Apple’s (AAPL) Legal Brawl With Epic Games Leaves Stockholders in Limbo

When Apple (AAPL) faced Epic Games in a landmark court case in 2021, the outcome seemed straightforward: Apple was ordered to let developers inform users about payment methods outside its app store.

However, as of May 2025, what began as a clear-cut injunction has turned into a heated legal battle, with Apple now accused of openly defying a federal court order. As an investor and observer, I’ve found this unfolding saga crucial to understanding the future of digital marketplaces, especially with Apple’s enormous influence at stake. It’s also a core reason why I’m neutral on AAPL stock right now.

Judge Slams Apple with Contempt Ruling

Two weeks ago, U.S. District Judge Yvonne Gonzalez Rogers dramatically escalated the ongoing legal battle between Apple and Epic Games by accusing Apple of deliberately violating a 2021 court injunction. The original injunction had required Apple to allow app developers to steer users toward payment options outside of Apple’s own system, thereby bypassing the tech giant’s hefty 15% to 30% commission.

In her sharply worded 80-page ruling, Judge Rogers condemned Apple’s response to the injunction as deliberately anticompetitive. Apple, she wrote, had secretly imposed a 27% fee on transactions conducted through external links, barely lower than their usual commission. Additionally, the company implemented intimidating pop-up warnings designed to discourage users from leaving Apple’s payment system. Rogers labeled these moves as apparent attempts to evade her order.

Even more troubling for Apple, the judge found that an executive, Alex Roman, lied under oath regarding compliance measures. Citing “misdirection and outright lies,” Rogers referred both Apple and Roman to federal prosecutors for potential criminal contempt charges—a rare move in civil antitrust cases.

Apple’s Appeal and Potential Financial Fallout

Apple swiftly responded to the contempt finding by filing an emergency appeal to the Ninth Circuit Court, arguing that compliance with the injunction would cause significant financial harm. In its court documents, Apple claimed that allowing unrestricted external payment methods could cost the company billions in annual revenue, severely undermining its App Store business model.

Despite Apple’s pleas, Judge Rogers refused to delay enforcing her order, emphasizing Apple’s repeated delays and clear non-compliance. She firmly stated that Apple could not ask for a pause given the severity of its conduct. Legal analysts predict that Apple faces significant hurdles in its appeal due to the abundance of evidence presented against it.

If Apple fails to secure a delay, it must immediately make the mandated changes to its App Store practices, significantly altering its longstanding business model. This could also mean the cult classic game Fortnite could return to Apple’s ecosystem after a multi-year hiatus.

Epic Games Moves Quickly to Rejoin the App Store

Epic Games, viewing the court’s ruling as a significant victory, immediately took action to return Fortnite, its hugely popular game, to Apple’s App Store. Fortnite had been banned since August 2020, when Epic introduced its own in-app payment system, sparking the initial lawsuit.

Fortnite gamer competes during the Summer Smash tournament in Melbourne, Australia. 

Following the contempt ruling, Epic announced it had submitted Fortnite for review, aiming to resume availability on iPhones and iPads. However, Apple’s compliance remains uncertain, as the injunction does not explicitly force Apple to restore Epic’s developer account or immediately approve the fan-favorite game. Epic cleverly submitted Fortnite through a Swedish subsidiary, anticipating potential resistance from Apple. The game’s potential return has significant implications for both companies, serving as a litmus test for Apple’s integrity.

Broader Industry and Regulatory Implications

The outcome of this conflict extends far beyond Apple and Epic Games. The court’s tough stance could significantly weaken the lucrative “walled garden” model that Apple—and, similarly, Google (GOOGL)—have operated for years. This model has allowed platform owners to collect significant commissions on in-app purchases, a practice increasingly scrutinized by developers and regulators worldwide.

The ruling aligns with new regulations such as the European Digital Markets Act, which requires companies like Apple to permit third-party app stores and alternative payment methods. Additionally, the U.S. Department of Justice has its own antitrust case against Apple, potentially bolstered by Judge Rogers’ findings of Apple’s defiance.

Furthermore, the ruling has energized a coalition of developers and companies, including Meta (META), Microsoft (MSFT), and Match (MTCH), who have bitterly opposed Apple’s policies. These companies see the potential dismantling of Apple’s App Store monopoly as an opportunity to lower costs and build a stronger developer ecosystem. Apple stockholders must beware.

Apple Faces Growth Headwinds Amid Regulatory Pressure

Analysts generally believe Apple will mitigate revenue losses through new business models, such as enhanced advertising in the App Store or other monetization strategies. However, the immediate impact of the regulatory overhang could mean a loss of control over App Store payments, and therefore, dent growth multiples.

Meanwhile, stocks potentially benefiting from a more open App Store have attracted increased investor attention. Each of these companies can gain financially if they can avoid Apple’s traditional commission fees and directly engage with users through their payment systems.

Is Apple a Buy, Sell, or Hold?

On Wall Street, Apple carries a Moderate Buy rating with 17 Buys, eight Holds, and four Sells over the past three months. Despite the ongoing legal squabble, Apple stock remains resilient. The average AAPL price target of $228.65 suggests analysts expect an ~8% appreciation over the next 12 months.

See more AAPL analyst ratings

An Inflection Point for Apple and Digital Markets

I view Apple’s current legal challenges as a critical juncture with significant implications for the future of digital marketplaces. Judge Rogers’ stringent enforcement of her injunction, alongside her unprecedented recommendation for criminal contempt charges against Apple, underscores the judiciary’s increasing willingness to assertively intervene when competitive equality is perceived to be at stake.

The potential financial repercussions for Apple are substantial, with billions of dollars in annual revenue potentially at risk. More fundamentally, the mandated adjustments to Apple’s App Store policies could compel the company to reevaluate core elements of its longstanding business strategy. As a result, for now, I maintain a neutral stance regarding the direct impact of these developments on Apple stock.