Y Combinator filed Amicus Brief in the ongoing legal battle between Apple and Epic Games, claiming that the App Store is thwarting startup innovation.
We have requested comment from YC and Apple legal representatives.
Briefs take place during a long-standing legal dispute. Epic Games first submitted antitrust laws against iPhone manufacturers in 2020 in protest that Apple would charge 30% of all purchases and in-game purchases made on the App Store. Epic alleged in the lawsuit that Apple illegally prohibits developers from communicating with customers about payment alternatives to their App Store.
The judge ordered Apple to terminate its anti-stalling policy, but instead the company implemented a linking program that allowed developers to link to alternative payment methods, with the App Store paying a 27% fee.
In another complaint, Epic accused Apple of violating a court injunction against anti-attack, and in April the judge agreed, ordering Apple to impose restrictions on alternative payment solutions and to halt collection of payments from such methods.
Apple is suing the ruling, which is why Y Combinator, a supporter of Epic Games, submitted this Amicus Brief to support Epic Games. Y Combinator is asking the court to deny Apple's appeal.
“Y Combinator, and the larger venture capital community, have long been hesitant to support app-based businesses that are under-invested due to Apple tax,” Y Combinator wrote in the submission. “A 30% revenue share is the difference between companies that can expand, hire new employees and reinvest in their products, and companies that are constantly struggling to stay floating.”
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With the current ruling that Apple must enable developers to provide alternative payment options transparently, startup investors write: Apple Tax refers to the fees Apple receives from its purchases in the App Store.
Apple taxes are “a profound and insurmountable barrier to entry that curtails its source competition and innovation,” and the court has declined to appeal Apple and said it should maintain its anti-spring rules. The next discussion is scheduled to take place on October 21st.
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