*

Judge refers Apple ( AAPL ) to federal prosecutors for criminal

contempt

investigation

*

Epic Games accuses Apple ( AAPL ) of stifling competition,

overcharging

commissions

*

Apple ( AAPL ) barred from impeding developers, must not levy new

commission

(Adds comment from Apple ( AAPL ) in paragraph 6)

By Mike Scarcella

April 30 (Reuters) - Apple ( AAPL ) violated a U.S.

court order that required the iPhone maker to allow greater

competition for app downloads and payment methods in its

lucrative App Store and will be referred to federal prosecutors,

a federal judge in California ruled on Wednesday.

U.S. District Judge Yvonne Gonzalez Rogers in Oakland said

in an 80-page ruling that Apple ( AAPL ) failed to comply with her prior

injunction order, which was imposed in an antitrust lawsuit

brought by "Fortnite" maker Epic Games.

"Apple's ( AAPL ) continued attempts to interfere with competition

will not be tolerated," Gonzalez Rogers said. She added: "This

is an injunction, not a negotiation. There are no do-overs once

a party willfully disregards a court order."

Gonzalez Rogers referred Apple ( AAPL ) and one of its executives,

Alex Roman, vice president of finance, to federal prosecutors

for a criminal contempt investigation into their conduct in the

case.

Roman gave testimony about the steps Apple ( AAPL ) took to comply

with her injunction that was "replete with misdirection and

outright lies," the judge wrote.

Apple ( AAPL ) in a statement said "we strongly disagree with the

decision. We will comply with the court's order and we will

appeal."

Epic Games Chief Executive Tim Sweeney called the judge's

order a significant win for developers and consumers.

"It forces Apple ( AAPL ) to compete with other payment services

rather than blocking them, and this is what we wanted all

along," Sweeney told reporters.

Sweeney said Epic Games would aim to bring back Fortnite to

the Apple App Store next week. Apple ( AAPL ) in 2020 had pulled Epic's

account after the company let iPhone users navigate outside

Apple's ( AAPL ) ecosystem for better payment deals.

Epic accused Apple ( AAPL ) of stifling competition for app downloads

and overcharging commissions for in-app purchases.

Gonzalez Rogers in 2021 found Apple ( AAPL ) violated a California

competition law and ordered the company to allow developers more

freedom to direct app users to other payment options.

Apple ( AAPL ) failed last year to persuade the U.S. Supreme Court to

strike down the injunction.

Epic Games told the court in March 2024 that Apple ( AAPL ) was

"blatantly" violating the court's order, including by imposing a

new 27% fee on app developers when Apple ( AAPL ) customers complete an

app purchase outside the App Store. Apple ( AAPL ) charges developers a

30% commission fee for purchases within the App Store.

Apple ( AAPL ) also began displaying messages warning customers of

the potential danger of external links in order to deter

non-Apple ( AAPL ) payments, Epic Games alleged, calling Apple's ( AAPL ) new

system "commercially unusable."

Apple ( AAPL ) has denied any wrongdoing. The company in a court

filing on March 7 told Gonzalez Rogers it undertook "extensive

efforts" to comply with the injunction "while preserving the

fundamental features of Apple's ( AAPL ) business model and safeguarding

consumers."

Gonzalez Rogers suggested at an earlier hearing that changes

made by Apple ( AAPL ) to its App Store had no purpose "other than to

stifle competition."

In Wednesday's ruling, Gonzalez Rogers said Apple ( AAPL ) is

immediately barred from impeding developers' ability to

communicate with users, and the company must not levy its new

commission on off-app purchases.

She said Apple ( AAPL ) cannot ask her to pause her ruling "given the

repeated delays and severity of the conduct." She took no view

on whether a criminal case should be opened.

"It will be for the executive branch to decide whether Apple ( AAPL )

should be deprived of the fruits of its violation, in addition

to any penalty geared to deter future misconduct," the judge

wrote.