By: Claire Remillard
The 180-page decision by U.S. District Court Judge Yvonne Gonzalez Rogers has a little bit of everything: specialized calculations, an injunction absent a finding of an antitrust violation, and even footnotes discussing the correct courtroom attire for bananas. Although Judge Rogers found that Apple is not a monopolist, the ranks are quickly closing in on the tech giant to loosen some of its regulations and costs imposed on app developers in the iPhone App Store. For now, Epic Games has appealed the decision and believes the overall outcome is not a good sign for consumers nor app developers.
Epic Games (“Epic”), the creator of the popular game Fortnite, initially sued Apple in August of 2020. Epic’s introduction of a separate in-app purchase method and a series of failed negotiations with Apple led to the removal of Fortnite from the iPhone App Store. Epic contended that Apple was a monopolist and violated antitrust laws such as the Clayton Act. Epic claimed that exorbitant commission fees with no alternate methods for consumers to buy outside apps or to access non-Apple app stores constituted an antitrust violation. Much to the chagrin of app developers, Apple has complete control over the iPhone App Store and takes 15-30% of all sales. Apple counterclaimed for breach of contract because Epic’s addition of in-app purchases bypassed the commission Apple was supposed to make from all app purchases.
Although Epic has already filed an appeal and litigation is far from over, the district court ruling does have a few unique aspects which will likely be a point of discussion upon the impending appeal. A key part of an antitrust determination is defining the market. Epic Games contended that the market Apple monopolized was its own iPhone App Store, while Apple argued that the market should be defined as all video games. In an interesting turn of events, the judge identified“digital mobile gaming transactions” as the valid market under review, and further strayed from the norm by calculating the percentage of that market that Apple was occupying through evaluation of the record.
Apple prevailed on nine out of ten counts and was not found to be a monopolist, with the judge noting that “success is not illegal.” However, the judge did impose an injunction effective in December of 2021 which will loosen the regulation of outside apps and app stores on iPhones. Within ninety days of the decision, Apple can no longer prohibit apps from directing customers to outside platforms to make purchases.
Apple has proclaimed Roger’s decision a win for the company, and Epic Games has essentially conceded the win as well, although the impending appeal from Epic is not the only antitrust investigation Apple must worry about. Last year both the Department of Justice and the UK initiated a probe into the practices of Apple’s iPhone App Store. Additionally, Congress is well on its way to introducing new anticompetition legislation that could end Apple’s successful reign as the premier app retailer.
As mentioned, Epic wasted no time filing an appeal just days after the opinion was published and is said to be very disappointed with the outcome. Apple is expected to follow suit and appeal the injunction that is supposed to take effect within ninety days of the decision. While it is understandable that consumers and app developers are disappointed, the district court is hardly the place for driving change, especially on big-ticket issues such as this one since there is a chance that the decision will be overturned. To see real change the battle will have to wage on, or Congress will have to step in to build a better framework of regulations. Increased regulation in this field would be earth shattering for companies like Apple and Google, both of whom have enjoyed uninhibited control and considerable commission charges since the advent of mobile devices.
It is anyone’s guess how the 9th Circuit will rule on appeal and whether Judge Rogers’ tailored ruling will be upheld. For now, iPhone users will just have to wait a little longer to redownload Fortnite onto their devices.
Student Bio: Claire Remillard is a second-year law student at Suffolk University. Claire is a Staffer on the Journal of High Technology Law, the Vice President of the Health and Biomedical Law Society, and the Assistant Coordinator for Mentorship in the Women’s Law Association. Claire received a bachelor’s degree in Cellular and Molecular Biology from West Chester University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
