NFT
In a decision that could have major implications for NFT and crypto builders, a U.S. federal appeals court has ruled that Apple violated California’s unfair competition law by prohibiting app developers from using a payment method other than that of the tech giant’s own App Store, which charges a 30% fee on most transactions.
The ruling, issued late Monday by the U.S. Court of Appeals for the Ninth Circuit, came as part of a re-evaluation of a 2020 lawsuit brought by Fortnite maker Epic Games against Apple alleging the tech giant’s alleged monopoly on the mobile games market. Apple largely prevailed in that 2021 lawsuit, as well as in Monday’s decision, with judges in both instances ruling that Apple does not have a monopoly on gaming apps.
But the wins came with a big caveat. The first judge of the case said in 2021 that by preventing app developers from directing customers to alternative payment methods, Apple was stifling fair competition. Monday’s panel confirmed that finding. Epic Games founder and CEO Tim Sweeney tweeted that “Apple prevailed overall,” but defended Epic’s lone victory on Monday.
Fortunately, the court’s affirmative decision rejecting Apple’s anti-steering provisions gives iOS developers the freedom to direct consumers to the web to do business with them directly. We are working on next steps.
— Tim Sweeney (@TimSweeneyEpic) Apr 24, 2023
“Fortunately, the court’s affirmative decision rejecting Apple’s anti-steering provisions gives iOS developers the freedom to direct consumers to the web to do business with them directly,” Sweeney tweeted. “We are working on next steps.”
If it stands, the decision could have numerous benefits for Web3 app developers. Last September, Apple opened its App Store to NFTs, but only to NFTs sold through its own payment system, which takes 30% of most transactions.
‘Apple must be stopped’ as Web2 company launches 30% NFT tax: Epic Games CEO
That huge load was bitterly received by the Web3 community. Access to the App Store – and the more than 1 billion iPhones and iPads it reaches – presents a huge opportunity for Web3 companies looking to break into the mainstream.
But given Apple’s payment policy, that option came at too high a price for most developers. For context, popular NFT marketplace OpenSea has historically charged a 2.5% commission on NFT sales; the company even recently eliminated that fee to better position itself against competitors.
Apple’s stranglehold on NFT-powered apps offered on its store was further strengthened in October when the company its policy updated to state explicitly that NFTs can only be used to unlock additional content or features within an app if those NFTs were purchased through Apple’s in-app payment system.
The move placed further restrictions on token gating – the increasingly popular practice of giving NFT holders access to exclusive communication channels, merchandise and other perks – by enabling such a tool only if developers gave in and struggled with Apple’s 30% drop in revenue. .
But given Monday’s ruling, the landscape for NFTs could soon look very different. Apple told Boomberg that it is “considering a further review” of the decision. But if Apple doesn’t appeal or if the ruling is reaffirmed, NFT developers may not only be able to use NFTs purchased over the Internet to unlock features in iOS apps, but also direct users within those apps to install NFTs on sites that don’t charge exorbitant fees.
In addition, a relaxation of such restrictions could allow the use of cryptocurrency in app-related transactions – a development currently prohibited by Apple’s policy.
