It is a huge blow to Apple Inc. This problem might push billions of dollars in new revenue just outside the tech behemoth’s reach. This follows a recent ruling by a three-judge appeals panel, which rejected Apple’s request to pause an order that limits the company’s ability to charge fees on in-app transactions processed outside its previously exclusive payment system.
And that’s exactly what the appeals panel just ruled in favor of. This comes on the heels of an April 30 order that bans Apple from collecting fees on in-app iPhone transactions that employ alternative payment methods. Apple has historically collected commissions ranging from 15% to 30% on a substantial portion of commerce conducted within iPhone applications. This ruling may be a deathblow to this company’s revenue model. App developers can now find other methods of processing payments and thereby sidestepping Apple’s share fees.
The national antitrust case against Apple, largely begun by Epic Games almost five years ago, has captured a lot of media attention. When Epic Games sued Apple, it claimed that Apple was using these monopoly App Store policies to create a price-gouging monopoly. The legal struggle has featured nine months of hearings, with Judge Gonzalez-Rogers ultimately handing down a lengthy decision in favor of Apple’s competitor. The judge ruled that the company’s commission scheme was unjust and harmful to competition in the app marketplace.
As we mentioned on Friday, late Thursday a three-judge panel’s decision came down—a brief two-page decision. They affirmed the April 30 decision and rejected Apple’s petition for a stay. Furthermore, this outcome demonstrates that the status quo of doing business is not acceptable for Apple. With increasing scrutiny of its App Store practices, it might need to reconsider its overall revenue playbook.
Apple’s current system prevents app developers from offering other payment options to consumers. This arbitrary restriction has generated a tremendous amount of disproportionate uproar from within the industry. As a result of the ruling, developers now have more flexibility when it comes to handling transactions. This one simple change would save consumers money and expand app developers’ market opportunities. Impacts of the decision This decision is highly impactful on Apple’s short-term revenue. Perhaps more important, it would upend the entire competitive landscape of mobile commerce.
