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Apple sets out appeal arguments in ongoing Epic battle over its App Store rules

By | Published on Friday 25 March 2022


Apple made a lengthy filing with the US Ninth Circuit appeals court yesterday setting out in detail why the appeal judges should uphold the lower court ruling in its big old legal battle with Fortnite maker Epic Games over its App Store rules. Except, of course, the one part of that lower court ruling that sided with Epic. That’s obviously bullshit and should be reversed.

Epic sued Apple in 2020 arguing that the tech giant’s App Store rules are anti-competitive. The main rules that Epic – like many app makers, including Spotify – don’t like are those that say that all in-app payments on iOS devices must be processed via Apple’s commission charging transactions system, and that no other payment platforms elsewhere on the internet can be sign-posted within an app.

While Spotify has mainly gone the regulatory route to fight those rules – in particular via the European Commission – Epic has sued Apple in multiple countries (as well as Google, over it’s similar app rules). Though the Epic v Apple legal battle in California has received by far the most attention.

In that battle, the lower court pretty much sided with Apple, concluding that its App Store rules don’t violate US competition law – or antitrust law if you prefer. However, the lower court judge did decide that prohibiting the sign-posting of alternative payment options was a violation of Californian law.

To that end, said judge issued an injunction ordering Apple to delete that rule and allow such sign-posting, although the Ninth Circuit then put that order on hold pending the wider appeal of the Epic v Apple case.

Both sides in the dispute are appealing. Epic still reckons Apple’s App Store rules violate competition law and wants the Ninth Circuit to say so. Apple, meanwhile, is appealing the decision regarding sign-posting alternative payment options.

In its 135 page filing with the appeals court yesterday Apple was keen to distinguish its appeal from that of its rival. Epic’s appeal, it reckons, is all about matters of fact, while its appeal is clearly about a matter of law. This is important because appeals courts generally intervene over matters of law not matters of fact.

“Epic did not lose the trial due to any legal error”, Apple’s legal filing begins. “Epic lost because it ‘overreached’ by asserting claims on the ‘frontier edges of antitrust law’. Epic’s accusations of anticompetitive conduct were not just unprecedented but unfounded. Epic built its case on witnesses who ‘lacked credibility’ and were ‘unreliable’, whose testimony was ‘wholly lacking in an evidentiary basis’ and who were ‘willing to stretch the truth in support of [Epic’s] desired outcome'”.

“In this court”, it goes on, targeting Epic’s appeal arguments, “Epic tries to change the narrative because it can show no clear error in the [original] decision … Epic caricatures the court’s 180-page opinion and reduces the robust evidentiary record to a handful of misleading and out-of-context quotations”.

“Epic ignores the deferential standard of review applicable to the court’s factual findings, on which every one of its antitrust theories foundered”, it continues. “Epic also refuses to acknowledge that the court applied settled precedent from the Supreme Court and this court on every material point. On the facts and the law, the court correctly decided every issue presented in Epic’s appeal”.

The legal filing then argues that “Epic had the burden to prove, among other things, that the challenged [App Store] limitations were unreasonable restraints of trade under a framework the parties agreed on before trial began. After a sixteen day bench trial, the district court found that Epic had failed to carry its burden of proof on every one of its antitrust claims”.

“That should not surprise”, it reckons, “throughout the history of the App Store, it is undisputed that prices have only gone down, while output has exploded. Those are the hallmarks of competition, not monopolisation. To reverse, this court would have to depart from settled law and ignore the district court’s detailed findings of fact”.

By contrast, it then says, its appeal of the ruling on the alternative payment sign-posting “raises pure legal issues and does not ask the court to second-guess any factual finding based on the trial evidence”.

Noting that the Ninth Circuit has already paused the injunction forcing Apple to abandon the alternative payment sign-posting rule, it says: “This court already recognised that Apple is likely to succeed on the principal issue – whether conduct that does not violate the antitrust statutes can be enjoined as ‘unfair’ under California law – in staying the injunction pending appeal”.

“Reversal on this point”, it argues, “would confirm that the rules Apple adopted more than a decade before this suit was filed are lawful under settled precedent”.

Apple’s new legal filing also deals with submissions to the Ninth Circuit by the US Department Of Justice, attorneys general from 35 US states, Microsoft and three other app makers which, like Epic, are members of the Coalition For App Fairness. Those so called amicus briefs either outright support Epic in this dispute – or at least raise concerns about how the lower court judge interpreted American competition law when reaching her conclusions.

But the Ninth Circuit should ignore all that, Apple says. “Epic’s amici are … litigating a different case on appeal than the one Epic tried, and lost, in the district court”, they argue. “Essentially ignoring the extensive factual record, they ask this court to change the law”.

“The Department Of Justice and state attorneys general advocate new legal positions that, if accepted, would make it easier for them to win antitrust lawsuits. Microsoft is pursuing a self-interested business strategy of distinguishing itself from other platforms even while making ‘hundreds of millions of dollars’ from its partnership with Epic”.

“And the three developer amici are members of the Coalition For App Fairness”, it goes on, “a front group created by Epic for purposes of this litigation; this court has already rejected one amicus brief from them. Each of Epic’s amici is advancing its own agenda rather than providing objective legal analysis for the court”.

Even if the interventions from all those other parties don’t help Epic in the Ninth Circuit, they do demonstrate that there is widespread concern about Apple’s App Store rules not only across the wider app-making community, but also within government and the political community.

All of which makes you think, even if Apple does win this appeal, it will still be forced to further relax its App Store rules in the years ahead.

Because, of course, that process is already underway around the world. Apple is already going to allow certain apps to sign-post alternative payments options as part of a deal it reached with a regulator in Japan.

Meanwhile, in South Korea, the law has already been changed to force both Apple and Google to allow alternative payment options within any one app. Plus, regulators in Europe seem to be erring towards intervening in this domain as well.

And back in the US, Apple might be right to say that Epic’s amici are basically asking the Ninth Circuit to “change the law” in overturning the lower court ruling, something that should make the appeals court side with Apple.

However, there is already a movement in US Congress proposing to actually change the law to deal with the concerns being expressed by the DoJ and attorneys general in their amicus briefs. All of which presumably explains why Google at least is now looking to compromise over alternative payment options, beginning with the pilot project with Spotify that was announced yesterday.