Apple wins antitrust court battle with Epic Games, appeals court rules(techcrunch.com)
techcrunch.com
Apple wins antitrust court battle with Epic Games, appeals court rules
https://techcrunch.com/2023/04/24/apple-wins-antitrust-court-battle-with-epic-games-appeals-court-rules/
603 comments
People need to think very seriously about the market structure of the digital world and creating genuine alternatives in the interest of a healthy, innovative and less risky society.
This is not a niche market and a cute little oligopoly. Tech touches, controls and even disrupts major parts of economy and social life and there is no visible counterbalance. E.g., in other recent news Apple was getting deeper into finance and banking.
Where exactly does the conglomeration stop?
Having let things reach such an advanced metastasized stage its not clear if there is a gentle way to turn things around. Which commercial entity would dare go against such a entrenched and systemically supported duopoly?
Taking the axe and creating by brute force less dominant pieces is the approach that was used in the past.
Another, maybe fanciful, idea is for governments to fund public goods that will undermine the commercial viability of certain business lines currently under the stranglehold of tech oligopolies.
As it stands, reinforcing the concept of TINA, there is no alternative, acts as a millstone around society and effectively robs us from the potential of technology.
This is not a niche market and a cute little oligopoly. Tech touches, controls and even disrupts major parts of economy and social life and there is no visible counterbalance. E.g., in other recent news Apple was getting deeper into finance and banking.
Where exactly does the conglomeration stop?
Having let things reach such an advanced metastasized stage its not clear if there is a gentle way to turn things around. Which commercial entity would dare go against such a entrenched and systemically supported duopoly?
Taking the axe and creating by brute force less dominant pieces is the approach that was used in the past.
Another, maybe fanciful, idea is for governments to fund public goods that will undermine the commercial viability of certain business lines currently under the stranglehold of tech oligopolies.
As it stands, reinforcing the concept of TINA, there is no alternative, acts as a millstone around society and effectively robs us from the potential of technology.
I yield to the arguments in the comments emphasizing the requirement of defining "the market" in the case of an antitrust case.
Sure.
I still think that Apple's dictatorial grip on their platforms broadly stifles innovation and has a negative impact on competition.
That's not a monopolistic issue, that's just the systemic underregulation we have come to expect from the US.
Sure.
I still think that Apple's dictatorial grip on their platforms broadly stifles innovation and has a negative impact on competition.
That's not a monopolistic issue, that's just the systemic underregulation we have come to expect from the US.
From the ruling [1], the only thing Apple lost.
> We now turn to Apple’s cross-appeal, beginning with its arguments concerning the UCL. The district court found that Epic suffered an injury sufficient to confer Article III standing, concluded that Apple’s anti-steering provision violates the UCL’s unfair prong, and entered an injunction prohibiting Apple from enforcing the anti-steering provision against any developer. Apple challenges each aspect on appeal. We affirm.
i.e., the District Court found Apple to be violating CA Unfair Competition Law which Apple had appealed and the US Court of Appeals for the Ninth Circuit concurs with the district court.
Consequence of this ruling is limiting the ability of app developers to communicate the availability of alternative payment options to iOS device users is unlawful. As a result, alternate payment methods can no longer be restricted by Apple.
The question of commission (30%) still remains because the ruling is silent on it except for observing what the district court said.
> Because the district court accepted only a general version of Apple’s IP-compensation rationale (that Apple was entitled to “some compensation”), Epic at step three needed only to fashion a less-restrictive alternative calibrated to achieving that general goal, instead of one achieving the level of compensation that Apple currently achieves through its 30% commission.
My reading of this is that the 30% commission can come under challenge from another plaintiff. Epic took a different tactic on this specific argument and failed to establish it. However, the Appeals court's observaton seems to indicate there is legal room for a challenger to attack this.
[1]: https://cdn.ca9.uscourts.gov/datastore/opinions/2023/04/24/2...
> We now turn to Apple’s cross-appeal, beginning with its arguments concerning the UCL. The district court found that Epic suffered an injury sufficient to confer Article III standing, concluded that Apple’s anti-steering provision violates the UCL’s unfair prong, and entered an injunction prohibiting Apple from enforcing the anti-steering provision against any developer. Apple challenges each aspect on appeal. We affirm.
i.e., the District Court found Apple to be violating CA Unfair Competition Law which Apple had appealed and the US Court of Appeals for the Ninth Circuit concurs with the district court.
