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Epic v Apple antitrust case ends in mixed decision – The Hollywood Reporter

 


In a long-awaited ruling, a California federal judge issued a nuanced ruling on how Apple controls its app platform. Apple has escaped determination that it is a monopoly, but thanks to conduct one deems anti-competitive, Apple must now allow developers to tell consumers how to make purchases outside of apps.

The costume was worn a year ago by Epic Games on the Fortnite manufacturer’s attempt to bypass Apple’s 30% commission on in-app purchases. Apple retaliated by starting Fortnite from its App Store, which then led to litigation. Epic has claimed antitrust behavior. Apple responded that Epic had violated the terms of being in the App Store. A trial took place last May the outcome of which could influence the future of streaming, as apps like Disney + and HBO Max often rely on middlemen like Roku and Amazon while selling premium access to movies that come from. go out.

In today’s ruling, U.S. District Court Judge Yvonne Gonzalez Rogers defines the market (valued at $ 100 billion) as digital mobile game transactions and finds that while Apple “benefits from A sizable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct.

“Success is not illegal,” she adds. “The final trial record did not contain evidence of other critical factors, such as barriers to entry and declining production or innovation in the relevant market. The Court does not find that this is impossible; only that Epic Games has failed to demonstrate that Apple is an illegal monopolist.

Considering in large part that Apple’s big commission was correct, judge gives Apple victory over its counterclaims and rules that Epic must pay 30% of all Fortnite income he has received since August 2020.

But Apple is not coming out of this case unscathed as Rogers finds that Apple is engaging in anti-competitive behavior under California competition laws.

“The court finds that Apple’s anti-management provisions hide critical information from consumers and illegally stifle consumer choice,” she wrote. “When combined with emerging violations of Apple’s antitrust rules, these anti-management provisions are anti-competitive and a nationwide recourse to eliminate these provisions is warranted. “

A permanent injunction will lift some of the restrictions Apple had placed on its developers, especially with regard to communication on purchase options. Apple may have seen the writing on the wall regarding its anti-leadership provisions. In a separate lawsuit, the company recently agreed to a settlement allowing developers to notify customers of purchasing options outside of their app. The injunction will increase the freedom of developers to do things like add buttons and links within the app to external shopping sites.

Here is the full decision.

The detailed analysis finds fault with Epic’s definition of the product market and reviews the game company’s antitrust theories. For example, Epic had argued that the Apple iOS platform was an “essential installation”, unable to be replicated, and under competition law, Apple had to provide access. The judge replied that “in terms of the distribution of mobile applications, multiple channels exist to distribute the content to the consumer. Distribution can be done through web applications, web access, and other play stores. This doctrine does not require distribution in the manner preferred by the competitor, here native applications.

It is only on the question of how Apple restricts communication between app developers and their customers that Epic scores a clear victory. The judge believes that the lack of an open flow of information “can create a” lock-in “for platforms because users lack information on the lifetime costs of an ecosystem.”

“Users may also not be able to attribute costs to the platform relative to the developer, which further prevents them from making informed choices,” the judge continues, describing why Apple loses under the law. Californian over the competition. “In these circumstances, the ability of developers to deliver cross-platform information is critical. Although Epic Games has not fulfilled its obligation to show an actual lockdown of this case, the Supreme Court has recognized that these information costs can create the potential for anticompetitive exploitation of consumers. So while Epic Games has not proven the existence of a current antitrust violation, the anti-leadership provisions “threaten a nascent violation of an antitrust law” by preventing informed choice among platform users. iOS form. “

Overall, Apple will likely welcome the decision as the judge concludes that Epic has broken the contract. This will ultimately cost Epic millions of dollars (assuming the decision survives appeal) and may deter others from taking on similar challenges.

Rogers examined Epic’s argument that the contracts Apple relied on were “illegal and unenforceable” and contrary to public order. But she considers the claim “on a large scale” unconvincing, rejecting the proposition that the imposition of a commission by Apple is prohibited. The judge accepts that the application guidelines relate to “security, privacy, performance and reliability” and writes: “For the reasons described in detail above, the Court has found and concluded that these DPLAs [Developer Product Licensing Agreement] provisions are not contrary to the interest of the public as a whole and do not contravene an established interest of society, whether competitive or otherwise.

Sources

1/ https://Google.com/

2/ https://www.hollywoodreporter.com/business/business-news/epic-apple-antitrust-ruling-1235011223/

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