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Posts tagged with "Legal"

Apple Denied a Stay of Judge Gonzalez Rogers’ Contempt Order

Reuters reported today that the United States Court of Appeals for the Ninth District has denied Apple’s motion to stay the effect of District Judge Gonzalez Rogers’ contempt order that required the company to allow developers to link to payment processing outside the App Store. Had Apple prevailed, Judge Gonzalez Rogers’ order would have been put on hold, allowing Apple to prevent developers from linking to external payment processing. Instead, developers can continue to add external payment options to their apps, which many already have.

The burden for staying an order pending appeal is high. As the Court of Appeals explained in its order:

In deciding whether to impose a stay, we consider:

“(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits;
(2) whether the applicant will be irreparably injured absent a stay;
(3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and
(4) where the public interest lies.”

Nken v. Holder, 556 U.S. 418, 426 (2009) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)).

This doesn’t mean Apple has no chance to win on appeal, but as the Ninth Circuit said quite bluntly in its order:

…we are not persuaded that a stay is appropriate.

And, given that the first factor the court decided was whether Apple is “likely to succeed on the merits,” things are not looking promising.

In a statement to 9to5Mac, an unnamed Apple spokesperson said:

We are disappointed with the decision not to stay the district court’s order, and we’ll continue to argue our case during the appeals process. As we’ve said before, we strongly disagree with the district court’s opinion. Our goal is to ensure the App Store remains an incredible opportunity for developers and a safe and trusted experience for our users.

Given that the writing is on the wall for the appeal, you can bet Apple is already looking ahead to the U.S. Supreme Court and will use the Ninth Circuit case as a dry run for that subsequent appeal.

EU Sets DMA Compliance Deadline in App Store Anti-Steering Dispute

Last month, the European Commission (EC) fined Apple €500 million for violating the Digital Markets Act. Today, the EC issued its full 67-page ruling on the matter, giving Apple until July 23 to pay the fine or face accruing interest on the penalty.

The ruling focuses on Apple’s anti-steering rules, which were the focus of the contempt order recently entered by a U.S. District Court Judge in California. According to the EC:

Apple has not substantiated any security concerns. Apple simply states that some limitations, such as linking out only to a website that the app developer owns or has responsibility for, are allegedly grounded in security reasons. However, Apple does not explain why the app developer’s website is more secure than a third party website which the app developer has taken the conscious decision to link out to. It also does not explain why this limitation is objectively necessary and proportionate to protect the end user’s security and therefore has not provided any adequate justifications in this regard.

(EC ruling at p. 22). In other words, “the App Store isn’t more secure than the web just because you say it is.”

Apple has until June 22 to bring the App Store into compliance with the EC’s ruling or face additional periodic penalties (EC ruling at p. 67). As we reported in April, Apple has said that it intends to appeal the EC’s ruling.

Microsoft Eyes Xbox Web Store after Epic Court Decision→

In the wake of U.S. District Judge Yvonne Gonzalez Rogers’ decision in Epic Games’ litigation against Apple, I commented on NPC: Next Portable Console that I expected Microsoft to enter the fray with its own web store soon. As reported by Tom Warren at The Verge, it looks like that’s exactly what Microsoft intends to do. Commenting on Judge Gonzalez Rogers’ contempt order in the context of Epic’s recent motion to return Fortnite to the App Store, Warren notes:

It’s a key ruling that has already allowed Fortnite to return to the App Store in the US, complete with the ability for Epic Games to link out to its own payment system inside the game. Microsoft has wanted to offer a similar experience for its Xbox mobile store prior to the ruling, but it says its solution “has been stymied by Apple.”

Ultimately, Microsoft wants its customers to be able to purchase and play its games from inside the Xbox app:

Microsoft started rolling out the ability to purchase games and DLC inside the Xbox mobile app last month, but it had to remove the remote play option to adhere to Apple’s App Store policies. You can’t currently buy an Xbox game in the Xbox mobile app on iOS and then stream it inside that same app. You have to manually navigate to the Xbox Cloud Gaming mobile website on a browser to get access to cloud gaming.

Developers continue to add options to link out to the web to purchase content, but as Microsoft’s court filing shows, the biggest players on the App Store are weighing the cost of setting up their own storefronts against the risk that Judge Gonzalez Rogers’ decision will be reversed on appeal.

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A Breach of Trust: Apple Held in Contempt Over App Store Rules

Late yesterday, U.S. District Judge Yvonne Gonzalez Rogers issued a blistering opinion, concluding that Apple had willfully disregarded the Court’s 2021 injunction, which found that the anti-steering provisions of the App Review Guidelines violated California state law. Judge Gonzalez Rogers also referred Apple’s conduct to the U.S. Attorney to investigate whether criminal prosecution of the company and one of its employees is warranted. For its part, Apple has said it disagrees with the decision and will appeal, but it will comply with the Court’s order in the meantime.

