On 12 August 2025, the Federal Court of Australia found Apple and Google engaged in a misuse of market power in breach of s 46 of the Competition and Consumer Act (CCA) by restricting the use of alternative app distribution methods and in-app payment methods on an Apple or Android mobile device since 2017. The proceedings were brought by Epic Games. This decision is the first contested application of the new misuse of market power provisions introduced in 2017 and grapples with the issues of ‘walled gardens’ created through a combination of technical and contractual restrictions on mobile device ecosystems. This development is particularly significant in light of the stalled efforts to introduce ex ante digital reforms in Australia, suggesting that ex post enforcement can still be effective. A deep dive of the reasons will follow once released. Apple and Google have 28 days to appeal the decision to the Full Court of the Federal Court of Australia. We provide you with the key takeaways.
Background
Epic Games, the creator of Fortnite, commenced proceedings in the Federal Court of Australia against Apple (November 2020) and Google (March 2021). Epic alleged that both companies engaged in anti-competitive and unconscionable conduct in the distribution of mobile apps and in-app payments, in breach of the Competition and Consumer Act 2010 (Cth) (CCA) and the Australian Consumer Law (ACL). These proceedings were heard alongside related class actions.
Key allegations
Misuse of market power
Epic alleged that Apple and Google each wield substantial market power over app distribution and in-app payment processing on their respective platforms (iOS and Android). This proceeding marks the first contested litigation to consider the application of the new section 46 of the CCA relating to the misuse of market power, the changes to which we covered here. Epic claimed both companies misused its market power by:
Requiring all apps to be distributed solely through their own app stores (App Store and Google Play).
Mandating exclusive use of their proprietary in-app payment systems for digital content, typically charging a 30% commission.
Blocking alternative app stores and payment processors, thereby foreclosing competition and enabling the extraction of supra-competitive fees from developers.
Exclusive dealing
Epic alleged that Apple and Google engaged in exclusive dealing by making access to their app stores conditional on the use of their own payment systems and by excluding alternative distribution channels. They also contractually barred developers from distributing apps to iOS users outside the App Store and to Android users outside the Play Store, with only limited exceptions. Additionally, developers were prevented from offering or advertising alternative payment options within their apps.
Anti-competitive contracts and arrangements
Epic alleged that Apple and Google imposed standard form, non-negotiable contracts on developers containing provisions that substantially lessen competition. These include bans on competing app stores, restrictions on alternative in-app payment solutions and terms allowing Apple and Google to unilaterally amend agreements or remove apps at their discretion.
Unconscionable conduct
Epic alleged that Apple and Google’s conduct was unconscionable under the ACL, citing the imposition of non-negotiable agreements, lack of developer bargaining power and the enforcement of terms not reasonably necessary to protect legitimate business interests.
Relief sought
Epic sought declarations of contravention, injunctions to remove anti-competitive restrictions, orders permitting third-party app stores and alternative payment processors and damages for losses suffered due to the alleged conduct.
The Epic global campaign – notable developments
The Australian proceedings form part of a broader, global campaign by Epic Games to challenge the app store practices of Apple and Google.
United States
Apple: Epic’s legal challenge began in 2020 after Apple removed Fortnite for bypassing its in-app payment system. US courts found Apple’s anti-steering rules (which prevented developers from directing users to alternative payment options) unlawful under California law, but did not find Apple to be a monopolist under federal antitrust law. After a series of appeals, Apple is now required to allow developers to link to external payment methods in the US App Store and cannot impose commissions or restrictions on these transactions. Apple is appealing the latest ruling but has updated its policies in the meantime.
Google: In contrast, a jury found Google guilty of maintaining an illegal monopoly over Android app distribution and in-app payments. Google is now required to allow alternative app stores and payment systems on Android devices and to stop anti-competitive practices such as exclusive deals. Google’s appeal was rejected in July 2025 and remedies are being implemented, though further appeals are ongoing.
European Union
The EU’s Digital Markets Act (DMA), fully in force since March 2024, requires ‘gatekeeper’ platforms like Apple and Google to allow alternative app stores and payment systems. Both companies have announced changes to comply, but their implementation and associated fees remain under regulatory scrutiny.
Other key jurisdictions
United Kingdom: The UK's Competition Appeal Tribunal is hearing Epic's claims that Google abused its dominance in mobile operating systems, app distribution and payment services, with the case now combined with related class action claims.
South Korea: The ‘Anti-Google Law’ requires app stores to permit alternative payment systems; compliance and enforcement are ongoing.
Japan: Apple now allows ‘reader’ apps to link to external payment sites, following an agreement with regulators.
India: Google has been ordered to allow third-party app stores and alternative payment systems on Android.
Judgment
The full terms of the judgment are currently embargoed pending resolution of confidentiality claims, but here’s what we know from Justice Beach’s oral delivery of the judgment summary:
Epic v Apple
The Court found two relevant markets: the iOS App Distribution Market and the iOS In-App Payment Processing Market. While there were alternative ways in which apps could be distributed or payments could be transacted, Beach J considered that these alternatives may be a constraint but were not a sufficient constraint to detract from these market definitions. Apple was found to have a substantial degree of power in both markets at all relevant times, as essentially a monopoly provider. The Court found that Apple had misused its market power by:
In relation to iOS App Distribution Market: engaging in conduct that had the purpose, effect or likely effect of substantially lessening competition in contravention of s 46 of the CCA.
In relation to the iOS In-App Payment Processing Market: engaging in conduct that had the effect or likely effect of substantially lessening competition in contravention of s 46 of the CCA.
However, the Court did not accept Epic’s other anti-competitive claims under s 47 (exclusive dealing), s 45 (anti-competitive agreements) or unconscionable conduct allegations.
In making the above findings, the Court considered Apple’s asserted security rationale for the restrictions. The Court considered that the security rationale did not mean that the anti-competitive purpose was not a substantial purpose, nor did it impact the assessment that the conduct had the effect of substantially lessening competition in the iOS App Distribution Market. The Court also noted that for the purchase of physical goods in apps, alternative payment methods were permitted and there were no security issues there.
Epic v Google
The Court found three relevant markets: the Mobile Operating System (OS) Licensing Market to Original Equipment Manufacturers (OEM), the Android App Distribution Market, the Android In-App Payment Solutions Market. Google was found to have a substantial degree of power in all three markets at all relevant times but had misused its market power in only the latter two markets (by engaging in conduct that had the purpose, effect or likely effect of substantially lessening competition in Android App Distribution Market and which had the effect or likely effect of substantially lessening competition in Android In-App Payment Solutions Market) in contravention of section 46 of the CCA. Similar to the Court’s finding in relation to Apple, the Court did not accept Epic’s other claims of exclusive dealing, anti-competitive agreements, or unconscionable conduct allegations.
Class actions
The Court found in favour of the Applicant’s case, finding that Apple and Google had caused developers to pay materially higher commissions than they would have in a competitive counterfactual but could not determine by how much at this stage. The class action applicant’s proceedings have not progressed at this stage and further evidence will be required to calculate the extent of any overcharge. The Court indicated that further hearings will be necessary to resolve these issues.
Further hearings will be held to determine the appropriate relief and the parties have liberty to apply for further orders as necessary. The written reasons will be subject to confidentiality arrangements, with redactions as required.
Next steps
The parties and stakeholders await the Federal Court’s detailed judgment. Apple and Google have 28 days to appeal the judgment. We will provide a further update analysing the Court’s full decision once it is published – watch this space.