The decision made on Wednesday by a federal appeals court in San Francisco adds to the legal challenges faced by the iPhone manufacturer in its prolonged dispute with Fortnite creator Epic Games Inc. regarding the dominance of its App Store in the smartphone software market.
Apple aimed to halt the enforcement while it appeals a judge’s April ruling, which stated that it must adhere to a 2021 injunction after determining that the company engaged in anticompetitive practices in violation of California law.
“Apple ‘bears the burden of showing that the circumstances justify an exercise of [our] discretion,’” the appeals court stated in an unsigned, two-page opinion. “After evaluating the relevant factors, we are not convinced that a stay is warranted.”
An Apple representative expressed disappointment with the ruling.
“We will continue to defend our position during the appeals process,” the representative noted. “As previously mentioned, we fundamentally disagree with the district court’s conclusion. Our aim is to ensure that the App Store continues to be an exceptional opportunity for developers and a safe, trusted experience for our users.”
Epic’s CEO, Tim Sweeney, praised the ruling in a post on social media platform X.
The April decision significantly impacts the substantial revenue that the App Store generates for Apple. It prevents the company from levying commissions on transactions linked outside the App Store and from controlling the wording and app designs that developers use to guide customers to their websites for payment.
In its appeal, Apple argued that the ruling by US District Judge Yvonne Gonzalez Rogers in Oakland, California, is causing “grave irreparable harm” to the company. Apple also asserted that Gonzalez Rogers misjudged her conclusion that it did not comply with her 2021 injunction.
Numerous developers, including Epic, Amazon, and Spotify, have already modified their applications to enable customers to bypass Apple’s payment methods.
Following a trial in 2021, Gonzalez Rogers predominantly sided with Apple, indicating that its App Store policies did not breach federal antitrust law. Nevertheless, she mandated that the company permit developers to circumvent its in-app payment system to evade a commission of up to 30%. This ruling was upheld by the US Supreme Court last year, as it opted not to hear further appeals in the matter.
In response to the 2021 injunction, Apple permitted developers to direct users to the web for in-app purchase transactions while imposing a requirement that developers pay the company a 27% share of any revenue generated.
Developers, including Epic, voiced concerns regarding both the new commission and a series of restrictions Apple placed on their ability to link outside the App Store, including button design and placement. Epic accused Apple of disregarding the 2021 injunction, which resulted in the April ruling.
After several weeks of hearings last year and this year, Gonzalez Rogers determined that Apple “willfully” violated her injunction four years ago. She also referred the company to federal prosecutors for a potential criminal investigation regarding contempt of court.
