Apple Suffers Another Setback in App Store Commission Battle! Court Denies Stay Request, Orders Fee Proposal Within 24 Hours

Apple's years-long legal battle with Epic Games over the App Store has taken a new turn. U.S. District Judge Yvonne Gonzalez Rogers in the Northern District of California has denied Apple's (AAPL-US) motion to stay related proceedings, meaning Apple must continue advancing its plan for commissions on external payment transactions via the App Store and submit its proposed fees, calculation methodology, and supporting evidence within 24 hours.

The dispute stems from the ongoing antitrust litigation between Apple and Epic Games. Rogers previously ruled that Apple's practice of charging a 27% commission on transactions completed through external links—after the court ordered Apple to allow developers to direct users to payment methods outside the App Store—constituted contempt of court. Apple subsequently appealed that decision, and the U.S. Supreme Court has agreed to hear the case. Apple had requested that lower court proceedings be paused during the Supreme Court's review.

However, Epic Games opposed the stay, arguing that regardless of whether the Supreme Court ultimately overturns or modifies the ruling, the current process regarding external payment fees should proceed. In filings submitted to the court, Epic noted that if the stay motion were denied, Apple had already agreed to submit its proposed fee structure and supporting evidence within 24 hours.

With Rogers now formally rejecting Apple's request to pause proceedings, the case will continue advancing in the lower court. Apple must now present a specific fee proposal for transactions completed by developers through external links, along with an explanation of how the fees are calculated and why the proposal should be approved by the court.

The core of this dispute is not merely about the commission rate, but whether Apple can charge fees at all for transactions where developers direct users to external payment systems—and if so, how those fees should be calculated. The U.S. Ninth Circuit Court of Appeals previously determined that Apple may charge a fee, but only based on the actual, reasonable, and necessary costs incurred due to external link transactions. As a result, the case was remanded back to Judge Rogers for further proceedings.

Apple has allowed developers to add external payment links under court order but continues to charge a 27% commission on such transactions. Epic argues this arrangement still undermines the incentive for developers to use third-party payments and has continued pushing for Apple to loosen restrictions. The court has previously further restricted Apple from using commissions or other means to hinder developers from guiding users toward external payment methods.

Apple contended that the upcoming Supreme Court review of its appeal could directly affect the fee calculation process currently underway in the lower court. Pausing proceedings, Apple argued, would prevent courts and parties from expending substantial resources only to restart later based on the Supreme Court's final decision. Apple also cited a recent case from the Northern District of California, claiming there was precedent for staying proceedings when a pending Supreme Court decision involves legal questions that could impact lower court cases.

However, the court did not accept Apple's arguments this time. Under the current schedule, Apple must first submit a concrete fee proposal before the court will examine whether the calculations comply with the limitations established in prior rulings.

This legal battle holds major significance for Apple's App Store business model. The App Store has long been a key revenue driver for Apple's services segment, with the company typically collecting a commission on in-app digital goods and services transactions. According to Apple's publicly reported global App Store data, the App Store ecosystem generated $1.295 trillion in billed sales and revenue in 2024, with over 90% of transaction types not subject to Apple's commission—but digital goods and services remain a critical part of its business model.

On the other hand, Apple's recent financial reports already reflect the impact of changes to App Store policies. Apple's Chief Financial Officer Kevan Parekh previously stated that the App Store business has been affected by softness in the mobile gaming market, adjustments to the App Store business model in certain countries, and U.S. court rulings on external link transactions. Apple's services revenue for the quarter reached $30.7 billion, up 12% year-over-year, but fell short of market expectations.

For developers, if Apple is ultimately limited to charging fees tied only to actual costs, compared to the traditional App Store commission model, they could retain more of their transaction revenue, making third-party payments more economically attractive. Conversely, if Apple succeeds in maintaining a higher rate, the impact on the existing App Store revenue structure may be relatively limited.

Currently, the Supreme Court's review will be another critical juncture in this legal battle. The Supreme Court is expected to take up Apple's related appeal in its new term beginning in October, and the lower court's refusal to stay proceedings means the two legal processes may advance in parallel.

Therefore, the fee proposal Apple submits within the next 24 hours will be a crucial document for observing the future direction of the App Store's commission system. If the court deems Apple's proposed fees too high, it could further compress the App Store's revenue potential from external payment transactions in the U.S.; if the proposal is accepted, it could provide Apple with a basis to rebuild its external payment monetization model under court order.