Judge Says Apple Lied, Now Faces Probe

Apple Rebuked: Tech Giant Faces Criminal Contempt Threat Over App Store Dominance

A district judge within the United States delivered a stinging assessment of Apple's conduct. The judge concluded the technology behemoth deliberately ignored a court order stemming from its legal battle with Epic Games. Furthermore, the judge found a high-ranking Apple executive provided demonstrably false testimony while sworn in. The original court injunction aimed to curb Apple's anti-competitive behaviour and pricing strategies. It sought to compel Apple to permit external payment options within its lucrative digital marketplace environment.

Judge Yvonne Gonzalez Rogers declared her intention to refer the entire issue to the federal prosecutor for California's Northern District. This federal office will now determine if pursuing formal charges of criminal contempt against Apple is warranted. The potential for criminal proceedings marks a significant escalation in the long-running dispute over App Store practices. Apple immediately signalled its opposition to the judge's conclusions. A company representative confirmed Apple would challenge the decision through the appeals process, while also stating it would follow the most recent judicial directive in the interim. This complex situation places Apple under increased legal and regulatory pressure, highlighting ongoing tensions between major technology platforms and developers seeking fairer market access. The judge's finding of wilful violation suggests a conscious disregard for legal mandates.

Roots of the Epic Games Conflict

The judge's recent damning findings connect directly to a landmark lawsuit initiated in 2021. Epic Games, creator of the globally successful game Fortnite, spearheaded this legal challenge. Epic contested Apple's tight control over its iOS platform. Central to the dispute was Apple’s requirement that developers use its proprietary payment system for all in-app purchases. Apple collects a commission, often as high as 30 percent, on these transactions. Epic Games depicted this arrangement as monopolistic. It argued the policy stifled competition and inflated prices for consumers. The conflict dramatically escalated when Epic Games implemented its own direct payment system within Fortnite, deliberately bypassing Apple's mechanism.

Apple swiftly retaliated. It removed Fortnite away from the App Store platform, cutting off access for millions of iPhone and iPad users. This move triggered the formal lawsuit, with Epic seeking judicial intervention to dismantle what it viewed as Apple's walled garden. The case became a focal point for developer frustrations worldwide concerning platform fees and restrictions imposed by dominant mobile operating systems. Legal observers recognised its potential to reshape the digital marketplace significantly. Epic positioned itself as a champion for developer freedom against overwhelming platform power.

The 2021 Injunction: Cracking Open the App Store

In her initial 2021 ruling, Yvonne Gonzalez Rogers, the judge, provided a mixed verdict. While she stopped short of labelling Apple an outright monopolist under federal law, she did find Apple engaged in anti-competitive conduct under California state law. Crucially, the judge issued an injunction targeting Apple's "anti-steering" rules. These rules specifically prohibited developers from informing users within their apps about alternative, potentially cheaper, purchasing options available outside its digital shop, for example on their own websites. The directive from Judge Gonzalez Rogers required Apple to cease enforcing these restrictions.

This directive intended to empower developers. They could now theoretically guide customers towards direct payment methods, bypassing Apple's commission structure. For instance, a streaming service could include a link within its app directing users to sign up through its own website. This represented a significant, albeit limited, victory for developers seeking greater autonomy. The ruling acknowledged the imbalance of power but avoided fundamentally dismantling the marketplace's business model at that stage. It aimed to introduce more transparency and choice for consumers and developers alike, directly challenging a key pillar of Apple's control.

Apple's Response: Compliance or Circumvention?

Following the 2021 injunction, Apple modified its App Store guidelines. However, developers quickly criticised the changes as insufficient and designed to maintain Apple's advantage. Apple permitted developers to apply for an "entitlement" to include external purchase links. Developers wanting to use this option faced new hurdles. Most controversially, Apple announced it would still demand a commission on purchases made through these external links. It initially proposed a 27 percent commission (only slightly lower than the standard 30 percent for larger developers).

