Google and Apple just had an Epic beating in legal action over app store charges
Justice Jonathan Beachโs findings, outlined in a 90-minute hearing in Melbourne, saw Epic Games granted a partial victory which cleared the way for consumers and app developers to receive compensation for some fees paid to Apple and Google.
Epic Games took legal action against Apple and Google in Australia in 2020 after the companyโs most popular game, Fortnite, was removed from Appleโs App Store and Google’s Play Store for offering its own in-app payment system.
Commissions taken by both companies through their respective app store purchases can reach up to 30 per cent for some transactions.
Epic’s Australian cases against Apple and Google were heard as one inย a 16-week trialย in 2024 alongside two class action lawsuits concerning consumers and app developers, with final arguments made in July of that year.
Justice Beachโs findings meant Fortnite and the Epic Games Store would be made available on Appleโs iOS platform in Australia, Epic Games claimed after Wednesdayโs hearing, without specifying a timeline.
โThis is a WIN for developers and consumers in Australia,โ the company said.
Fortnite returned to Appleโs App Store in the United States after a judge in that country found in May thatย the company had violated a court orderย by not allowing developers to display clear links and buttons to third-party payment options inside their apps.
While Justice Beachโs decision paved the way for compensation in Australia, it could also help improve transparency and competition in the nationโs app distribution and payment systems, argued class action lawyers, who claimed a โlandmark victoryโ.
Joel Phibbs from law firm Phi Finney McDonald said the case โcould result in one of the largest class action payouts in Australian legal history, with potential compensation of several hundreds of millions of dollars to come from two global corporate goliathsโ.
Kimi Nishimura from Maurice Blackburn Lawyers said the judgement was โa turning pointโ which sent โa clear message that even the most powerful corporations must play by the rules and respect the rights of consumers and developers alikeโ.
Justice Beach’s full judgement, which he said numbered more than 2,000 pages, is expected to be released at a later date after companies seek to redact some details over commercial sensitivities.
The exact amount of possible compensation for consumers and app developers will be determined at a later hearing.
Justice Beach agreed with Epic Games that Apple and Google had reduced market competition by not allowing alternative payment methods inside their respective app stores.
For Apple, he also found the company had engaged in conduct which was likely to reduce competition by preventing the side-loading of apps outside of its own App Store.
โIn my view, Appleโs restrictions on direct downloading or sideloading of native iOS apps had the purpose and effect โ or likely effect โ of substantially lessening competition in the iOS app distribution services market,โ he said.
While Apple claimed security was a key reason for such restrictions, Justice Beach said this did not outweigh potential anticompetitive effects.
However, he did not agree with Epic that Apple was being anticompetitive by not allowing alternative app stores to be distributed from within its own App Store.
An Apple spokesperson said the company welcomed the courtโs โrejection of some of Epicโs claimsโ, but it โstronglyโ disagreed with its rulings on others.
โApple faces fierce competition in every market where we operate,โ they said.
โWe continuously invest and innovate to make the App Store the safest place for users to get apps and a great business opportunity for developers in Australia and around the world.โ
While users of Googleโs Android operating system can sometimes access alternative app stores or download apps from a web browser, the company had used restrictive contracts and tactics to control pricing and keep developers inside Google Play, Justice Beach found.
A Google spokesperson argued the court had โrecognised the stark difference between Android’s open platform and Appleโs closed systemโ, and welcomed the judgeโs rejection of Epicโs push to force Google to distribute alternative app stores from within Google Play.
“However, we disagree with the court’s characterisation of our billing policies and practices, as well as its findings regarding some of our historical partnerships, which were all shaped in a fiercely competitive mobile landscape on behalf of users and developers,โ the spokesperson said.
โWe will review the full decision when we receive it and assess our next steps.โ
Consumer advocacy group ACCAN (Australian Communications Consumer Action Network) said it welcomed the courtโs decision, but urged the federal government to speed upย its work on reforming digital competition laws.
ACCAN CEO Carol Bennett said reforms currently being consulted on should be advanced as a priority so that the Australian Competition and Consumer Commission (ACCC) could โregulate the conduct of these platforms and consumers and small businesses can avoid bearing the significant costs of ongoing anti-competitive behaviourโ.
โโฆ We need genuine digital competition law reform in Australia to prevent these harms from happening in the first place, rather than requiring regulators, consumers, and small businesses to pick up the pieces and seek redress after these platforms abuse their market power,” she said.
Appleย warned the Australian government in Februaryย that it may cause โharms to its own citizensโ by exposing them to scams and security issues if it followed the European Union by opening up app stores and allowing alternative in-app payment methods.
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