Yesterday, US District Judge Yvonne Gonzalez Rogers decided Epic Games’ antitrust lawsuit against Apple, delivering a ruling in favor of Apple that comes with significant caveats. Although the Judge found that Apple‘s operation of the App Store isn’t an exercise of monopolistic power, she concluded that App Review Guidelines and related provisions of its agreements with developers foster a lack of pricing transparency store-wide that undermines competition under California law. So, while the decision is undeniably a win for Apple in many respects, it’s also a decidedly mixed bag. I’ve taken the time to read Judge Gonzalez Rogers’ 185-page decision and having written an in-depth look at the issues going into the trial, I thought I’d follow up with what the Court’s ruling is likely to mean for Epic and Apple as well as all developers and consumers.
Posts tagged with "Legal"
Apple has resolved an investigation by the Japan Fair Trade Commission by agreeing to allow ‘reader’ apps to link to websites to set up and manage an account with the app’s provider beginning in early 2022. The agreement reflects a loosening of existing App Store Guidelines and will be applied worldwide, but it’s also narrow.
First, the agreement is limited to what Apple refers to as ‘reader‘ apps. In App Review parlance, these are apps like the Netflix or Spotify apps, which “provide previously purchased content or content subscriptions for digital magazines, newspapers, books, audio, music, and video.’
Second, the developers of ‘reader’ apps can only share ‘a single link to their website to help users set up and manage their account.’ That language suggests, for example, that users could follow a link in the Kindle app to manage their Amazon account and perhaps initiate Kindle book transfers to an Apple device, but it seems to preclude the Kindle app from offering a catalog of books with links to a product page in a web browser. However, the press release does suggest a link could be used to set up a subscription to digital content like Netflix or Comixology Unlimited.
Third, the agreement doesn’t address videogame streaming services, which Apple does not consider to be ‘reader’ apps. Streaming games fall under a separate section of the App Review Guidelines, which require each game to be submitted to App Review.
The changes announced to end the Japan Fair Trade Commission investigation only affect a narrow category of apps and will only provide a single link out to the web. However, the agreement is a sign that the legal and regulatory scrutiny around the world is beginning to force Apple to change how it runs the App Store. With the number of pending lawsuits and investigations that remain outstanding worldwide, I expect we’ll see more of this sort of adjustment to App Store practices in the upcoming months.
Later today, Epic Games and Apple will square off in a high-stakes trial in US federal district court that’s nominally about money. However, if that were all that was at stake, the claims each company has made against the other would likely have been resolved by now. Companies the size of Apple and Epic settle because it’s rarely in their interest to have a judge make decisions for them. However, this trial is different.
There’s more to these disputes than Epic’s allegation that Apple violated antitrust laws and Apple’s claims that Epic violated its developer agreement. Underlying it all is the way the dispute was precipitated by Epic. The Fortnite creator’s actions don’t necessarily absolve Apple of antitrust violations, but Epic’s calculated orchestration of events leading to the dispute have not gone unnoticed by the judge presiding over the case and may influence the trial’s outcome. Coupled with Epic’s efforts to get regulators around the world to take up its cause and its very public crusade against the way Apple operates the App Store, it’s not surprising that the claims haven’t settled. Instead, the parties will begin today with opening arguments in front of US District Judge Yvonne Gonzalez Rogers, who the parties have agreed will decide the dispute instead of a jury.
Regardless of your opinion of the way Apple runs the App Store or Epic’s litigation tactics, the thing to keep in mind as the trial starts is that the judge is being asked to settle a legal dispute, not set policy. Both companies have made specific claims against the other, which by definition means the judge’s ruling will likely be narrower in scope than it would be in an antitrust case brought by the US government. Nor is any remedy imposed by the judge likely to be as broad as government regulation of the App Store might be someday.
Still, that doesn’t mean the stakes aren’t high; they are. An adverse ruling against Apple could significantly change the way the company operates the App Store and would likely trigger more antitrust lawsuits and regulatory scrutiny in the future. As a result, I thought it would be useful to dig in and take a closer look at some of the parties’ arguments and the context in which this dispute arose to provide a better sense of what to expect from the trial, which is expected to run about three weeks, and what the outcome might be.