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Apple has once again emerged victorious in its legal battle with Epic Games. The US Ninth Circuit of Appeals has upheld the decision made in November 2021, which found that Apple is not a “monopolist under either federal or state antitrust laws”, according to Bloomberg.
Apple has called the ruling a “resounding victory in this case” and has highlighted the continued benefits of the App Store. The company did, however, say that it still “respectfully disagrees” with the court’s decision to uphold the original ruling that Apple can’t prevent developers from directing users to third-party payment options. Apple did not indicate whether it will file an appeal.
This decision reaffirms Apple’s success in the case, with nine out of ten claims being decided in its favor. For the second time in two years, a federal court has ruled that Apple abides by antitrust laws at the state and federal levels. Apple believes that the App Store continues to promote competition, drive innovation, and expand opportunity, and is proud of its profound contributions to both users and developers worldwide.
The battle between Apple and Epic Games began when Epic circumvented App Store policies and added a direct payment option to Fortnite for iPhone. Epic sued Apple for not allowing it to use its payment platform instead of in-app purchases through the App Store, with Apple taking a 30% cut.
The court ruled that Apple must allow developers to steer app users to external payment platforms but concluded that the company did not meet the legal tests to be considered a monopoly, and thus did not have to permit competing app stores for iOS apps. Both Apple and Epic Games filed appeals on different aspects of the ruling.
Epic is appealing the ruling that the App Store is not a monopoly, arguing that there is no other way for developers to sell iPhone apps other than through Apple. The iPhone maker is arguing that the court made a legal error when considering the anti-steering issue.
The court’s decision states that Epic failed to establish, as a factual matter, its proposed market definition and the existence of any substantially less restrictive. The App Store protects user privacy and data while still giving users the freedom to choose a platform. With Apple’s restrictions in place, users are free to decide which kind of app transaction platform to use.
Users who value security and privacy can select (by purchasing an iPhone) Apple’s closed platform and pay a marginally higher price for apps. Users who place a premium on low prices can (by purchasing an Android device) select one of the several open app-transaction platforms, which provide marginally less security and privacy. Apple’s restrictions create a heterogeneous market for app-transaction platforms, which, as a result, increases interbrand competition—the primary goal of antitrust law.
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The court did, however, reverse the district court’s ruling that Apple was not entitled to attorney fees from Epic. Under today’s decision, that decision has been reversed and remanded for further proceedings.
On Apple’s cross-appeal, the panel affirmed the district court’s ruling in favor of Epic under California’s flexible liability standards but reversed the decision that Apple was not entitled to attorney fees pursuant to the DPLA’s indemnification provision.
Finally, the original ruling in November 2021 also included the decision that Apple could no longer forbid developers from directing users to third-party payment options. That decision was upheld in today’s announcement from the US Ninth Circuit of Appeals, but the injunction on that requirement going into effect also remains in place.
Apple has praised the court’s decision, stating that it “reaffirmed what we’ve known all along: the App Store is not a violation of antitrust law”.