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Apple Stock Slides After Judge Rules On App Payment Dispute in 'Fortnite' Case

A California judge says Apple's rules that prevent App developers from directly collecting fees are anticompetitive.

Apple  (AAPL) - Get Apple Inc. (AAPL) Report shares slumped lower Friday after a judge ruled that the tech giant had violated California competition laws in its dispute with Fortnite maker Epic Games.

U.S. District Court Judge Yvonne Gonzalez-Rogers said restrictions Apple has put in place that prevent app developers from steering customers to payment options beyond ApplePay are anticompetitive and issued an injunction restricting the practice. Judge Gonzalez-Rogers also said Apple can't prevent app developers from communicating directly with customers through contact information they provided at sign-up.

That aspect of the judgement formed part of a broader ruling in the Epic Games case in which Apple was awarded damages equal to 30% of revenue that Epic collected from users in the Fortnite app since 2020. 

Apple is "permanently restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms," Judge Gonzalez-Rogers wrote. "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."

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Apple shares marked 3.3% lower on the session, reversing an earlier 0.5% gain, to change hands at $149.00 each. 

Epic Games, the maker of the popular "Fortnite" app, had alleged that Apple's App Store has turned into an illegal monopoly. Epic argued that Apple collects commissions as high as 30% for in-app transactions because it forbids third-party app stores on its mobile devices.

Apple CEO Tim Cook took the stand in the case in May, saying it would be a "huge convenience issue, but also the fraud issues would go up” if the company allowed third-party app marketplaces, in addition to its own App Store. That's because customers would have to enter credit card information multiple times.

Cook also said Apple does a far better job reviewing apps than third-party companies do.

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