Apple declares 'resounding victory' after decision reached in Epic Games appeal
An appeals court on Monday mostly sided with Apple over its App Store rules in a suit with Epic Games.
Apple is not a free market zone.
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An appeals court on Monday mostly sided with Apple over its App Store rules in a suit with Epic Games.
The decision signals that Apple's control over the App Store and the fees it charges likely won't significantly change as a result of an ongoing legal challenge by Epic Games.
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Epic sued Apple after the game company introduced its own payment system into Fortnite, which broke Apple's rules and ultimately got the company banned from the App Store. It culminated in a weekslong trial two years ago in California where Apple CEO Tim Cook and Epic Games CEO Tim Sweeney testified.
Monday's ruling in the Ninth Circuit Court affirmed the decision that primarily found Apple did not violate antitrust law by banning competing app marketplaces on iPhones.
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However, the iPhone maker did lose one claim and had to allow developers to place links inside their apps so users could make purchases outside the App Store.
The appeals court did not overturn that decision, which was related to California law, and is the one claim that Apple says was not decided in its favor. Whether the company is forced to allow links to outside payments will be determined in possible future hearings.
Apple said in its statement that it was considering further action, which could include an appeal to the Supreme Court. ...
Google is headed back to court for its second antitrust trial in two months, this time in defense of its Android Play Store.
While Google continues to argue against monopoly claims brought by the Department of Justice and a bipartisan group of states in Washington, D.C., District Court, the company now has to simultaneously face off against Epic Games in a federal court in San Francisco.
The trial involving Epic, which begins Monday, revolves around Google's treatment of third-party mobile developers, and will be closely watched by Apple, which operates the rival iPhone App Store. Both companies have been accused by developers of taking an unfair cut of revenue from in-app payments and for making it harder for app creators to communicate with their customers.
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For the Epic suit, there's one key difference between what Google faces and the case against Apple. Google allows “sideloading,” or the ability to install software off the web, which Apple forbids.
Epic plans to argue that, even with that capability, Google abuses its dominant market position and makes it hard for consumers to get access to apps, according to a person familiar with the matter.
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Sounds like putting GM parts on a Ford.
Not quite.
Google maintains an App store for Android mobile devices. Apple maintains an App store for Apple mobile devices. Companies that want to distribute their apps on either platform have to contract with Google/Apple.
Epic Games contracted with both to distribute their Fortnite game. The Fortnite game has an in-game store to let players purchase in-game items. Google/Apple contracts forbid/restrict apps from selling anything outside of Google/Apple's app stores. That restraint wouldn't be a big deal if Google/Apple didn't have an effective monopoly on their respective platforms, but they do.
Google’s legal defeat at the hands of Fortnite maker Epic Games Inc. threatens to roil an app store duopoly with Apple Inc. that generates close to $200 billion a year and dictates how billions of consumers use mobile devices.
The loss — handed down by a San Francisco jury on Monday — is a blow to the two companies’ business model in apps, where they charge commissions of as much as 30% to software developers who typically have few other options. ...
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Though Apple won a similar case against Epic in 2021, that ruling was made by a single judge. The nature of the Google suit — where a jury sided unanimously with Epic — let actual consumers weigh in on the world of smartphone apps. In under four hours of deliberations, they found that Google had engaged in anticompetitive conduct, harmed Epic and illegally forced its own billing system on developers.
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The judge also ruled that Google had destroyed relevant trial evidence, and told the jury to weigh that behavior in its decision. Here’s Sean Hollister in the Verge on what happened after the jury heard the testimony and judicial instructions:After just a few hours of deliberation, the jury unanimously answered yes to every question put before them — that Google has monopoly power in the Android app distribution markets and in-app billing services markets, that Google did anticompetitive things in those markets, and that Epic was injured by that behavior. They decided Google has an illegal tie between its Google Play app store and its Google Play Billing payment services, too, and that its distribution agreement, Project Hug deals with game developers and deals with OEMs were all anticompetitive.
