Appeals court delays App Store payment changes that Apple opposed

Tim Cook, chief executive officer of Apple Inc., center, arrives at U.S. district court in Oakland, California, on Friday, May 21, 2021.

Nina Riggio | Bloomberg | Getty Images

An appeals court in San Francisco said on Wednesday that Apple doesn’t currently have to change its App Store rules to allow developers to embed links to alternate payment methods inside iPhone apps.

The stay temporarily protects Apple’s control over its App Store and the fees it generates, which can range up to 30% of digital transactions, until the court issues a mandate, it said.

“Apple has demonstrated, at minimum, that its appeal raises serious questions on the merits of the district court’s determination that Epic Games, Inc. failed to show Apple’s conduct violated any antitrust laws but did show that the same conduct violated California’s Unfair Competition Law,” the court ruled in an order reviewed by CNBC.

It means the App Store can continue to prohibit developers from adding external links to other payment methods while the case is appealed. The change requiring Apple to let developers link out to other payment methods had been ordered by Yvonne Gonzales Rogers, a federal judge in Oakland, earlier this year and was scheduled to come into effect on Thursday.

“We’re constantly evolving the App Store to help create an even better experience for our users and the incredibly talented community of iOS developers,” an Apple spokesperson said. “Our concern is that these changes would have created new privacy and security risks, and disrupted the user experience customers love about the App Store. We want to thank the court for granting this stay while the appeals process continues.”

Epic Games sued Apple last year, asking for the ability to install its own app store on iPhones.

While Rogers ruled in favor of Apple for nine of 10 counts, she ordered the iPhone maker to loosen “anti-steering” policies that restricted companies from telling their customers about alternative payment methods that didn’t use Apple’s iTunes billing. Rogers previously said that if the changes were delayed until the appeals process was completed that it could take as long as five years.

Apple and Epic are appealing the decision in federal appeals court in California.

Apple Store developers argue Apple’s fees, which range up to 30% of purchases, are too high. If app makers were allowed to link to their own website and take customer credit cards directly, they could cut their costs, developers previously said.

Apple says its control of the App Store enables it to ensure privacy and security for users. Apple has also previously changed its software distribution policies several times, including cutting fees to 15% for small developers and some subscription apps, and introducing an appeals process for rejected apps. Apple said that it would take a significant engineering effort to produce a new system

Most recently, Apple settled a class-action lawsuit and, as a result, said developers can email their own customers to inform them about alternative payment methods. Wednesday’s stay did not strike the part of Rogers’ order that focused on developers communicating with their customers.

Earlier this year, Google said that its app store for Android devices will allow developers to handle their own billing in response to a new South Korean law, but Google said it will still collect fees even if developers handled their own billing.

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