Epic victory: Court holds Apple in contempt over App Store competition rules

Epic Games has won a significant legal victory against Apple in a major development that could fundamentally alter how mobile app marketplaces operate. On April 30, 2025, US District Judge Yvonne Gonzalez Rogers found Apple in civil contempt for violating a court injunction that prohibited anti-steering practices in the App Store. The ruling effectively eliminates Apple's ability to charge commissions on purchases made outside of iOS apps, potentially ending what Epic CEO Tim Sweeney called "15-30% junk fees."

The case stems from a legal battle that began in 2020 when Epic Games introduced direct payment options in its popular game Fortnite, circumventing Apple's payment system and the associated 30% commission. This led to Fortnite's removal from the App Store and sparked a broader legal challenge of Apple's business practices.

After the original trial in 2021, Judge Gonzalez Rogers issued an injunction that prohibited Apple from restricting developers from directing users to alternative payment mechanisms. However, when implementing this injunction in January 2024, Apple introduced new policies that the court has now determined were deliberately designed to maintain anticompetitive control over the app marketplace.

The court's ruling exposes Apple's internal decision-making process, revealing that executives chose the "most anticompetitive option" at several critical junctures when designing their compliance program. According to the court, Apple's 27% commission on off-app purchases, coupled with restrictive design requirements and high-friction user experiences, effectively ensured that no viable competitive alternative to Apple's In-App Purchase system could emerge.

This latest ruling comes just seven days after Sweeney announced on social media platform X that Epic would be returning Fortnite to the iOS App Store after more than four years of absence. In his post, Sweeney offered a "peace proposal," stating that if Apple extended the court's "friction-free, Apple-tax-free framework worldwide," Epic would "return Fortnite to the App Store worldwide and drop current and future litigation on the topic."

In the contempt ruling, Judge Gonzalez Rogers has prohibited Apple from charging any commission on purchases made outside apps, restricting developers' design choices for external purchase links, requiring warning screens for external purchases, and excluding certain developers from accessing link options. The order took immediate effect, with the judge stating "time is of the essence" and refusing to entertain requests for a stay.

The court's order was unusually forceful, even referring the matter to the US Attorney for the Northern District of California for potential criminal contempt proceedings against Apple and specifically naming Vice President of Finance Alex Roman, who the court found had lied under oath during testimony.

The ruling represents a turning point in what has been a protracted battle spanning nearly five years. It marks a significant victory for Epic Games and potentially has far-reaching implications for other app marketplaces, including those operated by Google, Microsoft, Sony, and Nintendo.

Apple's compliance approach, which the court determined was designed to maintain its revenue stream rather than comply with the injunction, included several key components that worked together to stifle competition. Internal documents revealed through the legal proceedings showed that Apple executives knew their program would effectively prevent developers from using alternative payment systems.

Internal Apple communications unveiled during the February 2025 hearings showed employees designing what they called a "scare screen" to deter users from completing external purchases. One Apple employee wrote that "'external website' sounds scary, so execs will love it" when developing warning text for users attempting to make purchases outside the app.

Another component involved placing strict limits on how and where developers could include links to external purchase options. Apple prohibited developers from placing such links near in-app purchase buttons or using visually prominent buttons, effectively hiding alternative payment options from users.

The court's ruling means developers can now freely direct users to external payment options without paying Apple a commission. This could potentially save developers billions of dollars annually, savings that might be passed on to consumers through lower prices or invested in content development.

For the marketing community, this ruling represents a seismic shift in mobile user acquisition and monetization strategies. Companies that previously factored Apple's 30% commission into their customer acquisition costs may now find iOS users significantly more profitable. This could lead to increased advertising spending on iOS platforms and a reimagining of app monetization strategies across the industry.

Digital marketers who have long operated under the constraints of Apple's commission structure will now need to recalibrate their approaches. The elimination of the "Apple tax" on external purchases could make subscription businesses and other transaction-based apps substantially more viable on iOS. This may drive a new wave of innovation in mobile business models previously constrained by commission structures.

The timeline of this complex legal battle reveals a deliberate approach by both sides to establish precedent in the rapidly evolving digital marketplace. Beginning with Epic's calculated "Project Liberty" in August 2020, when it implemented direct payment options in Fortnite, through multiple court rulings and appeals, the case has consistently raised fundamental questions about platform economics and the balance of power between app stores and developers.

Throughout the proceedings, Apple maintained that its App Store policies were necessary to ensure security, privacy, and a seamless user experience. However, the court found these justifications pretextual, noting that Apple permits developers selling physical goods to include direct payment links without the same restrictions.

The court's findings pointed to internal Apple documents showing that restrictions on link placement, design, and functionality were explicitly intended to reduce competition with Apple's own payment system. One particularly damaging document revealed Apple's modeling of "breakage" rates—the percentage of users who abandon purchases due to friction in the payment flow—with the express goal of identifying the tipping point where developers would lose more money using external options than by using Apple's system.

Apple's Vice President of Finance Alex Roman faces potential criminal contempt charges for what the court described as "outright lies under oath." Roman testified that Apple had not considered the costs developers would face when using alternative payment options, but internal documents revealed Apple had indeed analyzed these costs and determined they would exceed the small discount Apple offered from its standard rate.

Industry experts suggest this ruling could spark similar challenges to other digital marketplaces, including console gaming platforms that typically charge comparable commission rates. However, those marketplaces may benefit from different competitive landscapes and legal considerations, including the fact that console manufacturers often sell hardware at a loss and recoup investments through software sales.

Timeline of Epic v. Apple legal battle

• August 13, 2020: Epic implements direct payment in Fortnite, leading to the game's removal from the App Store
• August 14, 2020: Epic files lawsuit against Apple
• September 10, 2021: Judge Gonzalez Rogers issues initial ruling and injunction against Apple's anti-steering provisions
• December 8, 2021: Ninth Circuit grants stay of injunction pending appeal
• April 24, 2023: Ninth Circuit affirms district court ruling on UCL violations and injunction
• January 16, 2024: Supreme Court declines review of case
• January 17, 2024: Ninth Circuit mandate issues, injunction takes effect
• January 16, 2024: Apple announces compliance plan including 27% commission on external purchases
• March 13, 2024: Epic files motion to enforce injunction and hold Apple in contempt
• May 8-31, 2024: Court holds first evidentiary hearing
• February 24-26, 2025: Court holds second evidentiary hearing
• April 30, 2025: Court finds Apple in civil contempt, issues immediate injunction prohibiting commissions on external purchases

This landmark ruling redefines the boundaries of platform economics in the digital age and could usher in a new era of competition in the mobile app marketplace. As Tim Sweeney declared in his social media post after the ruling: "Game over for the Apple Tax."