Apple’s outside payments ban ruled as unlawful in likely win for NFTs and crypto

Unless Apple appeals the decision and has the ruling overturned, developers are free to direct app users to their own systems to make purchases.

A California court ruled Apple violated state competition laws by barring app developers from using alternative in-app payment methods apart from its own, which includes a 30% commission.

The decision may clear the path for cryptocurrency and nonfungible token (NFT) projects to add more functionality to their iOS apps.

The April 24 ruling was made by the United States Court of Appeals for the Ninth Circuit in the case of Apple vs Epic Games — the creator of the video game Fortnite.

The court upheld the decision of a lower court from 2021 and said that Apple’s anti-steering provision harmed Epic.

The anti-steering provision is an Apple policy stating that iOS developers cannot communicate out-of-app payment methods through certain mechanisms such as in-app links.

The policy increased the costs of Epic’s subsidiaries’ apps that are still on Apple’s App Store and prevented other app users from becoming would-be Epic Games consumers, the court wrote.

Tim Sweeney, the founder and chief executive of Epic Games, tweeted on April 24 that the ruling “frees iOS developers” by allowing them to direct consumers to alternative payment solutions.

Fortunately, the court's positive decision rejecting Apple's anti-steering provisions frees iOS developers to send consumers to the web to do business with them directly there. We're working on next steps.
— Tim Sweeney (@TimSweeneyEpic) April 24, 2023

While the court ruled in favor of Apple on most issues, the tech giant failed in its argument that the anti-steering provisions shouldn’t apply to Epic Games because it terminated Epic Games’ iOS developer account in August 2020.

The court ruled that Epic Games would have earned additional revenue since then — save for Apple’s policy — by applying the competitor-suit “tethering test” and the consumer-suit “balancing test” and found the anti-steering provision to be “unfair” pursuant to both tests.

The court looked at Apple’s anti-steering violation through a second angle, ruling that consumers would have flocked to Epic Games directly had they learned about its much lower commission rate of 12%, compared to Apple’s 30%.

“If consumers can learn about lower app prices, which are made possible by developers’ lower costs, and have the ability to substitute to the platform with those lower prices, they will do so — increasing the revenue that the Epic Games Store generates.”

If Apple doesn’t appeal the ruling, it could set a case law precedent benefiting creators of crypto and nonfungible token apps because they won’t be subject to Apple’s 30% “tax.”

Decentralized exchange Uniswap is one of the latest crypto projects to make its way into the App Store despite Apple initially withholding its launch in March.

Nearly two months ago, the European Union set new anti-monopolistic rules that require Apple to permit third-party app stores on its devices, which in turn allow consumers to circumvent Apple’s 30% commissions.

However, in December, Apple interfered with NFT transactions sent on Coinbase’s self-custody wallet, claiming that it’s entitled to “collect 30% of the gas fee” through in-app purchases.

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App Store

Apple has barred Gnosis Safe from applying an app update unless the firm provides access to NFTs as an in-app purchase.

The Apple App Store reportedly blocked a Gnosis Safe crypto wallet app update due to it hosting NFTs that weren’t purchased inside the app.

Lukas Schor —a product developer at Ethereum-based crypto wallet provider Gnosis Safe — revealed the firm ran into trouble when it submitted an updated version of its app to the IOS app store earlier this month.

Schor noted on Sept. 14 that despite the update having nothing to do with non-fungibles, the App Store flagged a sample image that displayed an NFT in the app’s description section, even though it had been up for “many months.”

Apple is blocking a release of our @gnosissafe mobile app because we display NFTs in it. After 2 weeks of back-and-forth, I felt that we need to talk publicly about this to raise awareness.

See the thread for details and why this might affect other wallets and apps as well.
— Lukas Schor | Gnosis Safe (@SchorLukas) September 14, 2021

While the app is still listed in the store along with the image displaying the NFT, it appears that Apple is blocking the update due to its guidelines around digital content.

According to screenshots he shared of Gnosis’ correspondence with Apple support over email, the tech giant stated that while “NFTs are not mentioned specifically” in its guidelines, apps are not allowed to provide access to “previously purchased digital content” bought outside of the app store.

This essentially means that apps cannot provide any NFT-related services unless they are integrated with Apple payment methods.

“If you choose not to implement in-app purchase, it would be appropriate to revise your app so that does not access previously purchased digital content,” the email concluded.

⛔️ This shows how access to Web3 still relies heavily on gatekeepers like Apple
❗️ It's an industry problem, as the same arguments apply to any wallet displaying NFTs or games making use of NFTs
We need to find better ways to make Web3 accessible on mobile permissionlessly
— Lukas Schor | Gnosis Safe (@SchorLukas) September 14, 2021

Schor stated that Gnosis will submit an appeal over the decision as he called on Apple to clarify its guidelines around NFTs. He also suggested that the firm has no plans to walk back its NFT support in its app:

“Permissionless access to Web3 is core to our values, so we are willing to go the extra mile to clear this up. Simply removing NFTs from our app is definitely not an option for us.”

Apple currently prohibits the inclusion of payment rails beyond those offered by the firm in apps listed in its store. While Gnosis doesn’t sell NFTs in its app, Apple charges a flat 30% commission of in-app purchases of digital goods and services.

This policy may not last for much longer however, as Judge Yvonne Gonzalez Rogers issued a permanent injunction in the Epic Games vs Apple case on Sept.10 that will potentially see a major change to the app store.

Epic Games, the creators of widely popular online game Fortnite built its own in-game payment system last year to circumvent Apple’s in-app payment system, which resulted in the game being delisted from the App-store.

In August 2020, Epic took legal action against Apple and specifically took aim against the firm’s in-app payments policies.

In Judge Rogers’ first ruling on the case on Friday, she issued an order for Apple to allow alternate payment options in apps listed on its store, with the injunction set to go into effect on Dec. 9, 2021 — unless it is enjoined by a higher court.

Apple policy