Breaking News: Federal Judge Slaps Apple with Heavy Penalties for App Store Violations
Judge orders Apple to stop collecting commissions on sales not made through its App Store
In a scathing ruling that sent shockwaves through Silicon Valley, U.S. District Judge Yvonne Gonzalez Rogers has declared Apple Inc. guilty of violating a 2021 court order and has ordered the tech giant to open up its App Store to third-party payment options.
The judge's ruling, spanning a hefty 80 pages, chastises Apple for its "willful" disobedience of the previous order and its intent to maintain an anticompetitive revenue stream. This move could put a substantial dent in Apple's pocketbook, as the changes could significantly impact the double-digit billions of dollars in annual revenue the App Store generates.
Apple's noncompliance with the 2021 order has not gone unnoticed. The judge has referred the case to federal prosecutors for further investigation into potential criminal contempt charges against Apple. The U.S. attorney's office in San Francisco has not yet commented on the matter.
Following a trial in 2021, Judge Gonzalez Rogers initially sided with Apple, stating that its App Store policies did not violate federal antitrust law. However, she did require the company to allow developers to bypass its in-app payment tool to avoid a commission of up to 30%. Now, Apple can no longer collect any fees on purchases made outside the App Store.
In the ruling, Judge Gonzalez Rogers accused Apple of trying to cover up its noncompliance with the 2021 order. She also alleged that Apple executive Alex Roman, the vice president of finance, lied on the witness stand, a claim she backed up with evidence showing that Apple did indeed consider alternative payment solutions as Goliath had previously claimed otherwise.
In light of these findings, Apple has been ordered to pay Epic Games' legal fees associated with the fight for documents and information Apple tried to shield through attorney-client confidentiality.
Apple has yet to respond to the ruling, although Epic Games CEO Tim Sweeney called the decision a "huge victory for developers," as it forces Apple to compete with other payment services rather than monopolizing the market.
This ruling continues the ongoing antitrust lawsuit initiated by Epic Games, which accuses Apple of engaging in anticompetitive conduct and will likely have substantial financial implications for Apple, potentially setting a precedent for other tech companies in the industry.
[1] Apple no longer allowed to charge commissions on purchases outside its software marketplace[2] Federal prosecutors investigate potential criminal charges against Apple[3] Developers now free to communicate external payment options to users without interference[4] Apple faces potential multi-billion-dollar loss due to ruling
Sisco writes for Bloomberg.
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Enrichment Data:
- The judge found that Apple violated a court order issued in 2021 requiring it to open up the App Store to third-party payment options and allow competition.
- Apple is barred from collecting any fees on purchases made outside the App Store, which could significantly impact its revenue.
- The case has been referred to federal prosecutors for a possible criminal probe into Apple's conduct. Specifically, Apple and one of its executives, Alex Roman, were referred for investigation over their handling of compliance with the injunction.
- The ruling prevents Apple from impeding developers' ability to communicate with users about external payment options, increasing competition in the app market.
- Apple has expressed disagreement with the decision and plans to appeal it while complying with the order.
[5] The alleged misrepresentations made by Apple's executive, Alex Roman, are under scrutiny as the judge's ruling indicates he may have lied under oath.[6] This ruling may set a sizable industry standard for tech companies in the finance and business sectors, potentially compelling them to make their services more inclusive.[7] The entertainment industry, following the footsteps of Apple's case, may also face increased scrutiny, especially as it relates to anticompetitive practices and law violations.
