Apple Forced to Change App Store Guidelines After Epic Games Lawsuit Win

In a ground-breaking ruling that could reshape the digital app economy, Apple has been compelled to update its App Store rules, after a U.S. District Court sided against the tech giant in a years-long antitrust fight launched by Epic Games in 2020. The decision requires Apple to let developers add external links, buttons, and third-party payment systems to their apps essentially putting an end to the contentious "Apple Tax" for those who choose not to use Apple's in-app payment system.

This drastic shift may have far-reaching implications for app creators, consumers, and Apple as a whole. Here's what you need to know about the decision, Apple's compliance, and how it will impact app monetization on iOS in the future.

The Epic Games vs Apple Antitrust Battle

The dispute between Apple and Epic Games, the maker of Fortnite, began in August 2020. Epic knowingly broke Apple's App Store guidelines by introducing its own payment system within Fortnite. Apple retaliated by taking Fortnite off the App Store, which led Epic to sue Apple for operating a monopoly and exploiting its market dominance in apps.

Epic's main complaint had been Apple charging a 30% fee for in-app transactions, known informally as the "Apple Tax", and its being both unfair to developers and anti-competitive. The lawsuit became wider public debate surrounding iOS's openness and whether or not Apple could approve competing payments within its App Store environment.

A court ruled in part for Epic Games in 2021, ordering Apple to let developers redirect customers to external payment systems. Yet Apple still charged a 27% commission when developers utilized external payment links—something the courts have now ordered was a knowing disregard of the previous order.

In the latest update from the U.S. District Court, Apple is officially prohibited from:

• Blocking developers from including external payment links or buttons in their apps.

• Charging commissions (27–30%) on purchases made via third-party payment systems.

• Using scare tactics, such as warning popups, when users leave the app to complete a purchase externally.

This decision drastically changes Apple's App Store model, enabling developers to keep 100% of their earnings when utilizing their own payment infrastructure.

Apple has revised its App Review Guidelines to accommodate compliance with this new legal mandate but indicated that it strongly disagrees with the court's ruling and will appeal.

What Apple Said About the Changes

Apple, in a blog entry, admitted that it had updated its guidelines to align with the U.S. court's ruling. Apple insisted, though, on its continued view that the App Store payment system provides the best combination of privacy, security, and user convenience.

Here’s a direct excerpt from Apple’s statement:

"We respectfully disagree with the court’s ruling and are planning to appeal. Nonetheless, we are making the required changes to comply with the law while maintaining the best user experience and platform integrity."

This reflects Apple’s ongoing resistance to the idea of opening up iOS to third-party payment systems, which the company argues could compromise security.

No More "Apple Tax"

Arguably the biggest shift is an end to Apple's practice of collecting the so-called Apple Tax a 27% to 30% cut on third-party transactions.

Before this, even subsequent to the court injunction in 2021, Apple charged external payments a 27% charge by asserting that they were "facilitated" through the iOS ecosystem still. This behavior kept Apple's fingers on the lion's share of developer dollars, and people throughout the technology community criticized them for it.

The new policy dictates that Apple is no longer allowed to make such fees for purchases outside of the app, basically granting developers complete freedom with their revenues.

Perhaps the most thrilling news for app developers and users alike is the recently given permission to add external links and buttons that directly take users to external payment systems. This represents a fundamental change in how apps can process transactions and interact with users.

Before, Apple had stringent policies developers weren't allowed to add any outside links or call-to-action payment buttons in their apps. Whatever efforts were made to direct users towards other payment methods outside the App Store's system usually resulted in app rejection or even removal from the store. This rendered it extremely difficult for businesses to provide their own payment systems and have complete control over their revenue streams.

But due to a recent court decision, that prohibition has been removed. Developers can now freely place external links, buttons, and prompts in their apps, leading users to third-party sites for subscriptions, purchases, or other payment-related activities. Most importantly, Apple is no longer allowed to interfere with or penalize apps for doing so.

This is a game-changer for apps like Netflix, Spotify, Epic Games, and Kindle. Those apps can now direct users directly to their own websites to control subscriptions, purchase content, or make transactions without Apple receiving a share of the revenue. It's a huge victory for user experience and developer choice, opening up a more open and flexible app economy.

Apple has been employing pop-up notices reminding users that they were exiting the secure Apple zone when clicking on an external payment link. Popups would routinely dissuade users from moving forward.

This practice has been ruled out by the court. Apple cannot use alarmist notifications or fearmongering when users click on third-party payment links. This is a huge victory for user experience and transparency.

The market has welcomed this revolutionary ruling enthusiastically, viewing it as a tremendous victory most notably for digital-first businesses and app developers dependent on in-app purchases and subscription models. Over the years, many of them have been scathing critics of Apple's stifling policies and its high pay-out model. With the chance to utilize links outside the apps to make payments, they are finally free to control their monetization models themselves.

One of the largest beneficiaries is Epic Games, the same company that started the legal fight. Following a public and protracted battle, the result it supported is now soon to be a reality. Spotify, another vocal Apple rules critic, is also set to benefit significantly, as it can now send users to its own payment system without hindrance. Netflix can now also provide users with a smooth and more direct payment experience outside the walls of Apple's environment.

But the effect extends far beyond these high-profile players. A broad array of digital services fitness apps, learning platforms, content makers, and specialty subscription services will gain from this change. They are now able to concentrate on providing competitive pricing, targeted experiences, and seamless payment mechanisms without being concerned about Apple's commission or compliance hurdles. Finally, this decision creates more space for innovation and business expansion, giving developers the power to do things on their own terms.

What About Security and Privacy?

Apple has consistently emphasized that its payment system is intended to safeguard users with encryption, fraud protection, and effortless refunds. The company asserts that third-party payment systems may not be equally secure.

Although the court's decision obliges Apple to permit outside systems, it does not abolish Apple's privilege to warn users in a non-deceptive, neutral manner regarding security issues. Down the road, Apple may discover methods of providing informational notices without tipping into scaremongering.

While Apple has committed to obeying the court's order for the time being the company intends to appeal the decision. This legal maneuver may take months or even years to resolve, particularly if the case is heard by the U.S. Supreme Court. In the meantime, Apple must obey the court's directive and open up the App Store to third-party transactions.

Depending on the success of the appeal, these developments may either become permanent fixtures or be subject to possible revision in the future.

While this ruling only applies to the United States, it could influence global regulatory policies. Countries like South Korea, Japan, the EU, and India have also been scrutinizing Apple’s and Google’s app store practices.

• South Korea already passed a law requiring Apple and Google to allow alternative payment methods.

• The European Union is enforcing its Digital Markets Act (DMA) to promote fair competition.

This U.S. ruling could further accelerate international pressure on Apple to reform its global App Store policies.

The recent court decision is a turning point in the long struggle against app store monopolies and developer freedoms. Developers have long complained about Apple's stranglehold on app payments and its exorbitant commissions. Now, with the court compelling Apple to open up its platform, the future of iOS development has been transformed.

Even if Apple should continue to battle the ruling, developers and consumers can now already start enjoying the fruits of a more open and equitable app economy. The death of the Apple Tax, the allowance to utilize external payment systems, and the banning of anti-competitive fear tactics altogether collectively herald a new dawn for iOS apps.