Epic’s antitrust case against Apple looks dead in the water

Apple has emerged largely victorious in the latest round of a legal battle with Epic Games, which focuses on antitrust laws and the way the App Store is run. Epic’s suit, sparked by various shenanigans around the hugely popular Fortnite, says that Apple’s marketplace violates federal law by banning third parties from using their own payment platforms on the operating system: That is, it’s a monopoly.

The suit began in 2020 after Epic updated Fortnite on iOS with a payment workaround, which would bypass Apple’s usual 30% cut. In response, Apple promptly banned the app. Essentially this is all about the cut the platform-holder is taking from third party developers, and whether those developers should have the right to implement their own payment systems. The 2021 judgement in the case largely sided with Apple though gave Epic one win in finding that certain restrictions of the App Store were anti-competitive, and since that Apple has been actively working to address those concerns.

The latest ruling comes from the US Ninth Circuit Court of Appeals (thanks, Bloomberg), and affirms the 2021 decision by a lower court that mostly rejected Epic’s claims. The panel of three judges acknowledge the “lively and important debate about the role played in our economy and democracy by online transaction platforms with market power” but noted its role was not to attempt to resolve that debate but apply “existing precedent to the facts.”

The previous ruling did conclude that Apple’s iOS policies stopped consumers from getting cheaper prices, but rejected Epic’s claims that this constituted a monopoly in violation of federal antitrust law. The appeals court did think the lower court had “erred” in its definition of the appropriate antitrust market, which may yet prove relevant, but also bought Apple’s argument that it needs to actively police the applications running on its phones.

Apple has been mitigating some of the major antitrust concerns the courts have previously raised. It allows certain apps such as newspapers and streaming services to “steer” consumers to non-iOS payment services, for example, though notably still excludes games such as Fortnite.

Needless to say Apple called this latest ruling a “resounding victory” before adding several lines about how great the App store is, and disagreeing with the one count it lost on (that the App store restrictions have an anti-competitive effect): “We respectfully disagree with the court’s ruling on the one remaining claim under state law and are considering further review.”

Tim Sweeney, Epic co-founder and CEO, was serene about the latest result, though highlighted that the court upheld the element of the ruling allowing developers to send customers outside of the App store for payments.

“Apple prevailed at the 9th Circuit Court,” wrote Sweeney. “Though the court upheld the ruling that Apple’s restraints have ‘a substantial anticompetitive effect that harms consumers’, they found we didn’t prove our Sherman Act case.

“Fortunately, the court’s positive decision rejecting Apple’s anti-steering provisions frees iOS developers to send consumers to the web to do business with them directly there. We’re working on next steps.”

Then, ya boy Tim climbed a mountain:

Sweeney and Epic have been on the warpath for several years now against what they see as anti-competitive industry practices. You can’t say that they lack fight: As well as taking on Apple, Epic’s embroiled in an antitrust battle with Google parent company Alphabet.

And while it would be easy to characterise this fight as being about Epic wanting to keep all that lovely Fortnite money to itself, it’s a much larger battle that has profound implications for all developers and platform-holders. In the EU, for example, the new Digital Markets Act is addressing exactly this concern and will force platform-holders like Apple to make their operating systems more open to third party developers (though what this will mean in practice remains to be seen).

Will Epic be back for another round? It certainly has the money but, more to the point, this is a difference of world views between giants of technology. Epic is huge, but it’s not Apple or Alphabet huge, and sees itself as standing up for the future of developers on these ubiquitous platforms: Just how much control app-makers should have, and in what manner, will run and run.

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