The US Justice Department is taking a stance in the latest showdown between Apple Inc. and Epic Games Inc. over the iPhone maker’s dominance of the marketplace for mobile applications.
(Bloomberg) — The US Justice Department is taking a stance in the latest showdown between Apple Inc. and Epic Games Inc. over the iPhone maker’s dominance of the marketplace for mobile applications.
The world’s most valuable technology company will on Monday defend its App Store business model when Epic, the maker of the popular Fortnite game, asks the Ninth US Circuit Court of Appeals to find that Apple’s online marketplace policies are anticompetitive.
The DOJ says it’s worried that “errors” by the lower-court judge who mostly sided with Apple last year may weaken its hand in future enforcement actions.
The case, which is about online marketplace policies for transactions related to apps and services, is being closely watched as US regulators continue to scrutinize big tech companies in their role as gatekeepers to the digital economy.
Why App Store Fees Are Drawing Fire Worldwide: QuickTake
While the DOJ said in a court filing that it’s not siding with either Epic or Apple, it argued that two provisions of the Sherman Act, a central pillar of US antitrust law, were misapplied in the September 2021 ruling by US District Judge Yvonne Gonzalez Rogers.
The department didn’t specify what kinds of enforcement actions might be imperiled, but it’s likely concerned about its own investigations of Apple’s and Google’s business practices. The DOJ will have 10 minutes at Monday’s hearing to air its concerns.
The dispute before the Ninth Circuit started in 2020 when Apple expelled the Fortnite game from the App Store because Epic created a workaround to paying a 30% fee on customers’ in-app purchases.
Following a three-week trial in Oakland, California, Gonzalez Rogers rejected Epic’s claims that the App Store is run like a monopoly. The judge didn’t see the need for third-party app stores or to push Apple to revamp policies over app developer fees.
But Justice Department attorneys say the judge “narrowly and wrongly” interpreted parts of antitrust law in a way that would weaken safeguards against unlawful deals and business conduct.
The federal government lawyers also say Gonzalez Rogers failed to accurately weigh the harms and benefits of App Store policies challenged by Epic. That “could significantly harm competition and consumers by allowing a minor benefit to condone a major harm,” the DOJ said in a filing.
Apple is expected to argue the issue isn’t ripe for the appeals court to address because it didn’t come up during the Epic trial.
What Bloomberg Intelligence Says
Antitrust scrutiny of Apple’s practices is increasing globally, with the US Justice Department’s probe reportedly accelerating. Any lawsuit that may ensue will likely have to plead facts or theories different than Epic’s to be successful.
— Jennifer Rie, Senior Litigation Analyst
Click here to read the full report
The case is Epic Games Inc. v. Apple Inc., 21-16695, US Court of Appeals for the Ninth Circuit (San Francisco).
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