This move provoked outrage among developers, including Epic Games. They argued the fee negated the entire purpose of the injunction, making external links economically unviable for many. Critics labelled Apple's revised policy malicious compliance. They contended the company merely substituted one anti-competitive restriction with another, equally burdensome one. The complexity of the rules and the substantial commission appeared designed to discourage developers from steering users away from Apple's native payment system, effectively undermining the spirit, if not the precise letter, of the judicial directive. This approach set the stage for further legal confrontation.

Image Credit - Freepik

The Contempt Finding: Wilful Defiance Alleged

In her more recent ruling leading to the contempt referral, Judge Gonzalez Rogers forcefully condemned Apple's actions post-injunction. She concluded the company's compliance efforts were inadequate and, importantly, constituted a wilful violation of her original order. The judge stated that internal Apple papers the judge examined demonstrated the company's deliberate strategy. These communications apparently revealed Apple executives understood the injunction's requirements but actively sought ways to minimise its impact on their revenue. Judge Gonzalez Rogers wrote that the documents showed

Apple consistently selected the strategy most damaging to rivals at each decision point. This finding moves beyond mere non-compliance; it suggests intentional obstruction of a court mandate. The judge explicitly rejected Apple's arguments that its policies, including the 27 percent commission on external purchases, represented a good-faith effort to adhere to the injunction while protecting its interests. The court characterised Apple's tactics as manoeuvres to "get around" the injunction's core purpose, deeming such actions intolerable. The focus on internal communications suggests compelling evidence influenced the judge's determination of Apple's intent.

Executive Conduct Questioned: Leadership Decisions

Specifically, Judge Gonzalez Rogers commented on the roles played by senior Apple leadership in shaping the company's response. Her ruling indicated that Tim Cook, the Chief Executive Officer, received advice regarding compliance. According to the judge's written findings, Apple Fellow Phillip Schiller, a long-serving executive deeply involved in Apple's digital shop, recommended Cook ensure Apple followed the injunction's spirit. However, the judge noted that Cook ultimately sided with Chief Financial Officer Luca Maestri.

Maestri apparently persuaded Cook against Schiller's approach, likely favouring a strategy prioritising the protection of App Store revenue streams. The judge provided a concise critique of this decision, writing Cook's decision was unwise. This rare judicial commentary on specific executive decision-making highlights the court's view that the non-compliance stemmed from the highest levels of the company. It suggests a deliberate corporate strategy, driven by financial considerations, potentially trumped legal obligations. The ruling paints a picture of internal debate where commercial interests ultimately prevailed over adherence to the court's directive aimed at fostering competition. This aspect adds a layer of personal accountability to the corporate actions.

Allegations of False Testimony: Executive Under Oath

Beyond the company's actions, Judge Gonzalez Rogers issued a serious finding regarding individual conduct during the legal proceedings. She explicitly stated that Alex Roman, serving as Apple's Vice President of Finance, "had been deliberately untruthful while under oath" during his testimony. Perjury, or lying under oath in a court proceeding, represents a grave offence against the administration of justice. While the judge's contempt order focuses on the company's non-compliance, her specific finding about Roman's testimony adds another dimension to the case.

This accusation likely contributed to the judge's decision to refer the matter for a potential probe concerning criminal contempt. Providing false testimony can independently lead to criminal charges against the individual involved. The judge's forceful language underscores the severity with which she viewed the alleged falsehood. It suggests the testimony was not merely mistaken or inaccurate, but deliberately deceptive. This specific finding against a named executive further intensifies the scrutiny on Apple's corporate culture and its approach to legal obligations. It raises questions about the integrity of the information Apple presented to the court throughout the lengthy legal battle with Epic Games.

Potential Criminal Contempt: The Path Forward

The referral to the federal prosecutors based in California's Northern District initiates a distinct phase. Federal prosecutors now possess the discretion to investigate Apple's conduct concerning the injunction. They will independently review the evidence, including the judge's findings and potentially the internal documents mentioned. Their goal is to determine if sufficient grounds exist to formally charge Apple with criminal contempt of court. This differs from civil contempt, often used to coerce compliance. Criminal contempt serves to punish past defiance and vindicate the court's authority.

