In this installment of the ongoing Epic v. Apple litigation, Apple appealed the injunction requiring it to allow developers to take users outside the app to complete purchases (linked-out purchases). After the injunction, Apple allowed linked-out purchases, but with potential restrictions and a new commission owed to Apple. The district court found that Apple violated the spirit of the injunction by:
A panel of judges from the U.S. Court of Appeals for the Ninth Circuit reviewed the lower court’s decision and affirmed in part, holding that Apple’s restrictions effectively prohibit linked-out purchases. The Ninth Circuit affirmed the lower court’s decisions regarding message screens and dynamic links but held that the total bans on commissions and link restrictions are overbroad. The Ninth Circuit’s affirmation should mean that consumers and developers will have more options when making purchases for apps on their Apple devices. This decision comes right on the heels of the proposed settlement between Google and Epic Games, which could create a broader marketplace for Android apps.
Apple generally charges developers a 30% commission on in-app purchases. When the district court’s injunction required Apple to allow linked-out purchases, it imposed a 27% commission. Processing linked-out purchases would potentially cost developers more than 3%, so a developer could pay more than 30% in total on a linked-out purchase.
Even though Apple was no longer prohibiting linked-out purchases, the district court held that this new approach effectively prohibited linked-out purchases, and it violated the spirit of the injunction. The district court then enjoined Apple from imposing any commission or fee on linked-out purchases. However, the Ninth Circuit panel found that the complete ban was overbroad and punitive. Apple should be permitted to charge a commission based on costs that are genuinely and reasonably necessary for its coordination of external links and linked-out purchases, but not more. The Ninth Circuit remanded this issue, so the district court can either (i) modify the injunction to ban only prohibitive commissions or (ii) make the ban conditional, so Apple would not be able to impose a fee or commission until the court approves it as reasonable and non-prohibitive.
After the district court issued the injunction and Apple began allowing linked-out purchases, it restricted the style, content, language, formatting, flow, and placement of the links that directed consumers out of the app, making it potentially less likely that consumers would see or use those links. The district court said that these restrictions were also prohibitive and violated the injunction, and it prohibited Apple from restricting the links. The Ninth Circuit found this too to be overbroad, and it modified the order. Now, if both Apple and a developer offer a purchase option, Apple can restrict developers from placing links in more prominent fonts, larger sizes, larger quantities, and in more prominent places than Apple uses for its own purchase links. But Apple must allow developers to use the same fonts, sizes, quantities, and placements as Apple uses for its own links.
While more proceedings between the parties and the courts will follow, including potentially more appeals, the current status for app developers is that: