A federal judge on Friday said Apple can no longer force developers to use its payment system in their apps, a move that will allow companies to avoid Apple’s commission of up to 30 percent on some app sales.
The order could upend the economics of a $100 billion online market and is a major setback for Apple, which counts on revenue from its App Store to fuel its expansive profits.
The order came as part of the ruling in a prominent legal case between Apple and Epic Games, the maker of the popular game Fortnite that sued Apple last year over its App Store policies.
In the ruling, Judge Yvonne Gonzalez Rogers of U.S. District Court for the Northern District of California said that Apple violated California’s laws against unfair competition. But she ruled in favor of Apple on other counts, including that Epic breached its contract with Apple when it allowed Fortnite users to pay it directly, instead of via Apple, inside of its iPhone app last year.
The decision could have a major ripple effect across the digital economy. If Epic prevails after expected appeals, companies would have a new way to avoid the App Store commission, which runs as high as 30 percent. The change would be a boon to the bottom lines of businesses that say they are forced to share too much of their sales with Apple.
Epic has sued Google for the same issues with app-store commissions on its Android operating system, and that case is expected to go to trial this year. Last month, 36 states and the District of Columbia also sued Google for forcing companies to use its payment system in exchange for access to its app store. Google’s public response said, in effect, that Apple did the same thing.
The judge’s order takes effect in 90 days. Apple could seek to block the order before then.
Apple and Epic did not immediately respond to requests for comment.
This is a developing story. Check back for updates.