the court. Only when our law is brought into the digital age will the monopoly of apple and Google end, as South Korea did last week,” the company said in a statement
John Newman, a law professor at the University of Miami, said the ruling left room for U.S. regulators to challenge apple in court. It was previously reported that the U.S. Department of justice was investigating the iPhone manufacturer.
Ben bajarin, consumer technology director of creative strategy, said: “to some extent, apple can make its in app payment still the easiest to use.”
CNBC: court ruling unlikely to seriously damage Apple’s services business
In the face of 10 allegations by game developer Epic Games, apple won 9 victories, but federal judge Rogers issued an injunction requiring it not to prohibit application developers from providing links and other communication means to guide users to choose in app purchase methods other than apple. Wall Street analysts and Apple’s long-term followers believe that this will have a very limited financial impact on the company.
A person familiar with Apple’s ideas said that developers can only push links, not establish their own alternative payment mechanism in their applications. This limits the publicity effect, because Apple’s in app payment is still easier for consumers than putting credit cards on the website. Samik Chatterjee, an analyst at JPMorgan Chase, said the ruling did not change the bank’s outlook for Apple’s services or app store business.
Gene Munster, founder of Loup ventures and senior Apple analyst, also believes that the worst case for apple is that Apple’s revenue may decrease by 4% next year, but more likely, the impact will only be closer to 1%. “Investors have big reasons: first, Apple will return to normal growth rate 12 to 18 months after the implementation of the reform measures. Second, Apple’s long-term potential will not be affected by this change,” he said
Apple believes that judge Rogers’ ruling is a victory for it because it does not challenge Apple’s right to decide which software can be used in its app store, nor does it find that apple is a monopoly under federal or state laws.
However, investors will pay close attention to Apple’s service business, which has grown strongly in the past few years. In addition to online subscriptions, it also includes sales revenue from Apple’s app store, search license revenue from Google and AppleCare warranty revenue. The service business accounts for about 20% of Apple’s revenue, but it is Apple’s profit engine, and the profit margin is significantly higher than that of the hardware business. Apple’s service business sales in fiscal year 2020 were $53.77 billion, with a gross profit margin of 66%, much higher than 31.5% of Apple’s hardware business.
CNN: only a few large applications may benefit
Over the years, Apple’s Commission on in app payment has always been criticized by developers, legislators and regulators all over the world. Although Epic Games’ antitrust litigation is one of the more eye-catching legal challenges, it is one of the many challenges in the past year alone.
Spotify, a music streaming service, and match group, the parent company of tinder, a dating application, are also competitors of apple. The former sued apple for anti competitive behavior in the United States and Europe. In the weeks before the judgment, apple adjusted its app store policy several times to prevent further criticism of its practice. In late August, the company announced a settlement in a class action lawsuit, allowing application developers to send e-mail to users to inform them of alternative payment methods.
Just a few days ago, apple said it would further relax the restrictions on “reader applications”. This change applies to companies publishing media such as spotify and Netflix, and allow these applications to link to external websites to allow users to establish and manage accounts.
However, these changes have been questioned by major developers competing with apple. A match group spokesman said in response to Apple’s class action settlement agreement to relax the e-mail rules for developers: “This is Apple’s naked display of its monopoly power: when legislation, regulatory review and developer complaints are approaching, they have made capricious changes in their interests to stimulate public relations. We hope everyone can recognize the facts. This is a fraud.”

Josh Davis, a professor at the University of California, San Francisco law school, said that the actual result of the latest ruling may be that Apple App Store developers no longer need to use Apple’s in app payment system to charge IOS users. He added that Apple would have to implement the order carefully to avoid being convicted of contempt of court after the ban took effect within 90 days.
Nevertheless, mark Lemley, a law professor at Stanford University, said that only a few well-known large applications may benefit from no longer relying on Apple’s in app payment system. “I may never leave the ordinary application I’m using, but I just use it on my mobile phone. However, those who are ready to go to other platforms may have new choices,” he said
New York Times: Apple’s platform advantage is being weakened
A US judge has ordered apple to relax restrictions on app developers, which could have a significant impact on thousands of companies that pay Apple billions of dollars a year. This allows companies to avoid distributing app sales to apple, which may subvert the online market worth hundreds of billions of dollars.
Apple is counting on revenue from its app store to drive its lucrative profit growth, but the latest ruling could erode that money. This is a devastating loss for apple, which is facing increasingly sharp questions about its business from regulators and politicians around the world.
In the past month, regulators in Japan and South Korea have forced apple to adjust the way it manages its app store. In the United States, the Department of justice has launched an antitrust investigation into this business, and the Senate has introduced antitrust legislation aimed at promoting app store competition. The European Union, the United Kingdom and India are also investigating the dominance of Apple’s app store.
Overall, legal setbacks and stricter regulatory controls suggest that Apple’s long-term situation of giving orders to the app store may be coming to an end. This may represent one of the most significant changes in the technology industry in years, as smaller companies retain more profits and Apple’s ability to become a “toll collector” is disappearing.
Jonathan Rubin, a partner at moginrubin, an antitrust law firm, said Apple “enjoys a huge advantage because its platform is popular, but this advantage has now been weakened.”
The ruling allowed both sides to claim partial victory. Apple can claim that it does not occupy a monopoly position in important digital markets, which weakens the efforts of rivals to claim that Apple violates antitrust laws. But the Epic Games lawsuit may also force apple to crack its impeccable iPhone software, providing developers with more channels to avoid commissions.
Rubin, an antitrust lawyer, said that Apple was relieved to avoid being labeled as a monopoly, but the judge’s decision is likely not to strengthen Apple’s position in other investigations because antitrust litigation may be different. He said Apple may also have to consider reducing commissions because developers will make it easier to send customers elsewhere to buy.
Apple Insider: Apple’s defeat is the best result for all parties
Epic Games won an extremely important victory in the lawsuit against apple, which is the best compromise. The lawsuit retains the protection mechanism of the app store, maintains the convenience of users, and can continue to help developers. In making a specific ruling, judge Rogers tried to make apple and its customers, users and developers the winners.
Crucially, the judge’s ruling protects users. Many people prefer to be able to load apps into their iPhones from anywhere they like, but they account for only a small fraction of the world’s 1 billion iPhone users. More people may continue to download apps from the app store and are not worried about it.
If the app store is changed, it will give the side loading fans what they want and a very few developers what they desire, but this may irrevocably end users’ trust in the app store.
Apple will still argue that it needs a commission from the app, but since it is running the app store, it should be natural to take a commission. Although we don’t know the cost of running the app store, apple is right and it has got what it wants.
It sounds great to develop an independent payment system instead of Apple’s system, because you can get all the income, but the development cost plus other expenses, developers also need to bear higher expenses. To this end, most developers are likely to continue to pay 30% or 15% to use the app store.
The only thing Epic Games has lost is the ability to spin off its IOS app store. In the ruling, they will be able to direct consumers to pay outside the device. Epic Games and other large developers may find creative ways to use the new ruling to make more revenue. (reviewed by Tencent technology / Jinlu)