Y Combinator has stepped into the long-running legal dispute between Apple and Epic Games, urging the court to reject Apple’s latest appeal. The startup accelerator filed a supporting brief that argues Apple’s control of the App Store has held back innovation and made it harder for young companies to compete.
The legal fight over payment rules
Epic first sued Apple in 2020, challenging the iPhone maker’s practice of charging developers up to 30 percent on all purchases made through the App Store, including in-app transactions. The gaming firm also objected to rules that prevented developers from informing users about cheaper payment options outside the store.
Although a judge later ordered Apple to stop enforcing those restrictions, the company introduced a separate system that still allowed links to outside payment methods but kept a 27 percent service charge in place. Epic returned to court, arguing that Apple was sidestepping the injunction. Earlier this year, the judge agreed and directed Apple to end the practice of collecting fees on payments processed elsewhere. Apple is now appealing that decision.
Y Combinator’s stance
By filing its brief, Y Combinator has formally sided with Epic. The accelerator said that high platform fees discouraged investors from supporting app-based startups, since the costs could erase already slim margins and prevent companies from expanding or hiring. It argued that lowering these barriers would allow venture backers to fund businesses that were previously considered too risky.
Wider impact on startups
For investors like Y Combinator, the court’s current ruling could change the investment landscape. If upheld, developers would be free to point users to alternative payment methods without Apple taking a share. That shift could encourage more funding into mobile-first ventures, which have often struggled under the so-called Apple Tax.
What comes next
The appeals court will hear arguments on October 21. Until then, the order requiring Apple to allow outside payment options remains in effect. The outcome will not only affect Epic’s case but could also set a precedent for how platform operators handle transactions in digital marketplaces.
Notes: This post was edited/created using GenAI tools. Image: DIW-Aigen.
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