Wednesday, February 2, 2022

Epic Appeals Ruling in Apple Lawsuit

Juli Clover (ruling):

Both Apple and Epic Games have decided to appeal the original ruling as neither company was satisfied with the outcome. Epic Games wanted the court to force Apple to support third-party App Stores, which did not happen.


In the filing, Epic Games again argues that Apple’s App Store restrictions and fees are harming developers and consumers, calling the App Store unnecessary.


Epic Games argues that the court made an error when it found no Sherman Act violation against Apple, which would have painted Apple as a monopolist and would have likely resulted in a very different ruling.

Florian Mueller:

On this basis, Epic warns against “disastrous consequences” because “Section 1 would not reach firms with the market power to coerce non-negotiable terms,” which would “incentivize anticompetitive behavior.” One way to respond to this is: “So what? You still have Section 2. Higher hurdle, but still.”

I’m surprised that Epic puts this part front and center. Should Epic believe that this is its strongest point, then I wouldn’t be too optimistic about the prospects of its appeal. I am in favor of reasonably strong antitrust enforcement, but I don’t think unilateral conduct should just be imported into Sec. 1.


Epic does manage to demonstrate some inconsistencies in the district court’s reasoning that have implications for the rule-of-reason analysis. I’ve said before that one can find errors in that judgment (just like there are typos), but the question is whether anything changes the outcome.


Judge YGR decided the singe-brand market question against Epic based on an unreasonably high standard with elements that other (higher) courts had rejected.


From a policy point of view, I can’t see--and apparently various lawmakers and regulators can’t see either--why the in-app payment system for non-digital goods and services must be viewed as inextricably linked to app distribution. There would be a huge policy problem, however, if companies like Apple could just defend themselves by saying “we decided to combine the two, so it’s not tying.”

Florian Mueller (Hacker News):

35 U.S. states led by Utah and Microsoft have officially thrown their weight behind Epic’s appeal through amicus curiae briefs filed with the United States Court of Appeals for the Ninth Circuit.

Florian Mueller:

The Antitrust Division of the United States Department of Justice, speaking on behalf of the United States of America, has filed the following brief, formally in support of neither party but practically supporting some of the most important elements of Epic’s appeal[…]


Update (2022-02-04): Florian Mueller:

What Apple is telling the ITC there is this: even if [Ericsson] patent infringements are identified, the iPhone can’t be banned because it’s a product category of its own. There’s nothing else quite like it. Android smartphones may also be smartphones, but they are not iPhones, so they are not "like" articles (which would count as a potential replacement under the ITC’s rules).

In the Epic Games v. Apple App Store antitrust case, however, Apple argued that there was a broad market for game distribution.

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