A story about Apple? Catnip for me. An antitrust story about Apple? Absolutely gold plated gourmet catnip for me.
The judge in the case is not mincing her words:
Apple willfully chose not to comply with this Court’s Injunction. It did so with the express intent to create new anticompetitive barriers which would, by design and in effect, maintain a valued revenue stream; a revenue stream previously found to be anticompetitive. That it thought this Court would tolerate such insubordination was a gross miscalculation. As always, the cover-up made it worse. For this Court, there is no second bite at the apple.
Ouch. It takes quite a lot of effort to rile at judge so much they will start using words like that. Judge Gonzales Rogers is sending a very clear "I am not taking your shit" message.
But does the ruling go too far? Ben Thompson has an interesting take on the case, which suggests that Apple might have the ability to appeal based on a violation of Article 5 of the US Constitution - the so called "Takings Clause", which prevents the government seizing property. But I just don’t buy that there’s a Takings Clause violation here.
The Takings Clause argument assumes that Judge Gonzalez Rogers has effectively seized Apple’s intellectual property without compensation by prohibiting Apple from charging commissions on outside-app purchases. However, this interpretation distorts what’s actually happening.
First, the court isn’t “taking” Apple’s intellectual property - it’s prohibiting Apple from using that property as a tool to suppress competition. Apple still owns and profits from its IP through developer fees, in-app purchases, and the entire iOS ecosystem.
Second, antitrust enforcement has never been considered a “taking” in constitutional jurisprudence, despite several attempts to use it as a defence. When courts restrict anticompetitive behaviours, they’re regulating commerce, not confiscating property. The same principle applies here - Apple isn’t losing its IP; it’s losing the ability to leverage that IP in ways that harm the market.
The judge didn’t arbitrarily decide Apple’s IP is worthless. Rather, she found that Apple’s 27% commission was designed specifically to undermine competition, not to reflect legitimate IP valuation. When given the opportunity to determine a fair value, Apple instead created a post-hoc justification for a pre-determined anticompetitive rate. Apple, as she says, had plenty of chances to work with the court’s ruling to determine the true value of its IP in this context - it not only declined to do so, it deliberately flouted the ruling.
And there is a way back for Apple here. This is an injunction, not a permanent state of affairs. While the immediate injunction forbids Apple from “imposing any commission or any fee on purchases that consumers make outside an app,” this appears to be a response to Apple’s wilful violation rather than a permanent prohibition on any commission whatsoever. The judge’s reasoning focuses on Apple’s failure to justify its rate through legitimate valuation.
Gonzalez Rogers specifically states: “Apple was tasked with valuing its intellectual property, not with reverse engineering a number right under 30% that would allow it to maintain its anticompetitive revenue stream.” This suggests that if Apple had conducted a genuine bottoms-up analysis of the value provided by its platform and services, rather than working backwards from a revenue preservation goal, a commission might be acceptable.
If Apple were to conduct a genuine valuation exercise that wasn’t designed to preserve its anticompetitive revenue stream, the court might be more receptive to a commission structure – and the company could apply to have that injunction lifted. Effectively, Gonzales Rogers ruling is the equivalent of saying "come back to me when you're prepared to act like a grown up."
The irony is this was all so avoidable. As John Gruber notes:
Are the results of this disastrous for Apple’s App Store business? I don’t think so at all. Gonzales Rogers is demanding that Apple ... do what Phil Schiller recommended they do all along, which is to compete fair and square with purchases available on the web.
Apple is -- supposedly -- one of the greatest user experience companies in the world. If it can't make it's native solution for buying apps, installed on every device, better than a solution which will always involve shitty splash screens and more clicks for the user, maybe it doesn't deserve the money anyway?
Some aspects of the App Store experience remain great. It's convenient to have a single place to buy apps. It's great that I can see all my app subscriptions in a single place. But as a discovery mechanism for new apps, it's really just meh. I would still use it for the apps I purchase, but not because it's genuinely great: it's just the easy option.