The US Court of Appeals for the Ninth Circuit, based in San Francisco, upheld a lower court’s ruling from 2021 that largely sided with Apple in the case.
The appeals court’s ruling represents a defeat for many app developers, as well as activist groups and state attorneys-general, who had sided with Epic Games in its argument that Apple was in effect acting as a monopoly by restricting app developers to doing business through the App Store, where it charges a 30% fee on the revenue developers collect.
Epic Games’ founder, Tim Sweeney, had long argued that the 30% fee was excessive, and wanted Apple to either reduce the fee or allow app developers to bypass the app store’s fee system, and charge consumers directly.
Sweeney’s points of contention with Apple’s practices are virtually identical to the complaints of Spotify CEO Daniel Ek, who was in Washington, DC, last week to lobby policymakers for a change to US laws that would reduce the ability of app stores – particularly the App Store and Alphabet’s Google Play store for Android devices – to act as gatekeepers for all apps installed on devices.
Apple and Google parent Alphabet have long argued that their app stores exist for the protection of consumers, by ensuring that the app’s users download aren’t infected with malicious software, and help to ensure users’ privacy, which justifies the 30% fee they collect – an argument with which the appeals court in Epic Games v. Apple appeared to sympathize.
In August of 2020, Epic Games made changes to its Fortnite app for iOS to bypass the App Store, as part of a campaign against Apple that the company called “Project Liberty.” This prompted Apple to pull Fortnite from the App Store.
Epic Games quickly filed a lawsuit in the US District Court for the northern district of California, charging Apple with violations of US antitrust laws in its control of apps through its app store.
Apple filed a countersuit, arguing that Epic Games had intentionally violated its terms of contract with the Apple Store, in order to press Apple into taking the game off the store.
In 2021, the court ruled in favor of Apple on all charges except one: It upheld Epic Games’ challenge to Apple’s “anti-steering” practices, under which Apple prevented app developers from informing customers about their ability to make purchases on other platforms, outside the app store.
The court gave Apple 90 days to remove the anti-steering policy, but even before its ruling, Apple was already working on changing those policies, having come under pressure from numerous app developers. Apple did in fact drop the anti-steering policy for makers of various subscription apps, such as those for digital newspapers, books and audio, but not for video games, Bloomberg reported.
“The App Store continues to promote competition, drive innovation, and expand opportunity, and we’re proud of its profound contributions to both users and developers around the world.”
In its ruling on Monday (April 24), the appeals court upheld the lower court’s ruling, including the ruling on anti-steering.
“There is a lively and important debate about the role played in our economy and democracy by online transaction platforms with market power,” the three-judge panel wrote.
“Our job as a federal Court of Appeals, however, is not to resolve that debate — nor could we even attempt to do so. Instead, in this decision, we faithfully applied existing precedent to the facts as the parties developed them.”
In a statement sent to news organizations, Apple declared a “resounding victory.”
“For the second time in two years, a federal court has ruled that Apple abides by antitrust laws at the state and federal levels. The App Store continues to promote competition, drive innovation, and expand opportunity, and we’re proud of its profound contributions to both users and developers around the world. We respectfully disagree with the court’s ruling on the one remaining claim under state law and are considering further review,” Apple said.
“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,” he wrote, referring to the US’s federal antitrust law.
“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.”Music Business Worldwide