After a long legal battle across various jurisdictions, Justice Yvonne Gonzalez Rogers of the District Court of California handed down an unexpected decision against Apple. In her judgment, Justice Rogers issued an injunction against Apple to prevent the company from forcing users to use Apple in-app purchasing.
The Apple and Epic Games proceedings arose out of an alleged breach of competition and consumer law by Apple, primarily through its monopolistic control of systems in the App Store. For all App Store payments, Apple claims a 30 per cent fee. As such, Epic Games claimed that Apple holds ‘an antitrust monopoly over (i) Apple’s own system of distributing apps on Apple’s own devices in the App Store and (ii) Apple’s own system of collecting payments and commissions of purchases made on Apple’s own devices in the App Store.’ In the US proceedings, a central focus was on the relevant market, ie. whether Apple maintains a monopoly over general digital app marketplaces or whether Apple and Epic Games compete in the market for digital video games.
Interestingly, Justice Rogers took an approach that was different to both Epic Games and Apple’s arguments. Her Honour concluded, based on the evidence, that the relevant market concerned “digital mobile gaming transactions”. This does not cover gaming in general nor Apple’s system for the operation of its App Store. Justice Rogers came to this reasoning due to the dominance of gaming apps, whereby 70 per cent of all revenue generated in the App Store is by less than 10 per cent of all App Store consumers. More importantly, this revenue is primarily made through in-app/in-game purchases.
Once the relevant market had been identified, Justice Rogers assessed Apple’s role and conduct within the market. Despite recognising Apple’s considerable market share, influence, and success, her Honour could not objectively say that these factors alone resulted in Apple acting in an anti-competitive manner. Although, Justice Rogers did note that if argued correctly by Epic Games, such as by including factors of barriers to entry and innovation impacts, there may have been a possibility to portray Apple as an illegal monopolist. Irrespective of this, the Court ultimately assessed Apple’s behaviour in hiding critical information in its App Store to sway consumer choice. For these reasons, the District Court of California held that a nationwide remedy was necessary to eliminate Apple’s anti-competitive terms and conditions and issued an injunction to rework Apple’s App Store policies.
Funnily enough, Epic Games is appealing the decision, as CEO Tim Sweeney criticised the ruling as Epic Games’ focus is fighting for consumer choice and ‘fair competition among in-app payment methods’.
For the full reading of the judgment, see here.
