It’s Official, Apple’s 30% Tax Is Deemed Illegal

A US federal appeals court has ruled that Apple’s 30% tax mandate on iOS apps is illegal. The US Court of Appeals for the Ninth Circuit has found that Apple violated California’s Unfair Competition Law by forbidding app developers from using any payment method besides those of the tech giant’s own App Store, which charges a 30% fee on most transactions.

The ruling came as part of a re-evaluation of a 2020 lawsuit filed by Fortnite creator Epic Games against Apple over the tech giant’s alleged monopoly in the mobile games market. While Apple mostly prevailed in the lawsuit, the decision has a major caveat. The court found that by preventing app developers from directing customers to alternative payment methods, Apple was stifling fair competition.

If the decision is upheld, it could have significant implications for NFT and crypto builders. In September 2022, Apple opened its App Store to NFTs, but only those sold through its own payment system, which charges a 30% commission on most transactions.

The move was criticized by industry leaders, who say it is “grotesquely overpriced.” The court’s decision could allow NFT developers to use NFTs purchased across the internet to unlock features in iOS apps and direct users within those apps to purchase NFTs on sites that don’t charge exorbitant fees.

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

Moreover, easing such restrictions may allow for the use of cryptocurrency in app-related transactions, which is currently prohibited by Apple’s policies. The court’s ruling against Apple’s tax mandate could be a major boost for Web3 app developers and the crypto industry as a whole. However, Apple has said that it is “considering further review” of the decision.

This decision could lead to major changes in the landscape of the mobile app market and could have a positive impact on the adoption of cryptocurrencies and NFTs. The court’s decision could potentially allow app developers to direct users to alternative payment methods outside of Apple’s App Store, thereby circumventing the 30% fee imposed by the tech giant. This would be a significant win for developers, as it would give them more control over how they monetize their apps.

The decision also has implications for the NFT market. Currently, Apple only allows NFTs to be sold through its own payments system, which takes a 30% cut of most transactions. This has been a point of contention for many in the Web3 community, who view the fee as exorbitant. If the court’s decision is upheld, NFT developers may be able to use NFTs purchased from outside of Apple’s App Store to unlock features within iOS apps, giving them more flexibility and control over how they monetize their products.

While it remains to be seen how Apple will respond to the court’s decision, the ruling has the potential to create a more level playing field for developers, which could ultimately benefit consumers. Additionally, if the decision leads to increased adoption of cryptocurrencies and NFTs, it could have positive implications for the wider crypto ecosystem. As the use cases for these technologies continue to expand, it is likely that we will see more legal challenges and court rulings that shape the future of the industry.