The Verdict In Apple Case Is More Complicated Than You Think

The recent Epic v. Apple decision might seem like a win for Apple, says Jeffrey Jacobovitz, a partner at Arnall Golden Gregory LLP and an antitrust expert. The ruling, however, is a bit more complicated.
Despite Apple’s victory and Epic’s appeal, Jacobovitz told Sports Business Journal that this ruling benefits both sides.
Epic filed the antitrust suit to help fellow developers that are forced to use Apple’s in-app payment system and pay a 30% commission per transaction, but the move was actually motivated by Fortnite’s removal.
Apple eventually won a counterclaim from Epic that will cost the company millions if it doesn’t win on appeal: “The award of approximately $4M relates to Apple’s counterclaim against Epic for breach of contract and other claims (p. 168 of the decision).” The judgment ordered Epic to pay 30% of the $12M in revenue Epic Games collected from the Fortnite app on iOS through Epic Direct Payment. Frequently, antitrust cases involve litigating counterclaims as well.”
Jacobovitz added that companies suing big tech will face a tough fight: “What companies find is that if you’re using high tech, you’re in for a battle.” Companies won’t just roll over and settle right away.
A second takeaway is that Judge Yvonne Gonzalez Rogers held that Apple did not engage in antitrust behavior, even though it holds a monopoly in a particular sector. She found that Epic had failed to prove that Apple had engaged in antitrust behavior.
According to the judge, Apple was not a monopolist despite having a market share of over 55%. The implication is that it has market power, but it is not a monopoly,” he added. “The other issue is that Apple was ordered to allow other payment options; the judge ruled that Apple cannot force developers to use in-app purchases.”
Rogers also noted that Epic’s definition of Apple’s market power was rejected, an important step towards proving the company’s antitrust violations.
Judge Jacobovitz ruled that the product market is digital mobile gaming transactions, which is different from what Epic wanted to define as a market. Antitrust economists work for both sides in antitrust cases. “One defines market power very narrowly, while the other defines it very broadly.”
Although Epic should be commended for allowing app developers to sell content outside of Apple’s App Store payment system (such as through in-app links and direct communication with users), it will likely come back to haunt it during its current battle with Google.
He said the case illustrates plaintiffs are unable to show they have so much dominance in the market that judges are holding them accountable in terms of proving monopoly power or market power, and that it is illegal to maintain a monopoly in an anti-competitive manner.
Note: prior to its publication, it was revealed that Apple will not even consider reinstating Fortnite to the App Store for iOS devices until all appeals related to the antitrust case and Epic’s separate judgment for breach of contract are exhausted. Appeals could take anywhere from one to five years to resolve.

Tags: ,

%d bloggers like this: