Longtime combatants Epic Games Inc. and Apple Inc. were back in court Monday, making their case on whether the tech giant’s app store has unlawfully enriched its $2.38 trillion status via a so-called “walled garden,” which acts as a bulwark for the store.
Epic, the company behind the popular “Fortnite” videogame, revived its case that Apple’s App Store violates antitrust law before a three-judge federal appeals court in San Francisco. Apple
has levied commission fees of 15% to 30% on developers for years to cover the cost of of operating and securing the App Store, a practice that has helped the company haul in an estimated $15 billion to $20 billion annually.
Following oral arguments, the appeals court isn’t expected to rule for six months to a year; ultimately, legal experts expect the case to end up before the U.S. Supreme Court in 2024 or 2025.
“The one thing that really troubles me is this failure of proof. Looking at the record, it seems (Apple’s attorneys) have made a good case,” Judge Milan Smith told Epic attorney Tom Goldstein near the end of the 75-minute hearing late Monday. (Apple won a resounding victory in a federal court case last year.)
Earlier, Goldstein contended Apple’s “walled garden keeps out competitors” and that its “anticompetitive policies” increase consumer costs, reduce consumer choice, diminish the quality of the consumer experience and decrease innovation.
Apple attorney Mark Perry countered that Epic is simply retrying a trial it lost, when the onus is on Epic to prove last year’s trial decision was “wrong.”
Apple’s legal defense has consistently asserted it competes vigorously with other platforms, that its App Store is competitive, and itsIn-App Purchase is an integrated part of Apple’s platform.
It has been a winning strategy. Last year, Apple uniformly prevailed in a 16-day bench trial in federal court in Oakland, Calif., winning nine out of 10 claims tied mostly to antitrust law, but Epic won on one important count: Apple’s anti-steering policy on the App Store violates California’s Unfair Competition Law. The policy bars app developers from linking to external websites where they can purchase virtual currency or items without using the App Store payments system.
In 2020, Epic filed an antitrust lawsuit vs. Apple
contending the App Store gouged developers with a 30% commission fee and barred app makers from operating their own in-app purchasing methods. Apple countersued, contending Epicbreached its terms of contract with Apple.
While Epic awaits a decision from the three judges on the Ninth Circuit Court of Appeals, it is proceeding on another antitrust legal front.
Epic is scheduled to go to court in June against Alphabet Inc.’s
Google in a similar case. Last week, Epic accused the search-engine giant of even more antitrust misdeeds.
“Google spent a billion dollars on secret deals with the top app developers,” Epic and dating-app developer Match Group Inc.
wrote in a court filing that asserts Google “paid off developers with the means, capability and desire” to launch competing app stores.