Pixel Envy

Written by Nick Heer.

Judgement Issued in Epic Games v. Apple

A couple of weeks before WWDC this year, arguments wrapped in Epic Games v. Apple. Judge Yvonne Gonzalez Rogers took the summer to sort through the mountain of testimony, emails, and contracts and now, just a few days before Apple is set to launch new models of iPhone, Apple Watch, and AirPods, the judgement has been handed down.

You know what the weirdest thing about it is? The nearly two hundred page order is very readable and well-written, but the injunction ordering Apple to scrap the last sentence of the first bullet in App Store rule 3.1.1 leaves plenty of ambiguity over what developers can do and what Apple must allow. This will undoubtably be clarified with time, but it is the only part of the result that creates more questions than it answers. Apple is apparently interpreting it as requiring the company to, in effect, apply its settlement with the Japan Fair Trade Commission to all apps, not just Apple’s “reader” app category. That means the anti-steering App Store policies will be removed within three months. But it may not mean that Apple must permit alternative in-app purchase options.

It is strange to see many stories framing this result as a win for Epic Games, too. It is undoubtably big news that Apple’s anti-steering rules are going away, but that seems like a moderate sacrifice for the company to retain the vast majority of its App Store model— a real cut off the nose to spite the face result. Apple is calling it an affirmation of the App Store’s success.

Sara Morrison, Recode:

As for Epic’s other claims, Gonzalez Rogers said the company “overreached” and couldn’t prove that Apple was a monopolist. That doesn’t necessarily mean that Apple isn’t a monopoly, nor that another plaintiff couldn’t make a better argument that it is. Gonzalez Rogers added: “The trial record was not as fulsome with respect to antitrust conduct in the relevant market as it could have been.” The 30 percent commission Apple takes on most subscriptions and in-app purchases, she said, “appears inflated” and was “potentially anticompetitive.” But, since Epic wasn’t challenging the amount of the commission (only the fact that there was one), she wasn’t able to rule on it.

I will repeat what I wrote in May: Epic was a bad plaintiff. It did what plaintiffs do: go for the biggest plausible case and hope to settle somewhere in the middle. But Epic did not gamble well, and is unsatisfied with this ruling — understandably, as it now owes Apple several million dollars. I understand there are many developers who were hoping for an outcome more favourable to them, but a better case needs to be made.

The judge’s order shows the limitations in how competition law is currently interpreted by the courts. Apple may be operating almost entirely within those laws, but lawmakers seem increasingly keen to reduce the power of companies like Apple and Google. Expect more on this front, and not just because Epic will appeal this ruling.