Judge Rules That Apple’s 30% Tax Mandate on iOS is Illegal

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Last Updated on April 26, 2023 by Bitfinsider

In a decision that could have far-reaching implications for NFT and crypto developers, a federal appeals court in the United States ruled that Apple violated California’s Unfair Competition Law by prohibiting app developers from accepting payment methods other than those offered by the tech giant’s own App Store, which charges a 30% fee on most transactions.

The verdict, issued late Monday by the United States Court of Appeals for the Ninth Circuit, was part of a re-evaluation of Epic gaming’ 2020 lawsuit against Apple over the tech giant’s alleged monopoly in the mobile gaming market. Apple essentially won that lawsuit in 2021, as well as Monday’s judgment, with judges concluding that Apple does not have a monopoly on gaming apps in both cases.

Apple opened its App Store to NFTs in September, but only to NFTs sold through its own payments system, which takes a 30% share of most sales.

The Web3 community was outraged by the hefty charge. Access to the App Store and its over 1 billion iPhones and iPads represents a big potential for Web3 companies wanting to break into the mainstream.

However, given Apple’s payment procedures, that potential came at a price that most developers could not afford. In the past, popular NFT marketplace OpenSea charged a 2.5% commission on NFT sales; the firm even just eliminated that price to better position itself against competitors.

Apple’s stranglehold on NFT-powered apps available in its store was strengthened in October, when the firm changed its policy to specifically say that NFTs can only be used to unlock new material or features within an app if they were acquired through Apple’s in-app payment mechanism.

The decision restricted token-gating—the increasingly popular practice of offering NFT holders access to special communication channels, products, and other perks—by allowing such utility only if developers succumbed and agreed to Apple’s 30% cut of sales.

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