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Apple’s Outside Payments Ban Ruled Unlawful

Apple’s Controversial Payments Ban Deemed Illegal, Marking a Big Victory for NFTs and Crypto

In a groundbreaking ruling, a court in California has determined that Apple’s prohibition on app developers from utilizing alternative in-app payment methods, other than their own, is a violation of state competition laws. The ban, which includes a hefty 30% commission, has long been a point of contention in the tech industry.

This recent court decision could have significant implications for the world of NFTs (non-fungible tokens) and cryptocurrencies, particularly in terms of expanding the functionality of iOS applications. The United States Court of Appeals for the Ninth Circuit issued the ruling on April 24 as part of the high-profile Apple vs. Epic Games case.

By upholding the lower court’s 2021 verdict, the appeals court underscored the detrimental impact of Apple’s anti-steering provision on Epic Games. This provision specifically prohibits iOS developers from promoting alternative payment methods through in-app links, effectively limiting their ability to inform users about other options.

The court’s written opinion highlighted how this policy led to increased costs for Epic’s subsidiary apps on the Apple App Store. Moreover, it prevented potential customers from becoming future consumers of Epic Games’ products and services.

Following the ruling, Tim Sweeney, the founder and CEO of Epic Games, took to Twitter to express his satisfaction with the decision. He emphasized that iOS developers now have the freedom to redirect users to alternative payment methods, potentially offering more favorable terms.

While Apple has enjoyed certain favorable outcomes during the legal proceedings, the court rejected its argument that the anti-steering provisions should not apply to Epic Games. This rejection stemmed from Apple’s decision to terminate Epic Games’ iOS developer account in August 2020.

According to the court, Epic Games could have generated additional revenue if it had been allowed to implement the competitor-suit “tethering test” and the consumer-suit “balancing test.” Additionally, the court determined that the anti-steering provision was unfair based on both tests.

Taking a different angle, the court also examined Apple’s anti-steering violation in relation to consumers. It concluded that users would have been more likely to choose Epic Games directly if they had been aware of the significantly lower 12% commission rate offered by the company, compared to Apple’s 30% rate.

If consumers have access to lower-priced apps resulting from developers’ reduced costs and the ability to easily switch platforms, it is highly probable that they will take advantage of these options. This, in turn, would boost revenue for the Epic Games Store.

Should Apple choose not to appeal the court’s decision, it would establish a legal precedent that could benefit creators of NFTs and crypto apps. They would no longer be subject to Apple’s hefty 30% tax, creating a more favorable environment for their businesses.

Interestingly, Uniswap, a prominent crypto project, recently managed to enter the App Store despite Apple withholding its release back in March. This development coincides with the European Union’s introduction of new anti-monopoly regulations a couple of months ago. These regulations compelled Apple to allow third-party app stores on its devices, granting consumers the option to bypass Apple’s 30% commissions.

In a separate incident in December, Apple caused controversy by interrupting NFT transactions sent via Coinbase’s self-custody wallet. The tech giant argued that it was entitled to a 30% gas fee through in-app purchases.

As the legal landscape evolves and court decisions like this emerge, the world of NFTs and crypto is set to experience significant shifts. The ruling against Apple’s anti-steering provision not only challenges the company’s monopolistic practices but also paves the way for increased innovation and competition within the digital marketplace.

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