Context: Epic Games’ U.S.-wide injunction against Apple, granted by a district court in 2021, finally entered into force on Tuesday (January 16 article). But Apple responded with a set of new app rules designed to render the injunction commercially useless (January 18 article). While Apple’s agenda is clear, the legal standard and various statements by the court and even Epic itself serve as an excuse. Therefore, games fray considers it very unlikely (as explained in the previous article) that enforcement of the injunction with respect to links and buttons could bring about meaningful change anytime soon. Even a partial victory over Apple’s rules would normally fail to move the needle. Mere promotions (as also explained in the previous article) would be far harder for Apple to prohibit without running afoul of the injunction that was meant to enable an open flow of information, but would greatly diminish the impact relative to links and buttons, as there would be several steps between a banner and an actual transaction. Mere advertisements would be more likely to yield significant results for a service like X (formerly known as Twitter) than for games.
What’s new: Publishers of games and other apps could nevertheless take billions of dollars in in-app commissions away from Apple while offering consumers lower prices (win-win at Apple’s expense). The solution would be an email-centric strategy that would additionally benefit from Apple’s commitments under a class-action settlement and has been identified by games fray. This article explains how to make it work.
Direct impact: The email-centric strategy outlined in this article could be implemented in the very short term. There would be a significant probability of Apple not even daring to take any measures that would give rise to hefty contempt sanctions bringing the company into disrepute, but even if some enforcement turned out necesssary, the questions raised would be simpler and clearer, and Apple would struggle much more to justify its conduct than in connection with links and buttons. This strategy can be implemented beyond Epic challenging (as it intends to do) Apple’s link and button rules.
Wider ramifications: With the strategy described below, the first major hole in history would be poked into Apple’s in-app purchasing monopoly. The impact in the U.S. market would likely be even sooner than in the European Union, where the Digital Market Act’s gatekeeper rules will enter into full force and effect in March, but where Apple is likely to at least delay and potentially diminish the impact through litigation.
NOTE: This article, as stated on every page of game fray (below the logo), does not constitute legal advice. It voices certain opinions, but before you implement this, do consult a lawyer authorized to practice in the Northern District of California, which is where any dispute with Apple would have to be resolved. The purpose of this article is to spur debate in the industry over the best next steps, and games fray believes that app makers can (and absolutely should) minimize their risk anyway by openly telling Apple what they are doing, giving Apple the opportunity to reject a submission of a new app version (with Apple then taking the risk of being sanctioned by the district court in the event of a subsequent contempt motion based on the rejection).
What it would look like
Let’s take Candy Crush for an example (a great one because almost everyone knows it and it generates so much money). The author of this article has had a King account, under a personal email address, for about ten years, and particularly needed it when playing alternatingly on Android phones and on a Windows PC (in a browser).
If you want to solve a problem in Candy Crush, such as getting more moves or using boosters like the hammer, or want to arm yourself for battle, such as by obtaining boosters even before you start (some must be activated then), you eventually need to buy the in-game currency named gold bars. So far, that would require you to make an in-app purchase (IAP) taxed by Apple at a rate of 30%. You click on “Buy”, Apple’s IAP system handles the transaction, and returns you to the game where you can spend the gold bars.
With Apple’s new rules, a U.S.-only version of Candy Crush that would be available only on the U.S. App Store (meaning they’d have to split up the app; it could have the same name everywhere, but different app IDs in the U.S. versus the rest of the world) could tell you elsewhere in the app (not when and where you really need and want those gold bars) about where to buy them. Apple would still tax at the same effective rate (as the reduction would be offset by what the payment service providers charge). Therefore, the developer doesn’t save money and can’t (without losing money) offer end users a better deal outside the app. Moreover, you would end up on a web page where you’d have to authenticate again and search for what you wish to buy. Even if some of those requirements and restrictions were declared illegal by the court, it still wouldn’t work.
What games fray would consider a far better solution for developers and consumers, and one that Apple might not even dare to obstruct, is this:
In the same situation where you want the gold bars (e.g., you’ve run out of moves), the game would (provided you’re in the U.S.) tell you about a lower price that you can get. Say, gold bars that cost $49.99 on the App Store would cost $39.99 elsewhere. That would be a significant saving for you, but Activision Blizzard King (ABK) would still earn more than if you pay $49.99 via Apple’s IAP system.
There would be no link or button in the app. You would just have to have registered with your email address:
- For many people including the author of this article, that’s already the case.
- For those who haven’t registered yet, the app would merely request an email address to start the registration process.
You would then get an email that informs you of the option and contains a link that takes you directly to the Candy Crush website. The link would be parameterized, immediately logging you in. In fact, more and more services now offer one-time authentication links (Slack, Skype etc.). The system would know exactly how you got there and what you need. It would offer you the digital item you wanted to buy (and possibly some other options that make sense).
You would make the purchase there. The purchasing backend would communicate this to the game backend, which would update your gold bar account balance in the app.
After you’ve done it once and the game has your payment data, this process isn’t really less convenient than Apple’s IAP other than requiring you to click on an email each time you make a purchase.
This article explains below why it would be very risky for Apple to prohibit that flow.
Don’t be obsessed with links and buttons
It’s easy to understand why not only Epic Games but also many others, including many gamers, are outraged that Apple’s response to an injunction entering into force after Apple exhausted all appeals is a set of rules that renders the injunction irrelevant.
At the same time, games fray, while sharply disagreeing with various fundamental aspects and numerous details of Apple’s walled-garden policies, recognizes the fact that Apple’s executives have, beyond just a personal motivation, a fiduciary duty. They must defend the company’s rights vigorously. Also, games fray considers Apple’s notice of compliance a legal masterpiece by lead counsel Mark Perry and his team, with only one potential oversight discussed further below (over which the court might even sanction Apple now) and with a limitation one can’t blame on those lawyers but which enables games fray‘s workaround.
To challenge that set of rules is not likely to be fruitful unless one is from the beginning very realistic about the fact that the injunction is most likely a blunt sword against Apple’s ability to ensure that links and buttons (that lead users to alternative purchasing options) are going to be commercially counterproductive. Instead of getting stug in a quagmire where Apple needs to defend just one of various restrictions in order to be the factual winner, major app makers should look for how to make a commercial impact even under Apple’s rules and the most conservative (as that will be the applicable legal standard) interpretation of Epic’s injunction.
Some people thought in 2021 that the injunction would even enable alternative purchasing systems inside an app by bringing up a web control (i.e., a screen region in the app that has browser functionality). One company even developed a library for that. If Epic’s injunction and Apple’s rules had to be interpreted like patent claims, those people might have been right. Patent law is technical law, and if something looks the same but has inner workings that do not fall under the claim language (not even under the Doctrine of Equivalents), then you get away with it. But Epic’s injunction is an Unfair Competition Law injunction. That is economic law. Commercial considerations govern the analysis. Technical implementation matters only from a commercial vantage point.
Strongest contempt-of-court argument against Apple’s rules: “other calls to action”
The starting point must always be what Judge Yvonne Gonzalez Rogers of the United States District Court for Northern California ordered on September 10, 2021:
“Apple Inc. and its officers, agents, servants, employees, and any person in active concert or participation with them (“Apple”), are hereby permanently restrained and enjoined from prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.”
United States District Court for the Northern District of California
In part (i), games fray believes that “other calls to action” is Apple’s Achilles heel, while “buttons” and “external links” fall squarely within app functionality that Apple can regulate through its app guidelines. Apple is the feudal ruler and tyrant with respect to buttons and links. It can use a security pretext (in fact, dictatorships that lock up their citizens behind walls, as did East Germany, also say those walls are merely meant to “protect” their citizens). It makes the rules and it applies them by rejecting apps it doesn’t deem compliant, often arbitrarily so. Lawmaker, judge and executioner.
Trying to make links and buttons work in those circumstances is going to be like tilting at windmills, but “other calls to action” is wonderful because it’s open-ended and inclusive. And Judge Gonzalez Rogers made it totally clear that she wants an “open flow of information” from app makers to consumers. That is the important hole that Epic’s injunction has poked into the walls around Apple’s garden. And it’s one that judges (not just the district judge but also at the appeals court) will understand, more so than they will figure out whether a security argument is valid or pretextual.