Consequence of this ruling is limiting the ability of app developers to communicate the availability of alternative payment options to iOS device users is unlawful. As a result, alternate payment methods can no longer be restricted by Apple.
The question of commission (30%) still remains because the ruling is silent on it except for observing what the district court said.
> Because the district court accepted only a general version of Apple’s IP-compensation rationale (that Apple was entitled to “some compensation”), Epic at step three needed only to fashion a less-restrictive alternative calibrated to achieving that general goal, instead of one achieving the level of compensation that Apple currently achieves through its 30% commission.
My reading of this is that the 30% commission can come under challenge from another plaintiff. Epic took a different tactic on this specific argument and failed to establish it. However, the Appeals court's observaton seems to indicate there is legal room for a challenger to attack this.
[1]: https://cdn.ca9.uscourts.gov/datastore/opinions/2023/04/24/2...
Everyone talks about sideloading as something to circumvent 30% tax. While maybe true, I'm interested to see if sideloading would allow new browser engines, like gecko or chromium. This will open a ton of possibilities weakening even more the walled garden
So it seems like where we're at with this is... Apple can continue to charge a 30% fee on all transactions, but maybe can't prevent apps that direct users to sign up through a web browser to avoid the fees? (Pending further appeals)
The ability for the app store to take a percentage of each in-app purchase blows my mind.
Same for the private copying levy that can take a percentage on each storage device sale.
This is power abuse and it's a shame that the judges let it pass.
This is power abuse and it's a shame that the judges let it pass.
But in Europe they are being forced to allow side-loading anyway.
I don't really understand the commenters complaning here. Both of these two things can be true at the same time: companies operating "app stores" are indeed not monopolies under the Antitrust Act and yet "app stores" are an unacceptable distortion of the market. The solution seems pretty simple and is exactly what Europe did with the DMA: make a new law specifically targeted at digital stores.
Rather than allowing side-loading on iOS. I hope Apple is forced to open up its bootloader on iPhones.
Step 1: Go to the Apple store and ask to unlock the bootloader, they give you a form to void the warranty and Apple Care, they then unlock the bootloader.
Step 2: Wait for the Asahi Linux, Valve/Steam Proton, Google, and the Pinephone teams to showcase their skills.
Step 1: Go to the Apple store and ask to unlock the bootloader, they give you a form to void the warranty and Apple Care, they then unlock the bootloader.
Step 2: Wait for the Asahi Linux, Valve/Steam Proton, Google, and the Pinephone teams to showcase their skills.
Competition law is toothless today, so crooks like Apple get away with abusing it.
If I understand it correctly, they are reaffirming the decision that Apple has to allow developers to link to other payment options? Which mostly mollifies the issue IMO no? I can just create a link to my site for payment?
“Monopolists lie to protect themselves. They know that bragging about their great monopoly invites being audited, scrutinized, and attacked. Since they very much want their monopoly profits to continue unmolested, they tend to do whatever they can to conceal their monopoly—usually by exaggerating the power of their (nonexistent) competition.
Think about how Google talks about its business. It certainly doesn’t claim to be a monopoly. But is it one? Well, it depends: a monopoly in what? Let’s say that Google is primarily a search engine. As of May 2014, it owns about 68% of the search market. (Its closest competitors, Microsoft and Yahoo!, have about 19% and 10%, respectively.) If that doesn’t seem dominant enough, consider the fact that the word “google” is now an official entry in the Oxford English Dictionary—as a verb. Don’t hold your breath waiting for that to happen to Bing.
But suppose we say that Google is primarily an advertising company. That changes things. The U.S. search engine advertising market is $17 billion annually. Online advertising is $37 billion annually.”
“The entire U.S. advertising market is $150 billion. And global advertising is a $495 billion market. So even if Google completely monopolized U.S. search engine advertising, it would own just 3.4% of the global advertising market. From this angle, Google looks like a small player in a competitive world.”