If prosecutors decide to proceed, they would likely convene a grand jury or file charges directly. Apple would then face a separate legal process focused specifically on the contempt allegation. Potential penalties for corporate criminal contempt can include substantial fines. While imprisonment is a possible sanction for individuals in contempt cases, it is generally not applicable to corporations themselves, though executives could theoretically face charges related to perjury or obstruction. The US Attorney's decision remains pending as of early May 2025.

Image Credit - Freepik

Apple's Position: Disagreement and Appeal

Apple maintains its innocence regarding the judge's findings of wilful non-compliance and executive misconduct. The company's public statement expressed strong disagreement with Judge Gonzalez Rogers' conclusions. Simultaneously, Apple pledged to adhere to the judge's latest order, likely involving modifications to its external link policies. Critically, Apple also confirmed its intention to appeal the ruling. The appeals process allows a higher court, likely the US Court of Appeals for the Ninth Circuit, to review Judge Gonzalez Rogers' decision.

Apple will argue that its actions did constitute a reasonable interpretation and good-faith effort to follow the original 2021 injunction. It may challenge the judge's interpretation of internal documents and contest the finding that Alex Roman gave false testimony. Apple could also argue that the 27 percent commission structure was a legitimate way to recoup value for its intellectual property and platform services, even for external transactions initiated via links within apps. The appeal process will extend the legal uncertainty surrounding App Store rules within America for potentially many more months, or even years.

Epic's Reaction: Fortnite's Return and a Peace Offer

Tim Sweeney, who founded and leads Epic Games, publicly welcomed the judge's ruling. He interpreted it as a major victory against Apple's App Store restrictions. Sweeney quickly announced plans to bring Fortnite back onto the American iOS App Store, contingent on Apple adhering to the court's requirements for external links without prohibitive fees or friction. In a significant gesture, Sweeney also proposed a broader resolution. Via the social media platform X, he offered Apple a proposal for reconciliation.

Should Apple agree to implement the court-mandated framework – allowing frictionless external links free from Apple commissions – on a global scale, Epic Games would reintroduce Fortnite onto App Stores worldwide. Furthermore, Epic would drop all existing and prospective lawsuits against Apple concerning these specific payment issues. Sweeney framed this as an opportunity to end the long-running conflict. He declared the commission referred to as the "Apple Tax" effectively dead in the US, mirroring its status across Europe according to recent regulations. This offer places the onus on Apple to decide whether to accept a global change in exchange for resolving the dispute with its most prominent critic.

Global Regulatory Landscape: The EU's Digital Markets Act

The legal battle within the United States unfolds against a backdrop of increasing regulatory pressure on Apple globally, particularly within the European Union. The EU regulation titled Digital Markets Act (DMA) imposes stricter obligations on large technology platforms designated as "gatekeepers," including Apple concerning its App Store. The DMA mandates more comprehensive changes than the US injunction initially required. It forces Apple to allow alternative app marketplaces on iOS devices within the EU. The legislation also compels Apple to permit developers to offer alternative payment systems within their apps, not just links to external websites.

Furthermore, the DMA imposes tighter restrictions on the fees Apple can charge for transactions processed outside its system. Apple has introduced changes in the EU to adhere to DMA rules, but these too have faced criticism from developers like Epic Games and Spotify. They argue Apple's EU compliance plan includes new fees (like a "Core Technology Fee") and complex rules designed to maintain its control and revenue. European regulators are actively scrutinising Apple's DMA compliance efforts. This parallel regulatory action in Europe adds weight to the arguments against Apple's practices and potentially influences the ongoing US legal proceedings and Apple's strategic calculations.

Impact on Developers: A Glimmer of Hope?

The ongoing legal and regulatory challenges against Apple's App Store policies resonate deeply within the broader developer community. Many smaller developers lack the resources to mount legal challenges like Epic Games. They often feel constrained by Apple's rules and the obligatory commission structure. The finding of wilful non-compliance by a US judge, coupled with the DMA's enforcement in Europe, provides encouragement to developers seeking fairer terms. Organisations representing app developers have cautiously welcomed the recent US ruling. They see it as validation of long-standing complaints about Apple's market power.

