Justice Jonathan Beach’s 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 company’s most popular game, Fortnite, was removed from Apple’s 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 in a 16-week trial in 2024 alongside two class action lawsuits concerning consumers and app developers, with final arguments made in July of that year.

Justice Beach’s findings meant Fortnite and the Epic Games Store would be made available on Apple’s iOS platform in Australia, Epic Games claimed after Wednesday’s hearing, without specifying a timeline.

“This is a WIN for developers and consumers in Australia,” the company said.

Fortnite returned to Apple’s App Store in the United States after a judge in that country found in May that the company had violated a court order by not allowing developers to display clear links and buttons to third-party payment options inside their apps.

While Justice Beach’s decision paved the way for compensation in Australia, it could also help improve transparency and competition in the nation’s app distribution and payment systems, argued class action lawyers, who claimed a “landmark victory”.

Joel Phibbs from law firm Phi Finney McDonald said the case “could 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 goliaths”.

Kimi Nishimura from Maurice Blackburn Lawyers said the judgement was “a turning point” which sent “a clear message that even the most powerful corporations must play by the rules and respect the rights of consumers and developers alike”.

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.

Big tech disagrees

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.

“In my view, Apple’s restrictions on direct downloading or sideloading of native iOS apps had the purpose and effect — or likely effect — of substantially lessening competition in the iOS app distribution services market,” 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 court’s “rejection of some of Epic’s claims”, but it “strongly” disagreed with its rulings on others.

“Apple faces fierce competition in every market where we operate,” they said.

“We 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.”

While users of Google’s 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 “recognised the stark difference between Android’s open platform and Apple’s closed system”, and welcomed the judge’s rejection of Epic’s 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,” the spokesperson said.

“We will review the full decision when we receive it and assess our next steps.”

Digital competition reforms needed

Consumer advocacy group ACCAN (Australian Communications Consumer Action Network) said it welcomed the court’s decision, but urged the federal government to speed up 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 “regulate the conduct of these platforms and consumers and small businesses can avoid bearing the significant costs of ongoing anti-competitive behaviour”.

“… 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.

Apple warned the Australian government in February that it may cause “harms to its own citizens” 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.