Earlier today I published the findings of fact and conclusions of law that Epic Games and Apple propose. Also, I had just read a few dozen pages when I already found something so outrageously misleading in Apple's filing that I just had to comment on it.
By now I've read both documents cursorily (to my own surprise, not feeling dizzy yet), and I've shared a number of observations and tidbits on Twitter. All in all, I'm favorably impressed--and not just because I am myself at loggerheads with Apple over its App Store terms and policies--by how compelling Epic's case is. I'd like to draw a comparison to the FTC's case against Qualcomm in 2019. The FTC's strength was all that testimony from smartphone and chipset makers--but the FTC's lawyers hardly elicited any major concessions from Qualcomm's current and former employees, all of whom stayed very much on message and denied everything but the absolutely undeniable. Relatively speaking, the most useful statements by Qualcomm executives that the FTC found were in a transcript of an IRS interview with Qualcomm. Epic's lawyers, however, have managed to get Apple players to confirm key facts. Also, from what I can see so far, Epic is in far better shape than the FTC was with respect to economic expert testimony.
It's a euphemism to label Apple's security and privacy arguments as "pretextual."
I have to read everything again more carefully and give it further consideration, but it also appears to me that some of Apple's defenses are attacks on strawmen. It appears that Apple expects to get a lot of mileage out of a two-sided market theory, but Epic is in a position to prevail even on that basis. Again, this is my preliminary assessment after quickly going over almost 700 pages...
The case won't be decided based on last night's filings, but after the trial. So it's too early to go into too much detail these days. There'll be plenty of time in May. What I thought was useful to share now, however, is the specific language of the ruling and injunctive relief Epic is seeking because it's impressive and shows what's really going to be at stake in May (it's not simply about Epic making more money, but truly about competition and innovation):
Claims Concerning iOS App Distribution
The Court has found in favor of Epic on the following claims:
Epic Count 1: Sherman Act § 2: Unlawful Monopoly Maintenance in the iOS App Distribution Market
Epic Count 2: Sherman Act § 2: Denial of Essential Facility in the iOS App Distribution Market
Epic Count 3: Sherman Act § 1: Unreasonable Restraints on Trade in the iOS App Distribution Market
Epic Count 7: California Cartwright Act: Unreasonable Restraints of Trade in the iOS App Distribution Market
Epic Count 10: California Unfair Competition Law (with respect to iOS app distribution)
To remedy Epic’s injuries, the Court orders the following relief:
Apple is permanently enjoined from further violations of Section 1 and/or Section 2 of the Sherman Act, the Cartwright Act and/or the California Unfair Competition Law with respect to the iOS App Distribution Market and/or the App Store on the iOS platform;
Apple is permanently enjoined from restricting, prohibiting, impeding or deterring the distribution [footnote says: "Distribution includes both supply of apps by developers and acquisition of apps by consumers unless otherwise specified."] of iOS apps through a distribution channel other than the App Store, including by:
Restricting, prohibiting, impeding or deterring users of iOS devices, through technical, contractual, financial, or other means, from downloading, executing, installing and/or updating iOS apps and app stores from a distribution channel other than the App Store;
Enforcing contractual provisions, guidelines or policies, or imposing technical restrictions or financial penalties, that (i) restrict, prohibit, impede or deter the distribution of iOS apps through a distribution channel other than the App Store or (ii) have the effect of impeding or deterring competition among app distributors (including competition between third party app distributors and the App Store);
Conditioning access of developers to iOS on the pricing of their apps or in-app content on other platforms;
Conditioning access of developers to the App Store on the pricing of their apps or in-app content on other platforms and/or on the pricing of their iOS apps or in-app content available through other distribution channels;
Conditioning distribution through the App Store on exclusivity or on an agreement by a developer not to distribute an iOS app through other means; and
Retaliating or threatening to retaliate against any developer on the basis of the developer’s choice of iOS app distribution channel.
Apple is permanently enjoined from discriminating against or disadvantaging iOS app distribution through channels other than the App Store, including by:
Denying iOS app stores access to iOS functionality that the App Store has access to, including iOS functionality that assists in or is required for the downloading, execution, installation, updating and removal of apps;
Denying iOS apps that were downloaded through a distribution channel other than the App Store equivalent access to iOS functionality and/or features that iOS apps downloaded through the App Store have access to;
Deterring users from downloading, executing, installing and/or updating iOS apps from or through an app distribution channel other than the App Store, including by imposing “warning” screens or other user obstructions or deterrents on iOS apps distributed through channels other than the App Store that are not present for apps distributed through the App Store.
