Will Appellate Court Ruling Lead Apple to Pull Netflix, Disney+, Other Streamers from Its App Store?
Apple’s most recent day in court ended with a big, but not total, win for the iPhone manufacturer. Earlier this week, an appeals court judge handed down a ruling in Apple’s case against Epic, the game developer behind “Fortnite,” which had filed an antitrust lawsuit against the company in 2020.
Epic’s beef was that Apple had removed “Fortnite” from its App Store because the app was letting users make purchases while avoiding Apple’s in-app payment system, which charges a 30% commission. Many app developers think of this so-called “Apple Tax” as an unfair business practice, and it led Epic to sue Apple for anti-competitive practices.
The judge in that lower court case ruled that Epic violated its developer agreement with Apple, and ordered the game developer to pay up. Apple is allowed to keep its store closed and only put the apps it wants available in the App Store. But the judge also ruled that Apple could not prohibit apps in its store from steering customers toward payment options other than its in-app system it charges a commission for and that rules against allowing customers to use another payment choice could not continue.
Both Epic and Apple appealed those rulings, and now both sides have gotten their answer. The appeals court maintained that Apple is not in violation of antitrust laws, but also affirmed that it cannot continue to enforce rules against steering users of apps to alternative payment methods. That means that app developers can now inform customers when another way to pay for a purchase is available, even if they have to exit the app to use it.
That could have a big effect on Apple’s streaming strategy going forward. Netflix, Disney+, and other major streaming platforms have to pay Apple 30% every time a user signs up for a streaming account via the App Store. This ruling undoubtedly means that those streaming services will immediately start looking for workarounds, and most will likely start steering customers toward other sign-up options. YouTube TV has not let users subscribe through the App Store for years because of the Apple Tax, and this new ruling could mean that policy will now change.
But does it mean that Apple will begin kicking streaming apps out of the App Store if they tell customers how to help them evade the Apple Tax? The company could do so, but it’s highly unlikely. Apple’s relationships with streaming platforms are mutually beneficial, even without the financial goad of the Apple Tax. The tech company has invested billions in the Apple TV platform, and removing streaming services from the App Store would seem counterproductive to the continued growth of the service, especially as it doesn’t have enough streaming content by itself to make up for the content gap, even with Apple TV+ and MLS Season Pass.
In the end, the ruling is a bit of a mixed bag for Apple. It has the freedom to decide which apps can stay in its App Store, but it can no longer prevent those apps from steering users to alternative payment methods, which severely dilutes the effectiveness of the Apple Tax. That likely won’t have an effect on the biggest services like HBO Max and Prime Video, but it could mean smaller streaming platforms that don’t have the same volume of users could see themselves excluded from the App Store going forward.
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