However, scepticism remains. Developers express concern that Apple might continue finding ways to impose complex rules or fees that effectively limit the benefits of external linking or alternative payment systems. The true impact will depend on the final outcome of the contempt proceedings, Apple's appeal, and the practical implementation of any mandated changes. Many developers adopt a wait-and-see approach, hoping for genuine structural shifts rather than superficial adjustments that preserve Apple's dominance. The focus remains on achieving lower fees and greater freedom in reaching customers.

Market and Financial Considerations

Apple's Services segment, which includes App Store commissions, represents a significant and high-margin source of revenue for the company. Any forced changes to its digital storefront business model carry potentially substantial financial implications. While Apple's overall revenue base is vast and diverse, the high profitability of the iOS marketplace makes it strategically crucial. News of the contempt referral caused some concern among investors, although the immediate impact on Apple's stock price was relatively muted, perhaps reflecting the expectation of a lengthy appeals process. Analysts continue to monitor the situation closely.

They assess the risk that regulatory actions in the US and EU could gradually erode the profitability of the digital platform. A forced reduction or elimination of commissions on a global scale, as proposed by Tim Sweeney, would represent a material financial headwind for Apple. Conversely, if Apple successfully defends its current practices through appeals or implements minimal changes, the financial impact could be contained. The uncertainty underscores the high stakes involved in these antitrust battles for one of earth's most valuable companies.

Image Credit - Freepik

Broader Antitrust Context: Big Tech Under Fire

The Apple versus Epic Games saga, including this latest contempt finding, is not occurring in isolation. It forms part of a much wider trend of increased antitrust scrutiny directed at major technology companies worldwide. Within the US, the Department of Justice filed a comprehensive antitrust lawsuit against Apple earlier in 2024, accusing it of maintaining an illegal monopoly in the smartphone market through various restrictive practices, including its App Store policies. Google also faces ongoing antitrust litigation related to its Play Store and search dominance.

Similar investigations and legislative efforts are underway across the United Kingdom, Australia, Japan, South Korea, and other jurisdictions. Regulators globally express concerns about the concentration of power within digital ecosystems controlled by a handful of tech giants. They worry about the impact on competition, innovation, and consumer choice. The specific findings against Apple in the Epic case could potentially provide ammunition for other regulators and litigants pursuing similar claims, contributing to the mounting pressure on large platforms to reform their business practices.

The Future Trajectory: Reshaping Digital Markets

The confluence of judicial rulings like Judge Gonzalez Rogers', legislative actions such as the EU's DMA, and direct antitrust enforcement signals a potentially transformative period for digital platforms. The traditional "walled garden" approach, where platform owners exert tight control over software distribution and payments, faces unprecedented challenges. The outcome of Apple's contempt referral and appeal, alongside the enforcement of the DMA and other global regulations, will significantly shape the future environment for app developers and consumers.

A shift towards greater openness could foster more competition, potentially leading to lower prices, more diverse app ecosystems, and increased innovation. However, platform owners like Apple argue their controls are necessary for security, privacy, and maintaining a high-quality user experience. Striking the right balance between promoting competition and preserving platform integrity remains a central challenge for courts and regulators. The final resolution of these disputes will likely establish new norms for digital market conduct in the years ahead.

Conclusion: An Ongoing Power Struggle

The recent judicial finding that Apple intentionally disregarded a court injunction represents a serious escalation in its long-running feud with Epic Games and broader scrutiny of its App Store power. The referral for a potential investigation looking into criminal contempt introduces a significant new legal threat for the tech giant. While Apple vows to appeal, the judge's sharp rebuke, citing internal documents and alleged executive falsehoods, damages the company's defence. Simultaneously, Epic Games senses an opportunity, offering a global truce conditional on Apple relinquishing its controversial commission structure worldwide.

This drama unfolds amidst intensifying global regulatory pressure, most notably from the legislation known as the Digital Markets Act, that imposes even stricter rules. The coming months will prove critical as US prosecutors weigh criminal charges, appeals courts review the ruling, and regulators continue their oversight. The ultimate outcome holds profound implications not only for Apple's multi-billion-dollar App Store revenue but also for the fundamental structure of digital marketplaces and the balance of power between platform owners and the developers who rely on them. The battle over app store control is far from over.