As mentioned further above, there is a potential oversight on Apple’s part. Even when this article was written, there were two prohibitions of “calls to action” in Apple’s app review guidelines:
3.1.3(f) Free Stand-alone Apps: Free apps acting as a stand-alone companion to a paid web based tool (eg. VOIP, Cloud Storage, Email Services, Web Hosting) do not need to use in-app purchase, provided there is no purchasing inside the app, or calls to action [emphasis added] for purchase outside of the app.
3.1.1 In-App Purchase:
[…]
Apps may use in-app purchase to sell and sell services related to non-fungible tokens (NFTs), such as minting, listing, and transferring. Apps may allow users to view their own NFTs, provided that NFT ownership does not unlock features or functionality within the app. Apps may allow users to browse NFT collections owned by others, provided that the apps may not include buttons, external links, or other calls to action [emphasis added] that direct customers to purchasing mechanisms other than in-app purchase.
The district court wanted the injunction to apply to all apps, so Apple can’t impose restrictions on so-called free stand-alone apps and NFT apps that the court prohibited.
With buttons and external links, Apple can argue that it does allow them, just that a variety of restrictions and limitations are imposed. But in games fray‘s opinion there is a potentially strong contempt-of-court argument that Apple must allow “other calls to action” (the injunction is clear) and can’t just allow them in connection with links and buttons, which are then subject to Apple’s rules, requiring a so-called entitlement that developers must apply for (the entitlement being a data point relating to your app, subject to Apple granting your request)..
Simply put, one would tell the court: I want to make what constitutes [an]other call to action than a link or a button, and Apple doesn’t let me do it except if I do a link or button. It just can’t be reconciled with any reasonable interpretation of the the injunction in games fray‘s view, especially not when considering that if the court says “other calls to action” must be allowed, it even includes calls to action that are not foreseeable today.
The blanket prohibition of “[other] calls to action” in sections 3.1.3(f) and the NFT-related bullet point of section 3.1.1 is inconsistent with how Apple distinguishes between “links” (buttons are obviously just a manifestation of a link) and “other calls to actions” in the new section:
3.1.1(a) Link to Other Purchase Methods: Developers may apply for an entitlement to provide a link in their app to a website the developer owns or maintains responsibility for in order to purchase such items. Learn more about the entitlement. In accordance with the entitlement agreement, the link may inform users about where and how to purchase those in-app purchase items, and the fact that such items may be available for a comparatively lower price. The entitlement is limited to use only in the iOS or iPadOS App Store on the United States storefront. In all other storefronts, apps and their metadata may not include buttons, external links, or other calls to action [emphasis added] that direct customers to purchasing mechanisms other than in-app purchase.
In the above section, Apple just upholds the prohibition of “other calls to action” outside the U.S. market. And it does not say that the entitlement is needed for “other calls to action”! Instead, Apple says you need the entitlement “to provide a link in [your] app” (which is then only possible in the U.S.).
Apple’s rules for gathering and using end-user emails to promote alternative purchasing options
To make games fray‘s proposal work and to argue that Apple acts in contempt of court if it doesn’t allow it, one must combine the “other calls to action” opening with another one: email promotions.
That is part (ii) of Epic’s injunction, and Apple says the following about its abidance by that part in the notice of compliance:
“As part of the settlement, Apple agreed to revise Guideline 3.1.3 and thereby allow developers to “send communications outside of the app to their user base about purchasing methods other than in-app purchase,” including through points of contact obtained through account registration. […] Apple has made that revision. […] In doing so, Apple came into compliance with Paragraph 1(ii) of the Injunction. […] This Court approved the settlement as fair, reasonable, and adequate.”
Apple tells the court that guideline 3.1.3 says in relevant part:
“Developers can send communications outside of the app to their user base about purchasing methods other than in app purchase”
Furthermore, Apple notes that its guideline 5.1.1(x) says this:
“Apps may request basic contact information (such as name and email address) so long as the request is optional for the user, features and services are not conditional on providing the information, and it complies with all other provisions of these guidelines, including imitations on collecting information from kids.”
What games fray proposes meets Apple’s requirements for email collection: it’s optional and no features or services are conditional on providing the information: you can use the app with or without providing your address, and you can make your purchase with or without doing so.
The only thing that is conditional is that if you want to get the better price, you must provide an email address (unless you already have). But Apple doesn’t say you can’t offer a better price this way. And it can’t because that would very clearly mean to defeat the purpose of the injunction: price comparison.