“What if we frame Google as a multifaceted technology company instead? This seems reasonable enough; in addition to its search engine, Google makes dozens of other software products, not to mention robotic cars, Android phones, and wearable computers. But 95% of Google’s revenue comes from search advertising; its other products generated just $2.35 billion in 2012, and its consumer tech products a mere fraction of that. Since consumer tech is a $964 billion market globally, Google owns less than 0.24% of it—a far cry from relevance, let alone monopoly. Framing itself as just another tech company allows Google to escape all sorts of unwanted attention.”
Excerpt From Zero to One: Notes on Startups, or How to Build the Future Peter Thiel
“The entire U.S. advertising market is $150 billion. And global advertising is a $495 billion market. So even if Google completely monopolized U.S. search engine advertising, it would own just 3.4% of the global advertising market. From this angle, Google looks like a small player in a competitive world.”
“What if we frame Google as a multifaceted technology company instead? This seems reasonable enough; in addition to its search engine, Google makes dozens of other software products, not to mention robotic cars, Android phones, and wearable computers. But 95% of Google’s revenue comes from search advertising; its other products generated just $2.35 billion in 2012, and its consumer tech products a mere fraction of that. Since consumer tech is a $964 billion market globally, Google owns less than 0.24% of it—a far cry from relevance, let alone monopoly. Framing itself as just another tech company allows Google to escape all sorts of unwanted attention.”
Excerpt From Zero to One: Notes on Startups, or How to Build the Future Peter Thiel
Apple is right on the law, wrong on the morality.
Change the law.
Change the law.
My point still stands:
>> Even after the Epic v Apple court case, Apple unfortunately still wins. Don't like it?, Maybe use PWAs or failing that build an alternative. Good luck.
A predictable Epic failure and Apple still collects the 30% commission regardless.
[0] https://news.ycombinator.com/item?id=29914414
>> Even after the Epic v Apple court case, Apple unfortunately still wins. Don't like it?, Maybe use PWAs or failing that build an alternative. Good luck.
A predictable Epic failure and Apple still collects the 30% commission regardless.
[0] https://news.ycombinator.com/item?id=29914414
Legit pricing vs pure greed(Epic) hiding in a knight in shining armour fighting for all developers. As a dev myself I know the tax is high but Apple does a great job and not gonna say should be arbitrary 8.5% lower or whatever Epic is trying to wring out
Considering the sorry state of democracy in the world, this doesn't surprise me at all, though is deeply saddening.
Obviously the markets aren't functioning properly because of these massive monopolies hoarding wealth and controlling everything.
Proper tech feudalism.
Obviously the markets aren't functioning properly because of these massive monopolies hoarding wealth and controlling everything.
Proper tech feudalism.
Ninth Circuit opinion
https://cdn.ca9.uscourts.gov/datastore/opinions/2023/04/24/2...
https://cdn.ca9.uscourts.gov/datastore/opinions/2023/04/24/2...
In case anyone is interested in the legal background behind this decision I've read through the ruling and here are the key reasons why Epic's appeal failed:
1. The first reason involves Epic's attempt to define the relevant antitrust market as "iOS app distribution".
Courts do not allow you to simply declare an arbitrarily narrow market consisting of a single company in order to claim that company has a monopoly over the distribution of its own product. In antitrust law these are known as "single-brand aftermarkets" and are generally considered the exception rather than the rule. There are very specific criteria that need to be met in order for a "single-brand aftermarket" to be allowed:
> "In sum, to establish a single-brand aftermarket, a plaintiff must show: (1) the challenged aftermarket restrictions are “not generally known” when consumers make their foremarket purchase; (2) “significant” information costs prevent accurate life-cycle pricing; (3) “significant” monetary or non-monetary switching costs exist; and (4) general market-definition principles regarding cross-elasticity of demand do not undermine the proposed single-brand market."
The burden of proof was on Epic to provide evidence for all four criteria, and they failed at step (1). In order for "iOS app distribution" to qualify as a "single-brand aftermarket", Epic would need to prove that consumers were unaware that they would be limited to purchasing apps from the App Store when they originally bought their iPhones. Because if they knew about that restriction ahead of time and bought iPhones anyway, then they did so willingly, despite having the option to purchase smartphones on the marketplace without such restrictions.
