Apple Wins Ability to Charge Fees on External Payment Links as Appeals Court Modifies Epic Injunction

Apple should be able to collect a reasonable commission on purchases made using external links included in iOS apps, the U.S. Court of Appeals ruled today (via Reuters). The U.S. Court of Appeals partially reversed sanctions imposed on Apple after Apple was found to have willfully violated an injunction in the ongoing Epic Games vs. Apple legal battle.

Since April, Apple has been forced to let developers offer links to non-App Store purchase options in their apps, with no control over the design of those links. Apps like Spotify can advertise deals and direct customers to their websites, something that was not previously allowed.

Apple has not been able to charge any commission at all for purchases made using these in-app links, but that's going to change in the future. The appeals court says that Apple should be able to charge a fee that covers its necessary costs and intellectual property.

Apple is not going to be able to start charging a commission immediately, though. The case has been sent back to the district court so that a reasonable fee can be determined.

In our view, as the April 30 Order is written, it is more like a punitive criminal contempt sanction than a civil contempt sanction or modification of the Injunction. The biggest problem with the commission prohibition is that it permanently prohibits the compensation that Apple can receive for linked-out purchases of digital products, regardless of whether the commission is itself prohibitive.

Rather than coercing Apple to comply with the spirit of the Injunction with a reasonable, non-prohibitive commission, the district court used blunt force to ban all commissions, abusing its discretion.

Some other aspects of the initial ruling were also found to be too broad, so there are other updates in store. Here's an overview of what's changing:

• Fees on links - Apple will be able to charge a reasonable commission
• Link design - Apple can restrict developers from making external links more prominent than in-app purchase options. Specifically, Apple can restrict a developer from putting buttons, links, or other calls to action in more prominent fonts, larger sizes, larger quantities, and more prominent places than buttons for in-app purchases. Apple has to allow developers to place buttons in "at least" the same fonts, sizes, and places as Apple's own.
• Link language - Apple may restrict developers from using language that violates its general content standards, if such standards exist.
• Link access restrictions - The original court ruling prevents Apple from restricting certain categories and developers from using links, such as subscriptions provided using the News Partner Program. The appeals court says Apple is not specifically enjoined from excluding developers participating in the VPP and NPP programs.

Apple created a situation requiring court oversight because after the original ruling ordered it to allow in-app links, Apple didn't charge a reasonable fee for purchases made using those links. Apple charged developers 27 percent instead of 30 percent, knowing that developers would also need to pay a fee for payment services. Almost no developers opted in to Apple's link program because it ended up being more expensive than the in-app purchase fees.

The appeals court agreed that there was clear and convincing evidence of civil contempt, and it declined to vacate the injunction. With the exception of changes to fees and link design, the rest of the injunction will remain in place because Apple made external links "as hard to use as possible," which "flies in the face of the Injunction's spirit."

The appeals court recommends that the district court calculate a commission that is based on the costs that are necessary for its coordination of external links for linked-out purchases, along with "some compensation" for the use of its intellectual property. Costs should not include commission for security and privacy.

While Apple is not able to charge any commission until the district court approves an appropriate fee, the appeals court suggests that both Apple and the district court should work to settle on a fee "expeditiously." The full text of the ruling is available here.