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Apple Ordered to Relax Rules By US Judge For Its App Store

Apple Ordered to Relax Rules By US Judge For Its App Store
A US federal judge ruled that Apple Inc's App store rules were invalid on Friday. This allowed the company to allow developers access to other payment methods, which was a win for Epic Games and other app creators.
The judge didn't require Apple to allow app developers to use their in-app payments systems. Epic was the top request and Apple was allowed to continue to charge 15%-30% for its in-app payments system.
Epic stated it would appeal the ruling. CEO Tim Sweeney tweeted that the ruling was "not a win for developers nor for consumers".
Apple's rivals and critics said that they were more likely to seek out legislators than the courts to achieve the changes they want.
US District Judge Yvonne Gonzalez Rogers said her ruling required a "measured" modification to Apple's rules. Analysts believe the outcome will depend on the way the iPhone maker implements the decision.
Apple shares fell 3.2% on Friday afternoon but Wall Street analysts still have positive outlooks for the iPhone maker.
Amit Daryanani, Evercore ISI analyst, wrote that "we suspect the eventual effect from this will be manageable." He sent a note to investors.
This ruling greatly expands the concession granted to streaming video companies last Wednesday, which allowed them to direct users towards outside payment methods. This decision extends the exemption to all developers, even the most lucrative game developers for Apple's App store, which is itself the foundation of its $53.8 million services segment.
Apple cannot stop developers from directing customers to other payment options than Apple's in-app purchasing system. Apple can't ban developers from communicating directly with customers through contact information that was obtained by developers when customers sign up for the app.
After a three-week trial before Gonzalez Rogers of US District Court, Northern District of California, the ruling was reached.
Gonzalez Rogers did not grant Epic any of its other requests, including forcing Apple to open up the iPhone to third-party apps stores.
Apple stated in a statement that "success" is not illegal, as the Court acknowledged. Apple is constantly under pressure in all segments where it does business. We believe that our products and services are superior to the rest and customers and developers choose Apple over them.
Apple's legal team stated that it doesn't believe the ruling makes it oblige developers to create their own in-app purchasing systems. Apple officials stated that the company is still deciding how to implement the ruling's requirements and whether or not it will appeal.
Apple won key questions, such as the definition of the antitrust market for gaming transactions. Epic was rejected as an argument that the iPhone is its app market and Apple is a monopolist.
Epic CEO Sweeney stated on Twitter that Epic is fighting for fair competition between in-app payment options and app stores for one billion consumers. "We will continue to fight."
Epic was sued after it introduced its own in-app payment system to "Fortnite".
Apple's App Store rules face many challenges. They are more likely in capitals and statehouses to be challenged than in courtrooms, according to Friday's ruling.
The United States and Europe are currently considering legislation that would require Apple to allow third party in-app payments systems. South Korea's parliament has passed such a law.
"What today’s ruling also clarifies is that antiquated Antitrust Laws cannot solely be Fixed by the Courts," Match Group, a company that has challenged Apple's European practices and owns Tinder, stated in a statement. "Apple's monopolistic practices and Google's will end only when we bring our laws into digital age, like South Korea did last week."
The ruling was criticized by the US Congress as a sign that courts cannot address their concerns.
Gonzalez Rogers didn't find Apple a monopolist but she did find that Apple violated California state competition. She also found some "incipient antitrust violation" that needed to be addressed nationwide.
John Newman, a University of Miami law professor, stated that the ruling opens up avenues for US regulators and Apple to challenge it in court. Reuters previously reported that the US Department of Justice is investigating the iPhone maker.
These orders are in response to Apple's last week agreement with the Japan Fair Trade Commission. This allows it to relax rules for "reader apps" like Netflix Inc (NFLX.O), and provides a link for customers to sign up to a paid account. Read more Games account for a greater percentage of Apple's revenue.
However, whether or not the ruling affects that revenue will depend on how Apple implements those changes.
"To some extent, Apple could make its in-app payment easier to use," stated Ben Bajarin of Creative Strategies, head consumer technologies.
Alphabet Inc's shares, which operates an app store for Android phones and Epic is also suing over antitrust allegations, fell 1.7% on Friday.

Christopher J. Mitchell

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