Apple dodges 'monopoly' label ... for now

Apple dodges 'monopoly' label ... for now

Ruling in closely watched App Store case leaves door open for more challenges

(AFP Photo)
(AFP Photo)

WASHINGTON: A US judge has stopped short of labelling Apple Inc an “illegal monopolist”, but the closely watched ruling provides a roadmap for similar claims against the iPhone maker in the future, legal experts say.

Ruling on an antitrust case brought by Epic Games, the creator of the popular online game Fortnite, US District Judge Yvonne Gonzalez Rogers said on Friday that Epic did not present sufficient evidence of Apple having unlawful monopoly power in the relevant market, which she defined narrowly as “digital mobile gaming transactions”.

However, Apple was ordered to relax control over its App Store payment system, a blow to the global tech giant.

Apple will no longer be allowed to force developers to use its sales tool, something app producers have long complained about because of the hefty commissions of up to 30% charged on in-app purchases.

The order says Apple is permanently barred from prohibiting developers from including in their own apps “external links or other calls to action that direct customers to purchasing mechanisms”.

Apple booted Fortnite from its online mobile marketplace after Epic released an update that would direct users to its own payment site, dodging revenue-sharing with the iPhone maker.

But Epic still sees the judgement as essentially a loss for app developers who rely on the App Store in the multi-billion-dollar mobile gaming industry, and for consumers.

“We will fight on,” Epic CEO Tim Sweeney tweeted, and a company spokesperson later confirmed it would appeal.

The California judge made clear that the decision was limited to the facts before her.

“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,” Gonzalez Rogers wrote. “The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.”

She did find, however, that Apple’s rules on its lucrative App Store business violated California state competition laws.

The question of whether Apple abused monopoly power “remains very much unsettled,” said Joshua Paul Davis, a professor of antitrust law at the University of San Francisco School of Law.

“Given how controversial these issues are right now, I would expect this not to be the final say,” he said.

Apple has already announced some changes to its App Store as part of an apparent attempt to fend off further regulatory action.

In her ruling, Gonzalez Rogers noted that Epic Games had “overreached” in a trial earlier this year by trying to define the relevant market as all app distribution and in-app payments on iPhones.

“As a consequence, the trial record was not as fulsome with respect to antitrust conduct in the relevant market as it could have been,” Gonzalez Rogers said.

Apple’s legal team said it was still reviewing whether to appeal the decision.

“We’re extremely pleased with this decision,” general counsel Katherine Adams told reporters. “It underscores the merit of our business, both as an economic and competitive engine.”

Valarie Williams, a partner at the law firm Alston & Bird, called Gonzalez Rogers’ decision a “road map” to future plaintiffs pursuing monopoly claims against Apple.

Future plaintiffs could bring a case that adopts the judge’s market definition and introduces additional evidence, Williams said.

“This is only one particular piece of litigation framed in one particular way,” agreed Davis. “The court was pretty explicit that different litigants could come forward with different evidence … and that could potentially change the result.”

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