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Apple has been referred to a criminal prosecutor by a federal judge who found the tech giant deliberately “thwarted” her legal order requiring it to change its App Store rules in the US.
The scathing order on Wednesday, in which the judge found that one of Apple’s finance executives lied under oath to cover up an attempt to bypass the injunction, marked a stunning rebuke to the iPhone maker and a new twist in its long legal battle with Epic Games.
“Apple wilfully chose not to comply . . . with the express intent to create new anti-competitive barriers which would, by design and in effect, maintain a valued revenue stream,” California federal judge Yvonne Gonzalez Rogers wrote.
This was “a gross miscalculation”, she wrote. “As always, the cover-up made it worse.”
“The court refers the matter to the United States Attorney for the Northern District of California to investigate whether criminal contempt proceedings are appropriate,” she wrote, adding Apple has to comply with the injunction “effective immediately” and drop its new fees.
The injunction stems from a high-profile antitrust lawsuit Epic Games filed against Apple in 2020. The iPhone maker largely defeated the case in court and in subsequent appeals.
But the company still faced an injunction under California law requiring it to change rules that prevent developers from steering customers outside the App Store, where they can avoid Apple’s surcharge on digital payments — as high as 30 per cent for some products.
Apple’s App Store is a growing part of its services business, and generated $8.6bn in global revenue in the first quarter of the year, according to Sensor Tower estimates.
Apple can appeal against the order. It did not immediately respond to a request for comment.
The decision to refer a company to a criminal prosecutor in a civil antitrust case was unusual, said Gary Bornstein, lawyer for Epic Games. “I have never seen it before.”
Apple changed its rules in response to the judge’s injunction, creating a mechanism to allow developers to direct consumers to make purchases outside the app, for example on the developer’s website. But it continued to seek a 27 per cent commission on those purchases by requiring developers to report the sales to the company.
Epic Games claimed this and other measures Apple took discouraged developers from using the option and therefore violated the injunction. Several Apple executives testified at a hearing in February about their efforts to comply. An initial hearing in May 2024 was postponed after the judge asked for more internal documents from the iPhone maker.
In her order on Wednesday, Gonzalez Rogers said Apple had concocted its compliance plan with the aim of maintaining a multibillion-dollar revenue stream by creating new barriers to lock customers into its App Store.
“To hide the truth, vice-president of finance, Alex Roman, outright lied under oath,” the judge wrote. Documents uncovered during the case revealed “Apple knew exactly what it was doing and at every turn chose the most anti-competitive option”.
Phil Schiller, a senior Apple executive who testified before the judge earlier this year, had advocated against Apple introducing new fees, the judge found.
But chief executive Tim Cook “ignored Schiller and instead allowed [then] chief financial officer Luca Maestri and his finance team to convince him otherwise”, the judge found. “Cook chose poorly.”
Maestri left his role as CFO at the start of this year.
Tim Sweeney, CEO of Epic Games, on Wednesday said the company would return its popular Fortnite game to the App Store next week. Apple pulled the game from the store when Epic deliberately bypassed its payment policies in August 2020.
Apple has faced similar pressure in Europe over its App Store rules. Earlier this month the EU fined the tech group €500mn for failing to comply with regulations that similarly requires it to allow app developers to direct consumers to offers off its platform.
