Apple vs Epic Games: App Store Antitrust Battle Heads to US Court of Appeals
Apple is headed to court against the company behind the popular Fortnite video game, reviving a high-profile antitrust battle over whether the digital fortress protecting the iPhone app store is illegally enriching the world’s most valuable company while stifling competition.
Monday’s oral arguments before a three-judge U.S. Circuit Court of Appeals are the latest in a series of legal battles involving the app store that supplies many of the products on more than one billion mobile iPhones and is the backbone of Apple’s $2.4 trillion. about Rs.1,94,77,360 crore) state.
A dispute that is likely to remain unresolved for a long time. After hearing arguments Monday in San Francisco, the appeals court is not expected to rule for another six months to a year. The case is so important to both companies that the losing side is likely to take it to the US Supreme Court, a process that could extend into 2024 or 2025.
The dispute dates back to August 2020 when Epic Games, the maker of Fortnite, filed an antitrust lawsuit in an attempt to end the walls that have given Apple exclusive control over the iPhone app store since its inception 14 years ago.
That ironclad control over the app store has enabled Apple to impose commissions of 15 to 30 percent on purchases made for digital services sold by other companies. According to some estimates, those commissions pay Apple $15 billion (roughly Rs. 1,21,820 crore) to $20 billion (roughly Rs. 1,62,430 crore) a year — revenue that the Cupertino, California-based company says helps pay for technical costs. iPhone and the store now contains almost 2 million free applications.
US District Judge Barbara Gonzalez Rogers almost entirely sided with Apple in a 185-page ruling issued 13 months ago. That followed a closely watched trial that included testimony from Apple CEO Tim Cook and Epic CEO Tim Sweeney, as well as other top executives.
Despite declaring that Apple’s exclusive control over iPhone apps was not a one-off, Gonzalez Rogers has opened a loophole that Apple wants to close. The judge ordered Apple to allow apps to provide links to other payment methods outside of the app store, a requirement that has been put on hold until the appeals court rules.
Monday’s arguments are expected to open when Epic’s attorney Thomas Goldstein tries to persuade three judges – Sidney R. Thomas, Milan D. Smith Jr., and Michael J. McShane – why Gonzalez Rogers should have considered the iPhone store’s payment systems as distinctly separate markets instead of merging them. together.
The attorney for the Department of Justice will also have the opportunity to explain why the agency believes that Gonzalez Rogers has interpreted federal antitrust law, risking future enforcement actions against potentially anti-competitive behavior in the technology industry. Although the department is technically neutral, its arguments are expected to help Epic argue that the appeals court should overturn the lower court’s decision.
Another attorney from the California Attorney General’s office will present arguments defending the law that Gonzalez Rogers stated when he ordered Apple to provide links to other payment methods outside of its app store.
Apple attorney Mark Perry will have the opportunity to make closing arguments, giving him the opportunity to prepare a presentation aimed at answering some of the questions the judges may ask the lawyers before him.
Much of what Perry says may echo the successful lawsuit Apple brought to the lower court.
During his testimony at the lower court, Cook argued that forcing Apple to allow alternative payment systems would weaken the security and privacy controls valued by consumers who buy iPhones instead of devices that run on Google’s Android software. That situation could create “a kind of toxic chaos,” Cook warned on the witness stand.
Even as he railed against Apple’s ironclad grip on the app store, Sweeney admitted he owns an iPhone himself, in part because of its security and privacy features.