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Apple Faces Opposition from Tech Leaders

Plus500 | Thursday 21 March 2024

As the trading week nears its close, the latest battle between American tech giants is heating up. Several of the biggest names in gaming and mobile app development are taking the fight to Apple (AAPL) via the legal system after a series of disputes. Let’s take a closer look:


Tech’s Big Teamup

Wednesday, March 20th, four of the technology sector's leading companies joined Epic Games' filing against Apple. These firms, Meta (META), X, Microsoft (MSFT), and Match Group (MTCH), joined the creator of "Fortnite", to decry Apple's alleged failure to comply with a court-mandated injunction concerning transactions within its profitable App Store ecosystem.

These tech giants, responsible for some of the most popular downloads on the App Store, assert that Apple's actions constitute a blatant disregard for an injunction issued in September 2021, obstructing efforts to guide consumers towards more economical payment methods for digital content.

Apple chose not to provide a direct response to the accusation outlined in the filing submitted to the federal court, preferring instead to refer to its previous statement from January 16, 2024. In that statement, Apple maintained that it had indeed not contradicted the terms laid down by the injunction, positioning its compliance as a measure to safeguard consumer interests and the integrity of its ecosystem, all while ensuring developers are not afforded undue advantages.

The legal dispute between Epic and Apple originated in 2020 when Epic alleged that Apple's practices, including mandatory app distribution through the App Store and imposing commissions of up to 30% on developers' transactions, violated antitrust laws. The injunction mandated Apple to permit developers to include links and buttons guiding users to alternative payment options.

However, Epic maintains that Apple's practices stand in contradiction to the injunction's terms. The "Fortnite" creator maintains that new regulations and a large fee imposed on developers rendered these alternative links virtually ineffective.

In Wednesday's filing, submitted jointly by all the aforementioned firms against Apple, Apple's actions were sharply criticised. The assertions included that the company's behaviour effectively reinforces anti-steering regulations deemed unlawful by the court. They argued that Apple's stringent controls on developers' communication with users regarding payment options create substantial obstacles to competition, artificially inflating prices and perpetuating Apple's excessive commission structure to the detriment of consumers and developers alike.

In January, the U.S. Supreme Court declined to review Apple's appeal against the injunction, as well as Epic's appeal contesting lower court rulings affirming Apple's policies' compliance with federal antitrust laws. As the dispute now stands, the latter firm will need to respond to the former's latest court filing by the 3rd of April.

Deleting the Competition

This latest flareup of Apple and Epic’s long-running dispute comes just two weeks after what some might call another escalation. On Wednesday, March 6th, Apple terminated Epic Games' developer account, effectively preventing the company from releasing "Fortnite" and a third-party app store in Europe.

In correspondence shared by Epic Games publicly, Apple accused the firm of being "verifiably untrustworthy" and expressed doubts about Epic's willingness to adhere to contractual commitments outlined in Apple's developer licensing agreement. Apple executive Phil Schiller reportedly sought written assurance from Epic Games CEO Tim Sweeney that the company would comply with Apple's developer agreement. Despite Sweeney's assurance of good faith compliance, Apple deemed it insufficient and invoked its "contractual right" to terminate the developer agreement.

Epic Games didn't tarry in condemning Apple's actions, asserting that the termination violates the European Union's Digital Markets Act, which mandates the allowance of third-party app stores on iOS devices in Europe. By blocking Epic Games from launching its Epic Games Store, Apple is accused of eliminating a major competitor to its own app store, thus sending a message to other developers about the consequences of challenging Apple's dominance. (Source: Forbes)

As the situation currently stands, this plethora of legal issues does not seem to have exerted downward pressure on Apple’s stock value. Since March 6th, the company’s share price has risen by almost 5.6%. However, the resolution of the disagreement between these tech giants could have significant effects on the industry as a whole going forward; traders and investors alike will have to wait and see how it all plays out.

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