Even Apple’s notice of compliance says that certain price promotions will be accepted:
“For example, developers may insert language stating: ‘To get [X]% off, go to [link to developer’s website],’ or ‘Lower price offered at [link to developer’s website].” […] Users will therefore be able to price-compare across platforms, consistent with the Injunction’s purpose.
Note again that Apple appears to be careful about always attaching its new requirements to links.
Could Apple argue that email collection involves a button?
Apple would have a weak argument that even email collection with a “register” button is a “button” that falls under its new rule. It would not be a button that leads to an external website (only indirectly so). And app makers don’t even need an extra button: the enter key is enough to submit the email address.
Could Apple still insist on different apps for the U.S. market versus the rest of the world?
Various issues with Apple’s new rules were highlighted by many others, but games fray may have been first to raise the issue of Apple effectively requiring a split between apps for the U.S. market and for the rest of the world if developers want to benefit from the injunction.
The way it works is that Apple says the entitlement is specific to an app. An app has a unique ID. You then have to build one app for the U.S. market only, request the entitlement, and you can’t offer it in the rest of the world unless you build a rest-of-world version under a separate app ID.
The names can presumably be the same, but you’d have to get users either in the U.S. or the rest of the world to migrate to a new app ID.
With links, Apple has a security pretext that relates to functionality that is in the app itself. On that basis, Apple requires the app-specific entitlement, which it then uses to mandate a split between the U.S. market and the rest of the world. Apple’s argument would then be that the court can’t force it to implement entitlements on a per-app-ID-and-country basis as Apple has so far implemented them on a per-app-ID basis. Apple would also argue that it’s bad enough if a court orders a nationwide injunction under only one state’s (albeit the economically most important one) Unfair Competition Law, but that court can’t tell Apple under California law what to do in the rest of the world.
There is a risk that Apple would try the same if apps make “other calls to action” and leverage emails for this purpose, but games fray believes the risk to Apple would be far, far greater.
Those apps would have to make sure they make those other calls to action only in the United States. There are different technical ways (phone numbers, IP addresses and the iOS country setting) to do so; if it came to worst, even GPS. Apple could try to make an argument that it can’t be ruled out that people get those promotions who are not entitled, or who are in situations in which they’re not entitled (such as because they’re traveling). But Apple’s problem would then be that even its own new rule here isn’t 100% reliable: Apple just wants to make this subject to an app being downloaded from the U.S. storefront. One can download from the U.S. storefront even without being in the U.S. (it’s not straightforward, but can be done).
App makers need a simple story for the courts of law, and must do something Apple can only prevent by imposing new-new restrictions
What games fray proposes here is to balance commercial interests with legal realities. Apple will only be sanctioned if there’s a clear and simple case of contempt of court. Anything that gets into complicated security questions or the technicalities of app-ID-specific entitlements is not the kind of stuff over which the judges (thinking of the district judge as well as the appeals court) will be comfortable sanctioning Apple. Those sanctions will work pretty much like a criminal conviction, meaning that if Apple can just create reasonable doubt, it comes away unscathed.
With the approach proposed in this article, Apple could try to just impose a tax on out-of-app purchases. But then Apple would either get into trouble because of the Cameron class-action settlement as well as part (ii) of the Epic injunction or it would have to just disallow the consumption of digital items on iOS if they were purchased outside, which would be a new-new restriction.
Why “new-new” and not just “new”? Well, Apple’s tax on out-of-app web purchases is “new”, but Apple can argue it’s yet more permissive than its original rule (that any purchase originating from the app must go through Apple’s IAP). So technically it means to tax something outside the app, but it’s just an extension of what happens in the app, while a process involving an email creates a certain disconnect from the app (though it’s still seamless for users) and benefits from the safe harbor of email promotions.
By contrast, if Apple now just generally said that if you sell something on a website (as various major game makers already do), then Apple incontrovertibly prohibits something it has previously allowed or at least condoned. Then Apple can’t argue that it didn’t have market power when it made the new rule (which is Apple’s argument for the 30% rate that goes back to when the iPhone was far from market leadership).
All going well, the Epic injunction can lead to gamers saving billions of dollars in the U.S. per year, game developers making billions of dollars (by retaining a part of the saving and because lower prices create more demand), and Apple will hate it.
The industry should team up with Epic and try to make this work.