Epic v. Apple judge floats potential compromise over App Store payments

Imagine if the Netflix app could show you where to sign up online.

What you need to know

• The Epic v. Apple judge seems to agree with Epic on a particular issue about the App Store.
• The judge thinks that apps should be able to tell their users about payment options outside of the App Store.

The Epic v. Apple trial could result in a pretty simple compromise.

As reported by Bloomberg, the judge overseeing the trial has hinted at a decision that would require Apple to allow developers to inform their users of other payment options outside of Apple's in-app payment system. Developers would be allowed to tell their users that they can purchase a digital good, perhaps for cheaper, on their website.

The judge questioned Apple's App Store rule that blocks developers from including a link or other information in their apps to steer users away from the store to buy virtual goods elsewhere online at a discounted rate. The anti-steering policy is at the heart of Epic's argument that Apple maintains a near-monopoly and juices profits by barring developers from offering alternative payment options in their apps.

"What's so bad about it anyway, for consumers to have choice?" Gonzalez Rogers asked Richard Schmalensee, an economist and Massachusetts Institute of Technology professor, who was testifying Wednesday as an expert witness for Apple in the second week of trial in Oakland, California.

When Apple's expert witness pushed back, saying that adding other purchasing options would "undercut" Apple's App Store sales, judge Gonzalez Rogers said that she did not think those situations were "factually the same."

Her question drew pushback from Schmalensee, who noted that the U.S. Supreme Court, in a 2018 ruling, threw out a lawsuit that accused American Express Co. of thwarting competition by prohibiting merchants from steering customers to cards with lower fees.

"If the app vendor can say, if you press this button you can buy this for less, that means the App Store can't collect its commission," Schmalensee said. That amounts to "undercutting" Apple's App Store sales, he said.

Gonzalez Rogers said she didn't think the situations were "factually the same." At stores, customers can see signs that say they can use Visa, MasterCard and other credit card options -- unlike in the App Store. "Visual indications of options don't exist in this circumstance."

Apple does not currently let apps tell their users about payment options that exist outside of the app store. Netflix, for example, does not offer in-app purchases but is also not allowed to specifically tell potential customers that they can sign up for the service online.

The change would be huge for developers like Netflix, Epic, and others who wish to direct users to their own payment systems on the web, skirting Apple's in-app purchase system and therefore Apple's App Store fees.

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