Apple Just Lost $85 Billion In Value After A Crucial Ruling
Apple lost a hefty chunk of its profitability after a major court ruling.
This article is more than 2 years old
While Apple remains one of the most well known names in technology across the globe, that bite mark in the company’s iconic logo should arguably look a little bit bigger today. The company suffered huge losses last week after a court ruling was handed down that will change how it does business with its mobile games.
The ruling in question came from the Epic Games vs. Apple case. As explained by The Verge, the ruling — which is set to take effect on December 9 of this year — directs Apple to allow mobile game app developers to offer alternate payment options; thereby potentially steering clear of Apple’s 30% commission on all such purchases. With the obvious potential for profit loss, Bloomberg (via Yahoo) reported on Friday that Apple Inc. stocks took a 3.3% hit, translating into the corporation losing roughly $85 billion in its market capitalization. By Monday, Apple had recovered some ground. Reuters reported that by Monday’s opening bell, the company’s stocks had gone back up about 1%.
Everything started a little over a year ago, per CNN, when Epic Games’ founder and CEO Tim Sweeney initiated what he called “Project Liberty,” specifically designed to either force Apple and Google to change their policies or to spark a legal battle. Epic introduced a patch to Fortnite which secretly included code that would allow players to buy the in-game currency, “V Bucks,” directly from Epic. On August 13, 2020, Epic uploaded a hotfix that made these options visible, offered discounts to players, and at the same time warned that the discounts would not be available if buying through Apple or Google. Within hours, Fortnite was gone from both companies’ app stores.
Epic soon filed lawsuits against both Google and Apple, claiming their policies constituted antitrust and anticompetitive behavior. After a complex series of suits and counter-suits, the trial between Epic Games and Apple began on May 3, 2021, concluded on May 24, and the decision that caused Apple Inc.’s stock to nosedive was handed down last Friday.
The Verge offered a fairly comprehensive breakdown of the ruling, which is not completely in Epic’s favor. While, yes, Apple has been ordered to allow developers to offer alternatives for in-app purchases, the court was not friendly to all of Epic’s claims, including the company’s contention that Apple represents a mobile gaming monopoly. While Judge Yvonne Gonzalez Rogers’ decision recognizes Apple is “near the precipice” of such a monopoly, it isn’t there yet.
Further, Apple isn’t the only loser in the ruling. Judge Rogers ordered Epic Games to pay damages over the so-called “Project Liberty.” The ruling stated that Epic Games knowingly violated its contract, and did it in secret and with a hotfix. Along with ordering Epic to pay damages, Judge Rogers ruled that Apple doesn’t need to put Fortnite back in its app store, nor does it have to keep any of Epic’s other apps.
On Sunday, The Verge reported Epic had filed an appeal in the hopes of overturning Judge Rogers’ ruling on Epic Games v. Apple. Sweeney tweeted on Friday that the ruling “isn’t a win for developers or for consumers.” He added that Fortnite would return to the iOS store “when and where Epic can offer in-app payment in fair competition.”
