Apple (NASDAQ: AAPL) can kick the massively popular online game Fortnite out of its App Store after a judge ruled on Monday that developer Epic Games' "predicament appears of its own making."
But Apple was prevented from taking any action against Epic's affiliates, including its Unreal Engine, the game graphics engine that underpins some of the most successful video games, movies, and TV shows, including Disney's The Mandalorian.
Both decisions, though, are only temporary as the judge continues to hear arguments in Epic's motion for an injunction against Apple. A hearing is scheduled for the end of September.
Apple's App Store guidelines require game developers to use its payment processing system, for which Apple receives a 30% commission. The hefty cut has irked developers for a long time, but no one challenged the system for fear of being cut off from the iOS platform.
But rather than go through the App Store, Epic allowed players to pay it directly instead. That resulted in the tech giant notifying Epic that it had breached the conditions of its licensing agreement and that all of its developer-tool privileges were being revoked, including those for Unreal Engine.
In her ruling, Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California said that because Epic Games made the "calculated decision" to breach its agreement with Apple, its games, including Fortnite, could be delisted from the App Store. Yet she also noted that Epic has separate developer agreements for its affiliates, including Unreal Engine, which have not been breached, so Apple could not retaliate against them.
The judge wrote, "Epic Games and Apple are at liberty to litigate against each other, but their dispute should not create havoc to bystanders."
The temporary restraining order she issued is intended to maintain the status quo until the injunction hearing is held. A full trial is not expected to begin until next year.
10 stocks we like better than Apple
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 1, 2020
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.