It’s a long and winding road for Epic. The firm lost the Apple case, which is on appeal, but got the Google case to a jury, along with several other plaintiffs. Nearly every other firm challenging Google gradually dropped out of the case, getting special deals from the search giant in return for abandoning their claims. But Sweeney was righteous, and believed that Google helped ruined the internet. He didn’t ask for money or a special deal, instead seeking to have Judge James Donato force Google to make good on its “broken promise,” which he characterized as “an open, competitive Android ecosystem for all users and industry participants.”
Specifically, Sweeney asked for the right for firms to have their own app stores, and the ability to use their own billing systems. Basically, he wants to crush Google’s control over the Android phone system. And I suspect he just did. ...
The U.S. Supreme Court on Tuesday declined to hear an antitrust challenge by Epic Games, maker of the popular video game "Fortnite," to the way Apple runs its lucrative App Store, handing the software company a setback in its lengthy legal battle against the iPhone maker.
The justices turned away Epic's appeal of a lower court's decision that Apple's App Store policies limiting how software is distributed and paid for do not violate federal antitrust laws. The justices also decided not to hear Apple's appeal of the same decision, which barred certain App Store rules.
Apple's long legal battle with Epic Games over app store checkout policies has entered a new phase after Apple said it would charge a commission of up to 27% for non-Apple payment providers, a move that immediately drew threats of fresh legal action.
Apple's new policy for developers using non-Apple payment processors for app store transactions follows an earlier policy that required developers to use Apple's payment system, with an interchange-style fee of up to 35%. Apple announced the new policy last week, around the same time that the U.S. Supreme Court declined Apple's appeal of lower-court rulings in the Apple/Epic case that required Apple to open App Store payments to outside processors.
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Epic Games immediately cried foul over the new double-digit fee, with Epic CEO Tim Sweeney issuing a series of social media posts contending that the 27% fee "kills price competition. Developers can't offer digital items more cheaply on the web after paying a third-party payment processor 3-6% and paying this new 27% Apple Tax." Sweeney said Epic will "contest Apple's bad-faith compliance plan in U.S. District Court."
Spotify also criticized the new fee, saying Apple has demonstrated "that they will stop at nothing to protect the profits they exact on the backs of developers and consumers under their app store monopoly." ...
A U.S. judge on Monday ordered Alphabet's Google to overhaul its mobile app business to give Android users more options to download apps and to pay for transactions within them, following a jury verdict last year for “Fortnite” maker Epic Games.
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This week's court ruling is the next step in that victory. Having concluded that Google illegally acquired and maintained a monopoly over apps for Android, the court had to decide what to do about it.
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For the next three years, Google must meet the following criteria:
- Allow third-party app stores for Android, and let those app stores distribute all the same apps as are available in Google Play (app developers can opt out of this);
- Distribute third-party app stores as apps, so users can switch app stores by downloading a new one from Google Play, in just the same way as they'd install any app;
- Allow apps to use any payment processor, not just Google's 30 percent money-printing machine;
- Permit app vendors to tell users about other ways to pay for the things they buy in-app;
- Permit app vendors to set their own prices.
Google is also prohibited from using its cash to fence out rivals, for example, by:
- Offering incentives to app vendors to launch first on Google Play, or to be exclusive to Google Play;
- Offering incentives to app vendors to avoid rival app stores;
- Offering incentives to hardware makers to pre-install Google Play;
- Offering incentives to hardware makers not to install rival app stores.
These provisions tie in with Google's other recent loss; in Google v. DoJ, where the company was found to have operated a monopoly over search. That case turned on the fact that Google paid unimaginably vast sums - more than $25 billion per year - to phone makers, browser makers, carriers, and, of course, Apple, to make Google Search the default. That meant that every search box you were likely to encounter would connect to Google, meaning that anyone who came up with a better search engine would have no hope of finding users.
What's so great about these remedies is that they strike at the root of the Google app monopoly. Google locks billions of users into its platform, and that means that software authors are at its mercy. By making it easy for users to switch from one app store to another, and by preventing Google from interfering with that free choice, the court is saying to Google, "You can only remain dominant if you're the best - not because you're holding 3.3 billion Android users hostage."
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