Apple Facing Potential Criminal Probe Over App Store Policies

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The legal troubles for Apple are escalating as a judge has referred a criminal case against them to federal authorities, alleging they breached court regulations by manipulating revenues from their near-monopoly in certain sectors of the App Store.

The rules state that Apple can’t charge fees for transactions done outside their app and they can’t stop developers from telling users about other ways to pay (like direct payment methods) that don’t involve paying fees in the App Store where Apple takes up to 30%.

U.S. District Judge Yvonne Gonzalez Rogers stated that Apple knowingly refused to adhere to the court’s injunction. Their intention was to establish new competitive obstacles, which would preserve a lucrative revenue stream previously deemed anticompetitive. They apparently believed this court would allow such defiance, but they were gravely mistaken. As usual, attempting to hide their actions only worsened the situation.

The decision made by the court enables various businesses in Hollywood, including Spotify, to connect directly to reduced prices and payment options, thus avoiding Apple’s fee.

In 2021, I (as a fan) was captivated by the antitrust trial between Apple and Fortnite’s creator, Epic Games. The court found that Apple had breached California’s unfair competition law through policies that restricted consumer choice, but it didn’t establish an illegal monopoly. The verdict allowed Apple to postpone adjustments to App Store payment regulations while they appealed the decision at the U.S. Supreme Court, which ultimately chose not to review the case last year.

Initially, the court’s prohibition was intended to take immediate action, but Apple persisted in behaving anticompetitively, according to the decree. It highlighted Apple’s practice of demanding a 27% commission for off-app transactions, where they previously charged no fee.

Contrary to Apple’s statements made in court, internal business records indicated that Apple was fully aware of its actions and consistently opted for the most competitive-stifling alternatives, as stated by Gonzalez. He emphasized that Alex Roman, Apple’s vice president of finance, had perjured himself during his testimony. Inside the company, App Store head Philip Schiller advocated for complying with the court order, but was overturned by CEO Tim Cook.

The court passed the issue on to the Northern District of California’s U.S. Attorney’s Office, asking them to look into whether they should start a legal action for alleged contempt.

For approximately 15 years, Apple has been charging a fee equivalent to 30% of the price for apps downloaded via the App Store and in-app purchases. This fee is imposed on businesses from Hollywood who utilize Apple’s in-app payment system to bill users. This practice has faced criticism from these companies, some of which rely on subscription income to fund their content creation and compensate artists.

In 2018, Netflix stopped allowing direct subscriptions on iOS devices to avoid paying a fee. However, in 2023, they compelled users who were still paying through the App Store to add a new mode of payment to keep their accounts active. On the other hand, Spotify restricted iPhone users from purchasing audiobooks within the app in 2022. Instead, they received a message saying, “You wish to listen? Unfortunately, you can’t buy audiobooks here. We understand it’s not ideal.”

Next week, Tim Sweeney, CEO of Epic Games, announced in a post that Fortnite will be back on the App Store. He also suggested a compromise: If Apple allows the court’s conflict-free, tax-free framework to apply globally, Epic Games will reinstate Fortnite worldwide and halt any ongoing or future lawsuits concerning this issue.

In 2020, the Justice Department filed a groundbreaking antitrust lawsuit against Apple, focusing partly on its encroachment into the film industry. This lawsuit was backed by 16 states and the District of Columbia. The government claimed that the company is breaking antitrust laws by abusing its monopoly in the smartphone market, which keeps consumers tied to iPhones and discourages them from switching to competing devices. These practices could potentially harm competition and innovation in industries like film production and content creation, as suggested by Apple’s growing role as a media producer. The lawsuit warned that if left unchecked, Apple could pose a significant threat to lessen competition and stifle innovation.

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2025-05-01 03:24