U.S. District Judge Yvonne Gonzalez Rogers has handed down her decision in the Epic Games v. Apple trial. She ruled that Apple’s anti-steering conduct is anti-competitive but ruled in favor of Apple on all other counts.
In her 185-page ruling, Judge Rogers said “the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws,” but she said the trial “did show that Apple is engaging in anticompetitive conduct under California’s competition laws.”
Rogers determined that “Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice”:
Having defined the relevant market as digital mobile gaming transactions, the Court next evaluated Apple’s conduct in that market. Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal. The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.
Nonetheless, the trial did show that Apple is engaging in anticompetitive conduct under California’s competition laws. The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice. When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted.
Judge Rogers also issued a permanent injunction that requires Apple to let U.S. developers direct customers to payment options other than Apple’s in-app purchase system:
Apple Inc. and its officers, agents, servants, employees, and any person in active concert or participation with them (“Apple”), are hereby permanently restrained and enjoined from prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.
The injunction is set to go into effect in 90-days. Apple must allow developers of all applications to link out to third-party payment solutions.
Epic Games will be required to pay damages equal to 30% of the $12,167,719 in revenue that Epic Games collected from users in the Fortnite app on iOS through the direct payment option between August 2020 and October 2020. It must also pay 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment, plus interest.
Apple is likely to appeal the decision. The Cupertino firm has issued the following statement, as shared by Nick Statt:
Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law. As the Court recognized ‘success is not illegal.’ Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. We remain committed to ensuring the App Store is a safe and trusted marketplace that supports a thriving developer community and more than 2.1 million U.S. jobs, and where rules apply equally to everyone.
