Y Combinator Urges Court to Deny Apple App Store Appeal

Why Y Combinator backed Epic against Apple

Y Combinator has formally entered the Apple vs. Epic legal fight, filing an amicus brief that asks the court to deny Apple’s appeal. YC argues the App Store’s longstanding 30% revenue share — commonly called the “Apple Tax” — discouraged investment in many app-driven startups and dampened innovation across the ecosystem.

The filing lands in the middle of a years-long legal battle that began in 2020 when Epic sued Apple over App Store fees and restrictions on informing users about alternative payment methods. A judge later ordered Apple to stop anti-steering policies, but Apple implemented a link program that still collected a 27% fee on those payments. Epic later accused Apple of violating the injunction; a judge agreed, and Apple is now appealing.

YC’s brief stresses a practical point: for many early-stage businesses, a 30% cut can make the difference between scaling and folding. The firm told the court that the fee structure made app investments riskier and pushed venture capitalists to shy away from certain business models that simply couldn’t absorb that margin hit.

• Market impact: Higher fees reduce funds available for hiring, marketing, and product development.
• Investment signal: VCs avoid business models that can’t produce acceptable returns after platform cuts.
• Innovation risk: Product ideas that need thin margins or high volume are particularly vulnerable.

YC notes that the recent ruling — forcing Apple to allow transparent alternatives for payment — opens a rare window. For the first time in nearly two decades, YC says it can seriously consider backing app models that were impractical before because the platform fee made them unviable.

The stakes go beyond Epic and Apple. If the appeals court upholds the anti-steering injunction, developers, investors and regulators will recalibrate how they value app businesses. If Apple wins, the existing dynamics — high platform margins and tightly controlled payments — remain the default.

The next hearing is scheduled for October 21. Meanwhile, TechCrunch corrected an earlier misreport that suggested YC had invested in Epic; YC is not an investor in Epic, the publication said in a correction.

Why this matters for product and growth teams: imagine you run a subscription fitness app with tight margins. Losing 30% of every subscription payment forces tough trade-offs: cut back on trainers, reduce marketing, or raise prices and lose users. That’s the concrete calculus YC says pushed many VCs to pass.

What to watch next: investors will be assessing whether the legal environment shifts enough to make previously marginal app ideas fundable; developers will be testing alternative payment paths; and policymakers will watch the outcome for signals about platform regulation and competition.

For organizations weighing product strategies or legal positions, the ruling could change how you model unit economics and go-to-market plans. Data-driven stress tests of revenue share, user retention, and pricing elasticity will become essential tools for founders and investors navigating this new uncertainty.

In short: YC’s brief frames this as more than a single-company fight. It’s a debate about who controls platform economics and how that control shapes which products ever reach scale. Expect the October hearing to set the next chapter for app businesses, venture capital, and platform governance.