Tech

Gaming stocks soar after judge says Apple can't force developers to use in-app purchasing

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Key Points
  • Shares of AppLovin, Zynga, Playtika and Roblox climbed after a judge ruled that Apple can no longer force developers to use in-app purchases.
  • The judge issued an injunction in a lawsuit filed by Epic Games against Apple.
  • "This allows for companies to dramatically increase revenues and reduce their cost of goods," said Dan Burkhart, CEO of Recurly, which processes subscription transactions for app developers.
A Zynga logo, the U.S. social game developer running social video game services.
Pavlo Gonchar | LightRocket | Getty Images

Gaming stocks like AppLovin and Zynga soared Friday after a federal judge said Apple can't force developers to use in-app purchases, an issue that has long been a sticking point for mobile app companies.

U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, issued an injunction, saying Apple can no longer prohibit developers from including links that drive users away from Apple's store, where the company takes 15% to 30% of gross sales.

The action came in a lawsuit filed by Epic Games, developer of Fortnite.

"This allows for companies to dramatically increase revenues and reduce their cost of goods," said Dan Burkhart, CEO of Recurly, which processes subscription transactions for app developers. "Gaming companies are certainly going to be one of the most significant beneficiaries of this. Streaming media, entertainment and publishing — these categories are all going to greatly benefit."

Shares of AppLovin, which owns several game studios, closed up 8.85%, while mobile game developer Zynga rose 6.28%. Playtika, an Israeli game company that has had numerous popular iOS apps, jumped 6.08% and Roblox, a gaming app for kids, closed up 1.77%.

In recent weeks, Apple has made several changes to its App Store rules, enabling some companies to access lower commission rates or avoid mandatory 15% to 30% cuts. Earlier this month, the company said that content subscription apps could provide a link out to their website, enabling the developers to better convert potential iPhone customers to subscribers.

Game stocks weren't the only ones to rally after the injunction. Other companies that pay revenue to app-store operators, including Spotify, Match Group and Duolingo, also rose on the news.

Apple stock dropped 3.31%.

WATCH: This ruling could be long-term victory for Apple

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Court ruling could be long-term victory for Apple: The Verge's Nilay Patel