To remedy Apple’s past misconduct and its anti-competitive effects in the iOS App Distribution Market and other relevant markets, and in order to restore competition in the iOS App Distribution Market, the Court orders the following time-limited relief, which shall be effective from the date of this Order for a period of three (3) years:
Apple is enjoined from enforcing contractual provisions, guidelines or policies, or imposing technical restrictions, that restrict, prohibit, impede or deter distribution of iOS app stores through the App Store.
Nothing in this Order shall prohibit Apple from taking steps to prevent the distribution of malware.
Claims Concerning In-App Payment Processing
The Court has found in favor of Epic on the following claims:
Epic Count 4: Sherman Act § 2: Unlawful Monopoly Maintenance in the iOS In- App Payment Solutions Market
Epic Count 5: Sherman Act § 1: Unreasonable Restraints of Trade in the iOS In- App Payment Solutions Market
Epic Count 6: Sherman Act § 1: Tying the App Store in the iOS App Distribution Market to In-App Purchase in the iOS In-App Payment Solutions Market
Epic Count 8: California Cartwright Act: Unreasonable Restraints of Trade in the iOS In-App Payment Solutions Market
Epic Count 9: California Cartwright Act: Tying the App Store in the iOS App Distribution Market to In-App Purchase in the iOS In-App Payment Solutions Market
Epic Count 10: California Unfair Competition Law (with respect to iOS in-app payment processing)
To remedy Epic’s injuries, the Court orders the following relief:
Apple is permanently enjoined from further violations of Section 1 and/or Section 2 of the Sherman Act, the Cartwright Act and/or the California Unfair Competition Law with respect to the iOS In-App Payment Solutions Market;
Apple is permanently enjoined from restricting, prohibiting, impeding or deterring the use of in-app payment processors other than Apple’s In-App Purchase (“IAP”), including by:
Rejecting iOS apps for distribution through the App Store or retaliating or threatening to retaliate against any developer of an iOS app on the basis of the developer’s or the app’s actual or intended integration of one or more non-IAP payment processors;
Enforcing contractual provisions, guidelines or policies, or imposing technical restrictions or financial penalties, that (i) restrict, prohibit, impede or deter developers from integrating payment processors other than Apple’s IAP into their apps for processing in-app purchases of in-app content or (ii) have the effect of impeding or deterring competition among in-app payment processors;
Apple is permanently enjoined from discriminating against payment processors other than Apple’s IAP, iOS developers that use payment processors other than Apple’s IAP, or iOS apps or app stores that use payment processors other than Apple’s IAP, including by:
Denying access to iOS apps or app stores that use payment processors other than Apple’s IAP, to the same iOS functionality and/or features that apps using exclusively Apple’s IAP for processing in-app purchases of in-app content have;
Giving preferential treatment in search to iOS apps that exclusively use Apple’s IAP; and
Apple is permanently enjoined from imposing a financial penalty or technical limitation on access to the iOS platform by iOS apps (including iOS app stores) that use payment processing solutions other than or in addition to Apple’s IAP.
* * * * *
Nothing in this Order shall prohibit Apple from seeking a modification of the Court’s Order regarding the iOS In-App Payment Solutions Market on the basis of changed circumstances (i.e., Apple’s loss of monopoly power in the iOS App Distribution Market).
Anti-Circumvention
Apple is permanently enjoined from circumventing this Order by taking steps that violate the purpose, if not the terms, of this Order, including by imposing disincentives or providing incentives that are designed to, and have the effect of, making real competition in the iOS App Distribution Market and/or the iOS In-App Payment Solutions Market impracticable.
Anti-Retaliation
Apple is permanently enjoined from taking any retaliatory actions against Epic or any of its affiliates in connection with or based on Epic’s filing of this Action, the August 2020 enablement of a direct payment option in Fortnite, or the steps Epic took to enable that option (“Prior Epic Actions”). For the avoidance of doubt, prohibited retaliatory actions include conduct by Apple that denies Fortnite access to Apple’s App Store on the basis of such Prior Epic Actions.
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