If that all sounds like it’s a big deal, that’s because it is. Judge Gonzalez Rogers’ 80-page opinion and order don’t pull any punches, painting a damning picture of Apple’s response to the Court’s injunction. It’s a unique and unflattering look behind the curtain at how Apple responded to the Court’s 2021 order that’s worth looking at more closely.

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EU Fines Apple €500 Million for Digital Markets Act Violations

In a press release issued today, the European Commission (EC) announced that it has fined Apple €500 million for violations of the EU’s Digital Markets Act. The EC also fined Meta €200 million.

The EC’s press release explains that:

Under the DMA, app developers distributing their apps via Apple’s App Store should be able to inform customers, free of charge, of alternative offers outside the App Store, steer them to those offers and allow them to make purchases.

The Commission found that Apple fails to comply with this obligation. Due to a number of restrictions imposed by Apple, app developers cannot fully benefit from the advantages of alternative distribution channels outside the App Store. Similarly, consumers cannot fully benefit from alternative and cheaper offers as Apple prevents app developers from directly informing consumers of such offers. The company has failed to demonstrate that these restrictions are objectively necessary and proportionate.

In addition to the fine, the EC has ordered Apple:

…to remove the technical and commercial restrictions on steering and to refrain from perpetuating the non-compliant conduct in the future…

The Commission also closed its investigation into Apple’s user choice obligations under the DMA, finding that the company’s browser choice screen and interface for setting new default apps to satisfy the DMA’s requirements.

An unnamed Apple representative speaking to CNN criticized the fine:

A representative for Apple said the fine is “yet another example of the European Commission unfairly targeting” the company and forcing it to “give away (its) technology for free.” It added that it plans to appeal the decision.

We have spent hundreds of thousands of engineering hours and made dozens of changes to comply with this law, none of which our users have asked for. Despite countless meetings, the Commission continues to move the goal posts every step of the way.

The EC’s fines aren’t surprising given the long history and tenor of the investigation. What remains open as a point of potential future disputes is Apple’s compliance with the EC’s new order. As stated by its representative to CNN, Apple also plans to appeal today’s decision.

The European Commission Opens Two iOS Interoperability Proceedings Against Apple

The European Commission (EC) issued a press release today summarizing two specification proceedings that they have commenced against Apple:

The first proceeding focuses on several iOS connectivity features and functionalities, predominantly used for and by connected devices. Connected devices are a varied, large and commercially important group of products, including smartwatches, headphones and virtual reality headsets. Companies offering these products depend on effective interoperability with smartphones and their operating systems, such as iOS. The Commission intends to specify how Apple will provide effective interoperability with functionalities such as notifications, device pairing and connectivity.

The second proceeding focuses on the process Apple has set up to address interoperability requests submitted by developers and third parties for iOS and IPadOS. It is crucial that the request process is transparent, timely, and fair so that all developers have an effective and predictable path to interoperability and are enabled to innovate.

In a nutshell, the EC is unhappy with connectivity between iOS and third-party devices and plans to tell the company how to comply. The second part requires Apple to set up a process for third parties to request connectivity with iOS.

The EC has given Apple six months to comply with its latest proceedings, during which the commission will share its preliminary findings with Apple and publish a non-confidential summary of the findings publicly so third parties can offer comments.

Apple prides itself on its tight integration between hardware and software, and the EC is determined to open that up for the benefit of all hardware manufacturers. While I think that is a good goal, we’re getting very close to the EU editing APIs, which I find hard to imagine will lead to an optimal outcome for Apple, third-party manufacturers, or consumers. However, if you accept the goal as worthwhile, it’s just as hard to imagine accomplishing it any other way given Apple’s apparent unwillingness to open iOS up itself.

The Risk to Apple of OS Envy→

With the rerelease of iOS 18.0, the EU and the rest of the world will have two flavors of the iPhone’s operating system. As Jason Snell writes for Macworld, this is one of Apple’s greatest fears, but there are potentially bigger risks on the horizon for the company. As Jason explains:

…to me, the bigger danger is envy. It strikes me that Apple has tried to make residents of the European Union envious of other regions by withholding Apple Intelligence, at least at first. There are legal reasons to do so, of course, but it’s also a lesson to Europeans that if they support such a strict regulatory regime, they’re going to be left on the side of the road while the rest of the world enjoys the bounty of AI features inside iOS. (Whether that bounty actually exists is beside the point.)