2. The second reason involves Epic's failure to prove that Apple's app distribution restrictions were unreasonable.
Courts use a three-step process to analyze whether a competitor's behavior is considered an unreasonable restraint of trade:
Step 1: The plaintiff first has to show that the restraints have an anti-competitive effect.
Step 2: The defendant is then given the opportunity to show a pro-competitive justification for the restraint.
Step 3: The plaintiff then has to show that those pro-competitive justifications could have been achieved via less restrictive alternatives.
In this case, the court agreed with Epic that the constraints were anti-competitive. However, they also agreed with Apple that the restraints were justified because a) Apple is entitled to compensation for the use of their IP, and b) the restraints increase the security and privacy of their platform. At that point the burden is shifted back to Epic to show how (a) and (b) could have been achieved through less restrictive alternatives, which Epic failed to do.
1. The first reason involves Epic's attempt to define the relevant antitrust market as "iOS app distribution".
Courts do not allow you to simply declare an arbitrarily narrow market consisting of a single company in order to claim that company has a monopoly over the distribution of its own product. In antitrust law these are known as "single-brand aftermarkets" and are generally considered the exception rather than the rule. There are very specific criteria that need to be met in order for a "single-brand aftermarket" to be allowed:
> "In sum, to establish a single-brand aftermarket, a plaintiff must show: (1) the challenged aftermarket restrictions are “not generally known” when consumers make their foremarket purchase; (2) “significant” information costs prevent accurate life-cycle pricing; (3) “significant” monetary or non-monetary switching costs exist; and (4) general market-definition principles regarding cross-elasticity of demand do not undermine the proposed single-brand market."
The burden of proof was on Epic to provide evidence for all four criteria, and they failed at step (1). In order for "iOS app distribution" to qualify as a "single-brand aftermarket", Epic would need to prove that consumers were unaware that they would be limited to purchasing apps from the App Store when they originally bought their iPhones. Because if they knew about that restriction ahead of time and bought iPhones anyway, then they did so willingly, despite having the option to purchase smartphones on the marketplace without such restrictions.
2. The second reason involves Epic's failure to prove that Apple's app distribution restrictions were unreasonable.
Courts use a three-step process to analyze whether a competitor's behavior is considered an unreasonable restraint of trade:
Step 1: The plaintiff first has to show that the restraints have an anti-competitive effect.
Step 2: The defendant is then given the opportunity to show a pro-competitive justification for the restraint.
Step 3: The plaintiff then has to show that those pro-competitive justifications could have been achieved via less restrictive alternatives.
In this case, the court agreed with Epic that the constraints were anti-competitive. However, they also agreed with Apple that the restraints were justified because a) Apple is entitled to compensation for the use of their IP, and b) the restraints increase the security and privacy of their platform. At that point the burden is shifted back to Epic to show how (a) and (b) could have been achieved through less restrictive alternatives, which Epic failed to do.
https://archive.ph/IaCoO#selection-399.0-403.153
for fellow uMatrix users (with a selection by me)
for fellow uMatrix users (with a selection by me)
I feel like this is a case of winning the battle but losing the war. Epic started a movement which has resulted in legislative changes all over the world.
IANAL but they already won, the appeals court ruled that the lower court didn't make any glaring errors in reaching this judgement.
Well at least we would probably have sideloading in iOS soon, which would make the discussion about mobile app market monopoly irrelevant.
Given that Europe requires side loading apps now, did Apple really "win"?
WebGPU + WebAssembly is an alternative way around walled gardens, which would enable Epic to distribute Fortnite to iOS users via a client side web-app, enabling them to bypass Apple entirely.
Why does Apple continue to have control over something they already sold?
I bet the judge doesn't "own" an iPhone.
I bet the judge doesn't "own" an iPhone.
This was bound to happen. I guess Epic's goal was just to stir some shit.
How can the app store promote competition when it is a monopoly on iOS? (I suppose they could be talking between different apps, but that isn't what this case was about)
UPDATE: The comments seem to imply I am giving my opinion on this case. I am not. I am commenting on the PR-speak given here. The app store does not, IMO, "promote" competition...it may arguably not hinder it, but given what the case is about, it is, I think, more competitive if others could use different methods of selling apps on iOS. That doesn't mean it is better, right, more fair, or anything else... just more "competitive" IMO. In short, I'm commenting on the wording in their press release only.