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Apple’s Pain Is Gaming Developers’ Gain

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Apple suffered a defeat after a federal court decided the i-Phone maker must make changes to its App Store policies. The ruling came on the heels of a high-profile legal battle between Epic Games, which is behind Fortnite, and Apple in which the game developer sought to keep a bigger piece of the revenue pie.

Judge Yvonne Gonzalez Rogers decided that Apple can no longer stop developers — including gaming companies — from using third-party sites rather than the App Store for online transactions. The decision could cost the tech giant billions of dollars.

Court Ruling

The ruling will have far-reaching implications for this market segment, the size of which is valued at some $100 billion. The revenue that Apple generates from its App Store has been a driver of its earnings. The company has benefited from taking a cut of between 15-30% of the gross revenue that developers generate on its platform. The new rule goes into effect in December.

Ultimately the court ruled on Epic’s side on California’s unfair competition law but sided with Apple on the other nine counts in the complaint. Apple’s shares tumbled 3% on the development.

Epic Games is on the hook for a cut of the revenue it generated for sending its users off the App Store for purchases last year.

Gaming Stocks

While Apple was not found to hold a monopoly in the gaming market, the court ruling was a boon for gaming-related stocks. Companies such as Zynga and Roblox saw their shares advance by 6% and 2%, respectively. They could see their revenues increase now that they don’t have to direct a cut to Apple if they can send online purchases elsewhere.

One exception was GameStop, which did not participate in the gaming stock rally. In its recent earnings report, GameStop revealed how it is transforming to more of a tech company rather than the brick-and-mortar video game retailer that it has come to be known.

GameStop plans to invest in modernizing its e-commerce platform and product line beyond just video games to areas such as collectibles, toys, and other relevant categories. Investors, however, seemingly don’t see GameStop as an e-commerce play that is poised to benefit from the Apple court ruling.

This article was originally posted on FX Empire