Yet, when I consider everything being experimented with in the EU, I start to wonder if the envy is actually going to flow in the other direction. The Verge said that the iPhone is now “more fun” in the EU. Noted iOS expert Federico Viticci wrote that the EU version of iOS “is the version of iOS I’ve wanted for the past few years,” and that “we can finally use our phones like actual computers.”

As someone who loves clipboard managers and uses several apps that aren’t Apple’s defaults, I am warming up to their point of view.

I’m right there with Jason. At first, the differences between my iOS and Federico’s didn’t seem like that big of a deal. Sure, it was easier for him to access AltStore, but it’s available outside the EU if you jump through some extra hoops. However, over time, the differences have multiplied. I’ve also had the chance to try Apple Intelligence in 18.1, and although there’s more to come from Apple on the AI front, which could change my calculus, from where things stand today, I’d gladly trade iOS 18.1 for the EU’s 18.0.

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Google’s Antitrust Loss, Why Apple Doesn’t Just Build a Search Engine, and What Comes Next

Yesterday, Federal District Judge Amit Mehta issued a ruling in the U.S. Justice Department’s antitrust case against Google in favor of the government. Judge Mehta didn’t mince words:

Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act.

The Judge further explained his ruling:

Specifically, the court holds that (1) there are relevant product markets for general search services and general search text ads; (2) Google has monopoly power in those markets; (3) Google’s distribution agreements are exclusive and have anticompetitive effects; and (4) Google has not offered valid procompetitive justifications for those agreements. Importantly, the court also finds that Google has exercised its monopoly power by charging supracompetitive prices for general search text ads. That conduct has allowed Google to earn monopoly profits.

It’s a long opinion, coming in at nearly 300 pages, but the upshot of why Judge Mehta ruled the way he did is summed up nicely near the beginning of the tome:

But Google also has a major, largely unseen advantage over its rivals: default distribution. Most users access a general search engine through a browser (like Apple’s Safari) or a search widget that comes preloaded on a mobile device. Those search access points are preset with a “default” search engine. The default is extremely valuable real estate. Because many users simply stick to searching with the default, Google receives billions of queries every day through those access points. Google derives extraordinary volumes of user data from such searches. It then uses that information to improve search quality. Google so values such data that, absent a user-initiated change, it stores 18 months-worth of a user’s search history and activity.

If you’re interested in how web search works and the business deals that drive it, the opinion is a great primer. Plus, although the details already dribbled out over the course of the 10-week trial, there are lots of interesting bits of information buried in there for anyone interested in Apple’s search deal with Google.

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US Department of Justice and States Sue Apple Under Federal and State Antitrust Laws

The US Department of Justice and 16 states have sued Apple for antitrust violations in an 88-page complaint filed in New Jersey federal court. At the time of publication, the DOJ’s press release, which has been shared with some media outlets, has not been published on the DOJ website, although I expect it will be before long. In response, Apple says:

At Apple, we innovate every day to make technology people love—designing products that work seamlessly together, protect people’s privacy and security, and create a magical experience for our users. This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.

We’ll have a more detailed breakdown of the plaintiffs’ allegations against Apple soon, but the allegations are broad, claiming that:

  • Apple has monopolized or attempted to monopolize the smartphone market under the federal Sherman Act;
  • Apple has monopolized or attempted to monopolize the performance smartphone market under the federal Sherman Act and Wisconsin and New Jersey antitrust laws

(emphasis added).

The DOJ and states argue that Apple’s alleged anticompetitive behavior extends beyond its effect on users and developers to touch a wide swath of the economy:

Critically, Apple’s anticompetitive conduct not only limits competition in the smartphone market, but also reverberates through the industries that are affected by these restrictions, including financial services, fitness, gaming, social media, news media, entertainment, and more. Unless Apple’s anticompetitive and exclusionary conduct is stopped, it will likely extend and entrench its iPhone monopoly to other markets and parts of the economy. For example, Apple is rapidly expanding its influence and growing its power in the automotive, content creation and entertainment, and financial services industries–and often by doing so in exclusionary ways that further reinforce and deepen the competitive moat around the iPhone.

The DOJ and states seek a number of different remedies, including:

a. preventing Apple from using its control of app distribution to undermine cross-platform technologies such as super apps and cloud streaming apps, among others;

b. preventing Apple from using private APIs to undermine cross- platform technologies like messaging, smartwatches, and digital wallets, among others; and

c. preventing Apple from using the terms and conditions of its contracts with developers, accessory makers, consumers, or others to obtain, maintain, extend, or entrench a monopoly.

There’s a lot to digest in the complaint, which you can read for yourself here. I highly recommend reading at least the introduction to get a better sense of what Apple is being accused of. Keep in mind that this is just one side of the story, but Apple will tell its side in more detail soon enough. And, of course, I will be back soon with a more detailed look at what this lawsuit is all about and what’s at stake.